5976.T

Company Overview & Core Technology

• Founded in 1946 as Japan's first company to successfully industrialize IH (induction heating) technology, listed on the Tokyo Prime Market with ~6.4 billion yen in capital stock and 1,600 consolidated employees.
• Core IH technology is electric-only, produces zero direct CO2 emissions, enables selective heating, and reduces CO2 emissions by over 75% compared to conventional gas carburization, while improving metal mechanical properties for lighter, stronger, longer-lasting components.
• Global network: 25 domestic locations, 16 locations across 6 overseas countries (US, China, South Korea, Indonesia, Mexico, Czech Republic).

16th Mid-Term Management Plan (2024-2026, Phase 2 of NETUREN VISION 2030)

• Four core strategies: creation of growth drivers, cultivation of growth engines, global market expansion, development of proactive talent. Drives corporate value growth through cost of capital management.

Growth Driver Creation

• Developing the "Neturen Bedded" variable-thickness pipe manufacturing process, which combines variable thickness sizing and IH heat treatment to achieve both high strength and weight reduction; currently undergoing customer evaluation testing.
• Launched air-less quenching equipment with full electric actuation, reducing customer energy waste from compressed air use, cutting operating costs and CO2 emissions.

Growth Engine Cultivation

• High-strength shear reinforcement bars and PC steel bars selected for Hokkaido Shinkansen infrastructure projects: 8 of 18 construction blocks have selected the company's shear reinforcement bars, and PC steel bars are selected for nearly the full 212km of slab track reinforcement, with deliveries starting summer 2025.
• Launched the "REBORN Kariya" factory restructuring project for the core IH division Kariya plant, to address aging infrastructure and scattered operations. The 1.5 billion yen project will consolidate facilities, add new heat treatment equipment, improve productivity and capacity, with completion targeted by 2030.

Global Market Expansion

• Invested ~1 billion yen to expand Neturen US, increasing ITW production capacity by 1.4x; full production started October 2024 after customer approval.
• Invested ~0.9 billion yen to expand Neturen Indonesia to meet growing automotive contracted heat treatment demand; construction is on track for completion by summer 2025.

Talent Development & Capital Management

• Reformed the in-house technical report conference to an open poster session open to all employees, generating new ideas for early commercialization. Restarted the interrupted technical exchange partnership with Kyushu University after 7 years to collaborate on technical development.
• Fully introduced ROIC-based cost of capital management this fiscal year: completed training for executives and 222 plant managers/management staff, with general employee training starting April 2025.

Capital Allocation & Shareholder Return

• Total planned strategic investment over 3 years: ~16 billion yen, including the above global expansion, REBORN Kariya, and 0.3 billion yen for solar power installation.
• Updated dividend policy in 2023 to a 3.0%+ DOE (dividend on equity) target; 2024 full-year dividend is planned at 50 yen per share.
• Repurchased ~2 million shares (~5% of outstanding shares) for ~2 billion yen between May 2024 and January 2025; plans for total 6 billion yen in share repurchases between 2024-2026.
• Operates a shareholder QUO card incentive program, and a matching green donation program that earned a commendation from the Director-General of the Forestry Agency in 2023.

Sustainability & ESG

• Aligns operations with SDGs under the 2023 Neturen Group Sustainability Basic Policy, focusing on climate change mitigation, environmental protection, and human rights respect.
• Conducts multiple social contribution activities including disaster relief support, sports sponsorship, local community donations, and has won national awards for safety hygiene and technical contributions.

• Confirms the 16th Mid-Term Management Plan 2026 final year sales target of 70 billion yen, a challenging growth goal from the 2024 projected 62 billion yen.
• Maintains target of reaching a 60-65% equity ratio by the end of the mid-term plan; as of Q3 FY2025 ending March 2025, the equity ratio is already 69.9%, ahead of target, with the company continuing to balance financial health and capital efficiency.
• Confirms total 6 billion yen share repurchase authorization for the 2024-2026 mid-term period, to be executed based on cash flow and investment needs to maintain optimal capital structure.
• Neturen Indonesia factory expansion is on track for completion by summer 2025, and Hokkaido Shinkansen PC steel bar deliveries are scheduled to start summer 2025 as planned.
• Confirms the 12.8 billion yen 2024 new product sales target, driven by ITW large-diameter expansion, EV-related products, new high-rise construction products, and new high-frequency power equipment.
• The REBORN Kariya factory restructuring project is on track for completion by 2030, with 1.5 billion yen total investment planned over the 3-year mid-term period.

The company operates two core business segments based on induction heating (IH) technology, with 2024 estimated sales split by industry as follows:

1. Product Business Segment: Includes high-strength steel products (PC steel bar-related products for civil engineering/construction, high-strength spring steel wire "ITW" for automotive suspension springs) and integrated processed components (hollow rack bars for automotive steering, front fork inner tubes for two-wheeled vehicles, slewing rings for construction machinery). It holds ~48% domestic market share for ITW, ~21% domestic share for PC steel bars/ deformed PC steel bars in the construction/civil engineering industry, and ~26% domestic share for high-strength shear reinforcement bars for construction. This segment contributes ~34% of total sales based on 2024 industry estimates.
2. IH Business Segment: Includes contracted heat treatment processing for components across automotive, construction machinery, and industrial/machine tool sectors, plus design, manufacturing, and sales of induction heating equipment (including high-frequency quenching facilities). It holds ~47% domestic market share for contracted IH heat treatment processing, and ~20% domestic share for induction heating equipment. This segment is capable of processing very large specialty parts (up to 50-ton heat rolls, 8-meter outer diameter slewing bearings, 4-meter crankshafts), a key competitive advantage. This segment contributes ~66% of total sales based on 2024 industry estimates.

By geographic contribution: Overseas sales account for 38% of total consolidated sales (24% from China/Asia, 9% from North/Central America, 5% from Europe). By industry, 2024 estimated sales share is: 56% automotive, 14% construction, ~10% construction machinery, ~10% machine tools, ~5% civil engineering. 2024 full-year consolidated sales are projected at 62 billion yen (8.4% year-over-year growth), with 2024 new product sales targeted at 12.8 billion yen.

• 2024 full-year results face headwinds from delays in construction/civil engineering starts and project delays, and significant demand downgrades in the construction machinery and machine tool sectors.
• The core Kariya plant faces risks from aging infrastructure and scattered operations that create unnecessary logistics waste and limit productivity gains without major restructuring investment.
• The development of the new "Neturen Bedded" pipe product is still in the customer testing phase, with uncertain commercialization timeline and revenue contribution.
• The company faces growing industry competition for key products including high-strength shear reinforcement bars and induction heating equipment, requiring ongoing technical investment to maintain market share.

No formal question and answer section is included in the provided transcript.