FUJI CORPORATION Q4 FY2025 earnings call

• Overall Financial Results

  • FUJI achieved full-year revenue growth and profit growth after a stronger-than-expected recovery in Q4, reversing the prior expectation of a decline at the time of Q3 earnings. Total orders increased 6.6% year-over-year to 123.888 billion yen, with quarter-over-quarter order growth across all four quarters, and Q4 orders exceeding 4 billion yen for the first time since Q2 2023.
  • Operating profit increased 0.359 billion yen year-over-year to 13.781 billion yen. Positive factors include higher sales volume (+1.885 billion yen), improved operating efficiency from higher production (+0.391 billion yen), lower component costs (+0.345 billion yen), reduced R&D spending after reaching key milestones for new model development (+0.501 billion yen), and lower personnel costs from workforce restructuring in weak European and American markets (+0.207 billion yen). Negative factors include pricing pressure (-2.265 billion yen, driven by a higher mix of lower average selling price sales from China and other Asian markets and lower share of higher-priced European sales) and increased expenses for core system updates and expanded overseas innovation center activities (-0.748 billion yen).

• Product and Regional Operational Updates

  • Regional performance: Other Asian markets (led by Vietnam) saw strong demand for electronics manufacturing equipment for smartphones, wearables, and PCs, growing 6 percentage points in Q4 versus Q3. US demand increased from 10% to 15% of segment revenue in Q4, supported by infrastructure investment but has not yet reached a full recovery. Other North America (centered on Mexico) and Europe continue to see weak demand focused on the automotive segment.
  • Industry performance: Communications and computing electronics made up ~30% of Q4 revenue, with strong demand across Vietnam, India, and China. Server demand has gradually recovered since Q3 after low levels in the prior full year and first half of the fiscal year, centered on Chinese and Taiwanese demand. Automotive demand remains weak in Europe and the US but grew in China. Semiconductor-related mounter demand (FUJI's core product) grew in other Asian markets driven by increased demand for optical communication module packaging. Fasford Technology's (FFT) die bonder segment saw sluggish performance due to weak memory market conditions.
  • Product transition: The transition from the legacy NXTⅢ to the new high-speed placement machine NXTR accelerated in Q4, with NXTR accounting for over 30% of total NXT series sales in Q4, up from 10% in Q3. NXTR made up 16% of total Robot Solution segment revenue for the full year.

• Mid-Term Strategy and Capital Strategy

  • The mid-term management plan's first year missed the revenue target by 5.613 billion yen due to delayed electronics market recovery and sluggish die bonder market growth, but achieved the operating profit target by 0.281 billion yen, driven by on-schedule structural reform in the Machine Tool segment. The overall 2027 March fiscal year end targets of 180 billion yen total revenue and 33 billion yen operating profit remain unchanged, with only internal segment breakdowns adjusted.
  • Management is targeting at least 10% ROE by the 2027 mid-term plan final year. To achieve this, management will grow organic profit through mounter market recovery and share gains, and is actively evaluating M&A opportunities in the factory automation and semiconductor sectors to add incremental profit. For capital structure, management will maintain equity capital around 220 billion yen through continued shareholder returns, and will consider using leverage for M&A as needed to balance shareholder value growth and business expansion.
  • Share buyback has progressed as planned, reaching 4.2 million shares and 9.3 billion yen as of April 30, 2025. The full-year dividend is planned at 80 yen per share.

1. Robot Solution Segment: Revenue of 114.157 billion yen (89.6% of total consolidated revenue), with an operating profit of 16.349 billion yen. This represents a year-over-year decrease in revenue and profit, driven by weak European and American demand and pricing impacts, even as sales volume increased. Orders increased 8.5% year-over-year to 112.868 billion yen, with over 10 billion yen of order growth in Q4 alone showing a clear recovery trend. 2. Machine Tool Segment: Revenue of 11.093 billion yen (8.7% of total consolidated revenue), a 6.1% year-over-year increase. Following structural restructuring focused on turnkey solutions, the segment swung from a 0.786 billion yen operating loss in the prior year to a 0.74 billion yen operating profit, achieving its first profit since the 2019 March fiscal year after five consecutive years of losses. Orders totaled 8.9 billion yen, with an order backlog of 4.825 billion yen, which remains at a very low level compared to the prior year start backlog of 7.018 billion yen. Total consolidated revenue for the full year was 127.387 billion yen, a 0.3% year-over-year increase.

• Full-year consolidated guidance for the 2026 March fiscal year forecasts total revenue of 147 billion yen, a 19.612 billion yen year-over-year increase, and operating profit of 18 billion yen, a 4.218 billion yen year-over-year increase, which incorporates costs for rising personnel expenses and accelerated new model development.
• Robot Solution Segment guidance forecasts order growth of 19.631 billion yen and revenue growth of 20.842 billion yen year-over-year, supported by solid demand in China and other Asia, expanding mounter market size, and growing market penetration of the NXTR.
• Machine Tool Segment guidance forecasts revenue of 10 billion yen, starting the year from a low order backlog, with plans to grow through short lead-time order acquisition. Management will continue to monitor the impact of US additional tariffs.
• For the NXTR transition, management plans to increase NXTR's share of the total NXT series to 58% in the 2026 fiscal year. The new Okazaki plant already has a monthly production capacity of 500 units, and will expand to 1,000 units per month (double current capacity) by the end of the current fiscal year. Profitability is expected to recover as high-cost initial lot shipments are completed in the first half of 2026 fiscal year and mass production efficiency drives cost reductions.
• The mounter market is forecast to grow 20% from 330 billion yen in 2024 to 400 billion yen in 2026. FUJI targets a 30%+ market share leveraging the NXTR's competitive advantages.
• For FFT's semiconductor die bonder business, management lowered the 2026 general-purpose memory production growth forecast from 13% to 3% year-over-year from 2023, leading to lower than originally planned market volume forecasts. Management continues to pursue new product development for 2026 and beyond, and expansion in Southeast Asian and Indian markets.
• The Machine Tool segment will continue focusing on high-margin products to maintain profitability, and will evaluate full business model restructuring including all strategic options.

• Weak demand persists in automotive-related markets in Europe, Mexico, and other North American markets, which continues to pressure revenue and profitability for both the Robot Solution and Machine Tool segments.
• Pricing pressure remains a key headwind, driven by the current high mix of lower average selling price sales from China and other Asian markets, which reduced full-year operating profit by 2.265 billion yen in the 2025 fiscal year.
• The Machine Tool segment starts the 2026 fiscal year with a very low order backlog of only 4.825 billion yen, down from 7.018 billion yen at the start of the prior year, representing a major operational challenge for the segment.
• The memory market remains depressed, with FFT's die bonder business seeing sluggish demand, and 2026 memory production growth revised down sharply from 13% to 3%, creating ongoing headwinds for the semiconductor-related business line.
• The semiconductor equipment market has not grown as quickly as originally projected in the mid-term plan, requiring a slower, more cautious evaluation of spinning out a standalone semiconductor segment, delaying that strategic initiative.

Q: What are the current trends and future outlook for the smartphone market in China? / A: The question asks for trends in China's smartphone market and FUJI's outlook for demand for the company's equipment. While there is some volatility in low-tier model demand, overall demand for FUJI's high-density placement equipment remains supported by smartphone product upgrades and increased component counts per device. FUJI's NXTR is well-positioned to capture this demand given its advantages in high-automation and high-density assembly.

Q: What is the current state of the memory market and FUJI's future business outlook for this segment? / A: The memory market has been in a prolonged downturn, leading to sharply lower capex for memory production equipment, which has pressured FFT's die bonder business. While near-term demand remains weak, FUJI continues to develop new die bonder products for next-generation memory technologies, and is pursuing new customer expansion in growing Southeast Asian and Indian markets to position for a future market recovery.

Q: What are management's initiatives to improve average selling prices, including pricing for the new NXTR model? / A: The NXTR has a higher average selling price than the legacy NXTⅢ, driven by its enhanced capabilities and higher value for customers. As the mix shifts to the NXTR, this will naturally lift overall segment average selling prices. Management is also focused on improving cost efficiency as NXTR production scales to offset initial high costs and expand margins alongside higher average selling prices.

Q: What is the outlook for demand in Europe and the United States, and how is FUJI positioned in the current market environment? / A: Automotive remains the key end market in both Europe and the US, and demand has not yet recovered from the current industry downturn. There has been some pickup in infrastructure-related demand in the US, but this has not been enough to offset weak automotive demand. FUJI is maintaining a flexible cost structure in these regions, including adjusted workforce levels, to preserve profitability while waiting for demand to recover.