6143.T

• Company Milestone and Core Philosophy

  • Sodick celebrates its 50th anniversary in August 2026, 50 years after its founding in Yokohama. The company retains its founding core values of "Creation, Execution, Overcoming Hardship" and aims to become a truly global enterprise while remaining a critical partner to manufacturing companies worldwide.
  • A new corporate philosophy system has been established, with the corporate purpose stated as "Opening up the future of manufacturing through creativity and innovation", under the 50th anniversary theme "Grow Forward in the Next Era".

• Mid-Term Management Plan Transformation

  • The company shifted from its previous annual rolling 3-year plan to a 4-year commitment-based plan ending in FY2029 (December period), working backwards from the 2029 target to design strategy. This 4-year period is a turning point for corporate value transformation, focused on absorbing Advantage Partners (AP)’s management expertise, global network, and execution capability to build a self-sustaining operating model that can operate independently after AP exits.
  • Structural reform progress: The company launched structural reform in H2 2023, implemented cost cutting and production optimization. The relocation of the Suzhou Tech Center was completed in December 2025, with production capacity consolidated at the Xiamen plant and the Suzhou facility refocused on tech center functions, delivering ongoing profitability improvement.
  • AP partnership: The partnership with AP focuses on the core pillars of globalization, solution provision, and high value-added transformation. Initiatives include strengthening sales capability, advancing solution proposal sophistication, improving management systems, and evaluating M&A opportunities. Sodick is shifting its business model from product-centric sales to solution-centric offerings, and developing new businesses leveraging 3D printers and laser processing machines to expand into automotive, aerospace, medical, electronics, and energy sectors.
  • Capital allocation: Total planned strategic investment over the 4-year plan is 20 billion yen, with 10 billion yen from financing from AP and 10 billion yen from Sodick’s own cash. The company targets cumulative operating cash flow generation of 50 billion yen over the 4-year period, balances growth investment and financial soundness by expecting capital inflow from policy-held share sales, and allocates 16.5 billion yen of generated cash flow to shareholder returns.

• Operational Updates

  • In FY2025, Sodick acquired Italian metal 3D printer manufacturer Prima Additive, which was renamed AltForm and has been included in consolidated results from the second half of the year, contributing to higher H2 sales. The Suzhou Tech Center construction was completed, and the company raised 8 billion yen in cash via issuing 2 billion yen in share warrants and 8 billion yen in convertible bonds to AP for strategic investment.
  • EDM order momentum in Q4 FY2025 was very strong, particularly in December driven by rising demand in China. Regionally, aerospace-related demand remained solid in Japan, Europe, and the U.S., while automotive demand was weak; China continued to see rising order volume driven by strong demand from electronics and semiconductor-related sectors.
  • Non-financial initiatives: The company has identified 4 core materialities for sustainability, set KPIs, and publishes related details on its website and in its integrated report. It transitioned to an Audit and Supervisory Committee company in 2025 to strengthen management oversight, holds a majority of external directors on the board of directors, Audit and Supervisory Committee, and personnel/remuneration committees to ensure transparency and objectivity. It continues to advance IR/SR engagement focused on structural reform progress, mid-term plan updates, and PBR improvement initiatives.

• FY2026 (December period) Full-Year Guidance

  • The company expects increased sales and profit across its three core business segments. Following a segment reporting change that moved the linear motor business previously included in Other to the Machine Tool segment, guidance is: Machine Tool Business: 64.7 billion yen in sales, 6.3 billion yen in segment profit (growth in sales and profit); Industrial Machinery Business: 10.5 billion yen in sales, 0.8 billion yen in segment profit; Food Machinery Business: 7.7 billion yen in sales, 1.0 billion yen in segment profit (growth in sales and profit).
  • Capital expenditure guidance for FY2026 is approximately 6 billion yen, allocated to Suzhou Tech Center development, establishment/relocation of offices in the U.S. and India, and showroom renovations. R&D expenditure guidance is approximately 4 billion yen, allocated to 50th anniversary model development and next-generation CNC development.

• Shareholder Return Guidance

  • For FY2025, Sodick plans a full-year dividend of 29 yen per share (14 yen interim, 15 yen end-of-period), in line with its prior policy of targeting DOE of 2%+ and total payout ratio of 40%+, though total payout ratio did not reach 40% due to year-end foreign exchange impacts. To address the missed target, the company immediately implemented a share repurchase program with an upper limit of 1 million shares and 1 billion yen in total purchase value, with acquired shares to be used flexibly for future share issuances.
  • For FY2026, to commemorate the 50th anniversary, the company plans a 6 yen per share special dividend. Full-year dividend guidance is 35 yen per share (20 yen interim including the special dividend, 15 yen end-of-period). The company has introduced a progressive dividend policy that rules out dividend cuts: from FY2027 onward, annual dividends will not fall below the 35 yen per share planned for FY2026.
  • For the 4-year period from FY2026 to FY2029, the company targets a total payout ratio of 70% or higher, plans to repurchase up to 10 billion yen in own shares over the period to strengthen shareholder returns.

• Mid-Term (FY2029) Targets

  • Core targets: 100 billion yen in total sales, 10 billion yen in operating profit, 10% operating margin. This target is achieved via business portfolio restructuring, focus on high value-added areas, cost structure reform, and after-sales revenue expansion, rather than pure scale expansion. Full details of the plan and roadmap will be disclosed in May 2026.
  • Financial targets: PBR of 1x or higher, ROE of 8% or higher, EPS of 130 yen. These are formal target levels (not just aspirational goals), and management aims to achieve them as early as possible, not just by FY2029. Even in the scenario of full conversion/exercise of AP’s convertible bonds and share warrants (which would lead to maximum 19.6% dilution), the company still expects to achieve EPS of 130 yen or higher in FY2029, with share repurchases expected to absorb a portion of the dilution impact.
  • EPS targets are fundamentally based on business growth, not pre-adjusted for potential dilution.

1. Machine Tool Business: Sales grew 13.6% year-over-year driven by strong demand from smartphones, data center optical connectors, electronic components, and semiconductors in Greater China, and aerospace and medical sectors in Europe and the U.S. Segment operating profit grew significantly year-over-year due to higher sales, production consolidation in China, and improved factory utilization. However, Q4 segment profit decreased quarter-over-quarter due to one-time costs including AltForm-related expenses and valuation write-downs of slow-moving inventory from inventory optimization. This segment accounts for ~80.4% of total company sales based on 2026 guidance. 2. Industrial Machinery Business: Sales grew 1.8% year-over-year. Even with overall soft market conditions, demand for data center optical connectors and contact lens products remained solid, with optical connector-related business now accounting for ~25% of the segment's total sales. Segment profit decreased year-over-year due to higher personnel and R&D expenses. This segment accounts for ~13% of total company sales based on 2026 guidance. 3. Food Machinery Business: Sales decreased year-over-year, as strong demand for noodle-making equipment globally was offset by a more competitive market for aseptic packaged rice equipment in Greater China. Segment profit increased year-over-year due to higher sales of relatively high-margin products. This segment accounts for ~9.6% of total company sales based on 2026 guidance. 4. Other Business: Sales increased year-over-year. While automotive-related demand in the mold molding business slowed, solid demand for ceramic products for semiconductor manufacturing equipment offset the decline. Segment profit recovered from a prior-year deficit to a net profit, driven by structural reform and cost reduction efforts in the mold molding business.

• The historic China-focused growth model is no longer viable, as the 2018-level boom in China is not expected to recur; FY2025 EDM sales volume is slightly below 3,000 units, down from over 4,000 units in 2018, and past overexposure to China led to significant earnings deterioration in FY2023. Sustained growth under the old operating model is no longer achievable, requiring fundamental structural change.
  • Strong EDM order growth in China in December 2025 was stronger than expected, and it is still difficult to judge the sustainability of this demand momentum at present.
  • AltForm is still in an R&D-focused pre-investment phase and remained unprofitable in FY2025, with management expecting it to remain profitless in FY2026, targeting a return to net profit within 3 years. One-time costs from AltForm's consolidation and inventory valuation write-downs weighed on Machine Tool segment profit in Q4 FY2025.
  • ROE has remained below the 8% target and has been sluggish since 2022, while PBR has stayed below 1x for the past 8 years, even with a recent mild improvement, still remaining below the 1x target level.

Q: What are the main reasons for the deterioration in operating margin for the Machine Tool segment from Q3 to Q4?

A: AltForm, the Italian metal 3D printer subsidiary, is included in the Machine Tool segment. It was added to the consolidation in the second half of the year and contributed to sales, but is currently operating at an operating loss. While subsidies offset part of the deficit in net income, the deficit widened slightly in Q4 compared to Q3, which was a major driver of the profit deterioration. Additionally, we recorded valuation write-downs for part of our slow-moving inventory as a structural reform cost in Q4. While this is purely a one-time cost, it also contributed to lower profitability in Q4 compared to Q3.

Q: EDM order momentum strengthened further in Q4, with particularly strong growth in Greater China. What is the background for this strength, how sustainable is it, and are any other regions expected to see strong demand going forward?

A: The December order growth was stronger than we expected. Historically, China’s demand peaks after the Lunar New Year and declines gradually through the end of the year, but we saw increased orders from electronics component users this December. We are monitoring how this will translate into capital expenditure going forward, and it is very difficult to judge the sustainability of this momentum at this point.

Q: What is the progress of Sodick’s structural reform?

A: We launched structural reform in the second half of 2023, and have advanced various cost reduction efforts and production optimization across our facilities. The relocation of the Suzhou Tech Center was completed in December 2025, and we held a completion ceremony. We consolidated production capacity at the Xiamen plant, and the Suzhou facility now operates as a tech center-focused location. Structural reform is progressing steadily and is already contributing to improved profitability.

Q: Could the Japanese government’s recent U.S.-focused investment and financing initiative indirectly benefit Sodick’s business?

A: I am very optimistic about this initiative, and I believe it has the potential to meaningfully benefit Sodick’s business. The evolution of AI has led to massive demand for new data center infrastructure, and the U.S. is currently behind on this infrastructure buildout. As this buildout progresses, power demand will increase, and Sodick’s EDM machines play a major role in power generation-related businesses, so we are expecting significant demand growth going forward.

Q: What level of profit contribution can we expect from the newly acquired AltForm subsidiary?

A: AltForm is an Italian metal 3D printer company that was spun off in 2022, and is currently in a pre-investment phase centered on R&D. In addition to 3D printers for additive manufacturing matching Sodick’s existing business, AltForm is receiving a wide range of inquiries for 3D printer-based surface coating applications in the parts processing sector, which we expect to contribute to future sales and profit. We do not disclose specific profit contribution figures at this stage, but we expect the business to remain unprofitable this fiscal year. We are working to achieve a return to net profit within 3 years.

Q: Is there a priority order for the targets of ROE 8%+, PBR 1x+, and EPS 130 yen that management must achieve by 2029?

A: We have set these financial metrics as part of our targets for 100 billion yen in sales and 10 billion yen in operating profit for FY2029, and we aim to improve all of these metrics in a balanced manner.

Q: What is the background for setting the mid-term targets of 100 billion yen in sales and 10 billion yen in operating profit, and why did you revise the plan at this timing?

A: Historically, our sales have ranged between 70 billion yen and 80 billion yen, with a record high of around 83 billion yen and 80.5 billion yen in FY2025. Our previous rolling plan made it difficult to clearly communicate our strategy to the market, so we set a clear target of becoming a 100 billion yen company. This not only sends a clear message to outside stakeholders, but also clarifies the numerical target for internal teams. We are currently sharing the target with our executives and working on developing specific initiatives to achieve it.

Q: The FY2026 forecast calls for a 10% year-over-year sales increase and a 30% year-over-year operating profit increase. What is the likelihood of this forecast being achieved?

A: For our core Machine Tool business, we expect demand from the data center segment that has grown over the past year to remain solid. We are also making progress on sales and solution capability strengthening initiatives in partnership with AP, so we expect to deliver sales growth. On the cost and profit side, we expect improved profitability from AltForm, which weighed on results last fiscal year, so we expect both sales growth and improving operating margin.

Q: With the recent rise in Sodick’s share price, will AP convert its convertible bonds and exercise its share warrants to become a shareholder?

A: The deadline for conversion/exercise was February 4, 2026, so conversion and exercise became available after February 5 if Sodick’s share price exceeds 1117 yen. The final decision on equity conversion rests with AP, so we cannot make a definitive statement. At present, Sodick and AP are working together as one team to improve corporate value, and both parties recognize that the target share price level is higher than current levels.

Q: After accounting for potential dilution from AP’s conversion, is the PBR 1x target too low?

A: We arrived at this target after running multiple internal calculations under different assumptions. PBR 1x is a lower bound target, and we aim to achieve and exceed this level. We would ask investors to understand it as a minimum target rather than an endpoint, and we will not disclose detailed assumption details at this time.