Fuji Die Co.,Ltd. Q4 FY2026 earnings call

• Company Overview & Core Positioning

  • Fuji Dice is a 75-year-old Japanese manufacturer of cemented carbide wear-resistant tools and dies, and is the domestic top market player in the wear-resistant tool niche. It holds a niche top position globally supporting core infrastructure industries, with production bases in 2 countries and sales bases in 5 countries, serving approximately 3,000 total customers across a make-to-order, direct sales model.
  • Key unique competitive advantages: integrated in-house production from raw material development through final precision processing, which delivers 3x-4x higher added value than raw material-only suppliers. Few competitors can match the company's combined expertise in both metallurgy/material development and high-precision difficult/large-scale processing. Unique products only Fuji Dice can produce include 500kg tools for high-pressure synthetic diamond production, high-precision guide rails for semiconductor manufacturing equipment, and grooved copper tube forming rolls for air conditioners.
  • Growth end-market focus: glass lens molding molds for cameras and sensors, motor core/battery manufacturing tools for electric vehicles, components for semiconductor manufacturing equipment, and tools for optical communication connectors for data centers. The company is also developing a new hydrogen evolution electrode business using its existing synthetic diamond tool technology.

• Mid-Term Management Plan 2026 (FY2025 March – FY2027 March) Core Initiatives

  1. Strengthen Management Base: Refresh core ERP systems (launched October 2024), newly established a Quality Assurance Headquarters to reinforce quality control, focus on developing self-reliant employee talent, launch corporate branding initiatives, and formalize sustainability reporting. Shift from informal approximate accounting to data-driven decision making via DX.
  2. Productivity & Operational Efficiency Improvement: Introduce robots and automation for historically skill-dependent manual processes, use AI to optimize material cutting yield, and shift to a hybrid "skill × technology" model that retains skilled craft for unique products while automating repeatable processes. The company has already achieved initial tangible results from incremental automation despite the challenge of low-volume, high-mix production.
  3. Overseas Business Expansion: Prioritize growth in Southeast Asia, China, and India. The new Dongguan, China facility is gradually growing sales after a slower start, Indonesia is seeing growing inquiry for battery can manufacturing tools, and India plans to resume full operations by 2027 after a period of dormancy, currently showing Y-shaped recovery. North American expansion is under review due to tariff policy uncertainty.
  4. Contribution to Decarbonization & Circular Economy: Accelerate tungsten/cobalt-free cemented carbide development (current prototype is being revised to better match customer use cases), scale internal raw material recycling to improve supply chain resilience, and continue development of hydrogen evolution electrode technology in partnership with industry players.
  5. Establish New Business: Formed a dedicated new business development department (previously a side project), and is actively exploring M&A targets that can support automation and rationalization goals.

• Shareholder Return Update: Changed shareholder return policy from payout ratio targeting to Dividend on Equity (DOE) targeting, with a medium-term target of 4% DOE (up from ~2% currently), ROE of 7%+, and PBR of 1x+. For FY2025 March, the company set a full-year dividend of 40 yen per share, up from 32 yen per share in the prior year (which included a 75th anniversary special dividend).

The company does not break out separate product segment financial results in this presentation. By industry customer base, Fuji Dice reports that transportation equipment and steel are its core customer segments, while non-ferrous metals/metal products, production/business machinery, electrical machinery/electronics, and raw material supply each contribute approximately 15% of total revenue, reflecting a broad, diversified customer base across core industries. For the full 2025 March fiscal year, the company guided net sales of 17 billion yen (1.9% year-over-year increase), and operating profit of 680 million yen (15.9% year-over-year decrease).

• Full-year FY2025 March guidance has been revised downward, with operating profit lowered 15.9% year-over-year to 680 million yen, due to prolonged inventory adjustments in the global automotive industry and stagnation in the Chinese economy that weighed on customer demand. Net sales are guided to a 1.9% year-over-year increase to 17 billion yen.
• The company has high operating leverage: it has enough capacity to handle orders over 18 billion yen, so even a 1 billion yen increase in sales generates ~500 million yen in additional operating profit once operating leverage kicks in as volume rises above current levels.
• Mid-term targets under the Medium-Term Management Plan 2026 (through FY2027 March) are maintained, with a focus on hitting the targets of 7%+ ROE, 1x+ PBR, and 4% DOE.
• Management expects performance to recover in future fiscal years after the current industry headwinds fade, as preparation for long-term growth is on track.

• Current near-term demand headwinds from automotive industry inventory adjustments and Chinese economic stagnation have led to lower-than-initial expected sales and profits for FY2025 March, reflecting overly optimistic initial demand forecasting from management.
• North American expansion plans are currently under review due to tariff policy uncertainty related to US trade policy.
• The company's historically high reliance on skilled labor creates transition risk as it shifts to more automated production, though management is moving incrementally to retain critical skills while automating routine work.
• Small-volume, high-mix production creates inherent challenges to automation, which could slow productivity improvement efforts if technical barriers are harder to solve than expected.

Q: Can automation offset the shortage of skilled technical workers for Fuji Dice, and will the company always rely on skilled labor for core production? / A: Historically, production was almost fully dependent on skilled craft, but modern numerically controlled production equipment now allows less experienced new hires to produce quality standard products. The company is moving to a hybrid model that preserves skilled craft for products that still require it, while fully shifting standardizable work to automated/technology-based production. Incremental automation is already delivering tangible results despite the challenge of low-volume high-mix production, and the company frames continued experimentation as a core strategic priority.

Q: Is Fuji Dice planning expansion into European or US markets, in addition to its current Asian subsidiaries? / A: North America is the next target market after India, and the company recently completed its first trade show exhibition in Chicago to conduct market research. It will continue to work on brand building and new customer expansion in North America to capture latent demand, though no large-scale investment has been finalized yet due to ongoing policy uncertainty.

Q: How does Fuji Dice plan to get PBR to 1x, which is currently far below that level? / A: The company will lift ROE via two levers: increasing profits through productivity improvement and overseas sales growth, and improving capital efficiency via enhanced shareholder returns that reduce excess equity capital. It will also lift PER via stronger IR outreach (more investor presentations, increased disclosure, higher media visibility) to improve market recognition, plus build long-term growth via entry into new markets and new businesses to hit the 1x PBR target.

Q: Does Fuji Dice's performance depend heavily on semiconductor, auto and smartphone demand, and what does it do to stabilize earnings? / A: Fuji Dice has a very diversified customer base across food packaging, home appliances, industrial infrastructure and other non-automotive/electronics sectors, so earnings volatility is already lower than peer tool manufacturers. The core strategy to maintain stable earnings is to continue expanding into new growth areas and maintain a broad customer base across multiple industries.