KIMURA KOHKI Co.,Ltd. Q4 FY2025 earnings call

• Company overview and operational updates

  • Headquartered in Osaka, Japan, with 8 sales offices and 3 manufacturing bases covering the entire country; two new technology research centers are currently under construction in Osaka and Mie
  • The main building of the newly rebuilt Yaei Manufacturing Works started operations in April 2024
  • New products featuring the company's proprietary inclined flat elliptical tube heat exchanger are being released sequentially
  • The company develops, manufactures and sells commercial air conditioning equipment serving industrial, commercial, and healthcare/public sectors, with most sales coming through sub-contractors and trading companies

• New product and market updates

  • Launched a new chilled/hot water floor-standing thin air conditioner, with a depth of only 450mm to 480mm. The compact design maximizes limited space while integrating advanced functions (automatic control, humidifier) and energy efficiency, bringing benefits for both space utilization and construction
  • Starting June 1, 2025, workplace heat stroke prevention measures will become mandatory under Japanese law. Controlling humidity is critical for heat stroke prevention, and the company's factory zone air conditioners have seen accelerating adoption

• Overall financial performance

  • Kimura Koki achieved record-high revenue and all profit metrics in FY2025 March Term
  • Total revenue increased 15.8% year-over-year to 16.042 billion yen; gross profit increased 17.6% to 7.305 billion yen
  • The company absorbed an 85 million yen special loss from the demolition of the old Yaei Manufacturing Works plant building to still deliver record net income
  • High profit margins were maintained, driven by sales of the company's proprietary products, despite increased depreciation expenses. Selling, general and administrative expenses increased slightly due to higher packaging and shipping costs tied to sales growth
  • Order volume increased 21.5% year-over-year, with particularly strong demand in the industrial segment. Ending order backlog remained at a high level, increasing 2.4% year-over-year

• Capital allocation and dividend policy

  • The company maintains a policy of stable continuous dividends while retaining internal reserves for future business expansion
  • A 120 yen per share dividend is planned for FY2025 March Term, for a payout ratio of 17.2%. The company repurchased 25,000 treasury shares during the term
  • Internal reserves will be used for technology development to meet market demand and strengthen manufacturing capabilities to adapt to changing business environments

By end-use segment (FY2025 March Term, total revenue 16.042 billion yen):

1. Industrial segment: 8.789 billion yen, +1.377 billion yen year-over-year, 54.8% revenue contribution. Growth driven by new construction and renovation projects for factories (food, electronics, machinery, precision instruments) and data centers.
2. Commercial segment: 2.903 billion yen, +0.237 billion yen year-over-year, 18.1% revenue contribution. Growth driven by increased office building renovation projects.
3. Healthcare/public segment: 4.348 billion yen, +0.574 billion yen year-over-year, 27.1% revenue contribution. Growth driven by new construction and renovation of large public facilities, government buildings and hospitals.

By product segment:

1. Chilled/hot water type AHU (Air Handling Unit): 3.013 billion yen, +0.838 billion yen year-over-year
2. Chilled/hot water type FCU (Fan Coil Unit): 0.877 billion yen, +0.043 billion yen year-over-year
3. Air-cooled HP (Heat Pump) type air conditioning & outdoor air handling units: 8.153 billion yen, +1.092 billion yen year-over-year, led by rooftop outdoor air units across multiple industries
4. Factory zone air conditioners: 1.489 billion yen, +0.138 billion yen year-over-year, driven by growing demand for heat countermeasures
5. Other: 2.508 billion yen, +0.076 billion yen year-over-year, driven by increased construction projects

• Demand for factory heat countermeasures and workplace environment improvement is expected to continue growing, driven by global warming and labor shortages in production sites
• For the FY2026 March Term, the company will actively expand sales to capture demand for heat stroke prevention and workplace environment improvement in the industrial segment, leveraging the new mandatory heat stroke prevention regulation effective June 2025
• In the commercial and healthcare/public segments, the company will actively promote energy-efficient air conditioning system proposals
• The company targets growth for both chilled/hot water type and heat pump type product lines
• Product development will focus on energy-saving, resource-saving, space-saving products that leverage natural forces and integrate advanced control technology. The company will also actively pursue decarbonization in production processes to advance sustainability

• U.S. tariff policy changes are expected to have limited direct impact on the company, but may create indirect risks: delayed capital investment by affected domestic firms and higher prices for overseas-sourced components, which could hurt performance
• Prolonged high prices for energy, resources, and components will continue to create business uncertainty
• Sustained strong demand and high backlog do not eliminate the risk of unexpected shifts in domestic capital investment trends driven by external macroeconomic changes

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