EBARA CORPORATION Q2 FY2025 earnings call

• Company Background & Core Strengths • Founded in 1912 as a Japanese domestic pump manufacturer, Ebara has expanded its product portfolio by applying core fluid dynamics, rotating machinery and control technologies, now operating 5 business segments with a global presence. It holds top 2 global market shares for most key products: global top share for cryogenic pumps and downstream large centrifugal compressors for petrochemicals, domestic top share for standard pumps, and global 2nd share for semiconductor CMP systems and vacuum pumps. • The company has a proven innovation cycle: cross-segment combination of core technologies generates new products, and new market insights feed back to improve core capabilities. For example, Infrastructure + Environment core capabilities spawned the Precision & Electronics segment, and Architecture & Industrial + Environment capabilities have enabled new projects like land-based aquaculture and cultured meat production technology.

• Sustainability & Long-Term Strategy • The company's long-term vision E-Vision2030 targets simultaneous growth in social/environmental value and economic value, focusing on three contribution areas: advancing daily life, improving safety/security, and reducing greenhouse gas emissions. It is expanding products for growth areas including semiconductors, disaster resilience, water infrastructure, ammonia, CCUS and hydrogen. • The company defines four internally accumulated capitals (human, intellectual, manufacturing, social relational) as the source of competitive advantage, and aims to evolve its business portfolio and deepen ROIC-focused management by leveraging cross-segment synergies and new value creation.

• Recent Operational Milestones • Completed a waste plastic chemical recycling demonstration plant in Chiba Prefecture, which will start testing in July 2025. The plant processes contaminated waste plastic (including construction waste) to recover plastic feedstock oil and gas, targeting commercialization by 2030. • Launched the UDF4 ultra-low temperature freezer for cold chain logistics, which achieves -120°C to enable dry ice-free transportation. It delivers better insulation performance than dry ice and provides a new stable, sustainable option for logistics, food and medical industries. • Launched the EBARA-D3™ manufacturing DX project, which combines digital twin for existing processes with digital triplet that replicates hard-to-quantify tacit worker knowledge, and uses gamification to accelerate skill standardization and knowledge transfer to resolve manufacturing industry pain points of skill gap and workplace knowledge silos.

• Shareholder Return • Targets a consolidated payout ratio of at least 35%. 2024 full-year dividend was 55 yen per share (35.6% payout ratio), and 2025 full-year dividend is planned to increase 1 yen to 56 yen per share. • Approved a share repurchase program of up to 20 billion yen (upper limit of 9.09 million shares) to be conducted between August and December 2025, aiming to optimize equity capital levels, improve capital efficiency and drive mid- to long-term shareholder value growth.

1. Architecture & Industrial: Order intake and sales revenue were flat year-over-year, and operating profit decreased year-over-year. It accounts for approximately one third of total group revenue (less than Precision & Electronics) as of 2024.
2. Energy: Order intake decreased year-over-year due to large project timing shifts to the second half, but sales revenue and operating profit grew year-over-year and contributed to overall profit growth. The new energy product market remains solid.
3. Infrastructure: Sales revenue and operating profit grew year-over-year, and contributed to overall profit growth.
4. Environment: Order intake increased sharply year-over-year driven by large life extension and comprehensive long-term projects, and sales revenue grew year-over-year, contributing to the full-year operating profit upward revision.
5. Precision & Electronics: Order intake and sales revenue increased sharply year-over-year driven by sustained generative AI-driven semiconductor demand, and it led overall operating profit growth with a 10.1 billion yen year-over-year increase. It accounted for over one third of total group revenue by 2024, and drove large sales growth in Taiwan, South Korea and other Asian markets. China sales saw a slight year-over-year decrease but remain at steady levels. Overall, the company's 2Q25 total order intake was 51.6 billion yen higher year-over-year, total sales revenue was 54.2 billion yen higher year-over-year, and total operating profit was 10.1 billion yen higher year-over-year. Overseas revenue accounts for 66% of total revenue, up from prior year levels.

• Full-year 2025 order intake and sales revenue guidance is maintained at the level announced in May.
• Full-year 2025 operating profit guidance is upwardly revised by 1 billion yen to 102.5 billion yen, driven by better-than-expected profit growth in the Environment segment and other businesses.
• The company expects investment decisions for delayed Energy segment projects to progress through the second half as US tariff policy becomes clearer, and expects Precision & Electronics order intake and sales in the second half to exceed first half levels, with CMP systems seeing particularly strong growth.

• China market slowdown: China accounts for approximately 20% of total company revenue. The Architecture & Industrial segment has seen weakness due to the sluggish real estate market, and industrial demand and oil & gas projects have also slowed moderately. China-focused Precision & Electronics orders and sales are slightly lower year-over-year but remain at steady levels. The overall Energy segment remains solid due to strong demand for power generation custom pumps.
• US tariff policy uncertainty: While the impact is currently limited due to Ebara's "local production for local consumption" global strategy, the company expects an 1.8 billion yen negative impact on full-year operating profit (1.2 billion yen in the second half), which is already fully incorporated into current guidance. Uncertainty over future policy changes remains.
• Semiconductor market uncertainty: While generative AI-driven demand remains in expansion mode, capacity expansion investment is concentrated among a limited set of customers, leaving overall market outlook uncertain.

Q: What key business risks does Ebara face at present? / A: The primary identified risk is a broad slowdown across China-focused operations, which make up ~20% of total revenue. Architecture & Industrial has slowed sharply due to the weak real estate market, and industrial and oil & gas segments have also seen moderate slowdowns. Precision & Electronics sales to China are down slightly year-over-year but remain at steady levels, and energy demand for power generation pumps remains strong. Overall, China market slowdown is the most material near-term risk.

Q: What is the expected impact of US tariff policy on Ebara's full-year results? / A: Ebara's local production for local consumption strategy limits cross-border trade exposure, so the overall impact is limited. Up to the end of the first half, there was a 0.6 billion yen negative operating profit impact, which is immaterial relative to total results. The full-year negative impact is expected to be 1.8 billion yen, with 1.2 billion yen of impact in the second half, and this full amount has already been incorporated into the current guidance. Policy continues to evolve, but no material unaccounted impacts are expected at this time.

Q: How will the 5-segment profit balance change over the medium to long term, and which segments will drive growth? / A: Ebara targets Building & Industrial, Energy, and Precision & Electronics to become the three core growth pillars over the next 10 years, and expects these three to account for the majority of total revenue. Precision & Electronics will become the largest segment: the global semiconductor market is forecast to grow to $1 trillion by 2030, and Ebara expects to outgrow the market. For Energy, Ebara will offset expected contraction in traditional refinery businesses by expanding into new growth areas including ammonia and hydrogen. For Building & Industrial, the segment will grow in line with global GDP and outperform market growth via continued M&A activity. Overall, Precision & Electronics' revenue share will increase materially, but the other two core segments will also deliver steady growth.