6617.T

Corporate Reform: SQC First Reform

• Launched in October 2024 to address past improper incidents, the reform prioritizes safety, quality, and compliance (SQC) for corporate renewal, and is progressing roughly on plan.
• Four core action areas: 1) Update and embed a new corporate philosophy, and improve communication between management and frontline staff; 2) Develop and secure talent, and strengthen organizational capability; 3) Review business responsibilities, update operating manuals, and accelerate digitalization/automation of manufacturing and inspection lines to improve workplace quality; 4) Focus on high-priority product segments and drive business structure transformation.
• Progress is monitored monthly by executive leadership, with semi-annual reporting to the Board of Directors for oversight.

EV Infrastructure Business Progress

• Added the 150kW SERA-150 fast charger to the SERA product line in April 2025, featuring boost charging, industry-small footprint for 150kW output, space-saving weather-resistant connector housing, and compatibility with Japan's standard three-phase three-wire power supply.
• Launched the world's first CHAdeMO-compliant 400kW total output ultra-fast charger SERA-400 in May 2025, featuring a user-centric futuristic design and lightweight, easy-to-operate Sumitomo Electric connector/cable; first unit sales planned for fiscal 2025.
• The 50kW base model SERA-50 surpassed cumulative sales of 2,000 units by October 2025, with broad adoption across highway service areas, auto dealers, convenience stores, and commercial/enterprise facilities.

DX and Smart Meter Business Progress

• Implemented full-scale digital inspection check sheets via the i-Reporter system for EV charger production lines to support growing sales volumes, enabling paperless operation, reduced inspection errors, automatic pass/fail judgment, and improved labor efficiency and quality; plans to expand to assembly processes and data integration.
• At group subsidiary Toko Toshiba Meter Systems, development of 2nd-generation smart meters is complete, with a pilot production line launched in July 2025 and initial shipments to select power companies; full production line construction targeting 100% process automation is ongoing for the fiscal year end, and the company expects to maintain or increase its market share following completed bid tenders.
• The new Instrument Center building for 2nd-generation smart meter contract assembly was completed in Hasuda in July 2025, and will start full operations in January 2026.
• Completed a successful proof-of-concept for a smart meter data-based senior living monitoring service, which will now be rolled out as part of Japan's Ministry of Land, Infrastructure, Transport and Tourism national supportive housing model program.

Energy Management System (EMS) Progress

• Delivered a new off-grid EMS for a 100% renewable energy demonstration project on Haha-jima island, which enables full automatic supply/demand and frequency control and maximizes solar power utilization to reduce diesel generator use and CO2 emissions.
• Won an order from Tokyo Electric Power Holdings to develop an EMS for a green hydrogen Power-to-Gas (P2G) demonstration project at Suntory's facilities in Yamanashi, with features including automatic/scheduled operation, full system monitoring, and scalable capacity for additional production units.

• Management upwardly revised the full-year 2025 (fiscal year ending March 2026) consolidated earnings guidance from initial April projections, driven by higher-than-expected sales of high-margin maintenance services and small transformers. The revised guidance calls for: 110.0 billion yen total revenue (2.0 billion yen upward revision), 7.0 billion yen operating profit (0.8 billion yen upward revision), 7.2 billion yen ordinary profit, and 4.6 billion yen net profit attributable to parent shareholders. Increases come from higher growth in power equipment maintenance, small transformers, and GX Solution EV/EMS products, partially offset by lower smart meter and semiconductor inspection equipment sales.
• Full-year order guidance was upwardly revised by 5.5 billion yen to 115.2 billion yen, with a projected ending order backlog of 79.0 billion yen (5.2 billion yen increase from 2024 year-end). Power equipment orders remain strong for social infrastructure plant projects, including a recently won large gas-insulated switchgear order from a regional utility. GX Solution order guidance is unchanged from initial plans, while optical inspection equipment order levels remain challenging but the company is pursuing multiple active inquiries domestically and internationally.
• The year-end dividend forecast was increased by 12 yen per share to 49 yen per share under the company's new 30% payout ratio-linked dividend policy, bringing the full-year annual dividend to 86 yen per share.

1. Power Equipment Segment: 27.4 billion yen revenue (2.4 billion yen increase YoY), 4.1 billion yen segment profit (2.1 billion yen increase YoY), accounting for 56.6% of total consolidated revenue. Growth was driven by increased general and electric power company plant projects including renewable energy plants, partially offset by decreased small transformers and overseas construction projects. 2. Metering Segment: 15.8 billion yen revenue (0.7 billion yen decrease YoY), 2.3 billion yen segment profit (0.3 billion yen decrease YoY), accounting for 32.6% of total consolidated revenue. Revenue and profit decreased due to lower smart meter sales volume from reduced replacement work volumes at Tokyo Electric Power Grid, plus increased selling, general and administrative expenses. 3. GX Solution Segment: 4.5 billion yen revenue (0.2 billion yen decrease YoY), segment loss of -0.4 billion yen (0.04 billion yen improvement YoY), accounting for 9.3% of total consolidated revenue. Revenue was partially lifted by recognition of carried-over high-margin PPP/PFI project sales, which offset lower sales of EV fast chargers and EMS-related products and reduced the overall deficit. 4. Optical Application Inspection Equipment Segment: 0.2 billion yen revenue (0.7 billion yen decrease YoY), segment loss of -0.2 billion yen (0.3 billion yen decrease YoY), accounting for 0.4% of total consolidated revenue. Sharp drops in orders and sales of 3D inspection equipment occurred due to investment cuts by major customers (semiconductor package substrate manufacturers).

• Metering segment: Continued lower smart meter replacement volumes at Tokyo Electric Power Grid are expected to reduce 2nd-generation smart meter orders for the second half of the fiscal year.
• Optical application inspection equipment segment: Sustained investment cuts among semiconductor package substrate customers have led to sharply lower orders and sales, creating near-term performance pressure.
• GX Solution segment: EV fast charger and EMS-related sales are currently below plan, holding back segment revenue growth.
• Past improper quality/compliance incidents require ongoing organizational and operational reform to prevent recurrence, which imposes sustained internal implementation and cost effort.

No Q&A section was included in the provided earning call transcript.