6744.T

Overall 2Q 2026 Fiscal Year Performance

• Orders hit a new all-time high for the 5th consecutive year, sales hit a new all-time high for the 2nd consecutive year, and order backlog remained at a record high despite strong top-line growth. Aggregate consolidated sales were nearly 2.5 billion yen higher than the prior year record, orders were 5.8 billion yen higher year-over-year, and order backlog was 9.3 billion yen higher year-over-year.
• Profit fell below both consensus plan and prior year results, due to recognition of low-margin large projects and planned increases in SG&A. Cost of goods sold ratio improved 0.4pp year-over-year, but was 2.1pp above plan due to the low-margin project impact. Management expects these headwinds to fade through the second half and full-year profit to still hit a new record.

Mid-Term Vision 2028 Stage III Strategy

• The 10-year Mid-Term Vision 2028 enters Stage III, its final 4-year phase ending in FY2029 (March 2029). Following successful achievement of all Stage II (2023-2025) targets, management upgraded long-term performance targets: sales target is maintained at ≥170 billion yen, operating margin target is raised from ≥10% to ≥12%, and ROE target is raised from ≥9% to ≥10%. The target of adding ≥36 billion yen in incremental sales over the 4-year Stage III period is maintained.
• Three core focus areas for Stage III:
  • Human Capital Management & DX: Continue workforce expansion to eliminate opportunity loss from labor shortages, reallocate increased headcount to higher-margin business lines. 6 strategic HR priorities are defined with KPIs to track progress. Accelerate DX initiatives, including expansion of cloud services such as TASKis and N-HOPS, digital transformation of inspection and construction customer-facing processes, and full internal paperless operations.
  • Active M&A Expansion: Strengthened M&A and post-merger integration (PMI) capabilities have already enabled 4 announced M&As in the first 6 months of Stage III, exceeding the 3 M&A total from all of Stage II. M&A follows two core strategic directions:
    1. Deepen existing business: Hokuko Tsushin (weak electrical construction, Hakodate area share expansion) and Seft (fire equipment inspection, Ishikawa area market expansion)
    2. Expand into new areas: Prime Value (public sector disaster prevention DX, to integrate with Nohmi's N-HOPS platform) and Meisei Electric (weather, earthquake, and general disaster prevention equipment, joining February 2026, to expand Nohmi's focus from fire protection to full general disaster prevention).
  • New Service & New Business Creation: Continue developing and scaling new businesses, with dedicated internal teams addressing scaling challenges. N-HOPS, a web app supporting easy evacuation center setup and management for local governments, is conducting pilot trials with multiple municipalities and will accelerate development via collaboration with Prime Value post-M&A. Management will pursue active investment including M&A to support new business growth as needed.

Financial Strategy & Capital Allocation

• Adopted a new Stage III capital allocation policy that actively allocates operating cash flow and existing cash reserves to growth investment and shareholder returns. Total planned growth investment over 4 years is ≥44 billion yen, including 20 billion yen for new Stage III initiatives led by M&A plus 24 billion yen in carryover unexecuted investments from Stage II.
• Raised the target payout ratio from 40% to 50%, bringing the planned full-year dividend per share to 100 yen, up 24 yen year-over-year. Cumulative shareholder returns via dividends are projected at 26 billion yen over the 4-year Stage III period. Management is open to using debt as needed if cash balances decline, to support planned investment and returns.
• To meet Tokyo Stock Exchange requirements for capital cost and share price focused management, management is focused on improving return on equity, increasing profitability and shareholder returns to improve capital efficiency, and expanding IR activities to reduce cost of equity.

• Full-year FY2026 (March 2026) guidance is maintained: Management confirms its prior forecast of full-year record profit, after weaker-than-planned Q2 profit. Full-year sales are forecast to exceed 140 billion yen for the first time, reaching a new all-time high for the 3rd consecutive year, and orders are forecast to exceed 140 billion yen for the first time, a new all-time high for the 4th consecutive year. Full-year operating profit is forecast to reach a new record of 16.5 billion yen.
• All three business segments are forecast to deliver year-over-year revenue and profit growth for the full year. For fire alarm equipment, growth is driven by installation-included sales while product sales hold steady. For fire extinguishing equipment, strong demand for special projects and record order backlog will drive sales above the prior year record. For maintenance and inspection, stable growth from increasing new build maintenance contracts is expected, with repair work demand holding near prior year record levels.
• Long-term Stage III (FY2029) targets were revised upward: operating margin target increased from 10%+ to 12%+, and ROE target increased from 9%+ to 10%+, while the sales target of 170 billion yen+ and 36 billion yen+ incremental sales target are maintained.

1. Fire Alarm Equipment Segment: Orders, order backlog, and sales all hit a new Q2 record for the second consecutive year, with growth in both installation-included sales and product sales. While overall cost ratio showed an improving trend from construction efficiency gains and price adjustments, segment profit decreased year-over-year due to the impact of low-margin large projects and increased SG&A expenses. Revenue contribution percentage was not explicitly disclosed in the transcript.
2. Fire Extinguishing Equipment Segment: Orders, order backlog, and sales all hit a new Q2 record for the second consecutive year, driven by strong demand especially for special projects (plants, tunnels, etc.). Ongoing project construction progressed broadly on schedule despite persistent labor shortages. Segment profit improved to the second-highest level ever for a Q2, just slightly below the 2020 Q2 record. Revenue contribution percentage was not explicitly disclosed in the transcript.
3. Maintenance and Inspection Segment: Orders, order backlog, and sales hit a new Q2 record for the third consecutive year, with both mandatory maintenance inspection and repair/renovation work growing steadily. Active workforce expansion supported continued order growth. Profit decreased year-over-year due to a higher share of low-margin projects in Q2, though management expects this shortfall to be recoverable by year-end. Revenue contribution percentage was not explicitly disclosed in the transcript.

• Macroeconomic uncertainty over the Japanese economic outlook persists, and ongoing cost increases for raw materials and labor remain a headwind for profitability.
• Persistent labor shortages have caused opportunity loss in some business areas in prior periods, and remain a constraint on growth.
• The company's profit is heavily concentrated in the fourth quarter due to the timing of project completion, so weaker YTD profit can exaggerate underlying performance trends, though management expects full-year recovery.
• An internal compliance incident was disclosed: multiple required construction work qualifications were obtained improperly within the Nohmi group, confirmed by an external investigation panel disclosed in July 2025. Management apologized for the issue and is prioritizing full compliance implementation to prevent recurrence.
• Uncertainty remains around scaling new digital and new disaster prevention businesses, with multiple ongoing initiatives facing unproven market demand and operational scaling challenges.

No question and answer section was included in the provided transcript.