6750.T

Company Overview & Core Purpose

• Elecom is a comprehensive solution manufacturer serving BtoC, EC, and BtoB markets across PC, smartphone, AV, healthcare, and security product categories, approaching its 40th anniversary with ~2,000 consolidated employees. The company's core purpose is "Better being", focused on delivering improved products, services, and social impact.

Domestic Business Priorities

• BtoC: Target share expansion in high-margin growth categories including high-price hair dryers, high-value-added power supplies, and peripherals. Launched product distribution to 7-Eleven convenience stores, with plans to displace competitor Anker in this channel. Address underperformance in power supply and home appliances by launching new high-price-range products and strengthening EC marketing.
• EC: Continue executing a "head strategy" focused on placing top products on Amazon, with 115% YoY growth in high-margin categories including accessories, cables, and PC hubs. Added a dedicated 4-person team to expand sales on Rakuten, which has delivered pure sales growth, and co-located an SNS team to target younger consumers and build brand awareness.
• BtoB: GIGA School Initiative-related spot orders are tracking to over 2 billion yen this year (70% recognized this year, 30% next year), with reliable orders for keyboards, screen protectors, and cases. Expect growing replacement demand for I/O devices, keyboards, and screen protectors starting November-December 2025 following the Windows 10 end of support. Improved maintenance service attachment rates (from 26% to 46% for NAS and PCs YoY) to build recurring stock revenue. Plan to merge 230 DX Antenna sales staff and 130 Elecom sales staff into a unified BtoB sales organization by April 2026, to improve labor productivity (Elecom's per-employee sales are 2.5x DX Antenna's current level).

Overseas Business, Operating Expense, and Infrastructure

• Overseas: The business is in an early launch stage, projected to hit ~2.5 billion yen in full-year sales. Already launched the NESTOUT brand on Amazon in Europe and the U.S., and entered Malaysia and Indonesia in ASEAN. The CEO will personally lead delivery of results in the new 3-year plan.
• Selling, General and Administrative (SG&A) Expense: The company is shifting from marginal/gross profit-based segment management to operating profit-based accountability for segment leaders. Mandated that SG&A spending will not exceed 105% of the prior year in the second half, and targets holding SG&A growth to under 5% next year even while targeting double-digit revenue growth.
• Infrastructure: Investing in expanding the Kanagawa Logistics Center, which will become larger than the existing Hyogo Logistics Center by 2026. Accelerated new product development speed, with 23-24% of BtoC revenue coming from new products to improve profitability. Hired a new DX lead to build an offensive IT organization, focusing on efficiency and AI-enabled customer support. Achieved a 3.3+ ESG score in the FTSE Blossom Japan Index.

Japan Antenna M&A Integration (PMI)

• Japan Antenna joined the Elecom group on November 25, 2025, with a 100-day initial PMI period. Japan Antenna has strengths in communication and broadcast antennas, and will be merged with DX Antenna (Elecom's existing broadcast antenna business) by October 2026, unifying sales processes, targets, and strategy to capture synergy from Elecom's mature BtoB sales processes. The combined business will become the largest broadcast industry player in Japan, combining two of the top three industry firms. Japan Antenna will be consolidated into Elecom's financial statements starting in Q3 of this fiscal year.

• Maintains the full-year consolidated operating profit guidance of 14.9 billion yen, which does not include any contribution from Japan Antenna, and management states this target remains achievable through H2 cost control and marginal profit improvement.
• Confirms the planned full-year dividend of 52 yen per share, a 4 yen increase from the prior year, in line with prior commitments.
• Expects a material amount of negative goodwill from the Japan Antenna acquisition, which will be recorded as a one-off extraordinary gain; a full update to financial guidance will be provided at the Q3 earnings announcement, after integration due diligence is complete.
• Japan Antenna's full-year results will be fully consolidated starting next fiscal year, which is expected to meaningfully increase the probability of continued revenue and profit growth for Elecom, following the pattern of the prior Tescom Electric acquisition.
• For next fiscal year, management is budgeting for double-digit revenue growth while capping SG&A growth at 5% or lower.

1. By channel segment: Total consolidated upper-half (first half) sales reached 58.832 billion yen, up 3.9% year-over-year. EC sales grew 14% YoY, contributing 1.386 billion yen of total sales growth, and accounted for 18.9% of total consolidated sales. BtoB sales grew 6-7% YoY, contributing 1.186 billion yen of total sales growth. BtoC sales were roughly flat YoY (just over 100% growth), making up less than 60% of total consolidated sales. As of October 2025, EC grew over 10% YoY, BtoB grew over 20% YoY, and overall main channels reached near 10% YoY growth on a monthly basis.
2. By product category: Power supply and I/O devices (core products) recorded 1.4 billion yen in sales growth, while BtoB solutions recorded 0.9 billion yen in sales growth. Network-related products achieved a gross margin of nearly 30%, up sharply from ~17% YoY, though top-line growth remains a key challenge. Peripherals and accessories saw a year-over-year sales decline, driven by market shifts rather than price competition, with gross margins still improving overall.

• Ongoing yen depreciation increases import product costs: a 1 yen move in the USD/JPY rate changes annual input costs by approximately 98.1 million yen. For next fiscal year, only 36.7% of planned USD-denominated purchases are hedged at an average rate of 140.52 yen, leaving exposure to further yen depreciation that will need to be absorbed via price increases and cost cuts over the medium term.
• BtoC sales growth is currently slow, and power supply and home appliances missed H1 sales targets materially, requiring corrective action in H2.
• SG&A expense control has been insufficient to date, with SG&A ratio increasing 0.8% YoY driven by higher promotion costs and Tokyo branch relocation costs.
• Overseas expansion is in an early stage, and the company is still building local operational capabilities and talent, with a history of prior failed international acquisitions that management must avoid repeating.
• Security camera product growth has underperformed expectations to date.
• The full earnings impact of the Japan Antenna acquisition remains uncertain pending completion of due diligence.

Q: What is the underlying profitability of Nippon Antenna, and how much will it contribute to Elecom's current fiscal year consolidated results? / A: Nippon Antenna's original plan called for 11.2 billion yen in full-year sales and 0.9 billion yen in full-year operating profit, with 0.5 billion yen of operating profit planned for H2. The company reported 6.2 billion yen in H1 sales and 1.5 billion yen in H1 operating profit, beating plans due to special demand. Management estimates Nippon Antenna's baseline earning power is ~10 billion yen in annual sales and ~1 billion yen in operating profit after major structural reforms that cut fixed costs via headcount reduction and non-core asset sales. M&A and PMI costs will offset some of this profit, so no clear contribution guidance can be given yet, with an update planned for the Q3 earnings release. Prior M&A deals are progressing well: Tescom Electric acquisition is on track to recover invested capital, and groxi is expected to drive future BtoB growth.

Q: The company reported H1 sales missed targets, but profit margins improved. Does the profit contribution of BtoC, BtoB, and EC match the sales growth pattern? / A: Yes, BtoC sales were only ~flat YoY, but profit grew over 10% YoY thanks to higher profits from new product launches, which is material since BtoC accounts for less than 60% of total revenue. BtoB has the highest operating profit margin, and its 7% YoY sales growth has driven large profit gains. Starting next year, the company will implement operating profit-based management for all segments, with segment leaders held accountable for SG&A, and plans to start externally disclosing segment operating profit once internal processes are finalized.

Q: What explains the sales miss for power supplies and home appliances, and what is the H2 plan to address this? / A: Home appliance sales missed because new product launches (particularly the hair dryer and cooking appliance lines added from the Tescom acquisition) were delayed to H2. For power supplies, the company failed to gain share in the high-price segment where competitors Anker and UGREEN are strongly positioned on EC, and the company was over-reliant on lower and mid-range products. For H2, the company is launching new high-price-range power supply products and strengthening EC marketing to address this gap.

Q: Elecom has a history of failed overseas acquisitions. Can the company really deliver disciplined M&A for international expansion now? / A: Management acknowledges past mistakes and has built new processes to avoid repeating errors. All M&A deals go through rigorous valuation and review by the executive team and board of directors, with input from the business development team and relevant business units, so decisions are not made by top management alone. The company prioritizes avoiding overpaying for targets, especially overseas, and will only pursue deals that clearly increase corporate value. The company is still in the early stage of building international operational capabilities and hiring local talent, and is proceeding cautiously to address execution risk.