TOA CORPORATION Q2 FY2026 earnings call

Core Financial Results

• Total second quarter revenue was 24.051 billion yen, up 5.6% year-over-year, marking the 5th consecutive year of revenue growth and a new all-time high. Total operating profit was 1.255 billion yen, up 78.2% year-over-year, marking the 3rd consecutive year of profit growth.
• Profit growth was supported by easing post-pandemic supply chain and cost pressures (for semiconductors, steel, and logistics) plus the cumulative benefit of three prior rounds of price adjustments.

Key Operational Updates by Segment

• Japan: Growth was broad-based across factory, education, commercial, office, and local government projects, with 3 consecutive years of growth in disaster preparedness-related sales. Management plans to expand sales with new value-added services to address labor shortages driven by tourism recovery.
• Asia-Pacific: Local currency revenue growth was supported by large projects across Indonesia, Thailand, Malaysia, and Vietnam, with strong demand for government meeting microphone systems. Management will leverage local manufacturing capacity to continue securing new orders.
• Europe, Middle East and Africa: Core voice alarm system sales remained strong in Germany, and new channel expansion is underway for IP audio security solutions in the UK. Management will integrate PA-Vox's audio generation and software development capabilities to drive group-wide growth.
• Americas: Strong BGM equipment sales to retail and wireless microphone sales to Canadian education facilities were complemented by new market expansion in Central and South America. The company exhibited new solutions at InfoComm 2025 to expand education segment sales.
• China and East Asia: The segment grew driven by strong emergency broadcasting sales to semiconductor factories in Taiwan and new project wins in Hong Kong, offsetting sluggish sales in mainland China from real estate headwinds and domestic product preference policies.

New Product Launches

• Launched the CX-1000 Series IP communication system that integrates broadcasting, calling, and video, supporting a 3000×3000 full matrix (industry-leading scale for broadcast systems) to enable efficient, labor-saving management of large facilities.
• Launched an updated TRIFORA Series network camera system with a world-first NFC setup tool to reduce installation labor, plus AI people counting functionality and support for custom customer application development.

Osaka-Kansai World Expo 2025 Participation

• TOA participated as an operating bronze partner, providing an integrated communication system to share emergency information and evacuation orders across venue departments, paired with custom-developed high-quality outdoor IP speakers. Management will leverage the project experience for future large-scale venue projects.

Long-Term Strategy: NEXT100 TOA

• TOA launched its new long-term strategy centered on 7 core initiatives to reach the 100th anniversary of its founding in 2034, targeting consolidated revenue exceeding 100 billion yen by that year. The 9-year period is split into three 3-year stages to drive business transformation.
• The next mid-term management plan (starting FY2027) will prioritize four core focus areas: 1) innovating "information delivery solutions" to build a comprehensive public information delivery platform, 2) accelerating overseas growth by expanding into high-potential markets, 3) evolving customer support solutions to address operational challenges, and 4) expanding new business development. The company plans 11.2 billion yen or more in investment over the three-year period, more than double the prior mid-term plan's investment level, and is open to M&A to accelerate growth.

Product Segment Performance:

1. Acoustics: 20.592 billion yen, achieved 5 consecutive years of revenue growth, with strong sales of speakers and emergency/professional broadcasting equipment domestically and internationally.
2. Video: 2.715 billion yen, revenue declined due to slowing sales of network camera systems.
3. Railway rolling stock: 0.732 billion yen, revenue grew driven by increased sales to new rolling stock projects in the U.S.

Regional Geographic Segment Performance:

1. Japan: 13.014 billion yen, revenue increased from stronger deliveries to office buildings, commercial facilities, and government agencies; operating profit grew from improved cost ratios driven by prior price adjustments.
2. Asia-Pacific: 5.030 billion yen, revenue decreased due to foreign exchange impacts (though grew on a local currency basis); operating profit increased from improved profitability.
3. Europe, Middle East and Africa: 3.592 billion yen, revenue increased driven by the consolidation of acquired PA-Vox Holding B.V; operating profit decreased from higher operating expenses.
4. Americas: 1.452 billion yen, revenue and operating profit both grew from stronger deliveries to retail, education, and railway facilities.
5. China and East Asia: 0.962 billion yen, revenue and operating profit both grew from stronger deliveries to factories and hospitals.

• Full year FY2026 (ending March 2026) guidance is maintained unchanged from the prior release: consolidated revenue of 54.5 billion yen, operating profit of 4.5 billion yen, ordinary profit of 4.7 billion yen, and net profit of 2.75 billion yen.
• Growth is expected from Japan, Asia-Pacific, and Europe, Middle East and Africa, with China and East Asia targeting growth from airport project wins in mainland China and expansion in Taiwan and Hong Kong.
• Profit targets will be achieved through high value-added solution sales, product portfolio optimization, continued cost ratio improvements from prior price adjustments, and productivity gains from digital transformation.
• Dividend policy was updated starting FY2026: the company added consolidated return on equity (DOE) as a new guidance metric, and will set annual dividends to the highest value between a stable 85 yen per share annual dividend, 5% DOE, or 85% consolidated payout ratio. The full year dividend forecast was raised from 42 yen to 85 yen per share, with an intermediate dividend of 40 yen (up from 20 yen prior) and a closing dividend of 45 yen (up from 22 yen prior).

• The Asia-Pacific segment faces revenue volatility from foreign exchange fluctuations.
• Mainland China in the China and East Asia segment faces ongoing headwinds from the real estate downturn and government policies favoring domestically produced goods, which have created a challenging operating environment.
• The Europe, Middle East and Africa segment faced near-term profit pressure from higher operating expenses following the PA-Vox acquisition.
• Growing urbanization and increasing operational complexity for public and private operators create systemic risk of large-scale disruptions in dense areas, which TOA frames as a core business opportunity but also acknowledges as a growing systemic challenge for the markets it serves.

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