Chino Corporation Q4 FY2025 earnings call

• Company Overview & Core Competitiveness

  • Chino is a B2B manufacturer focused on temperature-based measurement, control, and monitoring solutions for industrial and R&D sites, offering sensors, equipment, and custom systems. It has 112 years of operating history since founding, with domestic production bases in Japan and overseas sales/production subsidiaries across China, South Korea, India, Thailand, the U.S. and a global agency network.
  • The company's core competitive advantage is its one-stop "Loop Solution" (registered trademark) for full temperature management, covering measurement, control, and monitoring, with capability to handle temperatures ranging from -269°C extreme cryogenic to 3500°C ultra-high temperature. Its standard temperature sensors are adopted in 29 countries worldwide, giving it strong global credibility for temperature measurement technology.

• 2025 March Full Year Consolidated Results

  • All revenue and profit metrics hit record highs, with 29.329 billion yen in total revenue (+6.9% YoY) and operating profit of 2.879 billion yen (+32.4% YoY). Operating profit hit the mid-term management plan's final target of 2.7 billion yen two years ahead of schedule. Orders reached 29.721 billion yen (+8.2% YoY), driven by continued strong demand for decarbonization-related products and large instrumentation system projects.
  • Gains were driven by solid manufacturing capital expenditure, ongoing cost reduction efforts, and the full impact of the April 2024 product price revision. All three core segments achieved year-over-year revenue and profit growth.

• Sustainability & ESG Achievements

  • Chino's Fujioka Works received the Prime Minister of Japan's Award for its long-term greening promotion and biotope conservation work. The 1-hectare site has restored a satoyama environment that absorbs approximately 1 ton of CO2 annually, and serves as a site for environmental education and community engagement.
  • The company maintained its "Gold" certification for health management from the Tokyo Health Enterprise Declaration Promotion Council, and continues to advance work-life balance initiatives and employee health support.

• Shareholder Return Policy

  • The company targets reaching a 40% payout ratio by the 2026 fiscal year (final year of the mid-term plan), with consistent dividend growth through sustained profit growth. For the 2025 March fiscal year, full year dividend per share increased 20 yen to 80 yen. For 2026 March fiscal year, the company guidance calls for a further 5 yen increase to 85 yen per share.
  • A shareholder benefit program is already in place for holders of 300+ shares, and the company will consider additional share buybacks going forward to further improve shareholder returns.

Chino divides its business into 4 core product segments, with the three main segments each accounting for approximately 30% of total annual revenue:

1. Measurement and Control Equipment: Revenue was 9.744 billion yen, segment profit was 1.511 billion yen. Revenue and profit both increased year-over-year, driven by solid demand centered on semiconductor and electronic component manufacturing equipment and heat treatment equipment. The 2024 product price revision also contributed to profit growth.
2. Instrumentation Systems: Revenue was 9.958 billion yen, segment profit was 1.551 billion yen. Both revenue and profit grew year-over-year. Growth was driven by expanding demand for decarbonization-related products including fuel cell evaluation test equipment for automotive applications, water electrolysis evaluation equipment for hydrogen energy R&D, and compressor evaluation test equipment for natural refrigerant air conditioners. Improved profit margins on large projects also lifted profit.
3. Sensors: Revenue was 8.597 billion yen, segment profit was 1.706 billion yen. Both revenue and profit increased year-over-year, supported by solid demand for applications centered on electronic component manufacturing equipment and heat treatment processing, as well as higher sales from group company Meiyo Electric. The revenue effect of higher sales drove profit growth.
4. Others: No specific full-year financial results were disclosed in the provided transcript.

• For the 2026 March fiscal year (FY2025), management expects continued modest revenue and profit growth, guiding for 30.0 billion yen in total revenue, 2.9 billion yen in operating profit, 3.05 billion yen in ordinary profit, and 2.0 billion yen in net income.
• The mid-term management plan covering 2021-2026 fiscal years is on track to outperform its original targets. After hitting the operating profit target two years early, through the end of the plan, management will continue accelerating growth, targeting further sales growth and improved operating profit margins to hit all 2026 fiscal year targets.
• Corporate capital expenditure plans across all Japanese industries are projected to increase 7.5% year-over-year in FY2025, indicating continued solid investment appetite overall, but downside risks from U.S. tariff policy remain.
• Management expects increasing global demand for solutions targeting high-growth areas including decarbonization/hydrogen energy, semiconductors/electronic components, next-generation batteries, new materials, and food/health/life safety, and will continue to expand differentiated solutions in these markets globally.

• Persistently high energy prices, broad-based commodity inflation, and slowing Chinese economic growth have created continued macroeconomic uncertainty.
• Geopolitical and trade risks including U.S. tariff policy changes and China's rare earth export restrictions have potential to impact global economic conditions and Chino's supply chain and demand.
• The overall level of corporate capital expenditure, which is a core driver of Chino's performance, faces downside risk from the aforementioned geopolitical and macroeconomic uncertainties.
• As of the end of March 2025, Chino's price-to-book ratio stood at 0.77x, below 1.0x, and while the ratio recovered to 0.94x by the end of June 2025, the company still needs to continue improving market valuation to meet capital cost and shareholder return expectations.

Q: What progress has Chino made on implementing capital cost and share price conscious management as requested by the Tokyo Stock Exchange? / A: The company has pursued progress on three core priorities. It hit its mid-term operating profit target two years ahead of schedule, meets ROE and ROIC return requirements above its cost of capital, has advanced shareholder return improvements with a target 40% payout ratio by 2026, and has steadily reduced cross-held policy shares, cutting the market value ratio of policy holdings to 5.6% as of March 2025. It also holds semi-annual IR events for both institutional and retail investors and expanded disclosure of non-financial ESG information. As of June 2025, PBR recovered to 0.94x, and the company will continue working to improve returns and valuation.

Q: What initiatives is Chino undertaking for human capital management? / A: Chino identifies talent and organizational strength as the most critical factor for sustained growth and higher enterprise value. It has formal talent development and workplace improvement policies as part of its mid-term plan, focused on recruiting and developing professional talent that can keep pace with rapid market change, and building work environments that let employees maximize their capabilities. In 2024, it focused on updating manager capability development, training executive candidates, strengthening digital talent, began rebuilding its personnel system to emphasize employee challenge and motivation, and continued engagement survey-based organizational improvement to build a more dynamic organizational culture. It will continue advancing these initiatives going forward.

Q: What is the progress of the mid-term management plan, and what is the future growth strategy? / A: The 6-year plan (2021-2026) is split into Phase 1 (foundation building, first 3 years) and Phase 2 (growth acceleration, second 3 years). 2024 was the first year of Phase 2, and cumulative average annual growth is 8.6% for revenue (vs 6.1% target) and 26.2% for operating profit (vs 15.5% target), putting performance well ahead of plan. ROE reached 9.4% in 2024, just shy of the 10% KGI target. Going forward, the company will continue executing its four core strategies: further expanding high-growth areas (decarbonization/hydrogen, semiconductors, next-gen batteries, new materials, medical/food/logistics), advancing core business sophistication, strengthening and expanding overseas business, and reinforcing management infrastructure to continue growing through the end of the plan and hit 2026 targets.