7022.T

• Overall Consolidated Performance

  • Full year 2025 March consolidated revenue reached 25.006 billion yen, a 1.653 billion yen year-over-year increase. Gross profit was 6.232 billion yen (+0.91 billion yen YoY), operating profit was 1.065 billion yen (+0.555 billion yen YoY), net profit attributable to parent shareholders was 1.182 billion yen (+0.723 billion yen YoY), delivering significant double-digit growth that beat the original plan.
  • 2 percentage points of gross profit margin improvement came from ~0.4 billion yen volume growth and ~0.5 billion yen from cost reduction efforts and successful pass-through of raw material price hikes.
  • Large net profit growth was driven by a 0.434 billion yen decrease in corporate taxes, stemming from the company's August 2024 capital reduction that shifted classification from large enterprise to small and medium corporation (saving ~0.2 billion yen in taxes) and a deferred tax asset recognition from consistent strong performance (adding ~0.14 billion yen in benefit).

• Mid-Term Management Plan (2024-2026) Progress

  • This is the first year of the 3-year plan, which focuses on offensive growth and business base strengthening after the prior 3-year plan was disrupted by COVID-19. The first year delivered large positive outperformance against plan, getting the plan off to a strong start focused on long-term growth through 2030 (Sanoyas' 10th anniversary as a reorganized company).
  • Priority Growth Drivers: Concentrating resources on industrial infrastructure and environmental solutions. Industrial infrastructure: Showei Electric has secured multiple large data center control panel orders, obtained ISO 9001 certification, and leverages group collaboration with Happiness Denki to expand capacity. Environmental solutions: Mizuho Industry's water treatment business grew ~0.2 billion yen above plan, with factory relocation completed for its Chinese subsidiary to support further regional expansion.
  • Existing Business Strengthening: The Yomiuri Land Ferris wheel project was completed on time despite tight schedules and technical complexity, demonstrating group capability. Mizuho Industry launched its new competitive LR-P2 emulsification/stirring product for research institutions.
  • New Business Entry: Announced the acquisition of KODERA ELECTRONIC MFG, scheduled to close June 2. KODERA is the leading domestic manufacturer of automatic wire cutting and stripping machines, holding ~70% domestic market share in its niche product category, representing an entirely new business line for the group. The president's direct Innovation Promotion Committee has gathered top talent across the group to develop new business ideas, with multiple concepts ready for prototyping and targeting 1-2 new product commercializations in the coming year.
  • Carbon Neutrality Commitment: Tracking toward the target of 25% CO2 reduction by 2030 (vs 2021 baseline) and full carbon neutrality by 2050, continuing steady investment in solar power and energy efficiency.
  • Human Capital Investment: Rolled out 65-year retirement to all group companies, with plans to extend reemployment beyond 70 for willing and qualified employees. Plans a second consecutive 5% wage increase for 2026 to retain and secure talent. A full revised personnel system focused on promoting young talent and rewarding performance will launch in April 2026. All domestic group entities received 2025 Healthy Excellent Corporation certification, and a new restricted stock incentive plan for management employees was introduced to align employee and shareholder interests. The company's monozukuri (manufacturing) training program has now trained 90 employees, reaching 10% of the full-time regular workforce by 2025.
  • Profitability and Business Base Strengthening: Push for sales capability improvements, component commonality, and design standardization to reduce costs and improve productivity. The company's share price has improved to a 0.86 P/B ratio as of May 2025, up from 0.6x at end-March 2025, tracking toward the mid-term target of 1.0x P/B by the final year of the plan. A 150% dividend increase was announced from 5 yen to 7.5 yen per share, aligned with the 30% payout target after adjusting for one-time tax gains.

• For the 2026 March full fiscal year, management guides 27.0 billion yen in consolidated revenue (+1.994 billion yen YoY, 25.006 billion yen in 2025) and 0.8 billion yen in operating profit, 0.8 billion yen in recurring profit, and 0.7 billion yen in net profit, representing planned growth in revenue but a profit decline of ~0.3 billion yen from 2025 levels.
• The planned profit decline is fully attributable to the planned 5% wage increase, which will add 3 billion to 4 billion yen in labor costs; after accounting for this new investment, the profit guidance is in line with underlying operating performance matching the prior year.
• Compared to the original mid-term plan for the second year of the plan, revenue is on track to meet plan, while operating profit is 0.3 billion yen above the originally planned 0.5 billion yen target, representing an upward revision to the mid-term profit outlook.
• Total order backlog at end-March 2025 was 12.694 billion yen, down 1.332 billion yen YoY, driven by a lack of large leisure segment orders in 2025. Management expects the backlog to recover in the 2026 fiscal year as large currently negotiated leisure projects are secured.
• Management maintains the 30% target payout ratio for dividends; after adjusting for one-time 2025 tax benefits, the 7.5 yen 2025 dividend aligns with this target.

1. Manufacturing segment: 9.258 billion yen in revenue, a 0.812 billion yen decrease year-over-year; 0.875 billion yen in operating profit, a 0.1 billion yen decrease year-over-year. This segment accounts for 37% of total consolidated revenue. The decline was driven by a pullback at Mizuho Industry after its outsized 2024 performance, offset partially by a 0.2 billion yen revenue increase at Sanoyas Seimitsu Kogyo from recovering customer demand. 2. Construction segment: 12.089 billion yen in revenue, a 2.259 billion yen increase year-over-year; 1.312 billion yen in operating profit, a 0.823 billion yen increase year-over-year. This segment accounts for 48.3% of total consolidated revenue. Growth was driven by an 0.9 billion yen increase at Happiness Denki (from resolved electronic component supply chain bottlenecks), an 0.8 billion yen increase at Sanoyas Engineering parking system business (from high carryover order backlog and proactive maintenance demand capture), and a 0.7 billion yen increase at Sanoyas Entec pipework business (from prior period hiring investments yielding results). 3. Leisure segment: 3.657 billion yen in revenue, a 0.2 billion yen increase year-over-year; 0.437 billion yen in operating profit, a 0.029 billion yen decrease year-over-year. This segment accounts for 14.6% of total consolidated revenue. Revenue grew from completion of a large 1.2 billion yen Ferris wheel project for Yomiuri Land, but higher-margin amusement park operations suffered from poor weather and extreme summer heat that reduced visitor numbers, leading to an overall profit decline.

• Rising interest rates since February 2024 have increased funding costs, leading to a 0.064 billion yen increase in non-operating expenses in 2025.
• Lower dividends from Mitsui O.S.K. Lines shares held by the company led to a 0.054 billion yen decrease in non-operating income in 2025.
• Weather and extreme heat can negatively impact leisure segment operating performance, as seen in 2025's lower amusement park visitor numbers and profit decline.
• The manufacturing segment saw a pullback in 2025 after outsized 2024 performance, though management notes this is a return to normal baseline levels and not a sign of underlying weakness.

Q: Can you share which construction sub-segments drove growth in 2025 and give your outlook for the segment? / A: The three fastest growing sub-segments were Happiness Denki (+0.9 billion yen revenue), Sanoyas Engineering parking systems (+0.8 billion yen), and Sanoyas Entec pipework (+0.7 billion yen), in line with the reported segment growth. Management also announced a accounting policy change: the company will switch fixed asset depreciation from the declining balance method to the straight-line method, effective starting from the current fiscal year. / A: This change aligns accounting with global IFRS norms and removes a barrier to growth investment. Under declining balance depreciation, large new investments create large upfront depreciation expenses that can create first-year losses even for economically profitable long-term projects, discouraging management from pursuing value-creating growth investments. The change removes this distortion and makes it easier to approve new investments such as new amusement park ride assets planned for the leisure segment, with all required auditor approvals already obtained.

Q: What is the strategic rationale for the upcoming acquisition of KODERA ELECTRONIC MFG? / A: KODERA is a niche market leader with ~70% domestic market share in automatic wire stripping and processing machines, a product category that does not overlap with Sanoyas' existing business lines. Adding this established profitable leader to the group expands Sanoyas' business footprint, and the company believes it can use its group resources to support KODERA's further growth after the acquisition closes in early June.

Q: How is the mid-term management plan progressing one year in, relative to the original plan? / A: The first year of the 3-year plan delivered significantly better financial results than originally planned, with large revenue and profit outperformance that gets the plan off to a very strong start. All strategic initiatives including priority segment growth, M&A for new business, human capital investment, and carbon neutrality efforts are progressing on or ahead of schedule, and the company remains on track to hit its mid-term targets for growth and profitability by 2026.