7609.T

2025 Full-Year Consolidated Performance

• Daitron achieved all-time record high revenue and profit for 2025: total sales reached 103.142 billion yen (110.3% of the prior year period), operating profit reached 7.01 billion yen (113.1% of the prior year period), ordinary profit reached 7.156 billion yen (113% of the prior year period), and net income attributable to owners of the parent reached 4.923 billion yen (112.4% of the prior year period).
• Strong results were driven by successful domestic new customer and application development, plus some equipment projects originally scheduled for 2026 were pulled forward and recognized as revenue in 2025.

11th Medium-Term Management Plan (11M, 2024-2026, final year 2026)

• The 11M slogan is "As a technology-based company, advance vigorously in the global market!", with a core goal of becoming and sustaining a company with over 100 billion yen in annual sales, a milestone that was achieved in 2025.
• Targeted Management KPIs & Current Status:
  • Target gross profit margin of 20% or higher: 2025 actual result was 20.3%, meeting the target.
  • Target equity ratio of 50% for financial soundness: 2025 actual result was 44.8%.
  • Target ROE of 12% or higher and ROA of 6% or higher: Both targets are currently achieved, with ROE at just over 14% and ROA at around 6.5%.
• Business Structure Transformation KPIs:
  • Business structure split by category (electronic equipment/components, manufacturing/inspection equipment, new business): New business (led by the data center UPS business) now accounts for 7.1% of total revenue, growing steadily.
  • Target original product ratio of 25%: Current ratio is 16.9%, but original product revenue has grown steadily from 2021 to 2025, so current strategy remains on track and will continue to be strengthened.
  • Target overseas business ratio of 30%: 2025 actual is 26.2%. The slight gap is due to strong overall growth in domestic general sales that outpaced overseas expansion; overseas revenue itself is on a steady growth trend, albeit exposed to investment cycle volatility as equipment accounts for ~half of overseas sales.
• Core Strategic Priorities:
  • Focus Areas & New Business: Daitron has clarified and narrowed its focus to high-potential markets. Beyond the growing data center UPS business, the company is now developing the software business as the next new growth driver, currently in the stage of project development and diversified marketing research.
  • Regional Strategy: Explore new domestic bases to penetrate under-served regions; expand overseas operations by adding branch offices and satellite offices in existing core markets (China, North America, Europe) to expand coverage from isolated points to broader regional coverage; monitor the Indian market and plan for a future representative office opening.
  • Production Capacity: Proactively develop new cooperating partners to expand production capacity in a timely manner to meet customer demand.
  • Technology & Intellectual Property: Prioritize software-related technology strengthening, consider alliances with external firms, and strengthen intellectual property strategy by building systems to encourage patent applications, including revising evaluation systems and reviewing compensation for IP-related staff.
  • Business Support: Promote DX to improve productivity and operational quality led by the administrative division; advance human capital management via training/education investment to boost labor productivity and promote diversity and inclusion.
  • Sustainability: Promote ESG management starting from this medium-term plan, advancing initiatives step-by-step.

Capital & Cash Allocation Policy (2025-2026)

• The company recognizes the importance of managing for capital cost and shareholder value, and raised the target payout ratio from 30% to 40% during 11M.
• Planned total investment of ~1 billion yen in R&D to strengthen original product development.
• Evaluate and invest in production capacity expansion, including factory reconstruction to increase in-house capacity, in addition to expanding the partner network.
• Plan investment in new facilities for the fast-growing Green Facility business to build out testing/evaluation capabilities and improve overall technical service for data center UPS.
• Evaluate investment in DX system replacement, and support software new business development, including considering M&A as an option if a suitable collaboration partner is identified.
• Prioritize shareholder returns: Maintain the current payout level, and proactively consider additional tranches of share buybacks based on market conditions moving forward.

• 2026 Full-Year Consolidated Guidance: Daitron expects continued slight growth, projecting full-year sales of 103.4 billion yen (100.3% of 2025 actual), operating profit of 7.2 billion yen (102.7% of 2025 actual), ordinary profit of 7.2 billion yen (100.6% of 2025 actual), and net income of 4.95 billion yen (100.5% of 2025 actual). If achieved, this will extend the streak of record high revenue and profit.
• 2026 Segment Guidance:
  • Electronic Equipment and Components: Overall growth is expected. The core parts & ASSY segment should benefit from the expected economic recovery in semiconductor manufacturing equipment and industrial machinery, and semiconductor inventory adjustment is expected to finally conclude, bringing gradual recovery in new orders and sales. The image equipment sub-segment expects a slight year-over-year decline due to planned price adjustments for North American operations.
  • Manufacturing Equipment: While order growth has slowed across Asia, particularly for semiconductor materials due to extended inventory adjustment delaying new investment, the domestic data center-related optical device equipment business is seeing rapid order growth driven by ongoing device shortage and strong customer investment, and the domestic recycled wafer equipment business is also growing steadily. Overall, the segment expects a slight year-over-year decline but will maintain a high revenue level.
• Dividend Guidance (post 2-for-1 stock split effective January 1, 2026): 2025 full-year dividend is 190 yen per pre-split share (40.9% payout ratio). 2026 full-year dividend is projected at 95 yen per post-split share, which equals 190 yen per pre-split share, maintaining the 2025 dividend level on a pre-split basis.
• Long-Term Growth Outlook: AI-related market expansion is expected to drive continued growth for the company's data center UPS and optical device manufacturing equipment businesses, with domestic investment activity already strong and order volumes increasing. Semiconductor inventory adjustment is wrapping up, and the shift to HBM production has created new demand that is expected to drive new investment going forward.

Product Segment Performance

1. Electronic Equipment and Components Segment: Grew steadily quarter-over-quarter in 2025. Overall, almost all sub-segments achieved year-over-year growth, except the semiconductor sub-segment which saw a slight decline due to inventory adjustment impacts. The Green Facility new business (providing UPS sales and technical services for data centers) grew rapidly and was a key contributor to overall good performance. Order backlogs for this segment saw gradual growth quarter-over-quarter, with Green Facility driving a particularly large increase in backlog. Gross profit margins for all original product sub-segments in this segment (except power supply equipment) are above 20%.

2. Manufacturing Equipment Segment: Experienced minor quarterly fluctuations due to cyclical investment trends, but maintained a high average level overall in 2025, with steady full-year sales growth. The segment's core growth drivers are semiconductor silicon material-related equipment and optical semiconductor-related equipment tied to data center demand, which delivered strong growth. After a period of large accumulated backlogs from extended lead times starting around 2022, steady deliveries proceeded through 2025 even as new orders slowed, leading to a slight decline in backlog that still remains at a consistently high level.

Reporting Segment (Geographic/Business Type) Performance

1. Domestic Sales Business: Achieved year-over-year revenue and profit growth. Strong domestic new customer and new application development drove expansion, and domestic revenue grew materially, with solid performance from data center optical device equipment orders.

2. Domestic Manufacturing Business: Achieved year-over-year revenue and profit growth.

3. Overseas Business: Achieved year-over-year revenue and profit growth, accounting for 26.2% of total revenue (flat year-over-year). Within overseas: North America grew driven by a large new received subway vehicle wiring harness project at the U.S. factory and the smoothly transferred and growing automotive image equipment business from Japan; Europe grew driven by large increases in orders and sales of semiconductor material-related equipment; Asia saw a slight year-over-year revenue decline, driven by a slowdown in China's semiconductor-related equipment investment after a period of strong activity in prior years.

• Geopolitical risk: Future changes to China relations, particularly related to rare earth supplies, represent a key concern. While there is no direct business impact currently, rare earths are used in many products including motors that Daitron sources for equipment production. A rare earth supply shutdown could disrupt motor supply and impact equipment production for Daitron.
• Cyclical industry risk: Manufacturing equipment is exposed to investment cycle fluctuations, and Asia (particularly China) has seen a slowdown in semiconductor-related equipment investment that has reduced near-term segment performance.
• Talent acquisition risk: The company continues to face challenges hiring enough technical personnel, with only 60-70% of open technical positions filled, even though general sales positions are filled as planned. Industry-wide labor shortages create ongoing headwinds for hiring.
• Near-term revenue headwind: Some 2026 equipment projects were pulled forward to 2025, creating a headwind for 2026 comparable growth.

Q: As the current medium-term management plan is approaching its end, what changes to the business environment are you anticipating for the next medium-term period? Around this time last year there was uncertainty around tariffs, and now the environment (including political conditions) seems to have become more predictable. Could you share your outlook for the business environment from next year onward?

A: For the next medium-term plan, I expect the AI-related market to expand further. We already operate a data center UPS business, and we also manufacture original equipment for optical devices used for communication between servers in data centers, a market that is seeing very strong demand growth right now. Demand is projected to grow along with ongoing data center construction, and we are already seeing very active investment from multiple domestic companies that has led to increased orders for our business. So AI-related markets are expected to deliver strong growth in the next medium-term period. On the other hand, one key concern is how relations with China will evolve going forward, particularly around rare earths. There is no direct impact on our business at this point, but rare earths are used in many products, including motors that are relevant to our business. If rare earth supplies were to stop, it would become difficult to source motors, which would impact production of our equipment. That is a key concern to monitor. In semiconductors, we have seen very strong activity for high-performance HBM semiconductors, while general-purpose semiconductors faced very difficult conditions over the past year due to extended inventory adjustment. Now that inventory adjustment is finally wrapping up, and the major shift to HBM production is underway, we are actually starting to see shortages of general-purpose semiconductors, and we expect this to drive new investment going forward. A medium-term plan that accounts for these dynamics will be very important going forward.

Q: Daitron has grown revenue and profit steadily, especially since you became CEO, maintaining growth even through the COVID-19 pandemic. Even in the current difficult hiring environment, you have steadily expanded headcount at both the consolidated and parent level, which suggests you have strong recruiting capabilities. But I would think it is hard to attract talent for a business model like yours. How have you managed to successfully attract talent? Can you share your approach?

A: You are right that there is widespread talent shortage across industries right now, and we do not actually manage to fill every open position we have. For technical roles specifically, we only fill 60% to 70% of our target hiring, even though general sales roles are almost fully filled as planned. So despite the compliment, we actually still struggle with hiring. That said, our HR team has leveraged their experience to deepen partnerships with a wide range of universities, and we focus on early engagement, proactively reaching out to candidates early and running internship programs. The management and HR teams lead these proactive early outreach efforts to secure talent, and that is the main reason we have managed to secure a steady number of new hires.

Q: There is a question asking: 2025 saw some weak performance in the first half, what is your outlook for the new fiscal year 2026?

A: I actually expected a very difficult start to the year, because some projects originally scheduled for 2026 were pulled forward to 2025, which created a headwind for the start of 2026. But unexpectedly, starting around December 2025, orders for electronic components for semiconductor manufacturing equipment have picked up sharply. This segment had been muted, but it has suddenly turned around, and we are already securing a large volume of new orders. We expected this recovery to start in the second half of 2026, but it has come earlier than expected, in the first half. Right now, we expect the first half performance to be roughly in line with plan.

Q: What is your outlook for the impact of subsidies related to the U.S. CHIPS Act?

A: I assume the question is about subsidies tied to the CHIPS Act for semiconductors. At this point, Daitron has no plans to directly receive any of these subsidies. However, many of our semiconductor customers are expected to receive these subsidies, so we expect that this will lead to new investment in related equipment and increased orders for Daitron going forward. Beyond semiconductors, we already have a confirmed large-scale state government project for our railway vehicle business in the U.S. This project is moving forward on state government budget, not CHIPS Act subsidies, and we expect it will deliver steady revenue over the next several years.