Hakudo Co.,Ltd. Q3 FY2025 earnings call

Core Financial Results

• Total consolidated revenue hit 50.153 billion yen, a 16.8% year-over-year increase, driven by expanded market share from consistent strategic execution, rising sales to the semiconductor manufacturing equipment industry (fueled by generative AI demand growth), and higher product unit prices.
• Gross profit reached 7.811 billion yen, a 12.9% year-over-year increase, lifted by higher revenue and increased inventory valuation gains from raw material market trends.
• Ordinary profit hit 2.335 billion yen, a 6.1% year-over-year increase, despite headwinds from lower non-operating income (lost one-time dividend income from the prior year period and a swing from foreign exchange gains to losses).

Digital Service Expansion

• Expanded the Hakudo Net Service e-commerce platform: available SKUs grew from 84,900 (March 2024) to 129,500 (December 2024), with 13,600 registered companies and 27,000 registered individual users.
• Added new user-centric features: automatic quotes/ordering for metal 3D printing, custom cutting design tools, automatic material size/price calculation from CAD data, and new automatic quoting for waterjet and laser processing from 3D/CAD files, alongside a platform UI refresh for improved usability.
• Roll out localized e-commerce systems (EC Packages) across global markets: fully implemented in Thailand, in beta testing with selected customers in the US, planned rollout to Vietnamese partner Oristar Corporation this fiscal year, with preparation ongoing in Malaysia and Indonesia.

Operational & Strategic Initiatives

• Restructured the sales organization in April 2024 to better target dormant new customers and existing accounts separately, and strengthened aluminum and stainless steel thin plate sales starting from H2.
• Launched operations at the new Fukuoka Plant in December 2024, the company's second production base in the Kyushu region, to meet growing semiconductor-related demand in the area.
• Targeted growth focus on three high-priority sectors: semiconductors, aerospace, and automotive. Partnered with US group company WCAS to strengthen imports of supply-constrained aerospace-grade materials from overseas manufacturers; all three target sectors have posted growing sales and revenue share compared to Q1 FY2021.
• Expanded global footprint: currently exploring business alliances and investment opportunities in South Korea and Taiwan, and plans to expand sales focused on EC Package and aerospace materials to additional markets including India and the Philippines. In the US, the company is expanding beyond existing thin plate sales to add cut thick plate and cut round bar sales.
• As of Q3 FY2025, overseas sales account for 15% of group consolidated revenue, with plans to grow this share through continued planned expansion.

Sustainability Initiatives

• Completed installation of solar panels at the Fukushima Plant (second solar-powered site), which started operations in January 2025.
• Scheduled to introduce internal carbon pricing in April 2025 to boost employee awareness and drive CO2 emission reductions.
• Maintains additional sustainability activities including community employment generation via company-owned farms as part of its broader ESG strategy.

1. Japan Domestic Segment: Aluminum holds the largest revenue share, with copper alloy and stainless steel contributing equal shares; sales to the semiconductor manufacturing equipment industry represent a large portion of revenue. The segment grew revenue driven by expanded share and rising demand for AI-related semiconductor products, with all product categories posting year-over-year revenue increases.
2. North America Segment: Sales grew 1.085 billion yen year-over-year, but the segment recorded an ordinary loss of 162 million yen, a 197 million yen year-over-year decrease in profit, due to sustained economic slowdown and stagnant capital investment. Stainless steel holds the largest revenue share, with most sales going to the residential construction sector.
3. China Segment: Both revenue and operating profit increased, with a 37 million yen year-over-year profit increase. Similar to Japan, aluminum for semiconductor manufacturing equipment holds a high revenue share, but other product categories including special steel for the automotive and mold industries represent a larger share than in Japan.
4. Thailand (Other Segment, Hakudo Thailand): Business conditions remain strong, with ordinary profit of 131 million yen, a 20 million yen year-over-year increase. Copper alloy for the automotive industry holds the largest revenue share. Overall, all three overseas segments posted year-over-year revenue growth, with a total 1.085 billion yen aggregate year-over-year revenue increase.

• Full-year FY2025 revenue is tracking above the prior forecast: even though semiconductor manufacturing industry recovery has been slower than expected, expanded market share offset the slowdown to hit sales volume targets, and higher product unit prices pushed revenue above the original forecast.
• Full-year FY2025 profit is tracking below plan as of Q3, due to higher domestic logistics costs and the impact of slowing economic conditions in the US and China.
• The full-year dividend forecast is maintained at 85 yen per share, calculated based on the company's 45% payout ratio policy. The interim dividend was raised 9 yen from the initial forecast to 49 yen per share, which was already paid out.
• Management will continue to work to improve full-year performance by expanding share in the semiconductor manufacturing equipment industry and growing sales to other industry sectors.

• Raw material prices for aluminum, copper, and stainless steel have seen large recent volatility; paired with high volatility in foreign exchange markets, management is monitoring market movements closely.
• The semiconductor manufacturing equipment industry has only seen partial recovery driven by generative AI and Chinese investment demand, and has not achieved a full broad-based recovery due to sluggish memory chip demand. The industry outlook remains uncertain due to rising interest rates, foreign exchange volatility, and geopolitical regulatory changes.
• Rising domestic costs including logistics, labor, and manufacturing expenses are pressuring profit margins.
• Sustained economic slowdown in North America and China is negatively impacting the profitability of the company's overseas operations.

No structured Q&A exchanges were included in the provided transcript, so no content is available for this section.