Takashima & Co.,Ltd. Q4 FY2025 earnings call

Overall Financial Results (FY2025 March Ending)

• Total consolidated net sales: 94.503 billion yen, +4.9% YoY
• Operating profit: 2.129 billion yen, +21.8% YoY
• Ordinary profit: 2.024 billion yen, +1.0% YoY (flat, impacted by increased foreign exchange losses from weakening local currencies at overseas subsidiaries)
• Net income attributable to parent shareholders: 1.566 billion yen, -67.6% YoY (decline driven by large gain on sale of leased hotel assets in the prior year comparison period)
• EBITDA: 3.744 billion yen, +21.2% YoY; ROE of 6.6% exceeded shareholder equity cost, ROIC of 4.4% exceeded WACC

Mid-Term Management Plan "Sustaina V (Value)" Progress

• The plan aims to capture growth opportunities from the transition to carbon neutrality by 2050, and deliver sustainable growth as a functional trading company providing solutions for energy and labor saving demand
• Total planned growth investment of 15 billion yen; 13.7 billion yen deployed as of FY2025 end, with management noting it will continue pursuing high return opportunities regardless of the original planned allocation cap
• Key completed strategic initiatives:
  • Acquired Sanwa Holdings (and 14 subsidiaries including Sanwa System) in February 2025; Sanwa System provides one-stop solar PV system sales and construction for industrial and residential use, expanding Takashima's coverage to the full value chain of material wholesale and construction for the solar PV market, alongside existing subsidiary New Energy Distribution System
  • Established joint venture DG Takashima with DG Capital Group to accelerate commercialization of digital grid technology for renewable energy expansion
  • Invested in ASF, a startup EV fabless manufacturer focused on carbon neutral mobility, laying groundwork for future growth in new energy sectors
• Portfolio rebalancing with selective focus on strategic growth areas; completed restructuring of the industrial materials business, continued reduction of policy-held shares to improve capital productivity
• Human capital initiatives: expanded human capital via women's empowerment promotion and establishment of a human growth committee
• Capital cost and share price focused management: committed to improving PBR from 0.93x to above 1.0x as a core management responsibility

New Product Launch

• Launched the "Smart Rack Offset", an improved residential solar PV mounting rack co-developed with an affiliated company; the product allows installation closer to roof edges to increase generation capacity, with integrated rainwater drainage control, supporting maximum utilization of residential roof space for carbon neutrality goals

Shareholder Return

• Temporary 2-year limited policy through the final year of Sustaina V (FY2026): maintained target of consolidated payout ratio ≥80% and total return ratio of 100%
• FY2025 full year dividend: ¥86 per share (¥40 interim, ¥46 end of period), 6 yen increase; resulting consolidated payout ratio of 94.1% and total return ratio of 100.2% including share buybacks
• Plans for 2-for-1 stock split in September 2025 to lower per-share investment amount, improve liquidity, and expand investor base; the split results in an expected full year dividend of ¥90 per original share for FY2026, representing a real net increase from FY2025

1.建材 (Building Materials) Segment: FY2025 sales of 61.017 billion yen, a 4.9% increase year-over-year; segment profit of 1.671 billion yen, a 15.0% decrease year-over-year. It contributes 64.56% of total consolidated sales. The increase in sales was driven by solid project acquisition, full-year contribution from the consolidated subsidiary Iwasui Kaihatsu (acquired in June 2023, only contributed 8 months in the prior period), and growth across renewable energy, insulation, and residential materials segments from functional strengthening initiatives. The profit decline came from lower profitability of some projects and higher indirect overhead costs. For FY2026, management forecasts sales of 70 billion yen and segment profit of 2.4 billion yen. 2.産業資材 (Industrial Materials) Segment: FY2025 sales of 17.998 billion yen, a 4.7% increase year-over-year; segment profit of 1.054 billion yen, a 49.0% increase year-over-year. It contributes 19.04% of total consolidated sales. Sales growth came from expanded orders for resin materials for automotive, electronics, and precision equipment sectors, and growing demand for industrial textiles (heavy cloth for transportation equipment and defense equipment) that offset declines in consumer-facing textile products. Profit growth was driven by higher sales across both material categories and improved factory utilization at consolidated subsidiaries. For FY2026, management forecasts sales of 20 billion yen and segment profit of 1.1 billion yen. 3.電子・デバイス (Electronics & Devices) Segment: FY2025 sales of 15.514 billion yen, a 4.9% increase year-over-year; segment profit of 0.727 billion yen, a 77.0% increase year-over-year. It contributes 16.41% of total consolidated sales. While the domestic consumer electronics and white goods markets remain weak, growth was driven by increased shipments as major customers reduced accumulated excess electronic component inventory in the device segment, and expanded orders for digital camera-related products that offset weakness in white goods-related assembly work. For FY2026, management forecasts sales of 20 billion yen and segment profit of 0.7 billion yen. Total unallocated corporate expenses for FY2026 are forecast at 1.6 billion yen.

• For FY2026 (March 2026 ending), which is the final year of the Sustaina V mid-term plan, management maintains the previously announced full year targets: total consolidated sales of 110 billion yen, operating profit and ordinary profit of 2.6 billion yen each, net income attributable to parent shareholders of 1.9 billion yen, matching the plan's original final year goals
• Planned full year dividend per original share is ¥90 for FY2026, representing an increase from FY2025's ¥86, with a forecast consolidated payout ratio of 81.2%, maintaining the 80%+ payout policy
• For segment performance, management forecasts growth in sales for all three segments versus FY2025, with operating profit growth driven by Building Materials and Industrial Materials, while Electronics & Devices profit is expected to remain broadly stable
• Management expects the Sanwa Holdings acquisition to contribute to sales growth in the renewable energy segment of Building Materials via expanded industrial solar PV business collaboration

• Uncertain demand conditions persist in the domestic consumer electronics and white goods markets, which pressure the Electronics & Devices segment's performance
• Trump tariffs on US trade create indirect risks for Takashima across two business areas: the wide supplier network for automotive and other export-focused industries in the Industrial Materials segment, and shifting competitive dynamics in the Electronics & Devices segment from Chinese manufacturers shifting production to Southeast Asia to avoid tariffs. The magnitude of these impacts is hard to forecast clearly at present
• Downside risk to the FY2026 earnings forecast cannot be ruled out if tariff-related trade friction negatively impacts the Electronics & Devices segment
• The current PBR of 0.93x remains below the 1.0x target management has identified as a core responsibility
• In the Building Materials segment, some projects have seen profitability come in below expectations, creating pressure on segment profit

Q: Management is asked to outline good and bad case scenarios for the impact of Trump tariffs on the business. / A: Takashima's CEO states direct impacts from the tariffs are expected to be very limited, but there will be meaningful indirect impacts across two business areas. For the industrial materials segment, the large domestic automotive and export-focused manufacturing supply chain has wide exposure, and management will carefully monitor how indirect impacts emerge while expecting growth in other business areas will offset any negative effects. / A: For the electronics and devices segment, the business environment has already become harder to forecast due to shifting trade dynamics: Chinese manufacturers are shifting export production to Southeast Asia to avoid tariffs, which has changed the competitive landscape. While the segment has seen improvement from inventory drawdowns, it remains difficult to assess the full scope of changes, and downside risk to segment performance from this trend remains a key uncertainty. A bad outcome could result in earnings coming in below the current FY2026 forecast.

Q: What is the shareholder return policy after the current limited high-payout measures expire? (Not fully transcribed in the available transcript, identified as a key Q&A topic by agenda listing) / A: The call agenda confirms this is a core investor question, but the full exchange is cut off in the provided transcript; management has already committed to maintaining the 80%+ payout ratio and 100% total return policy through the end of FY2026, the final year of the current mid-term plan.

Q: What is the achievability of the FY2026 earnings forecast? (Identified as a key Q&A topic by agenda listing) / A: The full exchange is cut off in the provided transcript. Management built the forecast based on all currently available information, accounting for demand shifts across regions and segments, and factors in the expected contribution from the newly acquired Sanwa Holdings and growth in high-priority strategic segments.