Takashima & Co.,Ltd. Q2 FY2026 earnings call

• Overall Consolidated Financial Results:

  • Total consolidated net sales decreased 3.0% year-over-year to 45.02 billion yen; operating profit decreased 1.2% year-over-year to 0.898 billion yen; ordinary income increased 29.0% year-over-year to 1.075 billion yen; net income attributable to parent company shareholders increased 44.0% year-over-year to 0.695 billion yen; EBITDA increased 4.2% year-over-year to 1.778 billion yen, with improving core profitability.
  • A 2-for-1 stock split was implemented effective October 1, 2025, and all per-share metrics have been adjusted to reflect this change.

• Segment Operational Updates:

  • Building Materials: Weak performance in non-residential foundation work dragged down overall revenue, but residential new product expansion, strong residential storage battery sales, and contribution from recently consolidated Sanwa Holdings drove growth in residential and renewable energy segments. Profit declined due to lower overall sales and increased expansion-focused sales expenses.
  • Industrial Materials: Resin materials grew on expanded orders for automotive/electronics/precision equipment components and amusement recycled resin products. Industrial functional fiber sales grew, but apparel revenue fell as the business pursued "selection and concentration" and scaled back non-core operations. Profit grew strongly on higher sales and improved factory utilization from function optimization across consolidated subsidiaries.
  • Electronic & Devices: Major Japanese electrical machinery customers face growing competition from Chinese firms in Japan's consumer and white goods markets. In the devices sub-segment, customer inventory drawdowns and translation differences reduced revenue. In the assembly sub-segment, weak digital camera demand and low domestic and ASEAN white goods board mounting orders drove a revenue decline.

• Balance Sheet and Cash Flow:

  • Total assets increased 1.245 billion yen year-over-year to 61.29 billion yen; equity ratio decreased 1.8pp to 38.0%. Cash and cash equivalents increased 1.439 billion yen to 10.504 billion yen.
  • Operating cash flow increased 1.587 billion yen, driven by pre-tax profit and corporate tax refunds, partially offset by inventory growth. Investing cash flow decreased 0.248 billion yen, primarily from purchases of tangible fixed assets. Financing cash flow increased 0.34 billion yen, primarily from proceeds of long-term borrowing.

• Mid-Term Management Plan "Sustaina V" Progress:

  • This is the third and final year of the plan, which aims to deliver sustainable growth and adaptation to a low-carbon society by capturing growth opportunities from energy/ labor saving demand as a solution-focused functional trading company.
  • Human capital is prioritized as the core source of value creation. The company has launched multiple committees (Women's Empowerment Promotion Council, Education Committee, and the April 2025 Committee on Considering People's Growth) to support employee development, improve engagement and retention, and systematize consistent, repeatable talent growth frameworks. Targeted talent categories for development include management, global, sales, and highly specialized professional talent.
  • Sustainability progress: A sustainability committee was established in 2022, and a sustainability roadmap was released in 2024. Diversity targets include 30% foreign manager ratio, 20% female manager ratio by FY2025, and 30%+ female officer ratio by 2030. KPIs for work environment improvement (parental leave acquisition rate, paid time off acquisition rate) are tracked, and regular engagement surveys are conducted to boost employee satisfaction.

• Shareholder Return:

  • A temporary 2-year (FY2024-FY2025) policy of minimum 80% consolidated payout ratio and 100% total payout ratio was implemented in 2024 to improve capital efficiency and hit a target ROE of 8%. For FY2025, an annual dividend of 45 yen per share (22.5 yen interim, 22.5 yen final, post-split) is forecast, representing an expected consolidated payout ratio of 80.9%.

1. Building Materials Segment: Net sales of 29.16 billion yen, down 3.4% year-over-year; segment profit of 0.795 billion yen, down 6.1% year-over-year. This accounts for approximately 64.8% of total consolidated revenue. 2. Industrial Materials Segment: Net sales of 8.839 billion yen, up 3.4% year-over-year; segment profit of 0.518 billion yen, up 29.8% year-over-year. This accounts for approximately 19.6% of total consolidated revenue. 3. Electronic & Devices Segment: Net sales of 7.046 billion yen, down 8.3% year-over-year; segment profit of 0.28 billion yen, down 23.9% year-over-year. This accounts for approximately 15.6% of total consolidated revenue.

• Full-year FY2025 (ending March 2026) consolidated earnings guidance is maintained with no upward or downward revision.
• Segment-level full-year FY2025 earnings guidance is also maintained with no revisions.

• Building Materials Segment: Weak non-residential construction demand has negatively impacted sales performance
• Industrial Materials Segment: The apparel business is undergoing portfolio restructuring that has driven near-term revenue declines
• Electronic & Devices Segment: Major customers are facing intense market share pressure from Chinese competitors in Japan's consumer and white goods markets, leading to weak demand for the segment's products and services

Q: What is the development status of the next mid-term management plan? / A: The current plan "Sustaina V" is in its final year this fiscal year. The next plan, starting next fiscal year, is currently being developed. It will align with the company's commitment to contributing to 2050 carbon neutrality, focusing on delivering sustainable business growth and employee development to meet shareholder and investor expectations. The plan will be finalized by March next year and presented at the May earnings briefing.

Q: What is the shareholder return policy for the next mid-term management plan, particularly regarding the sustainability of the current high payout ratio? / A: Management cannot share detailed policy information at this current stage of planning. The company intends to develop a shareholder return framework that meets the expectations of shareholders and investors.