DAIICHI JITSUGYO CO.,LTD. Q4 FY2025 earnings call

Core Financial Position

• Total assets at period end: 171.4 billion yen, down 22.4 billion yen from prior period end
• Total liabilities: 91.5 billion yen, down 28.8 billion yen from prior period end
• Total net assets: 79.9 billion yen, up 6.4 billion yen from prior period end, driven by 8.8 billion yen parent net income
• Ending cash and cash equivalents: 33.9 billion yen, up 3.7 billion yen year-over-year; operating cash flow was 11.6 billion yen inflow, investing cash flow was 1.3 billion yen outflow, financing cash flow was 7.7 billion yen outflow

Updated Long-Term Strategy & Materiality

• The long-term growth strategy V2030 had its targets updated: the operating profit target for 2030 was raised to 18 billion yen (from 12.5 billion yen, which was achieved ahead of schedule in FY2025), with ROE targeted at 10%+; sales targets were maintained. The company aims to hit this by boosting engineering capabilities to take on complex projects, increase added value, and raise operating margin to 6%.
• Five updated materialities were defined: 1) Create new value at manufacturing sites through thorough on-site focus; 2) Increase solution added value through strengthened engineering; 3) Improve working environments and secure/develop diverse talent; 4) Address climate change and strengthen supply chain management; 5) Expand and strengthen governance.

New Medium-Term Management Plan MT2027 (3-year plan starting FY2026 March)

• Qualitative goals: 1) Accelerate growth via business strategy, focused on optimizing the business portfolio and allocating resources based on segment conditions to deliver sustainable growth, plus strategic business investment to expand product offerings, grow market access and increase added value; 2) Build a resilient management base that adapts to change, focused on enhancing human capital value via skills development and improved work environments, plus driving DX to pursue new business creation, digitize core operations, improve efficiency and build competitive advantage.
• Quantitative goals: Target cumulative operating profit of 40 billion yen over the 3-year plan (1.4x the prior medium-term plan target).
• Segment strategic priorities:
  • Plant & Energy: Focus on large resources development orders, engineering collaboration with group company DJ-WAVE Engineering, and decarbonization (including CCS projects) and DX-themed projects with chemical industry clients
  • Energy Solutions: Expand business by adding new assembly-focused products to existing offerings and growing new assembly-related orders
  • Industrial Machinery: Strengthen large project order acquisition via collaboration with the engineering division for automation/labor-saving projects, and expand profit in coating equipment and medical machinery-related businesses
  • Electronics: Expand business by strengthening partnerships for the growing LOGITO logistics automation solution and capturing recovering Asian market demand for mounting machines
  • Automotive: Focus on lightweighting, electrification, safety and autonomous driving core themes, strengthen partnerships and expand growth by increasing operations in the Americas and India
  • Healthcare: Capture strong ongoing demand for packaging equipment, automation, and pharmaceutical inspection systems
  • Aerospace & Infrastructure: Capture new investment and replacement demand from electrification of ground support equipment (GSE) to meet carbon neutrality requirements

Cash Allocation & Shareholder Returns

• Total 3-year planned cash in: 16 billion yen from base operating cash flow, plus additional from balance sheet optimization (reducing policy-held shares, improving cash conversion cycle) and leveraged cash utilization while maintaining JCR A- credit rating.

• Total 3-year planned cash out: 11 billion yen for shareholder returns (mostly dividends, with additional share buybacks considered if needed), and 15 billion yen for growth investment (business investment plus DX, human capital and other infrastructure investment), with the goal of maximizing ROE and corporate value.

• Updated dividend policy: Enhanced shareholder returns, with a new target of the higher of 40% payout ratio on parent net income or 4.0% return on equity (DOE), balanced with growth investment needs. A dividend increase is planned for the current fiscal year.

• Targets for corporate value improvement: Maintain PBR above 1x, ROE above 10%, and reduce cost of equity; the company will continue working to improve low PER that has kept PBR below 1x recently.

For the full 2025 March fiscal year: Consolidated revenue exceeded 200 billion yen for the first time in company history, and operating profit reached 13.1 billion yen, hitting all-time high results that beat the prior year. The 2025 March fiscal year segment performance is as follows:

1. Plant & Energy: Large increase in both revenue and operating profit year-over-year, driven by large-scale projects.
2. Energy Solutions: Large revenue and operating profit growth year-over-year, was the primary driver of full-year results, on the back of scheduled revenue recognition for large-scale lithium-ion battery manufacturing equipment orders bound for North America.
3. Healthcare: Strong revenue and profit contribution, capturing demand for manufacturing equipment for high-control medical devices and packaging lines with engineering services.
4. Automotive: Contributed strongly to overall results.
5. Industrial Machinery: No specific absolute value provided.
6. Electronics: No specific absolute value provided.
7. Aerospace & Infrastructure: No specific absolute value provided.

Overseas total revenue was 116.6 billion yen, up 28.8% year-over-year, accounting for 52.6% of total consolidated revenue. By region: Americas revenue was 51 billion yen, up 164.9% year-over-year; Europe revenue was 4.7 billion yen, down 55.0% year-over-year; Asia revenue was 32.3 billion yen, up 12.6% year-over-year; China revenue was 28 billion yen, down 12.1% year-over-year.

For the 2026 March full fiscal year:

• Total orders are expected to increase 11.5% year-over-year, total revenue is expected to be flat year-over-year, and all profit levels (including net income) are expected to decline slightly
• By segment:
  • Plant & Energy: Revenue increase expected, operating profit decrease expected, driven by lower proportion of high-margin large projects than the prior year
  • Energy Solutions: Both revenue and operating profit decrease expected, due to lower order intake in FY2025 from external market changes
  • Industrial Machinery: Revenue decrease expected (due to fewer large projects), operating profit increase expected
  • Electronics: Revenue increase expected, operating profit decrease expected (driven by lower margins)
  • Automotive: Revenue increase expected, operating profit decrease expected
  • Healthcare: Both revenue and operating profit increase expected; revenue is projected to exceed 20 billion yen for the first time for the segment
  • Aerospace & Infrastructure: Both revenue and operating profit increase expected
• For the long-term V2030 strategy: The 2030 operating profit target was upwardly revised from 12.5 billion yen to 18 billion yen, with ROE maintained at 10%+ and sales targets unchanged

• Heightened macroeconomic uncertainty, and fluid U.S. policy developments (including potential expanded Trump tariffs) create unpredictable impacts on results. The company's complex, globally diversified supply chain makes it impossible to reasonably calculate specific tariff impact at this time, so no impact is included in the FY2026 guidance, and some downside risk to results is expected from potential impacts of tariffs and exchange rate volatility on customer investment decisions.
• The lithium-ion battery market is currently experiencing a lull, adding near-term industry uncertainty.
• China business has already seen a double-digit decline in revenue year-over-year in FY2025 driven by lower automotive sector sales, presenting ongoing regional risk.
• Europe saw a 55% year-over-year revenue decline in FY2025 driven by lower sales from Energy Solutions and Electronics, presenting ongoing regional weakness.

Q: Given ongoing business environment uncertainty, what are your good and bad scenario outlooks through next year?

A: Over Daiichi Jitsugyo's 75-year history, the company has delivered consistent growth through all environments, which management attributes to the hard work of all employees. The company does not plan for an explicit downside/bad scenario at this time. The good scenario is meeting the MT2027 targets and moving to upside results: the company has built capabilities to manage large, complex, global multi-party projects over the past 3-5 years, and more complex market conditions expand the addressable market for these capabilities. Customers are increasingly awarding full end-to-end projects to Daiichi Jitsugyo rather than splitting contracts between multiple firms, which drives revenue, profit, employee growth and positive top-line results. Meeting the MT2027 40 billion yen cumulative operating profit target and moving to upside from there is the core good scenario.