8059.T

Overall Financial Results

• The 2nd quarter cumulative period achieved year-over-year revenue and profit growth, with all profit metrics hitting record highs for any first half, driven by the company's four priority growth segments: automotive, healthcare, aviation & infrastructure, and energy solutions.
• Daiichi Jitsugyo is an independent general machinery trading company not affiliated with any specific capital group, with 77 years of operations and four core strengths: on-site operational expertise, in-house engineering capabilities, a global network across 18 countries and 36 locations, and specialized logistics management for complex international industrial equipment shipments.

Business Portfolio Structure

• The company maintains seven business segments split into two categories: Priority Growth Areas (Energy Solutions, Automotive, Healthcare, Aviation & Infrastructure) and Core Base Areas (Plant & Energy, Industrial Machinery, Electronics). Diversification across segments with different industry cycles and project timelines creates mutual complementarity that supports stable long-term growth.

Priority Growth Segment Operational Updates

• Healthcare: Japanese market capital investment is growing due to generic/OTC drug demand and industry consolidation; the company is securing orders for inspection and filling lines, and developing packaged validation services for drug manufacturing to improve customer value. Overseas, it has secured an order for cell culture equipment for vaccine manufacturing in Brazil, entering a new pharma equipment segment.
• Automotive: Completed vehicle exterior inspection equipment is seeing strong demand across Japan, the US, India, and China; the company is capturing demand for electric upgrades to large injection molding machines driven by carbon neutrality goals. While BEV market growth has slowed slightly, it continues to secure orders for internal combustion and hybrid vehicle equipment, including ADAS assembly lines, and is pursuing turnkey utility and equipment projects for new overseas automaker factories.
• Aviation & Infrastructure: Post-pandemic inbound growth has driven increased airline and airport investment; the company is targeting large orders for its core ground support equipment product line, and is exploring development of digital twin technology for disaster prevention and labor-saving infrastructure applications.
• Energy Solutions: After three years of rapid growth, the segment is currently in a plateau period, but continues to secure orders for electrodes for China and vehicle battery assembly inspection for North America, plus new inquiries for semi-solid and all-solid battery lab lines domestically. The company is developing new markets for lithium-ion storage batteries for data centers, expanding sales of perovskite solar cell manufacturing equipment with demonstration unit investment, and prioritizing development of a battery recycling business as part of the circular economy.

Core Base Segment Operational Updates

• Electronics: While the domestic market sees temporary sluggishness, investment in electronic component mounting equipment is recovering for large Chinese customers, with strong demand for pilot lines and special equipment for power semiconductors in Europe and Brazil. Domestically, demand for the company's proprietary LOGITO brand factory logistics automation solutions is strong, and the company is deepening partnerships with system integrators to expand the business.
• Industrial Machinery: Core products (injection molding machines, vacuum forming machines) see stable domestic demand, and the company is capturing demand for clean rooms for ceramic manufacturing and electric upgrades to large injection molding machines for high-performance film production. It is pursuing demand for vacuum forming machines in emerging markets like Vietnam, and targeting an order for automated dialysis component assembly equipment in Mexico, with ongoing development of data center-focused products.
• Plant & Energy: The company is targeting renewable energy projects including large geothermal drilling equipment and binary power generation units for waste incineration facilities, and is developing a recycled carbon business from waste tires in Thailand as a circular economy initiative. It is also selling high-efficiency DC-link direct storage systems for solar power, and supports Japan's first blue hydrogen/ammonia demonstration plant developed by INPEX, with plans to expand activity in this segment.

Geographic Expansion: India

• India was split into an independent headquarters region this year as a high-priority growth market, leveraging its strong projected economic growth and the Make in India policy. The company operates 3 main hubs and 2 satellite offices, with 100 total employees including 41 local engineers, a technical training center, and a local manufacturing subsidiary to achieve local business completion. It is also preparing a joint venture with leading automatic winding machine manufacturer NITTOKU to expand market access and operational efficiency.

• Management upwardly revised full-year revenue and all profit metrics based on the strong first half results.
• The company updated its dividend policy to target the higher of 40% payout ratio on attributable net income or 4% return on equity, and upwardly revised the year-end dividend from 57 yen per share to 71 yen per share, bringing the full-year annual dividend to 122 yen per share, strengthening shareholder returns.
• For the mid-term management plan "MT2027", management targets 10% annual order growth to 230 billion yen from 200 billion yen the prior year, with plans to achieve the target through steady progress across all priority growth segments. The plan targets cumulative operating profit of 40 billion yen over the three-year plan period.
• Full-year order guidance is 230 billion yen, with 90 billion yen ordered in the first half and 140 billion yen scheduled for the second half (a second half-heavy skew). Management confirms it expects to achieve the full-year target through focused order securing efforts in the back half.

1. Plant & Energy Business: Revenue and operating income decreased year-over-year, driven by a decline in large overseas projects. No contribution percentage is provided.
2. Energy Solutions Business: Revenue decreased overall, as solid North American sales of lithium-ion battery manufacturing equipment were offset by a decline in domestic sales. Operating income saw a slight decrease despite improved profit margins. No contribution percentage is provided.
3. Industrial Machinery Business: Revenue and operating income both decreased year-over-year due to the after-effect of fewer large projects compared to the prior year period. No contribution percentage is provided.
4. Electronics Business: Revenue decreased due to lower sales of electronic component mounting equipment to China, but operating income increased through margin improvements. No contribution percentage is provided.
5. Automotive Business: Revenue and operating income increased, driven by sales of EV drive motor manufacturing lines for the Americas and one-time projects. No contribution percentage is provided.
6. Healthcare Business: Revenue and operating income both increased, driven by growth in manufacturing equipment for highly-controlled medical devices and large engineering-inclusive projects. No contribution percentage is provided.
7. Aviation & Infrastructure Business: Revenue and operating income both increased, driven by sales of ground support equipment for airlines. No contribution percentage is provided.

Total overseas revenue came to 61.1 billion yen, representing 56.9% of total revenue, up 6.7 percentage points year-over-year. By region: the Americas was 28.2 billion yen (+8.7% YoY); Europe was 0.8 billion yen (-73.7% YoY); Asia was 17.2 billion yen (+43.5% YoY); China was 11.0 billion yen (-22.1% YoY); newly independent India region was 3.8 billion yen.

• Trumps' tariffs on North American-bound lithium battery manufacturing equipment could raise costs for customers/importers and potentially trigger a broader recession in the US and global markets that would reduce capital investment demand.
• Large and ultra-large lithium battery project orders are expected to remain challenging for approximately 2-3 years, which could lead to moderately lower segment orders compared to the prior three-year high-growth period.
• India market expansion faces risks including US high tariffs, rising labor costs, and high employee turnover.
• The 2026 change in Japanese trade settlement law may require an additional several billion yen in advance funding, increasing working capital requirements.
• First half order progress is below 50% of the full-year target, with many projects shifted to the second half, requiring focused execution to achieve the full-year plan.

Q: What impact will Trump's tariffs have on the North American lithium battery manufacturing equipment business, and how should investors view the outlook going forward? / A: Contractually, tariffs are the responsibility of the customer/importer, so Daiichi Jitsugyo does not bear the tax cost directly. The main concern is that tariffs could fuel inflation and trigger a US and global recession that would cut capital investment demand. Existing backlog is on track, but large project orders are currently sluggish after three years of blockbuster growth, and this softness may continue for 2-3 years. Incoming inquiries for new battery technology pilot plants remain strong, and overall orders are expected to stay flat year-over-year, with other segments offsetting any moderate decline.

Q: What is the performance outlook for next fiscal year, and will targets be raised if current year results come in above plan? / A: The MT2027 mid-term plan already sets out achievable targets including a 10% order increase to 230 billion yen, and management will focus on delivering the plan by supporting growth across the priority segment portfolio. Management notes that if current year performance stays on track, next year's base will be higher, but the immediate priority is securing full-year orders for the current fiscal year to lock in next year's profit base, and any changes to targets will be announced when finalized.

Q: Can the full-year 230 billion yen order target be achieved, given the slow first half progress? / A: The full-year plan is 90 billion yen in the first half and 140 billion yen in the second half, so the slow start is the result of a deliberate second half-heavy order skew this year. Management confirms it expects to hit the full-year target by securing all the expected second half projects, and the team is prioritizing order closing efforts to deliver on the plan.

Q: What areas and regions is Daiichi Jitsugyo targeting for data center-related business? / A: The company is focused on lithium-ion storage battery solutions for data centers. It is also pursuing opportunities in cooling systems required to manage heat from data center operations, and solid oxide fuel cell (SOFC) generator applications in this segment.