TOKYO SANGYO CO.,LTD. Q4 FY2025 earnings call

Overall Financial Results:

• Full-year consolidated revenue grew 5.6 billion yen year-over-year to 70.7 billion yen, with operating profit of 2.2 billion yen and net income attributable to parent company shareholders of 2.1 billion yen, achieving both higher revenue and profit.
• The annual dividend is maintained at 36 yen per share in line with the initial forecast, adhering to the company's basic policy of stable dividends with a DOE (dividend on equity) of 4% or higher, despite lower net income due to a delayed special gain from solar power asset transfer.
• Balance sheet improved: Cash and deposits increased 4.8 billion yen, interest-bearing debt decreased 6.3 billion yen, and the equity ratio remained stable at 24.8%, matching the prior year-end level.

Sub-Segment Operational Highlights:

• Thermal Power: Core agency business saw steady maintenance and renewal orders despite lower replacement projects, delivering total segment revenue of 4.5 billion yen, with growth in imported equipment sales to domestic heavy electrical manufacturers.
• Nuclear Power: Revenue grew 2.2 billion yen year-over-year to 6.4 billion yen, supported by strong agency business and related transactions for large-scale safety work at the nuclear fuel reprocessing plant, plus growing restart support and safety work for nuclear power plants amid strong global power demand.
• Renewable Energy: The large loss-incurring solar power construction project from the prior year was completed and handed over, resulting in significant profit improvement; remaining renewable energy construction projects are scheduled for completion sequentially. Biomass started delivery under a long-term wood pellet contract signed in the prior year after completing a large bulk contract.
• Production & Environmental Equipment: Excluding special factors, revenue was nearly flat year-over-year at 37.5 billion yen, with higher profit year-over-year driven by large automotive equipment renewal projects, European chemical plant equipment deliveries, and solid performance from lifestyle-related businesses.

Mid-Term Management Plan Progress (Core 5 Key Strategies):

• Active participation in energy transition: Strengthened organizational capacity (including adding staff) for growing nuclear and plant manufacturer-facing business; progressed sales of renewable energy investment assets and revised business strategy and capital allocation for the segment.
• Create new businesses for a sustainable society: Ongoing development and monetization of new products in the production and environmental equipment area, which is still in progress; has started reviewing individual businesses to pursue selective concentration based on growth and profitability.
• Strengthen combined group capabilities: Clarified the positioning of domestic and overseas subsidiaries (including renewable energy-focused subsidiaries) and strengthened headquarters involvement for both offense and defense, to support resource reallocation to growth areas and stronger governance.
• Build a resilient management foundation: Steadily implemented risk management improvement measures outlined in the improvement report following prior-year losses; the newly established risk assessment committee is now well-established and delivering effective results for project review checks and ongoing monitoring.
• Expand shareholder returns: Continues to follow the established strategy of expanding shareholder returns while strengthening the financial base.

All three product segments achieved year-over-year revenue and profit growth:

1. Electric Power Business: Revenue of 15.7 billion yen, operating profit of 1.48 billion yen, contributing 22.2% of total consolidated revenue. Performance was supported by steady core maintenance work for thermal power plants and growth in the nuclear power business area.
2. Environment, Chemical & Machinery Business: Revenue of 49.8 billion yen, operating profit of 0.56 billion yen, contributing 70.4% of total consolidated revenue. Growth came from strong sales of equipment to automotive-related companies, solid performance of the European subsidiary's chemical plant business, and significant profit improvement from solar-related business after prior-year losses.
3. Living Industry Business: Revenue of 5.1 billion yen, operating profit of 0.21 billion yen, contributing 7.2% of total consolidated revenue. Steady performance from core packaging materials and automatic toilet flush units, plus the addition of large new transactions drove results.

• For the full fiscal year 2026 (ending March 2026), management guidance calls for consolidated revenue of 65.0 billion yen, operating profit of 2.4 billion yen, and net income of 3.7 billion yen. Excluding special factors, revenue is expected to be nearly flat year-over-year, while profit is expected to grow roughly 1.0 billion yen on an operating profit basis, after accounting for the removal of special factors like bad debt provision reversals and higher personnel costs.
• Continued solid performance is expected from the nuclear power business area, with growth expected from transactions derived from core thermal power agency business and fuel supply business.
• The company maintains its dividend policy of stable dividends with 4%+ DOE, and plans to increase the annual dividend to 38 yen per share (19 yen for both interim and final dividends), representing a 2 yen per share increase from fiscal 2025.

• The company experienced a large loss from a solar power construction contract in the prior fiscal year, and while the primary problematic project has been completed, remaining renewable energy construction projects are still in progress, carrying potential residual execution risk.
• Prior risk management gaps contributed to the prior-year solar business loss, requiring the implementation of extensive governance and monitoring overhauls; operational effectiveness of new risk management processes is still being embedded, though early results are positive.
• Monetization of new sustainable business products remains incomplete, carrying risk that expected growth and profit from these initiatives may not materialize as planned.

Only a question topic about planned discussions with Seika Sangyo is noted in the transcript, with no full question or answer content included. No other material Q&A exchanges are available in the provided transcript.