9934.T

Overall Interim Financial Performance

• The company reported all-time record high interim results: consolidated revenue reached 192.246 billion yen (+7% YoY), gross profit 34.638 billion yen (+10.5% YoY) with gross margin expanding 0.6pp to 18%, operating profit 14.053 billion yen (+18.8% YoY), ordinary profit 15.201 billion yen (+22.4% YoY), and net profit attributable to parent company shareholders 10.622 billion yen (+25.9% YoY).
• Non-operating income increased due to higher dividend and interest income, while non-operating expenses decreased from lower foreign exchange losses, leading to non-operating profit of 1.148 billion yen, up 0.556 billion yen YoY.
• Balance sheet: equity ratio improved 5.1pp to 66.9% from the end of the prior fiscal year. Operating cash flow was 9.0 billion yen inflow, investment cash flow 3.3 billion yen outflow, financing cash flow 3.6 billion yen outflow, resulting in ending cash and cash equivalents of 68.1 billion yen, up 8.8 billion yen YoY.

Mid-Term Management Plan

• The company updates its rolling 3-year mid-term plan annually. The 2027 fiscal year target is 430.0 billion yen in revenue and 29.5 billion yen in operating profit.
• Six core strategic priorities: 1) Develop and expand in-house products; 2) Promote energy-saving and labor-saving solutions; 3) Expand market share in the Tokyo metropolitan area; 4) Accelerate global expansion; 5) Expand business domains; 6) Advance sustainability-focused management.

Segment Strategic Initiatives

• Electrical Equipment Materials Business: Actively pursue demand from Osaka IR (opening target 2030). Systematically recruit and train engineering talent to expand into the information and communications sector, improve construction capabilities, and strengthen proposal capabilities for growing disaster prevention, mitigation, and crime prevention equipment. Prioritize share expansion in the larger Tokyo metropolitan market (currently ~60% of revenue comes from western Japan, the company's traditional base) through aggressive staffing. Plan to develop original in-house designed products for the private brand JAPPY, in addition to continuing to source high-quality products from third-party manufacturers.
• Industrial Equipment Business: Leverage low current market share and large room for demand growth. Provide labor-saving solutions and mechatronics/IoT integrated consulting to improve productivity for labor-constrained manufacturing and logistics industries. Strengthen collaboration with suppliers to expand and deepen customer reach, train externally hired experienced personnel to boost electronic product sales capabilities, and expand into upstream value chain areas including planning and design to create additional added value.
• In-house Products Business: Defend domestic top market share for air conditioning-related components while prioritizing overseas expansion: expand sales areas through local agent development, improve cost competitiveness via refined logistics strategy, and develop expanded localized products for overseas markets. Focus on new non-air conditioning product development centered on "easy installation" pipe products; new product Hold One recently won both the Japan Building Materials Association Excellent Product/Technology Award and the Good Design Award. Announced construction of the Innovation Center R&D facility in May 2025, scheduled for completion in summer 2027, which will consolidate all in-house product divisions to strengthen the INABA brand.

Shareholder Return Initiatives

• Implemented a 2-for-1 stock split effective November 30, 2025 to lower per-unit investment size, improve liquidity, and expand the investor base.
• Launched a share repurchase program starting November 4, 2025, with an upper limit of 4.4 billion yen in total consideration and 2.1 million shares (post-split), aligned with the company's mid-term target of 60% total payout ratio including dividends and share repurchases.

• Full-year FY2026 March term guidance is maintained at the previously announced levels: consolidated revenue of 392.0 billion yen, operating profit of 26.7 billion yen, ordinary profit of 27.4 billion yen, and net profit attributable to parent company shareholders of 19.4 billion yen. Segment-level full-year revenue guidance is 273.0 billion yen for Electrical Equipment Materials, 42.0 billion yen for Industrial Equipment, and 77.0 billion yen for In-house Products.
• Management expects continued solid demand for metropolitan area redevelopment and corporate capital investment in the second half, but maintained guidance due to ongoing macro uncertainty.

1. Electrical Equipment Materials Business: Revenue was 130.6 billion yen, a 10% increase year-over-year. Contributed 68% of total consolidated interim revenue. Growth was driven by strong deliveries to large projects including metropolitan area redevelopment, factories, and data centers, with increases in sales of power receiving/distribution equipment, air conditioning equipment, and wire/cable products. Despite falling copper prices and declining industry-wide copper wire shipments, the company achieved a 4% increase in wire/cable sales through price optimization and inventory management. 2. Industrial Equipment Business: Revenue was 18.7 billion yen, a 3.9% increase year-over-year. Contributed 9.7% of total consolidated interim revenue. Electronic component sales remained sluggish due to ongoing semiconductor inventory adjustments, but sales of robots and control equipment increased amid a recovery in manufacturing capital investment driven by labor-saving and automation demand from labor shortages. 3. In-house Products Business: Revenue was 42.9 billion yen, a 0.2% decrease year-over-year. Contributed 22.3% of total consolidated interim revenue. By sub-segment: - Air conditioning segment (INABA DENKO): Revenue 32.8 billion yen, down 2.1% YoY, impacted by a pullback after last year's pre-price-hike rush demand and strong year-ago sales in northern Japan, though core product sales remained stable. - Industrial segment (PATLITE): Revenue 5.3 billion yen, up 7.9% YoY, driven by growing overseas sales. - Housing segment (Avaniact): Revenue 4.7 billion yen, up 5.5% YoY, driven by increased sales of information wiring systems and other in-house products. This segment forms the core of the company's profit structure despite its smaller revenue share.

• Industry headwinds for Electrical Equipment Materials: A projected weakening in new construction starts due to the pullback after rush demand ahead of the revision of the Act on the Improvement of Energy Consumption Performance of Buildings.
• Macro and operational uncertainties: Labor shortages in the logistics and construction industries linked to the 2024 labor market reform, potential impacts of US tariff policy, and volatile raw material price movements.
• Ongoing drag for Industrial Equipment: Lingering impacts of semiconductor industry inventory adjustments that have suppressed electronic component sales growth.

No Q&A section was included in the provided transcript.