Will recovering demand for semiconductor equipment-related products lead the increase in operating profit?

Consolidated sales in FY2025 were ¥274,390 million and operating profit was ¥24,089 million, compared with the company's FY2026 full-year forecasts of ¥285,000 million in sales and ¥28,000 million in operating profit. While sales growth is expected to be limited to approximately 3.9%, operating profit is forecast to increase by approximately 16.2%, implying operating leverage driven not simply by higher volumes but by an improved product mix and factory utilization.

The semiconductor and other equipment-related business includes several product groups, including vacuum components, contract metal processing, quartz, ceramics, silicon parts and component cleaning. The company reported higher sales of these products in FY2025-H1. The business had struggled through the previous year amid weak capital investment demand and lower equipment utilization, but is now recovering as it captures demand from Chinese domestic equipment makers and semiconductor demand within China. However, sales, margins and order intake by product have not been disclosed, leaving insufficient information to distinguish structurally higher production from temporary inventory replenishment within the increase in demand.

In FY2026-H1, it will be necessary to examine not only sales in the semiconductor and other equipment-related business but also the growth rate of operating profit and its operating margin. The company-wide operating margin was 9.5% in FY2025. If the H1 margin falls below that level, the increase in sales may be being absorbed by lower-margin products or start-up costs. Conversely, if the business's margin clearly exceeds the company-wide average and profit progress outpaces sales progress against the full-year operating profit forecast of ¥28,000 million, this would indicate that the product mix is improving.

At the next earnings announcement, the key issue will be how much semiconductor equipment manufacturers, Chinese domestic equipment makers, European and US customers, and sourcing outside China each contributed to sales and profit. Since the company does not quantitatively disclose order intake or order backlog, important checks will include whether it can disclose utilization rates and delivery times for major products, the direction of order backlog, and the contribution of the Malaysian plant to mass production.