The Japan Steel Works (5631): FY2025 Results Summary — Sales and Profit Rise as Defense Equipment Expands

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The Japan Steel Works, Ltd. (JSW) reported net sales of 274.8 billion yen and operating profit of 25.3 billion yen for FY2025 (the fiscal year ended March 31, 2026), with profit attributable to owners of parent of 19.2 billion yen. Orders received were 309.4 billion yen, essentially unchanged from the previous year, as orders for other industrial machinery significantly exceeded the full-year forecast and steel forgings and plates secured a high level of orders. The annual dividend was set at 92.0 yen per share, 4.0 yen above the previous forecast. For FY2026 the company forecasts higher orders, sales and operating profit, with net sales of 310.0 billion yen and operating profit of 27.0 billion yen.

Consolidated Results (Full-Year Actual)

The company summarized FY2025 as follows: orders received maintained the same level year on year, supported by orders for other industrial machinery that significantly exceeded the full-year forecast and by high-level orders for steel forgings and plates, where a favorable business environment continues; sales increased year on year supported by the ample order backlog; and profits increased year on year mainly due to the increase of sales and price improvement. Operating profit rose by 2.5 billion yen, with a positive contribution of 7.9 billion yen from changes in production, sales and prices, against negative contributions from variable cost (1.4), fixed cost (3.9) and forex fluctuations (0.1). The average exchange rate for sales in USD was JPY151/USD in FY2025 versus JPY153/USD in FY2024. All figures below are in billion yen unless otherwise noted.

Item	FY2025 (Result)	FY2024 (Result)	Change from the previous year
Orders received	309.4	310.2	(0.8)
Net sales	274.8	248.5	26.3
Operating profit	25.3	22.8	2.5
Operating profit margin	9.2%	9.2%	–
Ordinary profit	26.0	23.4	2.6
Profit attributable to owners of parent	19.2	17.9	1.3
Earnings per share (Yen)	261.38	244.03	17.35
Dividend per share (Yen)	92.0	86.0	6.0
EBITDA	34.3	30.7	3.6
EBITDA margin	12.5%	12.4%	–

Segment Results

In the Industrial Machinery Products Business, orders received decreased year on year, while sales and profit increased year on year. Sales increased due to the growth in defense equipment and other industrial machinery, while orders received decreased mainly due to the absence of the previous year’s strong orders for defense equipment. In the Material and Engineering Business, orders received increased year on year, while sales and profit were at a roughly equivalent level to the previous year. Sales decreased mainly due to the absence of the previous year’s strong sales for engineering, etc., while orders received increased driven by strong demand for thermal and nuclear power products.

Segment	Metric	FY2025 (Result)	FY2024 (Result)	Change from the previous year
Industrial Machinery Products	Orders received	248.2	258.5	(10.3)
Industrial Machinery Products	Net sales	226.2	199.0	27.2
Industrial Machinery Products	Operating profit	20.0	17.5	2.5
Industrial Machinery Products	Operating profit margin	8.9%	8.8%	–
Industrial Machinery Products	EBITDA	24.9	21.8	3.1
Material and Engineering	Orders received	58.1	49.3	8.8
Material and Engineering	Net sales	45.7	47.1	(1.4)
Material and Engineering	Operating profit	8.8	8.6	0.2
Material and Engineering	Operating profit margin	19.4%	18.5%	–
Material and Engineering	EBITDA	11.5	10.9	0.6

By product line, defense equipment sales grew to 46.9 billion yen from 32.2 billion yen, and other industrial machinery grew to 41.6 billion yen from 27.7 billion yen. Defense equipment orders received were 87.3 billion yen in FY2025 against 115.8 billion yen in FY2024, while orders for other industrial machinery rose to 51.0 billion yen from 25.6 billion yen. Orders for steel forgings and plates increased to 52.7 billion yen from 42.7 billion yen.

Product line (Net sales)	FY2025 (Result)	FY2024 (Result)	Change from the previous year
Plastic production and processing machinery	72.9	72.2	0.7
Molding machines	64.8	66.9	(2.1)
Defense equipment	46.9	32.2	14.7
Other industrial machinery	41.6	27.7	13.9
Industrial Machinery Products total	226.2	199.0	27.2
Steel forgings and plates	39.7	38.4	1.3
Engineering, etc.	6.0	8.7	(2.7)
Material and Engineering total	45.7	47.1	(1.4)

The consolidated order backlog at the end of FY2025 was 431.4 billion yen (Industrial Machinery Products Business 360.9 billion yen, Material and Engineering Business 70.2 billion yen), and is forecast to reach 461.4 billion yen at the end of FY2026. Net assets stood at 213.8 billion yen with an equity ratio of 49.4% and return on equity of 9.5%. Operating cash flow was negative 16.8 billion yen and investing cash flow was negative 17.1 billion yen.

FY2026 Forecast

For FY2026 the company expects year-on-year growth in orders received, sales and profits. Operating profit is expected to increase by 1.7 billion yen due to the increase of production, sales and prices, with a positive contribution of 13.7 billion yen offset by variable cost (3.6) and fixed cost (8.1). The assumed average exchange rate for sales in USD is JPY160/USD for FY2026, versus JPY151/USD in FY2025. Regarding the Middle East situation, the company states that the direct impact is limited as the scale of business in the Middle East is very limited, and that the indirect impact cannot be reasonably quantified at the moment and has not been factored into the full-year forecast.

Item	FY2026 (Forecast)	FY2025 (Result)	Change from the previous year
Orders received	340.0	309.4	30.6
Net sales	310.0	274.8	35.2
Operating profit	27.0	25.3	1.7
Operating profit margin	8.7%	9.2%	–
Ordinary profit	26.0	26.0	0
Profit attributable to owners of parent	19.0	19.2	(0.2)
Earnings per share (Yen)	258.11	261.38	(3.27)
Dividend per share (Yen)	92.0	92.0	0.0
EBITDA	39.1	34.3	4.8

By segment, the Industrial Machinery Products Business is forecast to post orders received of 261.5 billion yen, net sales of 249.0 billion yen and operating profit of 20.8 billion yen, with defense equipment sales rising to 72.0 billion yen while plastic production and processing machinery sales decline to 63.5 billion yen. The Material and Engineering Business is forecast to post orders received of 76.0 billion yen, net sales of 58.5 billion yen and operating profit of 9.5 billion yen, with steel forgings and plates sales of 48.0 billion yen.

Shareholder Returns

Under the dividend policy of the medium-term management plan JGP2028, the consolidated dividend payout ratio target is set at 35% or more, while ensuring a minimum dividend on equity (DOE) of 2.5%. The annual dividend for FY2025 is 92.0 yen per share, an increase of 4.0 yen from the previous forecast of 88.0 yen, for a consolidated payout ratio of 35.2%. The annual dividend forecast for FY2026 is 92.0 yen per share, for a payout ratio of 35.6%.

Item	FY2022	FY2023	FY2024	FY2025 (Plan)	FY2026 (Forecast)
Dividend per share (Yen)	58.0	59.0	86.0	92.0	92.0
Payout ratio (consolidated)	35.6%	30.4%	35.2%	35.2%	35.6%

Medium-Term Plan / Topics

The company states that progress is on track to achieve the final-year target of the medium-term management plan JGP2028, which targets net sales of 380.0 billion yen, operating profit of 37.0 billion yen (a 9.7% margin) and ROE of 10-11% in FY2028. Actions taken since FY2025 include the completion of the No.3 Machining Shop at the Hiroshima Plant, described as the first new factory in 80 years and installed with automation and unmanned equipment; progress on capacity expansion at the Muroran Plant, where production capacity for rotor shafts for steam turbines and generators is to increase to 1.5 times the FY2025 level by FY2028; the completion of a new Assembly Shop at the Hiroshima Plant for defense equipment; the establishment of a Global Strategy Headquarters and a Plastics Machinery Solutions Business Division; and the acquisition of a site in Kashiwa, Chiba for a new R&D base with operations targeted to begin in FY2027.

The company notes that the market environment for its main products has changed materially compared with when JGP2028 (FY2024-2028) was formulated in 2023, citing a global shift back toward nuclear in energy policy and growing electricity demand for AI and data centers, alongside a slowdown in EV-related investment and changes in trade policies of countries. Its aim for FY2033 remains unchanged with no major revisions to core policies and strategies, and an updated medium-term management plan was to be announced around July. In defense equipment, JSW concluded contracts to deliver 26 AMVs in 2024, 28 AMVs in 2025 and 28 AMVs in 2026, with delivery of the first AMV in November 2025.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.