Neturen (5976): FY2025 Results Summary — Operating Income Up 17.0% on Price Revisions and Newly Consolidated Subsidiaries

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Neturen Co., Ltd. released “Financial Results of the Fiscal Year Ended March 31, 2026” on May 26, 2026. In the presentation the company labels the fiscal year ended March 31, 2026 as FY2025 and the fiscal year now under way as FY2026. Net sales rose 1.2% year on year to ¥58,277 million and operating income increased 17.0% to ¥1,892 million, while profit attributable to owners of parent fell 26.8% to ¥1,329 million. For FY2026 the company forecasts net sales of ¥64.0 billion, up 9.8%, and operating income of ¥2.1 billion, up 11.0%.

Consolidated Results (Full-Year Actual)

The company states that, despite the impact of the stagnant customer industries, net sales rose by ¥714 million year on year (up 1.2%) due to successful cost passing to the sales prices, increased sales volume of overseas bases, and the contribution of sales by subsidiaries newly included in consolidated results as of FY2025. Operating income increased by ¥274 million year on year (up 17.0%) as a result of sales price revisions, improvements to variable costs, and the performance of the subsidiaries newly included in consolidated results.

Item (Million yen)	FY2025	FY2024	Change	Change Rate (%)
Net sales	58,277	57,563	714	1.2%
Cost of sales	47,069	47,217	(148)	(0.3)%
Gross income	11,208	10,346	862	8.3%
Selling, general and administrative expenses	9,315	8,728	587	6.7%
Operating income	1,892	1,617	274	17.0%
Non-operating income	994	811	182	22.4%
Non-operating expenses	222	108	114	105.3%
Ordinary income	2,663	2,321	342	14.8%
Extraordinary income	28	1,263	(1,235)	(97.7)%
Extraordinary loss	347	766	(418)	(54.6)%
Profit before income taxes	2,344	2,818	(473)	(16.8)%
Total income taxes	1,771	2,216	(444)	(20.1)%
Profit attributable to owners of parent	1,329	1,815	(486)	(26.8)%
Profit attributable to non-controlling interests	442	400	41	10.5%
Return on equity (ROE)	2.3%	3.0%	—	(0.7)%
Return on assets (ROA)	3.1%	2.8%	—	0.2%
Return on Investment Capital (ROIC)	2.7%	2.7%	—	0.0%

On the operating income bridge, the company cites a profit gain of approx. ¥0.2 billion due to the increase in net sales and a profit gain of approx. ¥0.5 billion due to improvement of variable costs resulting from the progress of sales price revisions and cost reduction effect, against a profit decline of approx. ¥0.4 billion due to fixed cost factors such as worldwide rising labor cost and the recording of share acquisition expenses stemming from M&A. Extraordinary losses of ¥347 million were recorded, including an impairment loss of ¥257 million at Neturen (China) Slewing Bearing Co., Ltd.; following finalization of the timing of the plant relocation requested by the Chinese government, the book value of assets (mainly buildings) no longer needed due to the old plant’s closure was written down.

On the balance sheet, total assets increased by ¥4.4 billion year on year to ¥88.1 billion, owing to newly including Dohken and MDI in the scope of consolidation, which were acquired through M&A. Liabilities increased by ¥5.3 billion to ¥22.7 billion, and net assets decreased by ¥1.0 billion to ¥65.3 billion due to purchase of treasury shares, despite an increase of approx. ¥0.6 billion in foreign currency translation adjustments resulting from the depreciation of the yen. Cash flows from operating activities were ¥1,773 million (¥4,107 million in FY2024) and cash flows from investing activities were ¥(5,235) million, leaving free cash flows of ¥(3,462) million.

Segment Results

In the Specialty Steel and Wire Products Division, sales to the civil engineering and construction industry declined due to continuous delays in construction and project starts, while sales to the construction equipment industry rose due to the impact of sales price revisions and recovery of orders received; ITW® sales to the automotive industry increased, buoyed by strong performance overseas, and sales of motorcycle parts were resumed following their suspension last year due to insolvency of a customer. In the Induction Heating Division, sales of contract manufacturing shrank due to a drop in automotive industry orders in the second half of the fiscal year and the ongoing sluggish market conditions for the construction equipment and machine tools industries, and equipment-related sales fell due to delays in shipment. Sales in Others increased as a result of newly including Dohken in the scope of consolidation.

Segment (Million yen)	Metric	FY2025	FY2024	Change	Change Rate (%)
Specialty Steel and Wire Products Division	Net sales	36,335	36,568	(233)	(0.6)%
Induction Heating Division	Net sales	19,526	20,851	(1,325)	(6.4)%
Others	Net sales	2,416	143	2,272	—
Total	Net sales	58,277	57,563	714	1.2%
Specialty Steel and Wire Products Division	Operating income	464	180	284	157.8%
Induction Heating Division	Operating income	1,301	1,377	(75)	(5.5)%
Others	Operating income	122	56	65	115.8%
Total	Operating income	1,892	1,617	274	17.0%

Net Sales by Region and by Industry

By region (billion yen), FY2025 net sales were ¥35.4 billion in Japan, ¥11.3 billion in China, ¥6.7 billion in North/Central America, ¥3.7 billion in Europe and ¥1.1 billion in Asia (excluding China). The company states that net sales in Japan increased due to the inclusion of new subsidiaries in the scope of consolidation and progress in sales price revisions, that net sales in China remained on par with the previous fiscal year despite the challenging market conditions, and that net sales rose year on year in North/Central America and Europe, driven by an increase in orders received and the impact of a weak yen in Europe and China. For FY2026 the company forecasts ¥38.6 billion in Japan, ¥12.1 billion in China, ¥8.5 billion in North/Central America, ¥3.8 billion in Europe and ¥1.0 billion in Asia (excluding China).

Industry (Billion yen)	FY2025	FY2024	FY2026 Forecast
Automobiles	32.4	33.0	35.3
Machine tools	5.1	5.1	5.6
Construction equipment	6.0	5.8	5.9
Construction	8.6	7.7	9.8
Civil engineering	2.9	2.8	3.0
Others	3.2	3.1	4.4
Total	58.2	57.5	64.0

FY2026 Forecast

Net sales are forecasted to total ¥64.0 billion, as civil engineering and construction industry sales are anticipated to be robust supported in part by progress in sales price revisions, orders for high-strength spring steel wire ITW® from overseas automotive customers are trending upward, and the machine tools market is showing signs of recovery. Operating income for FY2026 is forecasted to total ¥2.1 billion, based on expectations that civil engineering and construction industry sales will rise due to sales price revisions, the sales volume of ITW® to overseas automotive customers will grow, and the sales volume to the machine tool industry will expand. The exchange rate assumptions are 1 RMB = 23.11 JPY and 1 USD = 159.88 JPY for FY2026, against 1 RMB = 22.36 JPY and 1 USD = 156.56 JPY for FY2025. Forecasts for ordinary income and profit attributable to owners of parent cannot be confirmed from the materials.

Item (Billion yen)	FY2026 Forecast	FY2025 (Actual)	Change Rate
Net sales	64.0	58.2	+9.8%
Operating income	2.1	1.9	+11.0%
Operating income to net sales	3.3%	3.2%	—
Specialty Steel and Wire Products Division (net sales)	40.5	36.3	+11.6%
Induction Heating Division (net sales)	20.7	19.5	+6.2%
Others (net sales)	2.8	2.4	+16.7%

By segment, the company expects Specialty Steel and Wire Products Division net sales to grow in the civil engineering and construction industry due to the implementation of sales price revisions and ITW® sales by overseas bases to increase, while sales to the construction equipment industry are forecasted to shrink. In the Induction Heating Division, contract processing orders from the automobile and construction equipment industries will likely remain level, orders from the machine tool industry are expected to stay on a recovery track, and equipment sales are forecasted to grow, including those from projects carried over from the previous fiscal year. In Others, in addition to sales of Dohken, sales of MDI will be newly included in FY2026 results. On segment operating income, the company forecasts an increase for the Specialty Steel and Wire Products Division, a decrease for the Induction Heating Division as costs rise at overseas bases and amortization begins for a large-scale investment in Japan, and a broadly flat result for Others.

Shareholder Returns

According to the consolidated statement of cash flows, dividends paid in FY2025 were ¥2,005 million, compared with ¥1,785 million in FY2024, and purchase of treasury shares was ¥2,000 million in both FY2025 and FY2024. The company notes that net assets decreased by ¥1.0 billion year on year due to purchase of treasury shares, and that cash and deposits decreased due to purchase of treasury shares and dividends paid. On cross-shareholdings, the market value of the holdings included in investment securities trended upward with rising share prices, while the number of stocks held as cross-shareholdings shrank, decreasing by 34 stocks, or 69.3%, compared to FY2019. Dividends per share and the shareholder return policy for FY2026 cannot be confirmed from the materials.

Capital Investment and Growth Topics

Capital investment was ¥4.0 billion in FY2025, covering Kariya Plant restructuring, plant seismic retrofitting, production expansion in Indonesia and other investments, and is forecasted to rise to ¥5.6 billion in FY2026 (Japan: ¥4.4 billion; Overseas: ¥1.1 billion), including approx. ¥2.0 billion carried over from the previous fiscal year. Major FY2026 capital investments are the restructuring of the Kariya Plant and 3D printers in Japan and a plant relocation in China. R&D investment was ¥0.8 billion in FY2025 and is forecasted at ¥1.0 billion in FY2026, while depreciation is ¥2.3 billion in both years. Net sales from new products and new businesses were ¥11.2 billion in FY2025, or 19% of net sales, and are forecasted at ¥12.0 billion in FY2026 with the ratio exceeding 19%, with the cut-off construction method, large-diameter ITW®, FPGA power supply and the recording of sales by subsidiaries Dohken and MDI cited as contributors. In the presentation’s charts, FY2022 and FY2023 are shown under the 15th Medium-term Management Plan, and FY2024 through the FY2026 forecast are shown under the 16th Medium-term Management Plan.

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.