DISCO Corporation (6146): FY2025 Results Summary — Record Sales, Profit and Dividend on Generative AI Demand

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

DISCO Corporation (TSE Prime, 6146) reported record results for FY2025, the fiscal year from April 2025 to March 2026. Net sales rose 11.1% year on year to 436.9 billion yen and operating income rose 10.9% to 185.0 billion yen, while net income increased 9.4% to 135.5 billion yen. The Company attributes the growth to higher equipment shipments for generative AI applications and to progress in inspection/acceptance, with the gross profit margin holding at 70.1%. The annual dividend was a record-high 505 yen per share, and for the first quarter of FY2026 DISCO forecasts net sales of 106.1 billion yen and shipment figures of 132.0 billion yen.

Consolidated Results (Full-Year Actual)

For the full year, net sales increased due to an increase in shipments for generative AI and progress in inspection/acceptance. The gross profit margin remained at a high level despite a slight decrease of 0.5 points, which the Company attributes to changes in the product and application mix. SG&A rose 9.7% mainly due to an increase in personnel and R&D expenses. The ordinary income margin was 42.3%, down 0.7 points from the prior year.

Item (Billions of Yen)	FY2025 Full Year	FY2024 Full Year	Change (Amount)	Change (%)
Net Sales	436.9	393.3	43.6	11.1%
Gross Profit	306.5	277.6	28.9	10.4%
Gross Profit Margin	70.1%	70.6%	-0.5p	–
SG&A	121.5	110.7	10.8	9.7%
Operating Income	185.0	166.8	18.2	10.9%
Ordinary Income	184.9	168.9	16.0	9.5%
Ordinary Income Margin	42.3%	43.0%	-0.7p	–
Income before income taxes and minority interests	183.8	168.1	15.7	9.3%
Net Income	135.5	123.9	11.6	9.4%

The FY2025 Highlights slide summarises the year’s key indicators, with net sales, operating income, EPS and the annual dividend each marked as a record high. Note that the Highlights slide states net sales of 436.8 B yen and operating income of 184.9 B yen, while the results table on P.4 of the same presentation states 436.9 B yen and 185.0 B yen respectively; both sets of figures are reproduced here as printed in the materials.

Indicator (P.2 Highlights)	FY2025	Previous year	Note in materials
Net sales	436.8 B yen	393.3 B yen	Record high
GP margin	70.1%	70.6%	–
Operating income	184.9 B yen	166.8 B yen	Record high
Operating income margin	42.3%	42.4%	–
CAPEX	32.7 B yen	69.8 B yen	–
R&D	34.1 B yen	31.6 B yen	–
Total assets	743.4 B yen	654.0 B yen	–
Ordinary income margin averaged over a four-year period	41.4%	40.0%	–
FCF	-2.2 B yen	52.3 B yen	–
ROE	25.1%	27.6%	–
EPS	1,249.84 yen	1,143.26 yen	Record high
Annual dividend per share	505 yen	413 yen	Record high

In the fourth quarter alone, net sales were 133.1 billion yen, up 21.7% quarter on quarter and 10.2% year on year, with gross profit of 94.4 billion yen and a gross profit margin of 70.9%. Operating income was 58.8 billion yen and ordinary income 58.5 billion yen, giving an ordinary income margin of 44.0%; net income was 42.9 billion yen. The Company notes that fourth-quarter sales increased year on year due to progress in equipment inspection/acceptance and steady consumable shipments, and that profitability improved on high value-added products and the influence of the exchange rate. Fourth-quarter shipment volume was 121.6 billion yen, a record high, and the overseas sales ratio was 87.6%.

On the balance sheet, total assets stood at 743.4 billion yen at the end of the fourth quarter, up 65.1 billion yen from the third quarter, with cash and deposits of 284.6 billion yen, inventories of 141.3 billion yen and property, plant and equipment of 223.2 billion yen. Total net assets were 588.1 billion yen and the equity ratio was 78.9%, down 0.9 points from the third quarter. For the full year, operating cash flow was 133.5 billion yen against 120.4 billion yen a year earlier, while investing cash flow was an outflow of 135.8 billion yen — including 35.1 billion yen of property, plant and equipment purchases and 100.6 billion yen of “others,” which the Company explains as including 100 B yen of time deposits. Free cash flow was therefore an outflow of 2.2 billion yen, versus an inflow of 52.4 billion yen in FY2024. Financing cash flow was an outflow of 45.0 billion yen, mainly dividend payments of 45.3 billion yen, and cash and cash equivalents at the end of the period were 184.6 billion yen.

Sales Breakdown by Product and Region

DISCO presents its business by product and application rather than by reportable segment. On a full-year shipment basis, total shipments rose 10% year on year, led by Grinders at +17% and Others at +26%, while Precision Processing Tools (consumables) rose 9%. Precision Processing Equipment accounted for 62% of full-year shipments, Precision Processing Tools 21% and Others 16%.

Product (shipment basis)	Full Year Composition	Full Year YoY	4Q Composition	4Q QoQ	4Q YoY
Precision Processing Equipment	62%	7%	62%	9%	28%
Dicers	31%	1%	32%	23%	29%
Blade Dicers	16%	3%	16%	28%	36%
Laser Saws	15%	-1%	16%	18%	22%
Grinders	28%	17%	25%	-9%	26%
Accessory Equipment	3%	-2%	4%	69%	44%
Precision Processing Tools	21%	9%	21%	2%	31%
Others	16%	26%	17%	7%	46%
Total	100%	10%	100%	7%	31%

By application, the Company states that IC applications grew for both dicers and grinders, supported by strong demand for generative AI, while sales for other semiconductor applications — mainly power semiconductors — decreased. In the fourth quarter, IC accounted for 69% of dicer shipments and 76% of grinder shipments on a shipment basis. Precision Processing Tools (consumables) increased from the previous quarter driven by factors such as customer equipment operating rates, and hit a record high. On an inspection/acceptance basis, the fourth-quarter regional composition was Asia 73% (Taiwan 26%, China 31%, Singapore 9%, Korea 6%, Other 1%), Japan 12%, North America 9% and Europe 6%.

Summarising the year, DISCO states that equipment shipments for generative AI grew, that the increasing complexity and sophistication of semiconductor packaging technologies acted as a tailwind, and that high value-added products boosted shipment figures for memory and logic. Profitability remained high and a record-high profit was achieved for the sixth consecutive period: the GP margin crossed the 70% mark and an ordinary income margin of over 40% was recorded for the second consecutive period. On the Company’s business performance trend chart (acceptance basis, 100 million yen), net sales moved from 3,076 in FY2023 to 3,933 in FY2024 and 4,369 in FY2025, with operating income of 1,215, 1,668 and 1,850 respectively.

FY2026 Forecast

DISCO provides guidance for the first quarter of FY2026 only. For the three months from April to June 2026 the Company forecasts net sales of 106.1 billion yen, operating income of 42.0 billion yen, ordinary income of 42.3 billion yen and net income of 29.5 billion yen, with an operating income margin of 39.6%, an ordinary income margin of 39.9% and a net income margin of 27.8%. Shipment figures are forecast at 132.0 billion yen, above the record 121.6 billion yen recorded in the fourth quarter of FY2025. The assumed exchange rates for the first quarter are 157 yen to the US dollar and 181 yen to the euro, with annualised currency sensitivity of approximately 1.7 billion yen for the US dollar and approximately 0.1 billion yen for the euro. Figures are rounded to the nearest 100 million yen.

Item (Billions of Yen)	FY25 1Q	FY25 2Q	FY25 3Q	FY25 4Q	FY26 1Q (Forecast)
Net Sales	89.9	104.6	109.3	133.1	106.1
Operating Income	34.5	44.4	47.3	58.8	42.0
Ordinary Income	34.0	45.5	47.0	58.5	42.3
Net Income	23.8	32.1	36.7	42.9	29.5
Operating Income Margin	38.4%	42.4%	43.3%	44.2%	39.6%
Ordinary Income Margin	37.8%	43.5%	43.0%	44.0%	39.9%
Net Income Margin	26.5%	30.7%	33.6%	32.2%	27.8%
Shipment Figures	111.1	96.3	113.6	121.6	132.0

On a quarter-on-quarter shipment basis, the Company’s first-quarter sales forecast by product calls for Precision Processing Equipment to rise 20%, comprising Dicers +15% (Blade dicers +15%, Laser Saws +15%), Grinders +25% and Accessory Equipment +15%. Precision Processing Tools (consumables) are forecast to be flat at 0% and Others to decline 20%. On the quarterly shipment total trend chart, the FY2026 first-quarter forecast is shown as 1,320 (100 million yen).

Shareholder Returns

DISCO’s dividend policy is performance-linked. Decisions on the distribution of surpluses are made at the general shareholders meeting for final dividends and by the Board of Directors for interim dividends. The target dividend payout ratio is 25% of consolidated half-yearly net income, with interim and final dividends each equivalent to 25% of half-yearly consolidated net income. Irrespective of the level of income, a reliable dividend of 10 yen per half-year is maintained, meaning a minimum yearly dividend of 20 yen; the materials note that this 20 yen payout may be reviewed if there are consolidated net losses for three consecutive years. In addition, unless there is a loss, if the year-end balance of cash and deposits after payment of dividends and income taxes exceeds projected funding requirements — for the acquisition of technology resources such as patent purchases and investments in venture businesses, facility expansion, the retirement of interest-bearing debt and other purposes — one-third of that surplus is added to dividends.

For FY2025 the actual dividend was 129 yen for the interim and 376 yen for the year-end, giving a record-high annual dividend of 505 yen per share and a dividend payout ratio of 40.4%, against 413 yen and 36.1% in FY2024. The Company notes that a stock split of one share into three shares was implemented effective April 1, 2023, and that the dividend trend before FY2022 is presented on a post-split basis. Applying the additional-dividend formula, the year-end balance of cash deposits of 218.5 billion yen less funds necessary of 156.1 billion yen left surplus funds of 62.4 billion yen, one-third of which — 20.8 billion yen — was allocated to additional dividends. The funds necessary comprise working capital of 72.8 billion yen (previous-period consolidated net sales divided by 12 months, times two months), reserve funds for technology acquisitions including M&As of 32.0 billion yen (average consolidated net sales for the past three years times 10%), taxes, dividends and similar items of 34.9 billion yen, and funds for facility extensions of 16.4 billion yen for the Hiroshima Works new plant and other purposes; no funds were set aside for repaying long-term interest-bearing debt. Contract liabilities (advances received) are taken into account in the cash deposit balance.

Capital Investment Plan and Business Outlook

The presentation does not set out a formal medium-term management plan with numerical targets; instead it discloses multi-year capital investment plans and the Company’s operating policy. For FY2026, DISCO forecasts CAPEX of approximately 33.0 billion yen — including rationalization investment, reconstruction of the Haneda R&D Center and construction of a new plant — depreciation of approximately 15.0 billion yen, and R&D expenses of approximately 36.0 billion yen, stating that proactive research and development continues. The CAPEX breakdown identifies real estate for R&D of approximately 50 billion yen with payment timing in FY2024, the Haneda R&D Center new building at approximately 14 billion yen with payment timing in FY2025 to FY2027, and the Hiroshima Works new plant at approximately 33 billion yen, also with payment timing in FY2025 to FY2027.

Looking ahead, DISCO states that customers’ investment appetite continues to remain steady, focused on generative AI-related applications, and that high value-added product shipments are expected to continue, while demand trends for applications other than AI need to be closely monitored. Broader adoption and a full-scale ramp-up are expected for advanced packaging technologies. The Company also flags that the impact of international developments on the business environment needs to be closely monitored, and says it will continue initiatives to strengthen its BCM while closely monitoring procurement and cost trends. It intends to keep improving both the quantity and quality of production and to invest to strengthen the company, enhancing R&D abilities and production capacity in line with its Fab-Important strategy — including the addition of a new building at the Haneda R&D Center and construction of the new Gohara Plant as part of Hiroshima Works. Finally, the materials describe a high-quality corporate culture as a source of organisational strength, to be reinforced through DISCO VALUES, Will Accounting and PIM activities.

A separate slide addressed to investors considering purchasing DISCO shares lists the themes of pursuing quality of business, utilization of tangible net worth and purpose, the shareholder return policy, and action to implement management that is conscious of cost of capital and stock price, with details referred to elsewhere. The specific content of those policies cannot be confirmed from these materials.

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.