DKK Co., Ltd. (6706): FY2025 Results Summary — Net Income Up 144.9% as Defense and Mobile Communications Drive Growth

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

DKK Co., Ltd. (securities code 6706, Tokyo Stock Exchange Prime) presented its results for the fiscal year ended March 31, 2026, in a presentation dated May 20, 2026. Note: the company’s materials label the fiscal year ended March 31, 2026 as “FY2026/3,” and this article follows the labels used in the materials. Net sales rose 8.8% year on year to 35,446 million yen, operating income increased 30.4% to 1,219 million yen, and net income attributable to shareholders of the parent company jumped 144.9% to 1,903 million yen, mainly due to the increase in operating income and the recognition of extraordinary gains. ROE of 5% was achieved ahead of schedule, reaching 5.2%.

Consolidated Results (Full-Year Actual)

The improvement in the Telecommunications segment was driven by Defense and Mobile Communications. In the Radio Frequency segment, net sales and profits decreased due to the impact of curbs on capital expenditures, while orders were secured by stimulating demand for maintenance services. Operating income increased significantly on the back of higher revenue in the Telecommunications segment; the company absorbed higher fixed costs, including personnel expenses, and profit increased by 284 million yen year on year.

Item (Millions of yen)	FY2025/3 Full-year results	FY2026/3 Full-year results	Increase/decrease	YoY change
Net sales	32,582	35,446	2,863	8.8%
Gross profit	7,014	7,190	175	2.5%
Operating income	935	1,219	284	30.4%
Ordinary income	1,024	1,216	191	18.7%
Net income attributable to shareholders of parent company	777	1,903	1,126	144.9%
ROE (%)	2.1%	5.2%	–	–

Segment Results

In the Telecommunications segment, net sales and profits increased, mainly driven by steady performance in Defense and a recovery in demand for Mobile Communications. Although the Radio Frequency segment was affected by curbs on capital expenditures in the automotive-related industry and intensifying price competition, the company actively captured maintenance demand for existing equipment.

Item (Millions of yen)	FY2025/3 Full-year results	FY2026/3 Full-year results	Increase/decrease	YoY change
Net sales — Telecommunication	22,067	25,387	3,320	15.0%
Net sales — Radio Frequency	10,411	9,952	-458	-4.4%
Operating income — Telecommunication	1,917	2,377	459	23.9%
Operating income — Radio Frequency	1,743	1,596	-147	-8.4%

Note: the operating incomes for Telecommunication and Radio Frequency are provided by segment. Within Telecommunication, Mobile Communications sales rose 29.5% to 7,734 million yen on rising demand for antennas and steel towers and the commencement of deliveries of wireless equipment in the 700 MHz band, and Defense sales rose 31.4% to 3,703 million yen on solid demand for defense equipment and facilities driven by the increase in the defense budget. Fixed Wireless sales were 4,744 million yen (up 8.8%), Broadcasting 3,589 million yen (up 9.8%), Solutions 357 million yen (down 26.0%), and Others 5,257 million yen (up 1.8%). Within Radio Frequency, Induction Heating Equipment sales fell 7.3% to 6,800 million yen, Contract Heat Treating Service rose 2.6% to 3,146 million yen, and New Radio Frequency Areas came to 6 million yen (down 31.2%).

Order Status

Orders received are disclosed separately from net sales. In the Telecommunications segment, the company steadily accumulated orders mainly for Defense, and its order backlog remained robust. In the Radio Frequency segment, signs of recovery in orders from some customers are emerging.

Segment (Millions of yen)	FY2025/3 Order backlog (1)	FY2026/3 Orders received (2)	FY2026/3 Net sales (3)	FY2026/3 Order backlog (4)=(1)+(2)-(3)	Increase/decrease (4)-(1)
Telecommunication	14,552	28,092	25,387	17,257	2,704
Radio Frequency	3,097	10,781	9,952	3,926	828
Total	17,650	38,873	35,446	21,183	3,533

Note: the total net sales for FY2026/3 include the net sales of 105 million yen for the “Others” segment.

FY2027/3 Forecast

For FY2027/3, net sales are expected to increase due to steady growth in the Telecommunications segment and a recovery in the Radio Frequency segment. Operating income and ordinary income are also expected to increase due to the positive impact of higher net sales and improved profit margins. The company expects to record an extraordinary gain resulting from the handover of fixed assets sold in the fiscal year ended March 2024.

Item (Millions of yen)	FY2026/3 Full-year results	FY2027/3 Full-year forecasts	Increase/decrease	YoY change
Net sales	35,446	36,500	1,053	3.0%
Telecommunication	25,387	25,600	212	0.8%
Radio Frequency	9,952	10,800	847	8.5%
Operating income	1,219	1,650	430	35.3%
Ordinary income	1,216	1,650	433	35.6%
Net income attributable to shareholders of parent company	1,903	2,300	396	20.8%
ROE (%)	5.2%	6.1%	–	–

By segment, Telecommunication net sales are forecast at 25,600 million yen (up 0.8%), as Mobile Communications, Defense, and Broadcasting are expected to remain solid, offsetting the decline in demand for administrative radio systems for disaster prevention use. Radio Frequency net sales are forecast at 10,800 million yen (up 8.5%) in response to a recovery in demand for capital expenditures in the automotive-related industry. Segment operating income is forecast at 2,800 million yen for Telecommunication (up 17.8%) and 1,700 million yen for Radio Frequency (up 6.5%).

Shareholder Returns

The target consolidated payout ratio is set at 40%, with a minimum DOE (consolidated dividend on equity) of approximately 2.5%; the minimum DOE was raised to 2.5% from 2.0% in February 2026. Along with the change in the dividend policy, the annual dividend for FY2026/3 was raised to 100 yen. The annual dividend forecast for FY2027/3 is 50 yen for the interim dividend plus 55 yen for the year-end dividend, for a total of 105 yen (+5 yen per share). In addition to continuing flexible and opportunistic share repurchases, the company states it will continue to return value to shareholders through increased dividends.

Fiscal year	Mid-term (yen)	End of term (yen)	Annual (yen)
FY2023/3	30	30	60
FY2024/3	30	30	60
FY2025/3	30	50	80
FY2026/3	40	60	100
FY2027/3 (Forecasts)	50	55	105

Medium-Term Plan “DKK-Plan2028”

FY2026/3 was the first year of the Medium-Term Business Plan “DKK-Plan2028” (FY2026/3–FY2028/3), which is positioned as the second step toward realizing the company’s medium- to long-term vision for FY2031/3. The first year progressed smoothly and the ROE target was achieved ahead of schedule. There are no changes to the basic policy or priority measures, while the numerical targets and capital allocation were updated: the FY2028/3 targets are operating income of 2.0 billion yen or more and ROE of 5.0% or more. Under the updated capital allocation, shareholder returns were raised to 4.0 billion yen or more (three-year cumulative total), with growth investment of 10.0 billion yen or more. The cost of shareholder equity for FY2026/3 is put at 7.3% against ROE of 5.2% (an equity spread of -2.1%), and the company aims to achieve an ROE level of 8% or more in the medium to long term as part of its initiatives to achieve a PBR of 1.0 or more.

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.