Kyosan Electric Manufacturing (6742): FY2025 Results Summary — Record Orders and Sales; Operating Profit Falls on Power Electronics Write-Offs

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

Kyosan Electric Mfg. Co., Ltd. (Securities code: 6742, Tokyo Prime) reported results for the fiscal year ended March 31, 2026 (April 1, 2025 to March 31, 2026) in its presentation dated May 27, 2026. Note: the company’s materials label the fiscal year ended March 31, 2026 as “FY2026” in some charts; this article follows the labels used in the materials, while this site classifies the period as FY2025. Orders received reached a record high of ¥98,562 million, driven by strong performance in the signalling solutions business, underpinned by increased capital investment by railway operators. Net sales reached a record high for the second consecutive period at ¥93,122 million. Operating profit declined year on year to ¥4,503 million, as higher personnel expenses and the recognition of inventory write-offs and valuation losses in the power electronics business more than offset profitability initiatives, while profit attributable to owners of parent increased to ¥5,042 million on extraordinary gains from the sale of cross-shareholdings and the receipt of compensation income.

Consolidated Results (Full-Year Actual)

Orders received rose 20.3% year on year to ¥98,562 million and net sales rose 9.1% to ¥93,122 million, both record highs. Operating profit was ¥4,503 million (down 26.3%, operating margin 4.8%) and ordinary profit was ¥5,203 million (down 21.7%). Profit attributable to owners of parent rose 5.4% to ¥5,042 million. The backlog of orders increased from ¥105.9 billion at the end of March 2025 to ¥111.4 billion (+5.1%), a record high that the company says is expected to translate into future revenue. ROIC was 3.7% and ROE was 9.4%.

Item (Millions of yen)	FY ended Mar 31, 2025	FY ended Mar 31, 2026	Change (Rate of change)
Orders received	81,951	98,562	16,611 (20.3%)
Net sales	85,367	93,122	7,755 (9.1%)
Operating profit	6,112	4,503	(1,608) ((26.3%))
Ordinary profit	6,646	5,203	(1,442) ((21.7%))
Profit attributable to owners of parent	4,783	5,042	258 (5.4%)
Backlog of orders	105,990	111,430	5,439 (5.1%)

Results also exceeded the earnings forecasts disclosed on March 27, 2026: net sales came in ¥4,222 million above forecast (+4.7%) and operating profit ¥2,043 million above (+83.0%). The company attributes the differences mainly to earlier-than-expected revenue recognition in the signalling solutions business — in India, revenue of over JPY 2.0 billion was recognized when acceptance under a consortium contract was completed toward the fiscal year-end, and in Japan an agreement to split a contract into equipment and construction components led to revenue recognition of approximately JPY 1.0 billion for the equipment portion — as well as earlier deliveries in the power electronics business (approximately JPY 0.4 billion) and an improved cost ratio.

Item (Millions of yen)	Forecast (disclosed Mar 27, 2026)	Actual (FY ended Mar 31, 2026)	Change (Rate of change)
Net sales	88,900	93,122	4,222 (+4.7%)
Operating profit	2,460	4,503	2,043 (+83.0%)
Ordinary profit	3,120	5,203	2,083 (+66.8%)
Profit attributable to owners of parent	3,320	5,042	1,722 (+51.9%)

Segment Results

In the Signalling Solutions Business, orders received rose 24.3% to ¥82,559 million, net sales rose 12.2% to ¥79,781 million and segment profit rose 22.9% to ¥11,950 million — all record highs. Domestic orders increased against a backdrop of higher capital expenditures across railway operators, with broad-based growth not concentrated in specific operators, and overseas orders rose by more than 10% supported by large-scale orders. Overseas sales in the segment increased to ¥12,774 million from ¥10,545 million, with South Asia (India) accounting for a high proportion (55%) of overseas sales and sales in Europe (Poland) increasing. In the Power Electronics Business, orders received rose 2.9% to ¥16,002 million while net sales fell 6.3% to ¥13,341 million, mainly due to delays in end-user investment plans for power supply units used in FPD manufacturing equipment. The segment posted a loss of ¥2,339 million, as inventory write-offs and valuation losses were recorded on a portion of inventories due to temporary factors related to advance procurement during the semiconductor shortage in prior periods. Overseas sales in the segment decreased slightly to ¥11,669 million, while sales to the U.S. increased to ¥1.4 billion on volume production orders for power supply units for semiconductor manufacturing equipment.

Segment	Item (Millions of yen)	FY ended Mar 31, 2025	FY ended Mar 31, 2026	Change (Rate of change)
Signalling Solutions	Orders received	66,396	82,559	16,163 (24.3%)
Signalling Solutions	Net sales	71,128	79,781	8,653 (12.2%)
Signalling Solutions	Segment profit	9,721	11,950	2,229 (22.9%)
Signalling Solutions	Backlog of orders	98,594	101,372	2,778 (2.8%)
Power Electronics	Orders received	15,554	16,002	447 (2.9%)
Power Electronics	Net sales	14,239	13,341	(898) ((6.3%))
Power Electronics	Segment profit	1,191	(2,339)	(3,530) (—)
Power Electronics	Backlog of orders	7,396	10,058	2,661 (36.0%)
—	Corporate expenses	4,800	5,108	307 (6.4%)
Total	Operating income	6,112	4,503	(1,608) ((26.3%))

Financial Position and Cash Flows

In line with “improving financial soundness,” a key initiative of the current medium-term management plan, inventory reduction was promoted: inventories at the end of March 2026 decreased by JPY 9.2 billion from the previous year-end to JPY 41.3 billion, and the company says efforts to reduce inventories will continue in the fiscal year ending March 2027 and beyond. Borrowings decreased by JPY 2.0 billion year on year to JPY 31.0 billion. The equity ratio improved to 46.7% from 41.0% a year earlier, and the D/E ratio improved to 0.56 from 0.64. Sales of cross-shareholdings were carried out, although the balance of investment securities increased due to rising stock prices; efforts to reduce cross-shareholdings will continue. Net cash provided by operating activities was ¥3,391 million, net cash used in investing activities was ¥471 million, net cash used in financing activities was ¥4,169 million, and cash and cash equivalents stood at ¥6,898 million at year-end. Dividend and shareholder return details cannot be confirmed from the materials.

Forecast for the Fiscal Year Ending March 2027

For the fiscal year ending March 31, 2027, the company forecasts orders received of ¥89,000 million (down 9.7%), net sales of ¥90,200 million (down 3.1%), operating profit of ¥5,600 million (up 24.4%), ordinary profit of ¥6,000 million (up 15.3%) and profit attributable to owners of parent of ¥4,200 million (down 16.7%). Net sales are expected to decline as the signalling solutions business decreases — reflecting the bringing forward of revenue originally scheduled for the fiscal year ending March 2027 into the fiscal year ended March 2026 — while the power electronics business is expected to grow 13.2% to ¥15,100 million in line with a recovery in market conditions, driven by increased investment in AI-related logic applications and high-bandwidth memory (HBM). Operating and ordinary profit are expected to increase, driven mainly by an improvement in the cost ratio in the power electronics business, with the Power Electronics segment forecast to return to a profit of ¥1,620 million. Profit attributable to owners of parent is expected to decrease, as gains on the sale of cross-shareholdings are not included in the plan at this stage. The company notes that, at this stage, no impact from the escalating situation in the Middle East is assumed.

Item (Millions of yen)	FY ended Mar 31, 2026 (Result)	FY ending Mar 31, 2027 (Forecast)	Change (Rate of change)
Orders received	98,562	89,000	(9,562) ((9.7%))
Net sales	93,122	90,200	(2,922) ((3.1%))
Operating profit	4,503	5,600	1,097 (24.4%)
Ordinary profit	5,203	6,000	797 (15.3%)
Profit attributable to owners of parent	5,042	4,200	(842) ((16.7%))
Backlog of orders	111,430	110,230	(1,200) ((1.1%))

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