Nihon Dempa Kogyo (6779): FY2025 Results Summary — Upfront Investment Weighs on Profit as AI Data Center Demand Accelerates

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Nihon Dempa Kogyo Co., Ltd. (NDK), a manufacturer of quartz crystal devices, announced its full-year results for fiscal 2025 (ended March 31, 2026) on May 22, 2026. Full-year net sales increased year on year to 54,629 million yen, while operating income declined year on year to 3,355 million yen due to higher upfront investment expenses toward Vision 2030, but exceeded forecasts. Net income rose to 2,065 million yen. For FY2026 (ending March 31, 2027), the company forecasts net sales of 60,600 million yen and operating income of 4,000 million yen, with the significant increase in net sales driven primarily by higher sales of products for AI data centers.

Consolidated Results (Full-Year Actual)

FY2025 full-year net sales came to 54,629 million yen (26,686 million yen in 1H and 27,943 million yen in 2H), up 1,565 million yen year on year. Operating income was 3,355 million yen (operating income ratio 6.1%), down 1,267 million yen from FY2024, as upfront investment expenses, including R&D expenses, increased toward the realization of Vision 2030. Both net sales and operating income exceeded the company’s most recent full-year forecast as of November 11 (net sales 53,400 million yen, operating income 3,200 million yen). The average exchange rate for the year was 151.01 yen against the U.S. dollar.

Item (Million yen)	FY2024 Full Year	FY2025 Full Year	YoY
Net Sales	53,064	54,629	+1,565
Operating Income	4,622	3,355	-1,267
Operating Income Ratio	8.7%	6.1%	-2.6%
Income before Income Tax	2,955	2,552	-403
Net Income	1,792	2,065	+273
Exchange Rate (against U.S. dollar)	152.48	151.01	-1.47
R&D Expenses	2,085	2,830	+745
Depreciation	3,427	3,911	+484

On the balance sheet side, the shareholders’ equity ratio stood at 41.8% as of the end of March 2026, with net equity of 31.9 billion yen. The D/E ratio (loans and borrowings divided by net equity, adjusted for the arrangement fee of syndicated loan) improved to 0.81.

Net Sales by Application

Net sales for automotive, industrial equipment (mainly AI data centers), and special equipment (mainly defense) applications increased. Automotive electronics sales increased supported by customer’s efforts to secure safety stock amid rising memory prices, while sales for major smartphone manufacturers declined in mobile communications/IoT. Industrial equipment sales rose on higher sales for AI data centers, and special equipment sales increased on defense-related demand. Optical products declined as sales for professional cameras decreased.

Application (Billion yen)	FY2024	FY2025	YoY
Automotive electronics	29.2	30.1	+0.9
Mobile communications/IoT	13.4	13.0	-0.4
Industrial equipment	3.5	4.4	+0.9
Special equipment	1.2	1.7	+0.5
Optical products	1.9	1.4	-0.5
Others	3.8	4.0	+0.2
Total	53.0	54.6	+1.6

FY2026 Forecast

For FY2026 (ending March 31, 2027), net sales are expected to increase by JPY 6.0 billion year on year. Operating income is expected to increase year on year, while the company proceeds with upfront investments such as R&D as planned. The forecast assumes an exchange rate of 150.00 yen against the U.S. dollar.

Item (Million yen)	FY2025 Full Year Result	FY2026 Forecast (Full Year)	YoY
Net Sales	54,629	60,600	+5,971
Operating Income	3,355	4,000	+645
Operating Income Ratio	6.1%	6.6%	+0.5%
Income before Income Tax	2,552	3,100	+548
Net Income	2,065	2,300	+235
Exchange Rate (against U.S. dollar)	151.01	150.00	-1.01
R&D Expenses	2,830	3,600	+770
Depreciation	3,911	4,400	+489

By application, industrial equipment sales are forecast to increase significantly, mainly in AI data centers, from 4.4 billion yen in FY2025 to 8.4 billion yen in FY2026. Mobile communications/IoT sales are expected to increase mainly for ultra-compact products for major smartphone manufacturers, and automotive electronics sales are expected to be supported by customer efforts to secure safety stock amid memory shortages continuing through the first half.

Application (Billion yen)	FY2025 Full Year	FY2026 Forecast (Full Year)	YoY
Automotive electronics	30.1	31.4	+1.3
Mobile communications/IoT	13.0	13.2	+0.2
Industrial equipment	4.4	8.4	+4.0
Special equipment	1.7	2.1	+0.4
Optical products	1.4	1.6	+0.2
Others	4.0	3.9	-0.1
Total	54.6	60.6	+6.0

Capital investment for FY2026 is planned at 10.0 billion yen, up from the FY2025 result of 6.5 billion yen (FY2025 plan: 7.4 billion yen), with increased investments planned primarily in AI data centers, smart factory initiatives, and R&D.

Shareholder Returns

Under its shareholder return policy, the company aims to enhance medium- to long-term corporate value and aims for stable dividend growth, allocating realized profits to high-value-added, high-quality product manufacturing and the strengthening of the company’s business foundation. While maintaining a sound financial base, it targets a DOE of 3.0% or higher in FY2027. In the FY2025-FY2027 cumulative cash allocation, operating cash flow of 23.5 billion yen is allocated to growth investment of 18.5 billion yen, net interest-bearing debt repayment of 2.5 billion yen, and shareholder returns of 2.5 billion yen. Per-share dividend amounts for FY2025 and FY2026 cannot be confirmed from the materials.

Medium-Term Plan / Topics

Under the Medium-Term Management Plan (FY2025-2027), NDK is targeting net sales of 70.0 billion yen and an operating income ratio of 10% in FY2027, and 20% under Vision 2030 (with sales of 100.0 billion yen as the FY2030 target). FY2027 targets also include ROE of over 10%, ROIC of over 9%, an equity ratio of 46.0%, and a D/E ratio of 0.70. The plan’s four key initiatives are development of high-value-added products and creation of new businesses (including a new development base established in the UK), dramatic expansion of productivity through DX promotion (smart factory transformation targeting 3x productivity), efficient capital allocation reallocating management resources from automotive and mobile communications to growth and new areas, and strengthening the business foundation (ESG).

Under the growth strategy’s “Five Pillars + One” concept, industrial equipment sales (AI servers and optical transceivers) are expected to expand by nearly fourfold from FY2025 to FY2028, and demand for crystal devices for AI servers is expected to grow at a CAGR of around 20% (company estimates). Special equipment sales are projected at approximately 2.2x growth and optical products at approximately 1.9x growth from FY2025 to FY2028. In September 2025, the company formulated a new mission, “Wave Motion Tech Moves Our Future!”, aiming to transform into a solutions-based company with wave technology as the foundation.

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.