Foster Electric (6794): FY2025 Results Summary — Higher Profit on Premium Speaker Strategy Despite China Slowdown

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

Foster Electric Company, Limited (Stock code: 6794, Prime Market), a manufacturer of speakers, audio equipment, and electronic equipment, reported results for the fiscal year ended March 31, 2026 in its Financial Results Briefing dated May 27, 2026. Net sales declined 2.0% year on year to 134,910 million yen, while operating income rose 12.9% to 7,670 million yen and net income attributable to owners of the parent increased 26.9% to 4,951 million yen. Note: the materials label the fiscal year ended March 31, 2026 as “FY03/26”; this article follows the labels used in the materials.

Consolidated Results (Full-Year Actual)

Operating income to net sales improved from 4.9% to 5.7%, and ROE rose from 6.6% to 7.7%. Against the revised FY03/26 forecast, operating income came in at 109.6% (7,670 million yen versus 7,000 million yen forecast) and net income at 110.0% (4,951 million yen versus 4,500 million yen forecast), while net sales reached 99.9% of the 135,000 million yen forecast. Exchange rates were 151.10 yen/USD and 175.56 yen/EUR in FY03/26, versus 152.60 yen/USD and 163.66 yen/EUR in FY03/25.

Item (Millions of yen)	FY03/25	FY03/26	Percentage change (YoY)
Net sales	137,607	134,910	(2.0%)
Operating income	6,796	7,670	12.9%
Operating income to net sales	4.9%	5.7%
Ordinary income	7,726	8,002	3.6%
Net income*	3,902	4,951	26.9%
Net income per share (in exact yen)	174.98	221.04	26.3%
Dividends per share (in exact yen)	60.00	80.00	33.3%
ROE	6.6%	7.7%

*Net income attributable to owners of the parent. Free cash flow for FY03/26 was 1.1 billion yen (operating activities 6,936 million yen, investing activities (5,781) million yen). The equity ratio as of March 31, 2026 was 60.3% (57.0% as of March 31, 2025).

Segment Results

In the Speaker segment, sales fell due to a decline in speaker sales to some Chinese automakers as anticipated, but operating income increased, supported by higher sales of high-margin speakers driven by a sales strategy focused on branded and premium-level products, despite the impact of U.S. tariff policies. In the Mobile Audio segment, sales declined while operating income increased on strong sales of high-margin products, with shipments of earphones, earphone drivers, and consumer-use actuators exceeding the forecast. The Other segment posted higher sales driven by solid sales of speakers for acoustic vehicle alerting and warning systems, and turned a profit supported by structural reforms undertaken since prior periods.

Segment	Metric (Millions of yen)	FY03/25	FY03/26	Percentage change (YoY)
Speaker	Sales	114,521	111,869	(2.3%)
Speaker	Operating income	6,362	6,522	2.5%
Mobile Audio	Sales	12,893	12,469	(3.3%)
Mobile Audio	Operating income	641	672	4.9%
Other	Sales	10,192	10,572	3.7%
Other	Operating income	(207)	475	－

On U.S. tariffs, the company states that negotiations with customers on cost-sharing have been largely settled through pass-through arrangements, with bonded warehouses and similar options used to mitigate tariff burdens; tariffs are temporarily borne by the company and recovered from customers in the following quarter. Regarding China’s rare earth export regulations, export license applications for magnets containing dysprosium have progressed smoothly, and the company has worked with customers to revise specifications to magnets that do not contain dysprosium.

FY03/27 Forecast

For the fiscal year ending March 31, 2027, the second year of the medium-term business plan, the company forecasts net sales of 140,000 million yen (up 3.8% YoY) and operating income of 8,000 million yen (up 4.3%), stating it will accelerate its growth strategy to firmly achieve its targets and looks for profit to exceed initial expectations. Assumed exchange rates are 150.00 yen/USD and 175.00 yen/EUR. By segment, the company forecasts sales of 119.0 billion yen for Speaker, 10.5 billion yen for Mobile Audio, and 10.5 billion yen for Other, and states it will expand business with new customer groups among local EV manufacturers in North America and China and does not expect any adverse impact from U.S. tariffs in the Speaker segment.

Item (Millions of yen)	FY03/26	FY03/27 Forecast	Percentage change (YoY)
Net sales	134,910	140,000	3.8%
Operating income	7,670	8,000	4.3%
Ordinary income	8,002	7,500	(6.3%)
Net income*	4,951	5,000	1.0%
Net income per share (in exact yen)	221.04	222.54	0.7%
Dividends per share (in exact yen)	80.00	115.00	43.8%

Shareholder Returns

For FY03/26, the annual dividend was 80.00 yen per share (interim 35.00 yen, year-end 45.00 yen), with a dividend payout ratio of 36.2%, under a policy of a 40% dividend payout ratio and 2% DOE (minimum). For FY03/27, the company plans an interim dividend of 55 yen per share and a year-end dividend of 60 yen per share, for a full-year dividend of 115 yen per share (payout ratio 51.7% forecast), under a revised policy targeting the higher of a 50% dividend payout ratio or 4% DOE.

Item	FY03/23	FY03/24	FY03/25	FY03/26	FY03/27 (Forecast)
Dividends per share (in exact yen) (interim, year-end)	20.00 (10.00, 10.00)	25.00 (10.00, 15.00)	60.00 (20.00, 40.00)	80.00 (35.00, 45.00)	115.00 (55.00, 60.00)
Dividend payout ratio	52.3%	24.1%	34.3%	36.2%	51.7%

Medium-Term Plan / Topics

FY03/26 was the first year of the medium-term business plan, which targets 150 billion yen in net sales, 9 billion yen in operating income, a 6% income ratio, and 8% ROE. The company states that profit exceeded the forecast, marking a solid start toward achieving its targets, and that orders have already been largely secured for automotive business sales targeted under the plan, with growth expected to exceed twice the growth rate of the new auto sales market. Total investments under the plan are expected to amount to 23.0 billion yen, consisting of 6.8 billion yen in FY03/26 (actual), 10.0 billion yen in FY03/27 (forecast), and 6.2 billion yen in FY03/28 (forecast); progress as of May 2026 includes equipment investment at Vietnam and China plants, new plant construction in India, and expansion of local manufacturing in Europe and the Americas.

On management attuned to cost of capital and share prices, ROE improved to 7.7%, PER improved to 13.1x, and PBR reached 1.0x, while the company notes that the cost of capital (approximately 10% based on CAPM) has also increased. It aims to achieve ROE of 8% as early as possible, with 10% as the next target. Separately, following approval at the 92nd Ordinary General Meeting of Shareholders scheduled for June 25, 2026, Foster Electric will transition to a company with an Audit & Supervisory Committee to strengthen audit and supervisory functions and accelerate decision-making.

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.