NITTO KOHKI (6151): FY2025 Results Summary — Operating Profit Halves on New Plant Costs, Net Profit Up 59.4% on Subsidies

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NITTO KOHKI reported sales of 27,289 million yen for FY2025 (April 2025-March 2026), up 0.1% year on year, as increased sales of Couplings and Linear Pumps offset reduced demand affected by U.S. tariffs. Operating profit fell 49.5% to 1,182 million yen on increased costs associated with the new plant operations and higher material costs, and ordinary profit declined 41.6% to 1,466 million yen. Profit attributable to owners of parent nevertheless rose 59.4% to 2,144 million yen due to recording subsidies (2.3 billion yen) related to new plant investment. For FY2026 the company plans sales of 29,190 million yen (+7.0%) and operating profit of 1,750 million yen (+48.1%), with a forecast annual dividend of 32 yen per share.

Consolidated Results (Full-Year Actual)

Cost of sales rose 4.8% to 15,832 million yen, lifting the cost ratio to 58.0% from 55.5%, while SG&A expenses increased 4.8% to 10,274 million yen. As a result, gross profit fell 5.6% to 11,456 million yen and the operating profit margin narrowed to 4.3% from 8.6%. Extraordinary income of 2,370 million yen was recorded in FY2025 against extraordinary losses of 587 million yen (up 245.8%). The materials attribute the decline in operating profit mainly to expenses related to the new plant, including an increase in fixed costs due to relocation (749) and other cost items, partially offset by an increase in unrealized gains (+429).

Item (Million yen)	FY2024	% of sales	FY2025	% of sales	YoY Amount	YoY %
Sales	27,256	–	27,289	–	+33	+0.1%
Cost of sales	15,113	55.5%	15,832	58.0%	+718	+4.8%
Gross profit	12,142	44.5%	11,456	42.0%	-685	-5.6%
SG&A	9,799	36.0%	10,274	37.7%	+474	+4.8%
Operating profit	2,342	8.6%	1,182	4.3%	-1,160	-49.5%
Ordinary profit	2,510	9.2%	1,466	5.4%	-1,044	-41.6%
Extraordinary income	–	–	2,370	8.7%	+2,370	–
Extraordinary losses	169	0.6%	587	2.2%	+417	+245.8%
Profit attributable to owners of parent	1,345	4.9%	2,144	7.9%	+799	+59.4%

By region, domestic sales slowed due to reduced demand affected by U.S. tariffs and sluggish construction demand, falling 2.1% to 17,638 million yen. Overseas sales rose 4.4% to 9,651 million yen, with the Couplings business recovering in China: The Americas 2,518 million yen (+2.8%), Europe, the Middle East and Africa 2,102 million yen (+4.5%), East Asia 2,470 million yen (+6.1%), Asia Oceania 1,656 million yen (+3.9%) and Southeast Asia 904 million yen (+4.6%). The overseas sales ratio rose to 35.4% from 33.9%. On currency, the total effect on profit by currency was -90 million yen, with cost of sales increased by the exchange rate impact of the Thai baht (-134 million yen).

Segment Results

Couplings achieved increased sales due to solid demand for industrial machinery products, and Linear Pumps achieved increased sales due to higher sales in Europe. Machine Tools and Door Closers recorded operating losses due to increased fixed costs at the new plant. Couplings operating profit declined 5.0% to 1,963 million yen on high raw material costs and the effect of product composition, with the operating profit ratio at 15.8% (-1.4pt). Machine Tools sales fell 4.0% mainly due to decreased sales of products for the construction industry, and the segment swung to an operating loss of 600 million yen. Linear Pumps narrowed its operating loss to 121 million yen on increased sales, while Door Closers sales fell 9.3% due to decreased projects resulting from high material costs and labor shortages in the construction industry.

Metric	Segment	FY2024	FY2025	YoY
Sales	Total	27,256	27,289	+0.1%
Sales	Couplings	11,994	12,439	+3.7%
Sales	Machine Tools	8,605	8,257	-4.0%
Sales	Linear Pumps	4,365	4,514	+3.4%
Sales	Door Closers	2,290	2,078	-9.3%
Operating profit	Total	2,342	1,182	-49.5%
Operating profit	Couplings	2,067	1,963	-5.0%
Operating profit	Machine Tools	415	-600	–
Operating profit	Linear Pumps	-143	-121	–
Operating profit	Door Closers	2	-58	–

FY2026 Forecast

For FY2026 the company plans to capture the expanding demand for environmentally friendly products and drive sales growth through proactive expansion into hydrogen and new energy-related businesses, and expects a profit increase through product price revisions in Japan and overseas and expansion of projects for the semiconductor and automotive industries, as well as new fields. Profit attributable to the parent company is expected to decrease due to the absence of one-time factors from the previous fiscal year (subsidy income). The plan assumes exchange rates of 150.00 yen to the US dollar, 174.00 yen to the euro, 199.00 yen to the UK pound, 97.00 yen to the Australian dollar and 4.70 yen to the Thai baht. Uncertainties due to the Middle East situation are not factored into the full-year forecast.

Item (Million yen)	FY2025	FY2026 (plan)	%
Sales	27,289	29,190	+7.0%
Couplings	12,439	13,146	+5.7%
Machine Tools	8,257	8,904	+7.8%
Linear Pumps	4,514	4,787	+6.0%
Door Closers	2,078	2,353	+13.2%
Operating profit	1,182	1,750	+48.1%
Operating profit ratio	4.3%	5.5%	–
EBITDA	3,131	3,920	+25,2%
Ordinary profit	1,466	1,890	+28.9%
Extraordinary income	2,370	–	–
Extraordinary losses	587	–	–
Attributable to the parent company profit	2,144	1,470	-31.5%
Net profit ratio	7.9%	5.0%	–

The bridge to the FY2026 operating profit plan of 1,750 million yen (+568) comprises an increase of 1,378 million yen due to sales increase from price revisions and product mix, offset by depreciation (-218), labor costs (-220) and SG&A (-172), and the absence of prior-year one-time costs recorded as extraordinary losses (-200). Capital investment was 7,549 million yen in FY2025, of which 6,048 million yen was capital investment for the new plant, with depreciation of 1,949 million yen and research and development expenses of 930 million yen. For FY2026 the plan calls for capital investment of 2,030 million yen, depreciation of 2,170 million yen and research and development expenses of 986 million yen. Investments in the new plant totaled approximately 14.3 billion yen over three fiscal years (FY2023-FY2025), with depreciation starting in June 2025, and depreciation at TOHOKU NITTO KOHKI for FY2026 is expected to be 1.1 billion yen.

Shareholder Returns

The basic policy on shareholder returns in Medium-Term Management Plan 2026 is a consolidated dividend payout ratio of 40%. In accordance with that policy, an annual dividend of 32 yen is expected for FY2026, consisting of an interim dividend of 16 yen and a year-end dividend of 16 yen with a 40% payout ratio. The total dividend amount was 749 million yen in FY2025 and is planned at 600 million yen for FY2026. The company also states that cash allocation is to be reviewed for the next Medium-Term Management Plan.

Item	FY2024	FY2025	FY2026 Plan
Total dividend amount (Million yen)	730	749	600
Payout ratio	54.3%	34.9%	40.6%
Payout ratio from share buybacks	31.3%	–	–
Total payout ratio	85.6%	34.9%	40.6%

Medium-Term Management Plan 2026

The numerical targets of Medium-Term Management Plan 2026 are expected to fall short due to changes in the external environment and initial decline in profitability associated with the new plant start-up phase. Against final-year (FY2026) targets of sales of 32.0 billion yen, consolidated operating income of 3.5 billion yen and EBITDA of 6.2 billion yen, FY2025 results were consolidated sales of 27.2 billion yen, consolidated operating income of 1.1 billion yen and EBITDA of 3.1 billion yen, and the FY2026 forecast is 29.1 billion yen, 1.7 billion yen and 3.9 billion yen respectively. ROE was 3.6% in FY2025 with 2.4% forecast for FY2026, against a target to aim to exceed the cost of capital. Reported results include steady progress in the adoption of CUPLA for hydrogen use in passenger vehicles and an expanded product lineup for automation, labor-saving and environmentally friendly applications (7 models for robotic integration and 4 environmentally friendly products), plus completion of the new plant as planned. Identified issues include slowed overall sales growth associated with geopolitical risks, limited sales contribution from hydrogen and automation-related products still in the start-up phase, declining profitability, and insufficient shareholder returns and balance sheet management for improving capital efficiency.

Future policies based on the identified issues include thorough implementation of price revisions in Japan and overseas, actively developing sales activities including new overseas sales channels, pursuit of an optimal group-wide production system through expanded in-house production, process consolidation and increased automation, and group-wide cost structure reform. Based on the progress of Medium-Term Management Plan 2026, the company plans to announce Medium-Term Management Plan 2029 during fiscal year 2026.

Financial Position and Cash Flow

Total assets increased by 2,065 million yen from the end of the previous fiscal year to 68,670 million yen, mainly due to an increase in fixed assets related to new plant construction (fixed assets 33,553 million yen, +5,636), despite a decrease in current assets to 35,116 million yen (-3,570) and cash and deposits to 16,219 million yen (-4,085). Total liabilities decreased by 693 million yen to 7,727 million yen, and total shareholders’ equity rose to 56,385 million yen (+1,510) with net assets of 60,942 million yen (+2,759). Cash flows from operating activities were 4,174 million yen, cash flows from investing activities -4,798 million yen and cash flows from financing activities -1,039 million yen, leaving cash and cash equivalents at end of period of 11,749 million yen (-1,679).

Topics

The company launched a new Sustainability Site on its website covering basic policies on Environment, Social and Governance (ESG), the value creation process, materiality, quality and environmental initiatives, social and governance activities, ESG data and integrated reports. It also expanded automation-ready products for industrial robot integration, including the BELTON B-10-RBT-S / B-10-RBT pneumatic belt sander and the JET CHISEL JT-16-RBT pneumatic needle scaler. Four models of the home-use massage device MEDOMER, manufactured at TOCHIGI NITTO KOHKI, were selected as return gifts for the hometown tax program in Sakura City, Tochigi Prefecture. TOHOKU NITTO KOHKI received the inaugural Grand Prize at the Fukushima Digital Innovation Award hosted by Fukushima City for an AI-equipped application for warehouse receiving and shipping at third-party warehouses, achieving a 60% reduction in shipping operations.

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.