ESPEC CORP. (6859): FY2025 Results Summary — Record Orders and Net Sales, Lower Operating Profit

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

ESPEC CORP. (Securities code: 6859) announced its financial results for FY2025 (the fiscal year ended March 31, 2026) on May 25, 2026. Orders received rose 7.5% year on year to 72,596 million yen, marking a new record high for the fifth consecutive fiscal year, and net sales increased 4.1% to 70,034 million yen, renewing record highs for the fourth consecutive fiscal year, driven mainly by target markets such as AI semiconductors and satellite communications. On the profit side, operating profit declined 5.9% to 7,084 million yen, mainly due to deterioration in profitability in the China market and in laboratory testing services, as well as an increase in SG&A expenses. In this article, figures are presented as reported in the company’s materials, in which FY2025 refers to the fiscal year ended March 31, 2026.

Consolidated Results (Full-Year Actual)

Orders received remained strong in the AI semiconductor field in Japan, Southeast Asia, and Taiwan, and expanded significantly in the satellite communications field in North America, exceeding both the previous fiscal year and the revised forecast to reach a record high. Net sales also reached a record high, with Japan, North America, and Southeast Asia performing strongly. Operating profit fell below the previous fiscal year and the revised forecast (revised on 2025/11/13) due to deterioration in profitability in the China market and laboratory testing services and an increase in SG&A expenses, although profitability improvements for custom products progressed. Profit attributable to owners of parent decreased 2.1% to 5,879 million yen: a gain on sale of investment securities was recorded, but results were below the previous fiscal year due to the recording of an impairment loss on laboratory testing services facilities.

Item (Millions of yen)	FY2024 Results	FY2025 Results	Year on Year
Orders Received	67,514	72,596	+7.5%
Net Sales	67,288	70,034	+4.1%
Gross Profit	23,987	24,295	+1.3%
SG&A	16,460	17,210	+4.6%
Operating Profit	7,526	7,084	-5.9%
Ordinary Profit	7,793	7,473	-4.1%
Profit Attributable to Owners of Parent	6,003	5,879	-2.1%
ROE	11.0%	10.0%	-1.0pt

Segment Results

In the Equipment Business, orders received increased 8.6% to 62,216 million yen and net sales rose 3.4% to 59,468 million yen, while operating profit was 6,606 million yen, in line with the previous fiscal year (-0.1%), as higher revenue was offset by increased SG&A expenses; profitability also deteriorated due to intensified competition driven by the deflationary economy in the China market. In the Service Business, operating profit fell 71.2% to 228 million yen, reflecting reduced laboratory testing services revenue and rising depreciation expenses. The Other Business saw net sales jump 56.3% to 2,747 million yen, supported by large orders in the area of plant factories and orders associated with renovation work on green spaces.

Segment	Metric (Millions of yen)	FY2024 Results	FY2025 Results	Year on Year
Equipment Business	Orders Received	57,283	62,216	+8.6%
Equipment Business	Net Sales	57,507	59,468	+3.4%
Equipment Business	Operating Profit	6,610	6,606	-0.1%
Service Business	Orders Received	8,532	8,294	-2.8%
Service Business	Net Sales	8,425	8,327	-1.2%
Service Business	Operating Profit	793	228	-71.2%
Other Business	Orders Received	2,170	2,529	+16.5%
Other Business	Net Sales	1,758	2,747	+56.3%
Other Business	Operating Profit	126	239	+88.7%

In the target markets set out in the medium-term management plan (AI semiconductors, autonomous driving, and satellite communications), orders received increased by approximately 50% and net sales increased by approximately 30%. By region, net sales increased in Japan, North America, Southeast Asia & India, and Taiwan, while China was roughly unchanged from the same period last year. Net sales in FY2025 totaled 70,034 million yen, of which overseas sales were 35,675 million yen and domestic sales were 34,359 million yen, for an overseas sales ratio of 50.9% (FY2024: 51.9%).

FY2026 Forecast

Recognizing FY2026 as an important year toward achieving the revised targets of the medium-term management plan, ESPEC aims to maintain orders received at a high level and to achieve record-high net sales and operating profit, with both revenue and profit increasing. The company forecasts net sales of 73,000 million yen (+4.2%) and operating profit of 8,000 million yen (+12.9%). Assumed exchange rates for FY2026 are 155 yen to the U.S. dollar, 180 yen to the euro, and 22 yen to the yuan. Regarding rising tensions in the Middle East, the company currently views the direct impact as limited, while noting that future impacts are difficult to forecast and it will continue to monitor the situation.

Item (Millions of yen)	FY2025 Results	FY2026 Forecast	Year on Year
Orders Received	72,596	70,000	-3.6%
Net Sales	70,034	73,000	+4.2%
Operating Profit	7,084	8,000	+12.9%
Ordinary Profit	7,473	8,100	+8.4%
Profit Attributable to Owners of Parent	5,879	5,880	+0.0%
Basic Earnings per Share (yen)	270.39	275.17	+1.8%
ROE	10.0%	10.0%	±0pt

FY2026 investment plans call for capital expenditures of 3,920 million yen (+95.5%), with main investments including the Fukuchiyama Plant renovation and expansion of the production area at the North American subsidiary, and R&D expenses of 2,070 million yen (+36.1%), mainly to expand the product lineup for the AI semiconductors field.

Shareholder Returns

For FY2025, the annual dividend is 115 yen per share (interim 45 yen, year-end 70 yen), for a dividend payout ratio of 42.5%. The company has been conducting ongoing share purchases from November 14, 2025 to July 31, 2026, of up to 900,000 shares (4.05% of total shares outstanding) and up to 3.5 billion yen; in FY2025, 550,000 shares and approximately 1.9 billion yen were executed, bringing the total payout ratio to 75.3%. For FY2026, the company forecasts an annual dividend of 115 yen and a dividend payout ratio of 41.8%. The shareholder return policy sets the consolidated dividend payout ratio at 40% or more with flexible acquisition of treasury shares, and during the period of the Medium-Term Management Plan PROGRESSIVE PLUS 2027 (FY2025–2027), the total return ratio cumulative over the three-year period will be 50% or more, with no dividend reductions.

Item	FY2025	FY2026 (Forecast)
Interim Dividend (yen)	45	45
Year-end Dividend (yen)	70	70
Annual Dividend (yen)	115	115
Dividend Payout Ratio	42.5%	41.8%
Total Payout Ratio	75.3%	–

Revision of the Medium-Term Management Plan

Based on the FY2025 full-year results and progress on the strategy, ESPEC revised the targets of the Medium-Term Management Plan PROGRESSIVE PLUS 2027. The FY2027 net sales target was revised upward from 70 billion yen to 76 billion yen (+6 billion yen), reflecting smooth development of target markets, mainly AI semiconductors and satellite communications. The operating profit target was revised downward from 10.5 billion yen to 9.1 billion yen (-1.4 billion yen), and the operating profit ratio target from 15.0% to 12.0%, citing the impact on earnings from investment to increase production capacity in North America, delayed improvement in profitability in the China market and in laboratory testing services, and a delay in the timing of realizing the effects of the growth strategy. Profit attributable to owners of parent was revised from 7.6 billion yen to 6.7 billion yen, while the ROE target of 12.0% or more was left unchanged. The expected U.S. dollar rate was changed from 145 yen to 155 yen. The company states it will first steadily achieve an operating profit ratio of 12%, a record high level (11.6% in FY2018), and use this as a stepping stone to establish a lean, sustainable, high-profit business structure.

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.