TOCALO (3433): FY2025 Results Summary — Record Sales and Ordinary Profit, ROE Reaches 15.8%

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

TOCALO Co., Ltd. (TSE Prime: 3433) reported record results for FY2025 (April 2025 – March 2026). Net sales rose 7.9% year-on-year to 58,490 million JPY, exceeding the level from the initial plan, and ordinary profit increased 17.4% to 14,745 million JPY, also a new record high. Net income attributable to owners of parent grew 25.0% to 10,060 million JPY, and ROE improved to 15.8%, achieving the company’s 15% target. For FY2026, the company forecasts net sales of 65,000 million JPY and ordinary profit of 15,000 million JPY, both record highs, with the annual dividend scheduled to rise to 86 JPY per share.

Consolidated Results (Full-Year Actual)

Net sales trended strongly, increasing by 7.9% year-on-year, and ordinary profit increased by 17.4%. Operating profit rose 15.0% to 14,102 million JPY, lifting the operating profit ratio from 22.6% to 24.1%, while the ordinary profit ratio reached 25.2%. EPS increased by 33.75 JPY to 169.19 JPY.

Item (JPY Million)	FY2025	FY2024	Change	Change (%)
Net Sales	58,490	54,231	4,259	7.9%
Operating Profit	14,102	12,268	1,834	15.0%
Ordinary Profit	14,745	12,558	2,186	17.4%
Net Income Attributable to Owners of Parent	10,060	8,051	2,009	25.0%
Earnings Per Share (EPS)	169.19JPY	135.44JPY	33.75JPY	—

In the ordinary profit bridge, sales growth contributed +3,174 million JPY, driven by increased sales in Thermal Spray (TOCALO) and at overseas subsidiaries. Labor costs rose (-792 million JPY) as the company implemented wage increases and increased its number of full-time employees, and depreciation increased (-502 million JPY) due to active capital investment. The variable cost ratio remained almost flat and the exchange effect was minimal. The company notes that ordinary profit included 662 million JPY of actuarial gains and losses on retirement benefit accounting, lifted by higher interest rates and favorable equity market conditions, and 419 million yen of subsidy income. Excluding these items, ordinary profit on a substantive basis was 13,663 million JPY, compared with 12,239 million JPY in FY2024.

At fiscal year-end, total assets increased by 7,600 million JPY to 89,291 million JPY (tangible fixed assets increased 6,200 million JPY), and the equity ratio rose 0.6 percentage points to 74.8%. Interest-bearing debt increased to 7,359 million JPY from 3,796 million JPY. Operating cash flow was 7,749 million JPY and investment cash flow was -9,963 million JPY, resulting in free cash flow of -2,200 million JPY; the year-end cash balance was 14,461 million JPY.

Segment Results

In Thermal Spray (TOCALO), the largest segment, net sales increased 3.8% to 40,709 million JPY; despite a temporary slowdown in semiconductor and FPD growth, the industrial machinery segment was robust. However, segment profit decreased 0.7% to 8,802 million JPY due to rising fixed costs such as personnel and depreciation expenses. Overseas subsidiaries performed well, led by the semiconductor- and iron & steel-related fields, with net sales up 31.7% to 12,269 million JPY and segment profit up 48.2% to 4,937 million JPY. Domestic subsidiaries grew net sales 8.6% while segment profit declined 4.2%; cutting tools at Japan Coating Center are on a recovery trend, although machining orders at TERADA KOSAKUSHO remain sluggish. Other surface modification declined 14.3% in sales and 33.4% in profit, as orders for agricultural machinery parts continued in an inventory adjustment phase.

Segment (JPY Million)	Net Sales FY2025	Net Sales FY2024	Change (%)	Segment P/L FY2025	Segment P/L FY2024	Change (%)
Thermal Spray (TOCALO)	40,709	39,213	3.8%	8,802	8,868	-0.7%
Domestic Sub.	2,883	2,656	8.6%	331	346	-4.2%
Overseas Sub.	12,269	9,319	31.7%	4,937	3,330	48.2%
Other Surface Modif.	2,467	2,880	-14.3%	281	422	-33.4%
Total	58,329	54,069	7.9%	14,353	12,967	10.7%

Within Thermal Spray (TOCALO), net sales by field were: Semicon & FPD 24,813 million JPY (+2.9%), Industrial Parts 5,652 million JPY (+16.0%), Iron & Steel 3,963 million JPY (+0.9%) and Others 6,280 million JPY (-0.3%). Royalty income, which is not included in segment net sales, was 160 million JPY.

FY2026 Forecast

For FY2026, TOCALO forecasts net sales of 65,000 million JPY (+11.1%) and ordinary profit of 15,000 million JPY (+1.7%), both expected to be record highs. The semiconductor & FPD field is expected to remain strong, with Semicon & FPD sales projected to increase 24.9% to 31,000 million JPY as demand remains high, while net sales in non-semiconductor & FPD fields are expected to increase by 0.9%. The ordinary profit bridge assumes a sales-driven gain of +2,953 million JPY, offset by higher labor costs (-1,603 million JPY), a variable cost ratio increase (-384 million JPY), depreciation (-308 million JPY) and a decrease in profit due to the exchange effect (-334 million JPY). Excluding the 662 million JPY of actuarial gains and losses and 419 million JPY of subsidy income recorded in the prior year, the company states that ordinary profit on a substantive basis rises by +1,337 million JPY, up 9.8%. ROE is forecast at 14.8%.

Item (JPY Million)	FY2026 Forecast	FY2025 (Actual)	Change	Change (%)
Net Sales	65,000	58,490	6,509	11.1%
Thermal Spray (TOCALO)	46,291	40,709	5,581	13.7%
Semicon & FPD	31,000	24,813	6,186	24.9%
Industrial Parts	5,655	5,652	2	0.0%
Iron & Steel	3,964	3,963	0	0.0%
Others	5,671	6,280	-608	-9.7%
Other Surface Modif.	2,815	2,467	347	14.1%
Domestic Sub.	3,073	2,883	189	6.6%
Overseas Sub.	12,637	12,269	367	3.0%
Royalty Income	184	160	23	14.5%
Operating Profit	15,000	14,102	897	6.4%
Ordinary Profit	15,000	14,745	254	1.7%
Net Income Attributed to Owners of Parent	10,230	10,060	169	1.7%
Earnings Per Share (EPS)	172.02JPY	169.19JPY	2.83JPY	—
Return on Equity (ROE)	14.8%	15.8%	-1.0pt	—

Planned capital expenditure for FY2026 is 10,000 million JPY: TOCALO 8,000 million JPY for construction of new buildings at the Tokyo No.2 and Kitakyushu plants, installation of production equipment, R&D facilities, etc.; domestic subsidiaries 700 million JPY for construction of new buildings at TERADA KOSAKUSHO and increased production capacity at Japan Coating Center, etc.; and overseas subsidiaries 1,300 million JPY for the launch of new plants at TOCALO USA-Arizona LLC etc. R&D expenses will be maintained at around 3% of consolidated net sales.

Shareholder Returns

TOCALO targets a consolidated dividend payout ratio of around 50% and a dividend on equity (DOE) ratio of at least 5%, and will flexibly conduct acquisitions of treasury stock taking into consideration the business environment and its financial situation. The FY2025 annual dividend was 85.00 JPY per share (payout ratio 50.2%). Due to higher revenue, the annual dividend for FY2026 is scheduled to be increased to 86 JPY per share, with a payout ratio of 50.0%. Although ROE is expected to slightly decline to 14.8%, missing the target of 15%, DOE is projected to reach 7.4%, exceeding the target of 5%.

Dividend per Share (JPY)	Interim	Year-end	Annual	Payout Ratio (Cons.)
FY2024	30.00	38.00	68.00	50.2%
FY2025	37.00	48.00	85.00	50.2%
FY2026 (Forecast)	42.00	44.00	86.00	50.0%

Medium-Term Management Plan

The presentation’s contents list the announcement of a new medium-term management plan, “TOCALO2030”. The details of the plan are not included in this presentation, so they cannot be confirmed from the materials.

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.