IHI (7013) Q2 2026 earnings summary

Executive summary

• Orders reached ¥893.4 billion, a record high for the second quarter, driven by strong demand in nuclear energy, defense, and civil aero engines, despite global economic uncertainty and ongoing business portfolio reforms.

• Revenue was ¥713.6 billion, down 5.8% year-over-year, and operating profit was ¥69.4 billion, down 10.1%, due to project timing, business transfers, and cost rebounds.

• Net income hit a record ¥55.9 billion, up 42.2% year-over-year, supported by FX revaluation, improved equity-asset investment gains, and lower tax expenses.

• Structural reforms are nearing completion, with a focus on reallocating resources to growth businesses such as civil and defense aero engines and nuclear energy.

• Major business portfolio reforms included the transfer and integration of several subsidiaries and business units, including bridge and water gate businesses.

Financial highlights

• Orders revised up by ¥60 billion to ¥1.85 trillion for FY2025; revenue revised down by ¥10 billion to ¥1.64 trillion.

• Operating profit revised up by ¥10 billion to ¥160 billion; net income revised up by ¥5 billion to ¥125 billion.

• Operating margin is projected at 9.8%, and EBITDA is expected to hit a record ¥230.0 billion.

• Operating cash flow decreased significantly, mainly due to increased tax payments and powder metallurgy expenditures; cash flow from operating activities is forecast at ¥100.0 billion.

• Equity attributable to owners improved to 23.1% due to net income accumulation.

Outlook and guidance

• FY2025 is expected to achieve record highs in orders, revenue, operating profit, and net income, with revenue at ¥1,850.0 billion and operating profit at ¥160.0 billion.

• Upward revisions in operating profit and net income are driven by strong civil aero engine business, defense, and favorable FX.

• Management targets accelerated growth in nuclear energy and aero engine segments, aiming for ¥100 billion and over ¥1 trillion in revenue respectively by early 2030s.

• Assumes FX rate of ¥140/USD for the remainder of the year.