Kokusai Electric (6525) Q2 2026 earnings summary

Executive summary

• Second-quarter revenue and profit increased year-over-year and sequentially, surpassing forecasts due to accelerated equipment sales, especially to local Chinese manufacturers and service upgrades for global clients.

• 2Q FY26/3 revenue rose 33% YoY to JPY 65.4B; adjusted operating profit up 28% YoY to JPY 14.4B; net income up 85% YoY to JPY 8.8B.

• Revenue for the six months ended September 30, 2025, increased 2.3% year-over-year to ¥117,205 million, while operating profit declined 17.2% to ¥22,710 million.

• Interim dividend of JPY 18 per share was confirmed.

• Some equipment sales expected in 2H are now forecasted to slip into FY27/3, prompting a downward revision in full-year revenue and profit forecasts, but the dividend forecast remains unchanged.

Financial highlights

• Second-quarter revenue grew 33% year-over-year, driven by equipment and service sales to Chinese manufacturers.

• Adjusted operating profit rose 28% year-over-year in Q2, but cumulative first-half adjusted operating profit fell 17% due to margin pressure and higher R&D.

• Gross profit margin for the first half was 42.2%, down 2.6 points year-over-year due to product mix changes but in line with plan.

• Free cash flow for Q2 was JPY 7.1 billion; equity capital ratio rose to 60.7%.

• Net cash provided by operating activities was ¥16,859 million, while net cash used in investing activities was ¥16,672 million.

Outlook and guidance

• Full-year sales and profit forecasts were revised downward: sales revenue cut by 6% and adjusted operating profit by 20% from previous guidance, mainly due to delayed equipment sales now expected in the next fiscal year.

• Full-year revenue is forecast at ¥230,000 million, up 3.7% year-over-year.

• Operating profit is projected to decline 24.4% to ¥38,800 million, with net income expected to fall 22.5% to ¥27,900 million.

• Despite lower sales, annual dividend forecast remains unchanged.

• For fiscal year ending March 2027, sales growth of over 10% is expected (including delayed sales), with at least 5% growth even excluding delays.