HONYAKU Center Inc.

Business Details

The core business of the Group. With patent firms, pharmaceutical companies, automakers, and financial institutions as its main clients, the segment provides high-quality translation services across four fields: patents, pharmaceuticals, industrial localization, and financial/legal. The business is handled by the Company together with three consolidated subsidiaries (Media Research Institute, Inc., Panathea Inc., and Fukuyama Industrial Translation Center Co., Ltd.). The Company continues to strengthen its competitiveness by leveraging natural language processing technologies such as computer-assisted translation (CAT) tools, machine translation (MT), and large language models (LLM).

Recent Overview

Sharp declines in the industrial and financial fields led to an overall 4.8% year-on-year decrease in the Translation Business to ¥8,096 million.

Revenue from the Translation Business in FY2026 (ending March 2026) was ¥8,096 million (down 4.8% year on year), and segment operating profit was ¥545 million (down 29.7% year on year). The industrial/localization field declined 15.3% due to reduced orders from automotive-related companies amid uncertainty over U.S. trade policy and a decline from the prior-year large project comparison base, while the financial/legal field also declined sharply by 12.2% due in part to a decline from the prior-year large government project comparison base. The patent field increased 1.1% on the acquisition of new major clients, and the pharmaceutical field remained roughly flat year on year. An impairment loss of ¥37 million was also recorded in the Translation Business segment.

Key Products

Growth Drivers

• Acquisition of new major clients in the patent field and continued stable orders from patent firms
• Maintaining orders from foreign and domestic pharmaceutical companies in the pharmaceutical field and recovery in demand from CRO clients
• Expansion of IR-related document orders following the launch of a new service targeting timely disclosure information
• Strengthening service competitiveness through AI technologies such as MT and LLM, and promoting data-driven sales and marketing
• Operational efficiency improvements and service sophistication through AI and data utilization under the medium-term management plan (FY2026 (ending March 2026) through FY2028 (ending March 2028))

Risks

• Risk of declining orders from manufacturing clients such as automotive-related companies amid uncertainty over U.S. trade policy (already materializing as a 15.3% decline in the industrial/localization field)
• Structural changes in the translation market and intensifying price competition due to the spread of machine translation (MT) and generative AI
• Order volatility risk due to dependence on specific major clients (already materializing as declining orders from CRO clients and some major corporate IP department clients)
• Risk of margin decline due to increased selling, general and administrative expenses (¥4,448 million in FY2026, ending March 2026, up 0.5% year on year)
• Risk of future increases in depreciation and amortization associated with increased intangible fixed asset investment, centered on software in progress (¥306 million at the end of FY2026, ending March 2026)