TOCALO Co.,Ltd.

Business Details

The thermal spray coating business conducted by TOCALO Co., Ltd. itself. It provides surface modification processing that forms coatings by spraying metals, ceramics, cermets, etc. using plasma or combustion flame as a heat source, targeting semiconductor/FPD manufacturing equipment parts, industrial machinery parts such as power generation gas turbines and various bearings, and equipment parts such as steel rolls, papermaking rolls, and chemical plant components. Against a backdrop of generative AI and data center demand, the semiconductor field led growth, and the industrial machinery field also performed favorably.

Recent Overview

Net sales increased on strong semiconductor-related demand, but the profit margin declined slightly due to increased depreciation from expanded capital investment

In FY2026 (ending March 2026), Thermal Spray Coating (Standalone) saw net sales increase to ¥40,709 million (up 3.8% year on year), driven by robust demand for semiconductor-related processing amid the spread of generative AI and data centers, as well as favorable performance in industrial machinery parts for transportation equipment and power generation facilities. On the other hand, segment profit declined slightly to ¥8,802 million (down 0.7% year on year) due to increased depreciation associated with aggressive capital investment (¥6,808 million, up 151% year on year), including the launch of the new Tokyo Plant building, as well as the impact of soaring raw material and energy prices. The order backlog increased substantially to ¥11,081 million (up 38.3% year on year), providing high visibility going forward. For the next fiscal year (FY2027, ending March 2027), forecast net sales for Thermal Spray Coating (Standalone) are ¥46,291 million (up 13.7%), of which sales for semiconductor/FPD applications are expected to be ¥31,000 million (up 24.9%).

Key Products

Growth Drivers

• Continued increase in demand for semiconductor manufacturing equipment driven by expanding generative AI and data center investment (order backlog of ¥8,575 million, up 59.6% year on year)
• Expansion of production capacity in the semiconductor/FPD field through aggressive capital investment (¥6,808 million), including the launch of the new Tokyo Plant building
• Continued solid order intake in the industrial machinery field (for transportation equipment parts and power generation facilities)
• New demand expansion and strengthened order-taking activities in the steel and energy fields
• High visibility into next-period results due to substantial buildup of the order backlog (¥11,081 million, up 38.3% year on year)
• Creation of new markets through development of new film-forming processes and cultivation of new business areas

Risks

• Risk of temporary demand fluctuations due to inventory adjustment phases in the semiconductor market
• Profit margin pressure from increased depreciation associated with aggressive capital investment such as the new Tokyo Plant building (profit margin already declined from 22.6% to 21.6% in FY2026, ending March 2026)
• Uncertainty in the business environment due to uncertainty over additional U.S. tariffs and heightened geopolitical risk
• Materialization of risks related to soaring raw material/energy prices and procurement of rare metals and petroleum products
• Risk of continued weak demand in some markets such as the petrochemical field and the film/fiber field
• Risk of revenue concentration on major semiconductor manufacturing equipment customers (e.g., Tokyo Electron Group, Applied Materials Group)