KYORITSU AIR TECH INC.

Business Details

The Kyoritsu Air Tech Co., Ltd. group is centered on manufacturing and sales in two divisions: the Building Equipment Division (dampers, diffusers, Fas units, VAV, etc.) and the Housing Equipment Division (whole-house air conditioning systems, 24-hour ventilation systems, etc.). Domestic sales account for over 90% of the total, with major customers being Sumitomo Corporation Machinex Co., Ltd. (13.5% of sales) and Hinokiya Co., Ltd. (12.4% of sales). Consolidated subsidiaries include Changshu Kuaifeng Air Conditioning Co., Ltd. in China (manufacturing diffusers and VAV) and Mask Co., Ltd. (sale of air conditioning materials).

Recent Overview

Despite lower sales, operating income improved significantly by 17.5% year-on-year due to an improved cost ratio

In the first quarter of FY2026 (ending December 2026) (January to March 2026), net sales decreased to ¥2,831 million (down 2.0% year-on-year), while cost of sales was significantly reduced to ¥2,049 million (down 4.1% year-on-year), improving the cost of sales ratio to 72.4% (versus 73.9% in the same period of the prior year). Selling, general and administrative expenses also decreased slightly to ¥545 million (versus ¥552 million in the same period of the prior year), resulting in operating income of ¥235 million (up 17.5% year-on-year) and ordinary income of ¥241 million (up 16.5% year-on-year). In the construction market, public and private capital investment remained solid, while housing starts continued at low levels. The fiscal year-end of consolidated subsidiary Mask Co., Ltd. was changed from October 31 to December 31, aligning it with the consolidated fiscal year-end. The full-year earnings forecast remains unchanged (net sales of ¥11,800 million, operating income of ¥620 million).

Key Products

Growth Drivers

• Continued capital investment demand from large-scale station-front and urban redevelopment projects in the Kinki and Chubu regions
• Expansion of sales of high-value-added products such as diffusers and Fas units
• Securing orders from existing customers (developers of subdivided housing) for residential whole-house air conditioning and ventilation systems, and strengthening web-based sales promotion
• Reduction of manufacturing costs through overseas procurement of raw materials to curb variable costs and reduction of labor hours (improving trend in cost of sales ratio)
• Sales promotion of new products "Ea-Kurun" and "DESIX," and enhancement of the sales structure for residential air conditioning and ventilation systems "Kankimaru" and "Cool Dan"
• Appropriate disclosure and management efficiency improvement in consolidated financial statements through alignment of consolidated subsidiary Mask Co., Ltd.'s fiscal year-end

Risks

• Risk of deterioration in the cost of sales ratio due to rising raw material prices (improved in Q1, but sustainability throughout the year remains uncertain)
• Continued sluggishness in new housing starts due to rising mortgage interest rates, higher material costs, and increased labor costs
• Low levels of housing starts due to delays in building confirmation reviews resulting from revisions to the Building Standards Act and the Building Energy Efficiency Act
• Fluctuations in resource and raw material prices due to geopolitical risks such as US tariff policy, the Russia-Ukraine situation, and the Middle East situation
• Deterioration of the order environment in the Building Equipment Division due to intensifying price competition
• Risk of sales concentration in two major customers (Sumitomo Corporation Machinex Co., Ltd. at 13.5% and Hinokiya Co., Ltd. at 12.4%)
• Interest-bearing debt of ¥1,850 million in short-term borrowings and interest rate rise risk (interest expense increased from ¥3,857 thousand in the same period of the prior year to ¥5,409 thousand in the current period)