NS TOOL CO.,LTD.

Business Details

The company's core business is the manufacture and sale of "end mills," cutting tools mounted on machining centers for precision and micro-machining of metals and other materials. It focuses on small-diameter carbide products with a blade diameter of 6mm or less, which account for approximately 80% of handling volume (on a value basis). Domestically, products are distributed through agents and dealers, while overseas expansion into China, Asia, and North America is conducted through consolidated subsidiaries in Hong Kong and the United States. Products are supplied to a wide range of industries including automotive, semiconductors, electronic components, optical equipment, and medical devices. The reportable segments consist of two business segments, "End Mill Related" and "Other (Plastic Molded Products)," but since "Other" accounts for less than 10%, there is one reportable segment.

Recent Overview

Increased sales and profit driven by strong AI and semiconductor demand and favorable sales in Asia, achieving an ordinary profit margin of 21.2%, exceeding the 20% target.

In FY2026 (ending March 2026), net sales were ¥9,494 million (up 0.7% year on year), operating profit was ¥1,959 million (up 10.9% year on year), and ordinary profit was ¥2,011 million (up 13.0% year on year). Robust domestic demand for semiconductor-related products for AI and data centers, along with strong sales of automotive, optical, and data center-related products in Asia including Greater China, contributed to results. Cost reductions through mass production effects and the "Orange FC Activities" pushed the ordinary profit margin to 21.2% (up 2.3 percentage points year on year), exceeding the 20% target. To improve capital efficiency, the company repurchased treasury shares totaling over ¥1,307 million, and ROE improved to 8.0% (up 0.9 percentage points year on year). During the period, 14 new product models were launched. The forecast for the next fiscal year has been left undetermined due to sharp increases in the price of tungsten, the main raw material, and uncertainty over supply.

Key Products

Growth Drivers

• Robust tool demand for semiconductors, electronic components, and devices driven by AI-related and data center demand
• Growth in overseas sales driven by expanded sales of automotive, optical, and data center-related products in Asian markets including Greater China
• Continuous introduction of new products through agile development (14 new model numbers launched in FY2026 (ending March 2026))
• Mass production effects, cost reductions, and improved production efficiency through small-group improvement activities centered on the "Orange FC Activities"
• Promotion of unmanned and labor-saving operations through enhanced functionality of in-house developed tool grinding machines and expanded automated production lines
• Increased demand for precision and micro-machining in new growth areas such as medical and aerospace fields, along with expanding semiconductor and electronic component demand driven by the advancement of DX

Risks

• Sharp increases in international prices due to China's supply restrictions on tungsten, the main raw material, are squeezing manufacturing costs, making it difficult to reasonably formulate a forecast for the next fiscal year
• Impact on exporting companies from US tariff issues and sluggish tool demand growth due to the trend of reduced domestic production among automotive-related users
• Risk of declining profit margins due to continued increases in manufacturing costs and SG&A expenses, including labor costs, personnel expenses, and electricity costs
• ROE remains at 8.0%, still below the 10% target and the 8.6% cost of capital, making improvement of capital efficiency a challenge
• Uncertainty over the global economy due to geopolitical risks (US trade policy and China's economic trends) and the impact on overseas sales
• The impact of the new lease accounting standard (scheduled to apply from FY2028 (ending March 2028)) on financial statements is currently under evaluation