ENVALITH
ユニオンツール株式会社 logo

UNION TOOL CO.

6278・Prime Market・Machinery

Official website
ユニオンツール株式会社 logo
UNION TOOL CO.6278

Business

Union Tool Co., Ltd., founded in 1960, is an industrial cutting tool manufacturer that has established itself as a world-leading company in the field of carbide drills for printed circuit boards (PCB Drills). Its core products are PCB Tools (Drills for Printed Circuit Boards) and Carbide End Mills, and it also handles Rolling Dies, etc. (Other Products). Domestically, the Nagaoka Plant and Mitsuke Plant serve as core production bases, and the company has built a global structure with subsidiaries in Taiwan, China, Hong Kong, Singapore, Thailand, the United States, and Switzerland. Its main customers are electronic device and semiconductor package substrate manufacturers as well as automotive parts manufacturers, and it is directly benefiting from the rapid expansion in demand for high-layer-count boards for AI servers and data centers driven by the spread of generative AI. Consolidated net sales for FY2025 (ended March 2025) reached a record high of ¥40,165 million.

Business Model

The core of profitability lies in the "in-house equipment production model," whereby the company develops and manufactures the production equipment used to manufacture cutting tools in-house. By concentrating over 60 years of know-how into its equipment, the company maintains a technological edge over competitors, and improves its product mix by increasing sales of high-value-added tools and tools for high-layer-count boards. The structure combines internal transfers (¥13,260 million) of tools manufactured in Japan and supplied to overseas subsidiaries (Asia, North America, and Europe) with improved utilization rates at local production sites, building up earnings globally. Capital expenditures are, in principle, funded from internal resources, and the company maintains a debt-free management policy.

Company Strengths

The company has maintained an in-house system for developing and manufacturing cutting tool production equipment for over 60 years. This accumulated know-how of "layering technology upon technology" is a source of differentiation from competitors, enabling rapid equipment start-up leveraging the strength of its proprietary equipment even amid sudden demand fluctuations. Total capital expenditures in FY2025 (ended March 2025) reached ¥5,720 million (self-funded).

Since beginning production of PCB drills in 1970, the company has continued technological development for over half a century. It has introduced cutting-edge products such as ULF coated drills for FC-BGA package substrates used in AI servers and data centers, as well as tools for high-layer-count motherboards, achieving Asia segment sales of ¥24,259 million in FY2025 (ended March 2025), up 33.0% year on year.

At the end of FY2025 (ended March 2025), total net assets stood at ¥79,998 million and total liabilities at ¥8,203 million, reflecting an extremely high equity ratio. The company held cash and cash equivalents of ¥16,423 million and maintains financial soundness by funding all capital expenditures and R&D expenses (¥2,341 million) from its own resources.

ENVALITH's Perspective

For Q1 of FY2026 (ending December 2026), net sales of ¥12,551 million and operating profit of ¥3,544 million represent extremely strong year-on-year increases of 42.6% and 60.4%, respectively. The full-year forecast (net sales of ¥49,600 million, operating profit of ¥13,000 million), which has already been revised upward, implies year-on-year growth of 23.5% and 48.9%, and Q1 progress rates of 25.3% for net sales and 27.3% for operating profit are on track. As an external factor, expanding demand related to generative AI is driving performance, and the smooth progress of capacity ramp-up suggests room for further upside.

The actual Q1 exchange rates were USD ¥159.88 and EUR ¥183.41, reflecting a weaker yen, whereas the full-year plan assumes rates of USD ¥145.00 and EUR ¥165.00, premised on significant yen appreciation. As long as actual rates remain weaker than planned, this will act as an upside factor for performance, but a rapid shift toward yen appreciation would expose downside risk. In addition, overseas sales account for 77.0% of total net sales, with Asia concentrated at 66.8%, meaning geopolitical risks in China and Taiwan and uncertainty over trade policy remain factors that could cause performance volatility.

The full-year capital expenditure plan for FY2026 (ending December 2026) of ¥10,469 million is approximately 1.8 times the prior-year actual of ¥5,720 million, and a total investment of approximately ¥32,370 million, including proceeds from the public offering, is planned to be allocated to the construction of the Nagaoka No. 6 Plant and equipment expansion. Depreciation expense is also expected to increase to a full-year plan of ¥4,636 million (from ¥3,316 million in the prior year), and the pace of investment payback will be a key determinant of medium-term profitability. Meanwhile, segment profit remains low in North America at ¥36 million (down 14.5% year on year) and in Europe at ¥35 million (up 2.3% year on year), and the structure of profit concentration in Japan and Asia continues.

Growth Strategy

Large-scale capacity expansion to capture AI-related demand, including construction of the Nagaoka No. 6 Plant and production capacity expansion funded through a public offering of new shares

Of the maximum estimated net proceeds of ¥32,370 million from the public offering, ¥4,197 million is planned to be allocated to construction costs for the Nagaoka No. 6 Plant by the end of June 2027. The company aims to establish a supply system capable of responding to the rapid expansion in AI-related demand.

From the public offering proceeds, ¥23,866 million for the Nagaoka Plant and ¥1,953 million for the Mitsuke Plant are planned to be allocated to capital expenditure funds by the end of December 2028. The full-year capital expenditure plan of ¥10,469 million (up 83% year on year) is currently being executed. First-quarter actual capital expenditure of ¥2,293 million (versus ¥793 million in the same period of the previous year) represents a substantial increase, and progress is proceeding smoothly.

The company is promoting increased sales centered on high-value-added tools for package substrates and high-layer-count boards for AI servers and data centers. In the first quarter, Asia segment profit increased 123.8% year on year and Japan segment profit increased 68.7% year on year, reflecting the emerging effects of increased sales of high-margin products.

The company is expanding internal transfer supply from the Japan segment to Asia, North America, and Europe (internal transfers of ¥4,845 million in the first quarter, versus ¥3,466 million in the same period of the previous year), promoting flexible supply response utilizing held inventory and expanding production and supply capacity.

The full-year R&D expense plan of ¥2,349 million (previous fiscal year: ¥2,341 million) is being maintained. First-quarter actual R&D expenses increased to ¥579 million (versus ¥507 million in the same period of the previous year). Any excess amount from the public offering proceeds is planned to be allocated to R&D expenses for cutting tool products and other products by the end of December 2027.

Last updated: July 17, 2026