ZUIKO CORPORATION

Business Details

Manufactures and sells general industrial machinery and equipment, including Sanitary Napkin Manufacturing Machinery and diaper manufacturing machinery, on a made-to-order basis. Its main customers are hygiene product manufacturers in Japan and overseas, and it maintains sales networks across Japan, China, Asia, Europe, North America, and Latin America. From January 2026, the company newly launched a business for the manufacture and sale of Cotton Spunlace Nonwoven Fabric, and from the first quarter under review, changed its reportable segments to "Hygiene Products Manufacturing Machinery Business," "Cotton Spunlace Business," and "Other Business."

Recent Overview

Due to a shipment-timing skew at the Chinese subsidiary, first-quarter net sales fell 19.2% year on year, and the operating loss widened

Net sales for the first quarter of FY2027 (ending February 2027) (February 21, 2026 to May 20, 2026) were ¥4,170 million (down ¥993 million year on year). The main reason was that ZUIKO (Shanghai) Electrical Equipment Co., Ltd. recognizes sales on a shipment basis, and since its shipments are concentrated in the second quarter, its first-quarter net sales fell sharply by ¥2,108 million (down 95.0%) year on year. The operating loss widened to ¥225 million (compared with △¥76 million in the same period of the prior year). The new Cotton Spunlace business achieved profitability, with net sales of ¥1,135 million and segment profit of ¥13 million. In addition, based on a resolution of the Board of Directors, the company acquired 500,000 shares of treasury stock, increasing treasury stock by ¥485 million to ¥1,032 million. The full-year earnings forecast remains unchanged (net sales of ¥27,000 million, operating profit of ¥1,780 million).

Key Products

Growth Drivers

• Strengthening order-taking activities for Baby Diaper Manufacturing Machinery and Sanitary Napkin Manufacturing Machinery for emerging markets (prior-year order intake of ¥21,767 million, up 8.6% year on year)
• Strengthening order-taking activities in Europe through ZUIKO DELTA S.R.L. (Italy) (sales to Japan and Europe continued to progress steadily in the first quarter)
• Expanding value provision beyond machine bodies through parts and modification projects, etc. (first-quarter parts sales of ¥431 million, up 2.4% year on year)
• Full-scale operation of the Cotton Spunlace business (launched January 2026; first-quarter net sales of ¥1,135 million and segment profit of ¥13 million, achieving profitability)
• Setting a target of ¥8,000 million or more in new business net sales under the Fourth Medium-Term Management Plan (FY2026 (ending February 2026) to FY2028 (ending February 2028)), along with a policy of utilizing M&A
• Contribution to sales in subsequent periods from the accumulated order backlog (order backlog at the end of the prior fiscal year: ¥14,772 million)

Risks

• Risk of seasonal skew in sales to China (first-quarter net sales decline structurally occurring due to the shipment-basis accounting of ZUIKO (Shanghai) Electrical Equipment Co., Ltd.)
• Continued weak demand in the major markets of Japan and China (accelerating declining birthrate and delayed recovery in business sentiment)
• Risk of sales recognition timing delays due to project progress delays arising from the made-to-order production method
• Risk of increased costs due to delivery delays on new product projects involving high value-added functions (ongoing since the prior fiscal year)
• Risk of recording inventory valuation losses at overseas subsidiaries
• Intensifying competitive environment due to improved technological capabilities of competitors
• Cost ratio management risk associated with the launch of the Cotton Spunlace business