EBARA CORPORATION

Business Details

Targeting the buildings equipment market and industrial equipment market, this segment manufactures, sells, and maintains Standard Pumps (land-based, submersible, water supply), Refrigeration & Heating Machinery, and Blowers. With a wide network of domestic and overseas locations, it captures diverse demand including Service & Support in Japan, North America, Europe, Asia, the Middle East, and elsewhere. Under the medium-term management plan "E-Plan2028," the segment is pursuing improved global competitiveness and profitability through strengthening its management foundation via group-wide optimization.

Recent Overview

Orders received remained solid both domestically and overseas, with revenue and operating profit both increasing year on year

In Q1 FY2026 (ending December 2026), revenue was ¥63,075 million (up 12.0% year on year), segment profit was ¥4,408 million (up 1.8%), and orders received were ¥70,375 million (up 17.7%). Overseas, orders in Europe, the Americas, and Asia trended solidly and exceeded the same period of the prior year. Domestically, orders for Service & Support trended solidly and exceeded the same period of the prior year. Meanwhile, sluggishness in the buildings equipment market continued due to rising construction costs and labor shortages in North America, geopolitical risk in Europe, and the real estate market adjustment in China, causing the margin to decline slightly.

Key Products

Growth Drivers

• Continued expansion of domestic Service & Support demand (upward trend in the buildings equipment service market)
• Solid trend in overseas orders in Europe, the Americas, and Asia
• Resilient growth in cooling demand for North American data centers
• Development of new business models through IoT and labor-saving solutions leveraging the EBARA Maintenance Cloud
• Medium- to long-term expansion of industrial equipment investment in anticipation of decarbonization (e.g., growth investment in functional chemicals in the chemical market)

Risks

• Decline in the buildings equipment market due to continued adjustment in China's real estate market (a factor depressing overseas orders)
• Suppressed investment appetite due to rising construction costs, labor shortages, and geopolitical risk in North America and Europe
• Stagnation in industrial equipment investment due to sluggishness in Japan's domestic steel industry (increased imported materials, manufacturing sector weakness)
• Deferral of construction work and revision of plans due to concerns over rising material prices and labor costs (domestic buildings equipment market)
• Continued cautious investment stance due to the impact of US tariff policy (outlook for FY2026, ending December 2026)
• Risk of materializing impacts on logistics disruption and material prices due to the Middle East situation

Business Details

Targeting the oil & gas, power, and new energy markets, this segment manufactures, sells, and maintains Custom Pumps, Compressors & Turbines, Cryopumps, Expanders, and other equipment. Key subsidiaries include Elliott Company (US), Ebara Elliott, and Elliott Ebara Singapore, with global operations centered on the Middle East, North America, and Asia. The business consists of two pillars: products for the LNG, petrochemical, and power markets, and Service & Support. E-Plan2028 sets targets of an operating margin of 14.5% or higher and ROIC of 15.0% or higher. Note that from the current first quarter of the consolidated cumulative period, revenue and segment profit/loss from part of the hydrogen business have been included in this segment.

Recent Overview

Q1 orders received increased 31.7% year on year, while segment profit/loss fell into a loss

Orders received in Q1 FY2026 (ending December 2026) increased to ¥55,752 million (up 31.7% year on year), with product orders exceeding the same period of the prior year. Meanwhile, revenue decreased to ¥46,575 million (down 4.2%), and segment profit/loss fell into a loss of -¥1,666 million (compared with a profit of ¥1,979 million in the same period of the prior year). In the service field, maintenance demand had peaked and normalized, compounded by the impact of the Middle East situation on parts shipments and instructor dispatch. The full-year earnings forecast maintains revenue of ¥205,000 million and segment profit of ¥21,000 million.

Key Products

Growth Drivers

• Medium- to long-term expansion of demand in the LNG market (market outlook of approximately 6% growth in LNG for FY2026, ending December 2026) and recovery of customer investment sentiment in North America
• Medium- to long-term solid trend in Service & Support demand in the Middle East and Asia
• Transition of new decarbonization markets such as ammonia, hydrogen, and CCUS into the commercialization phase
• Continued demand for new thermal power plant construction and efficiency-improvement retrofits in the Chinese power market
• Strengthening competitiveness through focused investment in human resource development, technology and product development, and DX under E-Plan2028
• Expansion of business scope through the integration of part of the hydrogen business into the Energy segment

Risks

• Sluggish orders and profitability due to the normalization of maintenance demand in the service field (segment profit/loss fell into a loss in Q1 FY2026 results)
• Stagnation in parts shipments and instructor dispatch, and delays in some projects, due to the prolonged Middle East situation
• Risk of deteriorating profitability due to increased fixed costs (segment profit/loss was a loss in Q1 FY2026)
• Geopolitical risks such as tightened semiconductor export control regulations due to US tariff policy and US-China tensions
• Arbitration claim in India based on alleged violation of a non-compete obligation by Kirloskar Brothers Limited (amount of loss undetermined)
• Litigation related to a fire accident at the Naphtachimie ethylene plant in France (Elliott Turbomachinery S.A. named as defendant, amount of loss undetermined)
• Uncertainty in demand trends in the petrochemical market (ethylene market outlook for FY2026, ending December 2026, limited to approximately 3% growth)

Business Details

This business manufactures, sells, operates, and maintains Custom Pumps (Agriculture, Drainage, Water & Sewage) and Tunnel Blowers. Key customers are domestic public institutions (municipalities, the Ministry of Land, Infrastructure, Transport and Tourism, etc.), capturing stable demand for the renewal and repair of social infrastructure. Overseas, the segment also expands into water infrastructure markets in Southeast Asia, North America, and China. Under E-Plan2028, the segment is pursuing a strategy that combines maintaining the top domestic market share with overseas expansion. In Q1 FY2026 (ending December 2026), both revenue and operating profit exceeded the same period of the prior year, continuing to make a stable profit contribution.

Recent Overview

Revenue and profit increased, but orders received declined sharply, down 26.4% year on year

Revenue in Q1 FY2026 (ending December 2026) was ¥23,271 million (up 8.1% year on year), and segment profit was ¥6,126 million (up 9.4%), achieving both increased revenue and profit. Meanwhile, orders received fell sharply to ¥14,783 million, down 26.4% year on year. Overseas, some water infrastructure projects were affected by delays, and domestically, while orders for comprehensive-evaluation projects and after-sales services trended solidly, they fell short of the same period of the prior year, when multiple large projects were won. The full-year forecast for FY2026 (ending December 2026) is orders received of ¥60,000 million and revenue of ¥60,000 million.

Key Products

Growth Drivers

• Continued expansion of demand for renewal of aging domestic social infrastructure (medium-term plan for national resilience)
• Accumulation of domestic public-sector orders through measures to expand comprehensive-evaluation projects and after-sales service orders
• Increased demand in response to intensifying and more frequent natural disasters (river basin flood control, drainage pump installation)
• Expansion of demand in water infrastructure markets in Southeast Asia and North America driven by economic growth and aging facility renewal
• Expansion into remote monitoring and automation services through infrastructure DX

Risks

• Downward pressure on order unit prices due to fluctuations in domestic public investment budgets and intensifying bidding competition
• Risk of delays and plan changes in overseas water infrastructure projects (impact of the Middle East situation and China's economic slowdown)
• Risk of deteriorating profitability due to rising construction costs and labor costs
• Impact of an arbitration claim in India based on alleged violation of a non-compete obligation (Kirloskar Brothers Limited) (currently difficult to estimate the loss)
• Risk of period-to-period fluctuation in orders received and revenue due to uneven timing of large project awards

Business Details

Targeting the solid waste treatment market, this segment provides engineering and construction (EPC) and Operation & Maintenance (O&M) for Municipal Waste Incineration Plants (EPC), Industrial Waste Incineration Plants, and Water Treatment Plants. Key entities include Ebara Environmental Plant Co., Ltd. and the jointly controlled entity Swing Corporation (share transfer scheduled for July 2026). Main customers are domestic public-sector waste treatment facilities, and the segment also handles private-sector biomass power generation and industrial waste treatment facilities.

Recent Overview

Orders received expanded sharply, up 860.7% year on year, driven by large EPC and O&M project awards, with margins also improving significantly

In Q1 FY2026 (ending December 2026), orders received in the Environment segment expanded sharply to ¥32,494 million (up 860.7% year on year). In addition to the award of a large project for new construction of a public-sector waste treatment facility and a long-term comprehensive operation contract (one contract), the application of inflation-linked pricing A in O&M also contributed. Revenue was ¥30,138 million (up 28.4%), and segment profit increased substantially to ¥6,174 million (up 103.2%). The operating margin remained at a high level of 20.5%. Additionally, as a subsequent event, a resolution was passed to transfer all shares of the jointly controlled entity Swing Corporation to Infroneer Holdings Inc. (scheduled to be executed on July 1, 2026). In connection with this transfer, a gain on sale of the equity-method investment of ¥172 million (note: the original source stated ¥17.2 billion) is expected to be recorded in FY2026 (ending December 2026). The full-year forecast for segment profit in FY2026 (ending December 2026) is ¥9,500 million (revised upward from the previous forecast of ¥8,500 million).

Key Products

Growth Drivers

• Continued occurrence of large-scale improvement construction projects driven by increasing demand for renewal and life-extension of aging public-sector waste treatment facilities
• Accumulation of stable stock-type revenue through expansion of orders for long-term comprehensive operation contracts (O&M) (order backlog of ¥387,200 million)
• Continued construction demand for private-sector biomass power generation facilities and industrial waste treatment facilities
• Increase in O&M revenue through application of inflation-linked pricing clauses
• Maintenance of a high level of profitability (operating margin of 20.5% in Q1 FY2026, ending December 2026)

Risks

• New construction demand for public-sector waste treatment facilities is expected to remain flat at typical annual levels, limiting significant growth potential from EPC alone
• Large project awards tend to be one-off in nature, with uncertainty as to whether the sharp increase in orders seen in Q1 FY2026 (ending December 2026) will recur
• Following the share transfer of Swing Corporation (scheduled for July 2026), equity-method earnings from the water treatment plant business will disappear, changing the segment's revenue structure
• Ongoing litigation related to a fire accident at the Gifu City Eastern Clean Center bulky waste treatment facility (Gifu City has filed a final appeal)
• Risk of deteriorating construction profitability due to rising construction costs and labor costs

Business Details

Manufactures and sells vacuum pumps (Dry Vacuum Pumps), CMP Equipment, Plating Equipment, and Exhaust Gas Treatment Equipment essential to semiconductor manufacturing processes. Customers are global semiconductor device manufacturers, centered on logic/foundry and memory makers. In addition to product sales, the segment also provides Service & Support, growing on both axes in line with the recovery in customer factory utilization rates. In Q1 FY2026 (ending December 2026), this core business accounted for 33.7% of company-wide revenue and 47.3% of reportable segment profit.

Recent Overview

Q1 orders received expanded sharply, up 104.4% year on year, driven by AI-related demand, marking a new record high

In Q1 FY2026 (ending December 2026), orders received in the Precision & Electronics segment were ¥151,225 million (up 104.4% year on year), revenue was ¥82,949 million (up 32.9%), and segment profit was ¥13,531 million (up 63.9%), with substantial increases across all indicators. Equipment orders expanded particularly sharply, up 155.0% year on year. AI-related demand drove the market, centered on logic/foundry customers, with continued increases in customer factory utilization rates and expansion of production-increase investment. Memory-related demand has also been increasing, driven by AI demand. Note that from this first quarter, the sub-segment classification of the Precision & Electronics Business has been changed to two categories: "Equipment" and "Components."

Key Products

Growth Drivers

• Increased orders for CMP Equipment and vacuum pumps for logic/foundry customers driven by continued expansion of demand for AI-related semiconductors
• Expansion of Service & Support demand in line with the continued upward trend in customer factory utilization rates
• Expansion of production-increase investment driven by AI demand for memory
• Accumulation of order backlog driven by the projected growth of the WFE market of 10% or more in FY2026 (ending December 2026) (order backlog of ¥217,600 million)
• Substantial expansion of revenue for Taiwan, South Korea, and other parts of Asia (an increase of ¥24.6 billion year on year in revenue by region)

Risks

• Impact on China-related business due to tightened semiconductor export control regulations amid US-China tensions
• Uncertainty regarding the impact on market conditions and the company's business due to increased material and transportation costs stemming from the Middle East situation
• Uncertainty in orders due to fluctuations in customers' production-increase investment cycles
• Risk of increased fixed cost burden in the event of demand fluctuations, given the sharp expansion of capital expenditure (¥34,009 million in FY2025, ended December 2025)
• Risk of increased compliance costs due to tightening environmental regulations such as PFAS regulations

Business Details

The "Others" segment consists of business entities not included in the five reportable segments, such as regional headquarters companies including Ebara (China) Co., Ltd. Revenue from external customers was ¥300 million, less than 0.1% of the company total, and segment profit/loss was a loss of -¥1,675 million. The segment is primarily composed of internal group management and support functions, and does not have an independent target market or product lineup.

Recent Overview

Segment loss expanded to approximately 2.6 times the prior-year level, with the loss margin worsening significantly

Segment profit/loss in Q1 FY2026 (ending December 2026) was a loss of -¥1,675 million, an expansion of approximately ¥1,020 million from the loss of -¥655 million in the same period of the prior year. Revenue from external customers was ¥300 million (¥303 million in the same period of the prior year), remaining roughly flat, while orders received increased modestly to ¥320 million (¥275 million in the same period of the prior year, up 16.5% year on year). The main cause of the expanded loss has not been disclosed, but it is believed to be affected by increased group-wide common costs and upfront costs associated with strengthening regional headquarters functions.

Key Products

Growth Drivers

• Demand for strengthening regional headquarters functions in line with overall group business expansion (increases in revenue and orders received)
• Increase in orders received in line with expanding demand for internal group services (up 16.5% year on year)
• Sophistication of common group infrastructure development and management functions in connection with the promotion of the medium-term management plan "E-Plan2028"

Risks

• Structure in which the segment loss has expanded to approximately 2.6 times the prior-year level, persistently weighing down group-wide operating profit
• Revenue structure in which cost increases readily translate directly into expanded losses, given the minor level of external revenue (¥300 million)
• Indirect exposure to the risk of an economic slowdown in China's business through regional headquarters companies
• Risk of delays in planned group-wide common investments such as core system renewal (ERP)