ORGANO CORPORATION

Business Details

Composed of the Plant Business, which includes facilities for pure water/ultrapure water production, water/wastewater treatment, and valuable resource recovery, and the Solutions Business, which includes consumable parts replacement, maintenance, operation management, and facility-ownership-type services. This is the core segment accounting for 85.5% of consolidated net sales, and it is developing large-scale projects in Japan, Taiwan, the U.S., and Europe, mainly for advanced semiconductor manufacturing. Capital expenditure expansion driven by generative AI demand serves as the main growth engine.

Recent Overview

Sales and profit both reached record highs, driven by steady progress on large-scale projects for advanced semiconductors and expansion of the Solutions Business

In FY2026 (ending March 2026), the segment achieved net sales of ¥151,961 million (up 10.0% year on year) and operating profit of ¥34,339 million (up 25.4% year on year). In the electronics industry field, plant projects in Japan, Taiwan, and the U.S. progressed smoothly, and facility-ownership-type services and various maintenance services also performed well. Gross margin improved due to profitability improvement initiatives and cost reductions centered on overseas plant projects, which absorbed the increase in SG&A expenses centered on personnel costs and IT-related expenses, resulting in a significant profit increase. Orders received reached ¥141,685 million (up 12.2% year on year), supported by orders for large-scale semiconductor-related projects in Taiwan, the U.S., and Europe.

Key Products

Growth Drivers

• Continued high level of capital expenditure for advanced semiconductors, driven by rapid expansion of generative AI demand and full-scale investment in data centers (orders for large-scale projects in Japan, Taiwan, the U.S., and Europe)
• Favorable trends in the Solutions Business, including facility-ownership-type services and various maintenance services, both domestically and internationally, contributing to improved profitability
• Progress on plant projects in the electronics-related field within general industry and expansion of the Solutions Business
• Increased orders and sales in the social infrastructure field (new and additional thermal power plant construction projects, nuclear power plant maintenance, etc.)
• Improvement of gross profit margin through profitability improvement initiatives and cost reductions centered on overseas plant projects
• Expansion of production and delivery capacity, including establishment of a local engineering structure in the U.S. and a new base in India

Risks

• Risk of timing mismatches in sales and orders due to variability in the timing of orders for large-scale projects (some large-scale projects were pushed into the next fiscal year during the current period as well)
• Risk of deteriorating profitability due to uncertainty in estimating total construction costs (arising from material price fluctuations and changes in work content)
• Risk of fluctuations in customers' capital expenditure plans due to heightened U.S. tariff policy and geopolitical risks
• Stagnation in some markets due to delayed recovery in non-AI-related semiconductors, such as sluggish EV demand
• Risk of cash flow fluctuations due to the prolonged period between facility construction and capital recovery for facility-ownership-type services (lease investment assets increased by ¥18,344 million during the current period)
• Risk of production and delivery capacity constraints due to intensifying global competition for talent and rising wages