DAIWA INDUSTRIES LTD.

Business Details

A single-segment company centered on the manufacture and sale of commercial refrigerators/freezers, showcases, and ice machines, which also operates a merchandise procurement and sales business for store and kitchen refrigeration equipment, and an equipment inspection and repair business. Its main customers are in the food service industry. In the sales composition for 1Q of FY2026 (ending December 2026), Products accounted for 57.1%, Merchandise 22.0%, and Inspection and Repair 21.0%. Domestic sales account for over 90% of the total, and the company maintains a solid financial base with an equity ratio of 75.4%.

Recent Overview

Sales increased 7.0% year-on-year, but operating profit declined 2.9% due to a rise in the cost-of-sales ratio, resulting in higher revenue but lower profit

In 1Q of FY2026 (ending December 2026) (January to March 2026), the company achieved sales of ¥11,224 million (up 7.0% year-on-year). Vertical commercial refrigerators/freezers for kitchen use (118.9% year-on-year) and store equipment (116.1% year-on-year) drove growth. On the other hand, cost of sales increased at a pace exceeding sales growth, reaching ¥5,058 million (up 12.5% year-on-year), causing the gross profit margin to decline to 55.0% (from 57.1% in the same period of the prior year). SG&A expenses also increased to ¥4,670 million (up 4.9% year-on-year), resulting in operating profit of ¥1,496 million (down 2.9% year-on-year). There has been no change to the full-year earnings forecast (sales of ¥49,400 million, operating profit of ¥8,400 million), and the annual dividend forecast for FY2026 (ending December 2026) remains at ¥60 per share (up ¥10 year-on-year). Additionally, due to share buybacks, the number of treasury shares at period end reached 2,603,957 shares (an increase of 250,056 shares from the end of the prior fiscal year).

Key Products

Growth Drivers

• Expanding sales through an enhanced lineup of IoT-enabled and natural-refrigerant commercial refrigerators
• Launch of sales of the new Cube & Crush Ice machine, which won the 2025 Good Design Award
• Sales growth trend in the food service industry, supported by recovering inbound demand and rising customer spending, underpinning equipment demand
• Enhanced hygiene support driven by expanding demand for optional ion generator units equipped with Plasmacluster technology
• Inspection and Repair Services account for 21.0% of sales composition, forming a stable earnings base
• Expansion into a comprehensive kitchen equipment manufacturer through strengthened comprehensive support capabilities addressing labor-saving, workforce-reduction, and HACCP compliance needs

Risks

• Continued price pressure amid intensifying competitive environment
• Risk of rising raw material prices pushing up cost of sales (1Q cost-of-sales ratio worsened to 45.1% from 42.9% in the same period of the prior year)
• Suppression of customers' capital expenditure due to chronic labor shortages in the food service industry and heightened consumer thrift amid rising prices
• Indirect risk of demand decline through adverse effects on personal consumption stemming from U.S. trade policy and volatility in financial and capital markets
• Demand fluctuations in the merchandise category, as seen in the sharp decline in store equipment installation work sales (66.8% year-on-year)
• Impact on the supply chain from geopolitical risks such as the situation in the Middle East