Di-Nikko Engineering Co.,Ltd.

Business Details

The Japan Segment comprises the parent company (Dai Nikko Engineering) and domestic subsidiaries (Staffing & Outsourcing Services, Office Equipment Sales, Printed Circuit Board Manufacturing, and Parts Processing). It primarily engages in contract processing for electronic component mounting and mechanical assembly on printed wiring boards, serving electronic equipment manufacturers in the automotive, medical, industrial, and office equipment sectors as customers. Within the group's division-of-labor structure, it plays the role of producing small-lot, high-value-added products domestically.

Recent Overview

In 1Q, the Japan Segment saw a decline in sales and fell into a segment loss. Industrial equipment, board manufacturing, and staffing dragged down performance.

In the first quarter of FY2026 (ending December 2026), sales to external customers in the Japan Segment were ¥3,793 million (down 5.5% year on year), and the segment posted a loss of ¥10 million (compared with a profit of ¥158 million in the same period of the prior year). For industrial equipment, demand for semiconductor manufacturing equipment was suppressed due to concentrated investment in generative AI-related semiconductors, leading to a decline in sales. The board manufacturing subsidiary saw a decline in sales and profit due to inventory adjustments at ordering customers, while the staffing and outsourcing subsidiary saw a decline in sales and profit due to reduced orders from the parent company. The parent company's profit declined as cost increases were not passed through to prices as planned. On the other hand, the processing subsidiary saw increased profit due to an increase in deliveries of mold-related prototypes and containment of SG&A expenses, and medical equipment saw increased sales as orders related to X-ray examination equipment remained solid.

Key Products

Growth Drivers

• Continued sales growth for medical equipment: orders related to X-ray examination equipment remained solid
• Improved profitability at the processing subsidiary (NC Network Factory) through expansion of high-value-added parts sales and containment of SG&A expenses
• Expansion of orders for automotive electrical components
• Measures to expand the sales ratio of the medical and semiconductor fields under Phase 2 of the medium-term management plan
• Expansion of sales from development and design projects (¥560 million actual in 2025, ¥2,000 million target in 2026)

Risks

• Risk that the pass-through of rising raw material costs to selling prices does not proceed as planned
• Risk of declining orders for industrial equipment (related to semiconductor manufacturing equipment): suppression of other fields due to concentrated investment in generative AI-related semiconductors continues
• Risk of prolonged inventory adjustments at ordering customers of the board manufacturing subsidiary
• Risk of declining orders from the parent company at the outsourcing and staffing subsidiary
• Decline in export sales to the U.S. for automotive equipment due to the impact of Trump tariffs
• Risk that order acquisition related to large-scale examination equipment for medical equipment falls short of expectations
• Risk of impairment of fixed assets due to declining profitability of the domestic division (¥265 million recorded in FY2025, ending December 2025)
• Decline in orders for household living equipment amid sluggish housing starts due to soaring housing material costs