RION CO., LTD.

Business Details

A segment that develops, manufactures, and sells liquid-borne particle counters, airborne particle counters, and related products. Its primary customers are semiconductor manufacturing plants, and it captures demand for new plant construction and expansion around the world driven by capital expenditure demand for data centers for generative AI and similar applications. The Company (development, manufacturing, sales), Rion Techno Co., Ltd. (manufacturing), Kyushu Rion Co., Ltd. (sales), and Rion Service Center Co., Ltd. (service) collaborate to conduct this business. TAIWAN AMITY TECHNOLOGY CO., LTD. of Taiwan is a major sales destination.

Recent Overview

Net sales increased, but profit fell 14.0% year on year due to capacity expansion and higher development expenses

In the Particle Counter Business for FY2026 (ending March 2026), continued capital expenditure demand for generative AI data centers and similar applications drove new construction and expansion of semiconductor manufacturing plants, and sales of liquid-borne particle counters were strong, resulting in net sales of ¥9,711 million (up 1.7% year on year). On the other hand, segment profit declined to ¥2,391 million (down 14.0% year on year) due to increased capacity expansion to meet high product demand and rising development expenses related to cutting-edge models, with the profit margin falling from 29.1% to 24.6%.

Key Products

Growth Drivers

• Continued expansion of demand for liquid-borne particle counters driven by new construction and expansion of semiconductor manufacturing plants amid growing semiconductor demand for generative AI-related data centers
• Rising demand for particle counters from new construction and expansion of semiconductor manufacturing plants worldwide, driven by responses to geopolitical risk
• Addressing needs for cutting-edge models (high-precision particle counters) amid semiconductor miniaturization
• Acquisition of new orders and expanded sales leveraging enhanced production capacity (net sales expected to grow approximately 19% and operating profit approximately 32% over the next three years)
• Continuation and expansion of transactions with major overseas sales destinations such as TAIWAN AMITY TECHNOLOGY CO., LTD. in Taiwan

Risks

• Continued pressure on profit margins from capacity expansion to meet high product demand and increased development expenses related to cutting-edge models
• Demand volatility risk due to the semiconductor market's capital expenditure cycle (e.g., postponement of large orders)
• Volatility in net sales as a reaction to the concentration of large orders related to new semiconductor plant construction in the prior period
• Risk of changes in semiconductor plant investment plans due to shifts in geopolitical risk (such as US-China friction)
• Risk of sales concentration with a specific customer (TAIWAN AMITY TECHNOLOGY CO., LTD.)

Business Details

This segment develops, manufactures, sells, and services hearing aids (Rionet series) and medical testing equipment (audiometers, audiometric test rooms, etc.). It is operated through a six-company structure comprising the Company, Kyushu Rion, East Japan Rion, Tokai Rion, Rion Service Center, and Rion Techno. Its primary customers are medical institutions such as ENT clinics, university hospitals, and general hospitals. It accounts for approximately 44.8% of consolidated net sales (FY2026, ending March 2026), making it the largest segment.

Recent Overview

Both sales and profit increased due to the contribution of the new product Rionet Plus, with profit margin improving to 9.7%

In the Medical Equipment Business for FY2026 (ending March 2026), net sales were ¥12,757 million (up ¥226 million, +1.8% year on year) and segment profit was ¥1,236 million (up ¥145 million, +13.4% year on year), achieving both higher sales and higher profit. For hearing aids, despite the impact of reduced personal consumption due to rising prices, sales increased due to the contribution of the new product Rionet Plus. For medical testing equipment, sales of large audiometric test rooms were strong, but equipment replacement was sluggish due to a cautious stance toward capital expenditure at university hospitals and other institutions, keeping net sales at the same level as the prior period.

Key Products

Growth Drivers

• Expansion of hearing aid sales through continued expanded sales of the new product Rionet Plus
• Increased awareness and store visits for hearing aids through strengthened collaboration with ENT clinics
• Strengthened sales of new medical testing equipment products and reliable acquisition of new domestic clinic openings
• Capturing equipment replacement demand as capital expenditure recovers at medical institutions such as university and general hospitals
• Medium-term growth outlook projecting approximately 5% sales growth (net sales forecast of ¥13,450 million for FY2029, ending March 2029) and approximately 17% growth in operating profit over the next three years

Risks

• Risk of declining hearing aid store visits due to continued suppression of personal consumption from rising prices
• Risk of sluggish medical testing equipment sales due to continued cautious capital expenditure stance at medical institutions such as university hospitals
• Profit pressure risk from increased depreciation (up ¥70 million year on year)
• Intensifying competition with competitors in sales and technology
• Risk of rising costs due to increased investment in new product development

Business Details

A segment that develops, manufactures, and sells acoustic and vibration measuring instruments such as sound level meters, vibration meters, seismometers, and frequency analyzers. It holds a high market share domestically and captures capital expenditure demand and equipment replacement demand related to infrastructure. Overseas, it has Norsonic AS of Norway as a subsidiary and is promoting expansion into Europe and Asia. As the group's third-largest segment, accounting for approximately 21.2% of group net sales, it achieved significantly improved profitability in FY2026 (ending March 2026), with net sales up 4.0% and profit up 348.2% year on year.

Recent Overview

Strong domestic and overseas sales combined with operational efficiency improvements drove a significant profit margin improvement from 2.8% to 12.2%

In the Environmental Instruments Business for FY2026 (ending March 2026), net sales were ¥6,033 million (up ¥232 million, +4.0% year on year) and segment profit was ¥733 million (up ¥569 million, +348.2% year on year), achieving a substantial profit increase. Domestically, in addition to capturing equipment replacement demand through the launch of new sound level meters and vibration meters, replacement orders for infrastructure-related seismometers and aircraft noise monitoring systems increased. Overseas, sales trended steadily due to expanded sales channels. The promotion of operational efficiency improvements greatly expanded the profit increase, with the segment profit margin improving dramatically from 2.8% in the prior period to 12.2%.

Key Products

Growth Drivers

• Continued equipment replacement demand from the launch of new sound level meters and vibration meters in the domestic market
• Increasing replacement orders related to seismometers and aircraft noise monitoring in the infrastructure-related market
• Increased sales through expanded sales channels in overseas markets (Europe and Asia)
• Strengthened sales infrastructure in the European market leveraging Norsonic AS
• Significant improvement in operating profit margin through operational efficiency improvements (2.8% to 12.2%)
• Three-year outlook projecting approximately 15% sales growth (net sales forecast of ¥6,950 million for FY2029, ending March 2029)

Risks

• Risk of downside overseas demand due to economic slowdown in Europe and China
• Profit pressure risk from increased new product development expenses (the three-year outlook anticipates operating profit growth of only about 2%)
• Intensifying competition with domestic and overseas competitors in sales and technology
• Impact on raw material and procurement costs from continued yen depreciation trends
• Demand instability due to fluctuations in the infrastructure-related capital expenditure cycle

Business Details

Rion Co., Ltd.'s "Other (Corporate & Adjustments)" is a category that records corporate assets not allocated to the three reportable segments: the Particle Counter Business, the Medical Equipment Business, and the Environmental Instruments Business. No net sales or operating profit are recorded, and only assets are disclosed. The total profit of the reportable segments matches the operating profit in the consolidated financial statements, and the adjustment amount is zero.

Recent Overview

Corporate assets increased by ¥2,807 million year on year, further strengthening financial soundness

At the end of FY2026 (ending March 2026), corporate assets (adjustment amount) stood at ¥11,894 million, an increase of ¥2,807 million from ¥9,087 million at the end of the prior period. Consolidated total assets were ¥41,784 million (up ¥2,651 million year on year), and net assets were ¥34,803 million (up ¥3,367 million year on year), with the equity ratio rising to 83.3% (from 80.3% in the prior period). The main drivers of the increase in net assets were an increase in retained earnings of ¥2,396 million and an increase in the accumulated adjustments for retirement benefits of ¥499 million. Cash and cash equivalents increased by ¥2,548 million year on year to ¥8,397 million, confirming a strengthened financial base.

Key Products

Growth Drivers

• Continued increase in net assets through the accumulation of retained earnings (profit attributable to owners of parent of ¥3,345 million for the current period)
• Stable generation of cash flows from operating activities (¥4,165 million in FY2026, ending March 2026, an increase of ¥728 million year on year)
• Increase in valuation difference on available-for-sale securities due to expanded unrealized gains on investment securities (from ¥481 million at the end of the prior period to ¥716 million at the end of the current period)
• Expansion of comprehensive income due to an increase in the accumulated adjustments for retirement benefits (from ¥698 million at the end of the prior period to ¥1,197 million at the end of the current period)

Risks

• Difficulty for investors in evaluating asset efficiency, as corporate assets are not allocated to any business segment
• Risk that an increase in corporate expenses could pressure consolidated operating profit (though the current adjustment amount is zero)
• Impact on net assets from fluctuations in the foreign currency translation adjustment account (improved from -¥42 million at the end of the prior period to ¥165 million at the end of the current period, though there is a risk of reversal in a future yen appreciation phase)
• Impact on comprehensive income and net assets from fluctuations in the fair value of investment securities