Optics business drives results with +81.8% YoY revenue growth; order backlog of JPY 7.877B builds a solid foundation for achieving full-year targets

Key Positives From The Results

Revenue grew +29.0% YoY and operating income surged +63.2% YoY, with double-digit growth across all profit line items. Rapid expansion in the Optics business and the consolidation of Oyo Koken Kogyo lifted results, while order backlog rose +18.7% versus FY-end, expanding the scope for revenue conversion from H2 onward.

• Optics Business Revenue:
  JPY 1.077B (+81.8% YoY), segment profit of JPY 320M (+88.1% YoY), driven by demand for optical components used in semiconductor manufacturing and inspection equipment
• Order Backlog:
  JPY 7.877B (+18.7% vs. FY-end), led by the Optics business (+20.7% vs. FY-end) and Inspection Systems business (+82.2% vs. FY-end)
• Control Equipment Business – Steel Segment:
  Profit of JPY 226M (+90.1% YoY), supported by continued capex in high-grade steel and environmental compliance
• Non-Operating Expenses:
  Contracted to negative JPY 10M YoY, as JPY 10M in FX losses booked in the prior year were eliminated, lifting the recurring profit margin to 9.5%

Key Concerns From The Results

The Inspection Systems business posted a segment loss of negative JPY 218M, widening from negative JPY 82M in the prior year. In addition to the seasonal revenue skew toward Q2 onward, front-loaded costs related to order fulfillment are weighing on profitability; progress toward full-year breakeven warrants close monitoring.

• Inspection Systems Segment Loss:
  Negative JPY 218M (vs. negative JPY 82M in the prior year), attributable to higher costs on certain projects and front-loaded order fulfillment expenses
• Control Equipment Business – Functional Films Segment:
  Profit of JPY 79M (−32.7% YoY), reflecting lingering weakness in secondary battery-related capex
• Gross Profit Margin:
  Declined to 32.1% (vs. 35.5% in the prior year), pressured by a rise in the COGS ratio to 67.9% (vs. 64.5%)
• "Others" Segment:
  Loss of negative JPY 10M persisted; restructuring costs associated with the wind-down of the former Miyota Seimitsu operations are also anticipated

Focus Areas / Items To Monitor Going Forward

• Inspection Systems Full-Year Breakeven Outlook:
  The timing and profitability of revenue recognition from the JPY 1.271B order backlog (+82.2% vs. FY-end) from Q2 onward will be key
• Sustainability Of Optics Order Momentum:
  Demand cycle for optical components used in semiconductor manufacturing equipment and trends in customer capex plans
• Full-Year Contribution From Oyo Koken Kogyo Consolidation:
  Quantifying synergy creation and earnings contribution from the radiation measurement equipment business

Key Financial Highlights

Revenue rose JPY 661M YoY versus the prior-year Q1. The primary drivers were the initial consolidation of Oyo Koken Kogyo and the rapid expansion of the Optics business. However, the increase in COGS (+JPY 526M) outpaced the increase in gross profit (+JPY 134M), resulting in gross margin compression. SG&A growth was contained at +6.5%, and OPM improved to 8.0% (vs. 6.4% in the prior year).

Performance By Business Segment

The company comprises three business segments plus "Others." The Optics business accounted for 36.6% of consolidated revenue, up from 25.9% in the prior year. The Control Equipment business maintained steady growth, while the Inspection Systems business saw its loss widen despite an +82.2% surge in order backlog versus FY-end.

Segment Performance Table

Progress Versus Full-Year Guidance

Q1 revenue progress versus the full-year plan stands at 23.6%, while operating income progress is 12.4%—optically low. However, factoring in the seasonal revenue concentration of the Inspection Systems business from Q2 onward, the JPY 7.877B order backlog provides ample room for a H2 catch-up. Management has left guidance unchanged, indicating performance is broadly tracking the plan.

• The Inspection Systems business tends to concentrate revenue from Q2 onward; Q1 typically incurs front-loaded costs, making segment losses a structural feature of the quarter
• On a full-year basis, H2 (Q3/Q4) carries a higher revenue weighting, which inherently depresses Q1 progress rates

Changes To Guidance

H1 cumulative and full-year consolidated guidance for FY03/2027 remain unchanged from the figures announced on May 14, 2026. While orders are robust, higher order fulfillment costs and other factors leave overall performance broadly in line with the plan.

Commentary On Shareholder Returns

A 1-to-3 stock split was executed on August 1, 2026. The post-split FY03/2027 dividend forecast is JPY 14.00 interim and JPY 21.00 year-end (including a JPY 1.00 special dividend), for a full-year total of JPY 35.00. On a pre-split equivalent basis, this equates to JPY 105 per share (vs. JPY 89 in the prior year), representing a de facto increase. No change to the dividend forecast.

Financial Position

Equity ratio remains at a robust 82.8%, and the balance sheet is near net-cash. In Q1, dividend payments of JPY 386M reduced net assets by JPY 164M, but interest-bearing debt stayed at a low JPY 469M.

News Released Alongside The Earnings Announcement

None

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

None