NIRECO CORPORATION

Business Details

In the steel and non-ferrous metals field, the segment provides Process Control Equipment, Eddy Current Molten Steel Level Meters, and Edge Position Control devices for rolling and continuous casting processes. In the functional film and flexible packaging materials field, it offers Edge Position Control devices, Tension Control Equipment, registration control devices, and Print Quality Inspection Equipment for strip-shaped materials. Overseas subsidiaries in China, South Korea, and Taiwan also participate in sales. Global expansion is being promoted through collaboration with Germany's IMS Group and Erhardt+Leimer Group. This is the largest segment, accounting for approximately 52% of consolidated net sales.

Recent Overview

Decreased sales and profit, but order backlog expanded significantly by 18.8% year-on-year, and sales activities to India also commenced

In FY2026 (ending March 2026), the Control Equipment Business recorded net sales of ¥5,758 million (down 0.8% year on year) and segment profit of ¥1,398 million (down 10.1% year on year), representing both decreased sales and profit. The steel and non-ferrous metals field remained solid with net sales up 6.3% year on year, but profit declined 6.2% year on year due to the reactionary decline from the prior period's high proportion of high-margin product sales and rising cost of sales. In the functional film and flexible packaging materials field, both net sales and profit declined year on year due to the continued slowdown in orders from the secondary battery industry. Meanwhile, order backlog increased substantially to ¥3,214 million (up 18.8% year on year). Globalization was also advanced, including the launch of CPC sales activities for the steel and non-ferrous metals industry in India in cooperation with IMS Group's Indian subsidiary.

Key Products

Growth Drivers

• Continued expansion of capital investment by steel makers for high-grade steel, environmental applications, and facility consolidation
• Global expansion through strengthened collaboration with Germany's IMS Group (including new entry into the Indian market)
• Recovery trend in orders for Edge Position Control devices and Tension Control Equipment, and a substantial order for Print Quality Inspection Equipment
• Development of applications for meandering control devices for new power generation methods, including manufacturing equipment for perovskite solar cells
• Strengthening of domestic and overseas businesses, including control equipment and inspection equipment, through enhanced collaboration with Germany's Erhardt+Leimer Group
• Accumulation of future sales from an order backlog of ¥3,214 million (up 18.8% year on year)

Risks

• Continued slowdown in orders from the secondary battery industry to manufacturing equipment makers (pressuring sales and profit in the functional film/flexible packaging materials field)
• Rising cost of sales and declining profit margin due to ongoing inflation
• Fluctuations in profitability due to changes in the proportion of high-margin product sales
• Risk of oversupply of steel demand due to changes in the Chinese economic environment, and capital investment restraint by steel makers
• Impact on exports and overseas business due to fluctuations in U.S. trade policy and heightened tensions in the Middle East
• Declining trend in paper demand due to progress in digitalization in the paper manufacturing and printing markets

Business Details

A business handling quality inspection equipment for a wide range of fields, from food to electronic components and battery materials, based on the image processing technology cultivated by the Group over many years. Main customers include food manufacturers, secondary battery manufacturing equipment makers, film manufacturers, and steel/non-ferrous metal makers. Radiation Measurement Equipment from Oyokoken Kogyo Co., Ltd., which became a subsidiary in October 2025, was added to this segment from the fourth quarter, acquiring a business area that also addresses demand from the restart of domestic nuclear power plants.

Recent Overview

Net sales increased 20.3% year on year due to the addition of Oyokoken Kogyo; the loss narrowed but remained in deficit

Net sales for FY2026 (ending March 2026) were ¥1,904 million (up 20.3% year on year), a substantial increase. While both Plain Fabric Inspection Equipment and Food Inspection Equipment remained sluggish, the main driver was the addition of Oyokoken Kogyo Co., Ltd.'s radiation measurement equipment from the fourth quarter. Segment loss narrowed to ¥30 million from ¥89 million in the prior period, but the business did not return to profitability due to increased expenses from upfront investments. Order backlog in the Inspection Equipment Business also increased to ¥697 million, up 17.5% year on year, with inquiries for electrode inspection equipment continuing to increase.

Key Products

Growth Drivers

• Expansion of sales of electrode inspection equipment for manufacturing equipment of new power generation methods such as perovskite solar cells
• Enhanced added value and cultivation of new demand through the incorporation of AI discrimination functions into food inspection equipment
• Development of applications for new surface inspection methods using new AI discrimination techniques for the steel and non-ferrous metals industry
• Expansion of sales of Oyokoken Kogyo's radiation measurement equipment in line with the full-scale restart of domestic nuclear power plants
• Continued expansion of labor-saving and quality improvement needs in the manufacturing and food industries

Risks

• Impact on sales and profit if the slowdown in orders from the secondary battery manufacturing equipment industry continues
• Risk of prolonged segment loss due to increased upfront investment (R&D expenses, personnel costs, etc.)
• Risk of delayed profitability recovery if Plain Fabric Inspection Equipment and Food Inspection Equipment continue to underperform
• Uncertainty in profit contribution associated with the consolidation of Oyokoken Kogyo's performance, and risk of fluctuations in the nuclear power plant restart schedule
• An impairment loss of ¥30 million was recorded in the consolidated fiscal year under review, and the risk of declining profitability of fixed assets continues

Business Details

A business handling high-precision optical components (wave plates, prisms, etc.), laser equipment, and optical thin film products for semiconductor manufacturing and inspection equipment. Main customers are semiconductor manufacturing and inspection equipment makers. The segment consists of the Company (Nireco Corporation), Keihin Kohmaku Co., Ltd. (subsidiarized in October 2024), and Oyokoken Kogyo Co., Ltd. (subsidiarized in October 2025; the Crystal Optics division belongs to this segment). Backed by demand for miniaturization of advanced semiconductors, this segment has high growth potential and drives the Group's overall profitability.

Recent Overview

Sales and profit declined slightly, but order backlog expanded sharply by 47.0% compared to the end of the prior period

In FY2026 (ending March 2026), net sales were ¥2,855 million (down 1.6% year on year) and segment profit was ¥1,025 million (down 4.1% year on year), representing a slight decrease in both sales and profit as laser equipment sales settled down from a peak. On the other hand, a substantial order for optical components and multiple new orders for laser equipment were received in the fourth quarter, and orders from Oyokoken Kogyo Co., Ltd. were also added, resulting in a substantial increase in order backlog to ¥2,601 million (up 47.0% compared to the end of the prior period). To meet strong demand, the Company plans capacity expansion investment on the order of ¥2 billion over the next several years, aiming for the start of operations in FY2029 (ending March 2029).

Key Products

Growth Drivers

• Expanding demand for manufacturing and inspection equipment using deep ultraviolet (DUV) light in the semiconductor industry (order backlog remaining at a high level)
• Resolution of supply constraints and order expansion through capacity expansion investment on the order of ¥2 billion over the next several years (targeting the start of operations in FY2029 (ending March 2029))
• Expansion of the Group's technology and product lineup through the addition of the Crystal Optics division of Oyokoken Kogyo Co., Ltd. (subsidiarized in October 2025)
• Improved profitability through progress in performance improvement at Keihin Kohmaku Co., Ltd.
• Contribution to next-period sales from multiple new orders received for laser equipment

Risks

• Risk of lost opportunities due to tight production capacity (supply constraints until the completion of large-scale capital investment in FY2029 (ending March 2029))
• High dependence on the capital investment cycle of the semiconductor industry, with performance significantly affected during phases of restrained industry investment
• Risk of delayed performance improvement at Keihin Kohmaku Co., Ltd. (currently in the process of improvement, a factor depressing segment profit)
• Volatility in laser equipment sales (uneven distribution of sales between quarters due to concentration of projects)
• Impact on the semiconductor supply chain due to fluctuations in U.S. trade policy and geopolitical risks

Business Details

The "Others" segment consolidates businesses not included in the three reportable segments of Control Equipment, Inspection Equipment, and Optics, including the Machine Parts Manufacturing Business and the Electronic Equipment Assembly Business. It is small in scale, accounting for approximately 4-5% of the Group's overall net sales, and serves to complement the three core businesses. In FY2026 (ending March 2026), net sales were ¥505 million (up 7.8% year on year), turning around from the decline in the prior period. On the other hand, the segment fell into a loss of ¥12 million.

Recent Overview

Net sales recovered to ¥505 million, up 7.8% year on year, but the segment fell into a loss of ¥13 million

In FY2026 (ending March 2026), the "Others" segment recorded net sales of ¥505 million (up 7.8% year on year), turning around from the decline in the prior period. However, segment profit/loss deteriorated from a profit of ¥6 million in the prior period to a loss of ¥12 million (of the total segment loss of ¥30,987 thousand, ¥12,463 thousand was attributable to "Others"), and the decline in profitability was pronounced. Segment assets decreased from ¥813 million to ¥694 million. While the Group-wide recovery trend in orders was a tailwind, increased expenses pressured profit.

Key Products

Growth Drivers

• Boost in demand for machine parts and electronic equipment assembly in line with the Group's overall recovery trend in capital investment
• Increase in intra-Group demand due to the expansion of orders in the three core businesses (particularly the Optics Business and Control Equipment Business)

Risks

• The segment fell into a loss in FY2026 (ending March 2026), and the profit base is fragile with an uncertain outlook for a return to profitability
• As a complementary segment within the Group, its performance is easily affected by demand trends in the three core businesses
• Net sales account for only about 4-5% of the Group's overall total, limiting the capacity to absorb fixed costs
• Segment assets have decreased compared to the prior period, indicating a shrinking business base