TOKYO KEIKI INC.

Business Details

This segment centers on the manufacture, sale, and repair of marine and port equipment, with Tokyo Keiki's core operations handling the manufacture and sale of marine equipment. Its revenue base rests on equipment sales to the domestic and overseas newbuilding vessel market and high-level demand for maintenance services. In FY2026 (ending March 2026), revenue increased, but operating profit declined due to higher R&D expenses and other costs. The overseas sales ratio was high at 62.5% (¥8,545 million) of total revenue, giving the segment a structure in which performance is influenced by trends in the global shipbuilding market.

Recent Overview

Revenue increased, but operating profit fell 15.1% due to higher R&D expenses; order backlog rose 28.1%, indicating solid future demand

In FY2026 (ending March 2026), steady progress in demand for equipment for newbuilding vessels and continued high-level maintenance service demand drove revenue to ¥13,675 million (+9.1% year on year). On the other hand, operating profit declined to ¥1,317 million (-15.1% year on year) due to increased R&D expenses and other costs, with operating margin falling from 12.4% to 9.6%. Orders received rose to ¥15,280 million (+10.6% year on year), and the order backlog expanded to ¥7,309 million (+28.1% year on year), broadening the future revenue base. For FY2027 (ending March 2027), revenue of ¥14,800 million (+8.2%) and operating profit of ¥1,370 million (+4.0%) are forecast.

Key Products

Growth Drivers

• Steady progress in demand for equipment for newbuilding vessels (revenue +9.1% in FY2026, ending March 2026)
• Stable revenue from continued high-level maintenance service demand
• Accumulation of order backlog (¥7,309 million at end of FY2026, ending March 2026, +28.1% year on year)
• Improved visibility of future revenue from increased orders received (¥15,280 million, +10.6% year on year)
• Increased effect of yen conversion gains from the weak yen trend, given an overseas revenue ratio of 62.5%

Risks

• Margin pressure from increased R&D expenses and other costs (operating margin of 9.6% in FY2026, ending March 2026, down 2.8pt year on year)
• Foreign exchange fluctuation risk (overseas revenue ratio of 62.5%, risk of reversal of weak-yen benefits)
• Risk of demand fluctuation in the shipbuilding market
• Risk of cost ratio deterioration due to rising raw material and parts prices
• Risk of rising parts procurement costs due to China's tightened rare earth export controls and similar measures

Business Details

This segment manufactures, sells, and repairs hydraulic and pneumatic equipment and hydraulic application equipment. In addition to Tokyo Keiki's core operations, Tokyo Keiki Power System Co., Ltd. and affiliate TOKIMEC KOREA POWER CONTROL CO., LTD., among others, conduct this business. Its main customers are in the construction machinery, machine tool, and plastic processing machinery markets, with a sales network spanning both Japan and overseas. The segment is also advancing R&D on an edge AI system utilizing the Dynamically Reconfigurable Processor (DAPDNA). In FY2026 (ending March 2026), the construction machinery, machine tool, and overseas markets trended solidly, achieving increases in both revenue and profit.

Recent Overview

Solid performance in construction machinery, machine tools, and overseas markets drove increased revenue and profit, with cost ratio also improving

In FY2026 (ending March 2026), demand for plastic processing machinery applications was weak, but the construction machinery, machine tool, and overseas markets trended solidly, and revenue increased by ¥375 million (+3.3%) year on year to ¥11,836 million. Operating profit rose by ¥25 million (+12.7%) year on year to ¥222 million, as efforts to secure profit through appropriate pricing and enhanced sales of high-value-added products improved the cost ratio. For FY2027 (ending March 2027), revenue of ¥12,200 million (+3.1%) and operating profit of ¥280 million (+25.9%) are forecast.

Key Products

Growth Drivers

• Continued solid demand in the domestic machine tool market
• Expanding demand driven by a recovery trend in the construction machinery market
• Increasing demand in overseas markets, centered on Asia
• Improved profitability through appropriate pricing and productivity gains
• Improved cost ratio through enhanced sales of high-value-added products
• Development of new business areas through an edge AI system utilizing the Dynamically Reconfigurable Processor (DAPDNA)

Risks

• Downward pressure on revenue from the continued slump in the plastic processing machinery market
• High sensitivity to economic conditions in the construction machinery and machine tool markets, making performance prone to sharp changes amid macroeconomic deterioration
• Profit pressure from rising raw material and parts prices
• Risk of declining overseas demand due to a slowdown in the Chinese economy and the impact of U.S. tariff policy
• Risk of rising parts procurement costs due to China's tightened rare earth export controls
• Risk of product mix deterioration and rising cost ratio due to a decline in deliveries of hydraulic application equipment

Business Details

This segment manufactures, sells, and repairs fluid equipment. Its main products are ultrasonic flowmeters for the public-sector market (water, gas, etc.) and fire extinguishing equipment for multi-story parking structures. It has a stable revenue base centered on the domestic market, and is a highly profitable segment, with an operating margin of 16.1% (FY2026, ending March 2026) far exceeding the company-wide average (8.8%). Expanding sales of new products for private-sector and overseas markets is also positioned as a growth factor for the next fiscal period.

Recent Overview

Solid trends in public-sector and fire extinguishing equipment drove increased revenue and profit, maintaining operating margin above 16%

In FY2026 (ending March 2026), ultrasonic flowmeters for the public-sector market and fire extinguishing equipment for multi-story parking structures trended favorably, achieving increases in both revenue and profit, with revenue of ¥5,410 million (+7.8% year on year) and operating profit of ¥873 million (+10.6% year on year). The increase in revenue directly contributed to profit growth, and operating margin improved to 16.1% from 15.7% in the prior period. The order backlog also increased 19.8% from the prior period-end to ¥2,297 million, expanding the room for accumulation into the next fiscal period. For the next fiscal period (FY2027, ending March 2027), revenue of ¥5,500 million (+1.7%) and operating profit of ¥880 million (+0.8%) are forecast. Expanded sales of new products for private-sector and overseas markets are expected to serve as an additional growth factor.

Key Products

Growth Drivers

• Continued stable demand in the public-sector market (water, gas, etc.)
• Solid market trends for fire extinguishing equipment for multi-story parking structures
• Expanded sales of new products for private-sector and overseas markets introduced in the current period
• Room for accumulation into the next fiscal period from an increased order backlog (+19.8% from the prior period-end)

Risks

• Demand fluctuations due to changes in public-sector market budget trends and bidding environment
• Profit pressure from rising raw material and parts prices
• High dependence on the domestic market, limiting the benefit from foreign exchange due to a low overseas revenue ratio
• Risk that market penetration of new products for private-sector and overseas markets falls short of expectations

Business Details

This segment manufactures, sells, and repairs defense-related equipment (Aircraft-Mounted Equipment, Naval Vessel-Mounted Equipment, etc.), marine traffic system-related equipment, communication equipment, and sensor equipment. Its main customer is the Ministry of Defense, and against the backdrop of continued expansion of the defense budget, the order backlog remains at a high level. In FY2026 (ending March 2026), both revenue and operating profit increased significantly, positioning this segment as the driving force of profitability for the entire group. Subsidiary Tokyo Keiki Aviation Co., Ltd. handles repair and sales of aircraft- and naval vessel-related equipment.

Recent Overview

Expanding defense demand drove significant increases in both revenue and operating profit, with operating profit up 43.3% year on year

In FY2026 (ending March 2026), sales of Aircraft-Mounted Equipment and Naval Vessel-Mounted Equipment trended favorably against the backdrop of increased defense budgets, while Space-Related Equipment and mobile satellite communication antenna stabilizers within the communication equipment business also performed solidly. Revenue reached ¥26,015 million (+6.6% year on year), and operating profit surged to ¥2,344 million (+43.3% year on year). In addition to the revenue increase, an improved cost ratio from better pricing and changes in product mix contributed to the profit expansion. The order backlog remained at a high level of ¥43,235 million. For FY2027 (ending March 2027), driven by the delivery of large-scale projects such as the MEMS Hemispherical Resonator Gyroscope research and expansion of the space business, revenue of ¥31,100 million (+19.5% year on year) and operating profit of ¥3,500 million (+49.3% year on year) are forecast.

Key Products

Growth Drivers

• Increased orders and deliveries of Aircraft-Mounted Equipment and Naval Vessel-Mounted Equipment against the backdrop of continued defense budget expansion
• Visibility of future revenue from maintaining a high-level order backlog of ¥43,235 million (end of March 2026)
• Improved cost ratio from better pricing and changes in product mix (operating margin of 9.0% in FY2026, ending March 2026)
• Expanded sales of Space-Related Equipment and mobile satellite communication antenna stabilizers within the communication equipment business
• Development of new technologies and products through the 'Research on MEMS Hemispherical Resonator Gyroscope / Inertial Navigation Technology' with the Acquisition, Technology & Logistics Agency (large-scale project delivery planned for FY2027, ending March 2027)
• Development and mass production of Doppler lidar for the defense market through investment in and business alliance with Metroweather Co., Ltd.
• Expanded production capacity through enhanced production facilities such as testing equipment amid increased production for the defense business

Risks

• Risk of revenue concentration with the Ministry of Defense (the majority of segment revenue is directed to the Ministry of Defense, making it directly exposed to policy changes and budget cuts)
• Risk of reduced orders due to defense budget policy changes or cuts
• Risk of slowing accumulation of the order backlog going forward, given the significant decline in orders received to ¥26,004 million in the current period (-23.5% year on year)
• Risk of cost ratio deterioration due to product mix changes arising from the long-lead-time, build-to-order business model
• Risk of strain on production and staffing systems amid increased production for the defense business
• Risk of short-term cost increases from higher R&D expenses (¥2,883 million on a consolidated basis)
• Risk of rising material procurement costs due to China's tightened rare earth export controls

Business Details

This segment consists of businesses not included in the reportable segments, encompassing the manufacture and sale of inspection equipment for printed matter and other items, manufacture and sale of railway measurement equipment and contracted track inspection services, overseas sales of marine and hydraulic equipment parts, packing and crating, and information processing, software development, and factoring services. While supporting the group's logistics and IT infrastructure, the railway equipment business and inspection equipment business serve as the main drivers of external revenue.

Recent Overview

Revenue was flat year on year, but operating profit fell 9.4% due to a decline in the railway equipment business

Full-year revenue for FY2026 (ending March 2026) was ¥4,249 million (+¥2 million, +0.0% year on year), essentially unchanged from the prior period. The railway equipment business saw a revenue decline due to a decrease in the number of units sold of the mainstay Ultrasonic Rail Flaw Detection Car, but the inspection equipment business trended solidly, supporting overall results. Operating profit declined to ¥684 million (-¥71 million, -9.4% year on year). Orders received increased significantly to ¥5,572 million (+¥906 million, +19.4% year on year), and the order backlog also surged to ¥3,472 million (+¥1,322 million, +61.5% from the prior period-end), advancing the accumulation of future revenue. For the next fiscal period (FY2027, ending March 2027), revenue of ¥4,700 million (+10.6%) is expected, while operating profit is forecast to decline to ¥510 million (-25.5%) due to an increased depreciation burden associated with the head office relocation and other factors.

Key Products

Growth Drivers

• Accumulation of future revenue from a surging order backlog (¥3,472 million at end of March 2026, +61.5% from the prior period-end)
• Expansion of the railway equipment business product lineup through the new launch of sales of the Inertial Track Measurement System and increased sales of track inspection labor-saving devices
• Solid trends in the inspection equipment business and expected sales expansion in the next fiscal period
• Continued demand for information processing and software development amid the group's overall promotion of digital transformation
• Medium- to long-term demand for track inspection services against the backdrop of demand for railway infrastructure maintenance and renewal

Risks

• High dependence on revenue from the railway equipment business, with performance significantly affected by fluctuations in orders for the Ultrasonic Rail Flaw Detection Car
• Risk of increased costs, with operating profit for the next fiscal period (FY2027, ending March 2027) forecast to decline sharply by 25.5% due to an increased depreciation burden associated with the head office relocation and other factors
• Risk that performance is affected by trends in public investment and railway companies' capital expenditure plans
• Complexity of business portfolio management due to the coexistence of multiple small-scale businesses within the segment
• Risk of cost ratio deterioration due to rising raw material prices