OKAMURA CORPORATION

Business Details

This segment manufactures and sells Office Furniture, Furniture for Public Facilities, Security Products, Healthcare-related Products, and other items. Manufacturing is handled by the Company, NS Okamura Corporation, Sanyo Okamura Corporation, Fuji Seiko Head Office Co., Ltd., Boss Design Limited, and others, while sales, logistics, construction, and services are handled by the Company, Okamura Support and Service Co., Ltd., Okamura (China) Co., Ltd., Siam Okamura International Co., Ltd., DB&B Holdings Pte. Ltd., Boss Design Limited, and others. The segment is capturing demand for open office layouts following the COVID-19 pandemic and demand for office relocation/renovation aimed at securing talent, driving overall group earnings.

Recent Overview

Both net sales and operating profit reached record highs. Overseas expansion strengthened through full consolidation of Boss Design

In the fiscal year under review (FY2026, ending March 2026), net sales in the Office Environment Business were ¥191,852 million (up 14.6% year on year) and segment profit was ¥22,630 million (up 30.3% year on year), both reaching record highs. This was mainly attributable to expanding demand for open office layouts and robust demand for office relocation/renovation aimed at securing talent. In addition, effective April 1, 2025, the Company made Boss Design Limited of the UK a wholly owned subsidiary, strengthening its business foundation in overseas office markets. Note that the segment name is scheduled to change to "Work & Life Creation Business" effective July 1, 2026 (no change to the segmentation method). Impairment losses of ¥480 million were recognized in the fiscal year under review, and the unamortized balance of goodwill was ¥9,020 million (amortization of ¥1,181 million for the fiscal year).

Key Products

Growth Drivers

• Expanding demand for open office layouts driven by an emphasis on communication following the COVID-19 pandemic
• Nationwide rise in demand for office relocation/renovation as measures for securing and retaining talent
• Strong proposal capabilities and product development capabilities based on research into future ways of working and abundant delivery track record
• Strengthened business foundation in overseas office markets through the full consolidation of Boss Design Limited
• Expanding business opportunities from renovation and new construction projects for aging facilities in the public market
• Expansion into the domestic BtoC market centered on task seating

Risks

• Increase in cost of sales and SG&A expenses due to rising procurement prices and soaring logistics costs
• Increase in fixed costs due to wage increases (5.48% implemented in the fiscal year under review)
• Uncertainty over the outlook due to geopolitical risks (situations in Ukraine and the Middle East) and the slowdown of the Chinese economy
• Risk of declining profitability of held assets, having recognized impairment losses of ¥480 million in the fiscal year under review
• Future impairment risk related to the unamortized goodwill balance of ¥9,020 million (from the acquisition of Boss Design, etc.)

Business Details

This segment manufactures and sells Store Display Shelving (Store Fixtures), Refrigerated & Frozen Showcases, Store Counters, and other items. Its strength lies in an integrated system that provides design, construction, and after-sales service, supporting retailers in addressing social issues such as labor savings and reduced environmental impact. With domestic and overseas retailers as its main customers, this is the group's second-largest business segment, accounting for approximately 35.3% of total group net sales. The segment name is scheduled to change to "Commerce Solutions Business" effective July 1, 2026.

Recent Overview

Both net sales and profit declined year on year, with rising fixed costs pressuring earnings

In the fiscal year under review (FY2026, ending March 2026), net sales were ¥116,171 million (down 1.8% year on year) and segment profit was ¥2,798 million (down 41.6% year on year), a significant decline. This was mainly attributable to an increase in fixed costs from strengthened staffing and talent development, as well as an increase in SG&A expenses due to office relocation. Although demand for store renovations itself remained solid, the Company was unable to absorb the cost increases. In addition, an impairment loss of ¥110 million was recognized in the fiscal year under review. Capital expenditures were ¥1,104 million, a significant decrease from ¥8,279 million in the prior fiscal year.

Key Products

Growth Drivers

• Rising demand for labor savings and operational efficiency at stores against a backdrop of labor shortages
• Increasing demand for environmentally friendly products and energy-efficient showcases (addressing social issues in the retail industry)
• Expansion of store operation support services utilizing digital technology
• Strengthened responsiveness to experience-oriented stores that emphasize experiential value
• Differentiation through an integrated system covering design, construction, and after-sales service

Risks

• Risk of pressure on profit margins from increased fixed costs due to investment in staffing and talent development
• Risk of rising costs due to soaring prices of materials and logistics costs
• Risk of declining demand due to restrained capital expenditure by retailers
• Risk of intensifying price competition with competitors
• Risk of declining asset efficiency, as seen in the occurrence of impairment losses (¥110 million recognized in the fiscal year under review)

Business Details

This is a segment that manufactures and sells Storage Racks for Factories & Warehouses and Automated Logistics Equipment & Devices. It is a business area that captures demand for labor savings at logistics facilities against a backdrop of labor shortages, as well as needs to reduce logistics costs through high-density storage and highly efficient transport. In the fiscal year under review, as a reaction to record-high net sales recorded in the previous fiscal year, design engineer resources were concentrated on handling existing projects, which constrained new order-taking activities, resulting in a significant deterioration with net sales of ¥14,702 million (down 34.9% year on year) and a segment loss of ¥1,467 million.

Recent Overview

Net sales declined 34.9% and the segment recorded a loss of ¥1,467 million, falling from a profit in the prior fiscal year

As a reaction to the record-high net sales (¥22,599 million) recorded in the previous fiscal year, design engineer resources were concentrated on handling existing projects, which constrained new order-taking activities. As a result, order intake for the fiscal year under review declined year on year, with net sales of ¥14,702 million (down 34.9% year on year) and a segment loss of ¥1,467 million (compared with a profit of ¥1,619 million in the prior fiscal year). On the other hand, the Company launched its first software product, "Optify," in the fiscal year under review, and also began efforts to transition into an integrated integrator of logistics systems. In addition, the segment name is scheduled to change to "Smart Logitech Business" effective July 1, 2026.

Key Products

Growth Drivers

• Continued robust demand for labor savings at logistics facilities against a backdrop of labor shortages
• Expansion of investment in automation aimed at reducing logistics costs through high-density storage and highly efficient transport
• Rising demand for visualization and optimization through data, as logistics DX and automation implementation are positioned as key issues for sustainable management
• Strengthened positioning as an integrated integrator of logistics systems through the introduction of the warehouse optimization system "Optify"
• Stabilization of earnings through narrowing the focus on markets and customers, and transition to a continuous support model including post-launch operational support

Risks

• Constraints on new order-taking activities due to limited design engineer resources (risk of repeating the prior fiscal year's pattern)
• Volatility in earnings due to project concentration in a made-to-order business model
• Rising costs due to soaring prices of materials and logistics costs
• Increased fixed costs due to intensifying competition for talent acquisition and wage increases
• Uncertainty regarding recovery from the deteriorated performance, having recorded a 34.9% decline in net sales and a fall into loss

Business Details

The "Others" segment is a business category outside the reportable segments, including the powertrain business, with its main business being the manufacture and sale of Fluid Transmissions for Industrial Vehicles & Construction Machinery. Manufacturing is handled by the Company and Hangzhou Okamura Transmission Co., Ltd. (China), while sales, logistics, construction, and services are handled by the Company. Although small in scale, accounting for approximately 1.9% of consolidated net sales of ¥329,031 million, the segment maintains profitability.

Recent Overview

Both net sales and profit increased modestly; an impairment loss of ¥680 million was recognized related to the real estate business

In the fiscal year under review (FY2026, ending March 2026), net sales were ¥6,304 million (up 1.3% year on year) and segment profit was ¥182 million (up 16.0% year on year), a modest increase in both revenue and profit. Production results on a manufacturing cost basis were ¥5,678 million (up 4.9% year on year). On the other hand, an impairment loss of ¥680 million (related to the real estate business) was recognized in this segment, warranting attention from the perspective of asset efficiency. Capital expenditures were ¥347 million, a significant decrease from ¥801 million in the prior fiscal year.

Key Products

Growth Drivers

• Stable demand for fluid transmissions in the industrial vehicle and construction machinery markets
• Maintaining cost competitiveness through utilization of the manufacturing site in China (Hangzhou Okamura Transmission Co., Ltd.)

Risks

• Small scale, accounting for approximately 1.9% of consolidated net sales, resulting in low strategic priority within the group
• Recognition of an impairment loss of ¥680 million related to the real estate business in the fiscal year under review, indicating a materialized risk of asset impairment
• Segment assets have decreased from ¥11,277 million in the prior fiscal year to ¥10,669 million, indicating a trend of shrinking assets
• Risk that prolonged stagnation of the Chinese economy could affect operations and earnings at the manufacturing site in China