TSUZUKI DENKI CO., LTD.

Business Details

Comprises three business models: sales of information and communication equipment (Equipment), provision of technical services such as consulting, design, development and construction (Development & Construction), and provision of monthly services such as operation & maintenance and cloud (Services). Major affiliated companies include Tsuzuki Techno Service Co., Ltd., Tsuzuki Software Co., Ltd., Tsuzuki Cross Support Co., Ltd., and Com Design Co., Ltd. Following the sale of the Electronic Devices business in January 2024, the company transitioned to a single-segment structure. The market is on an expanding trend against the backdrop of accelerating DX and the advancement of generative AI.

Recent Overview

In the final year of the medium-term management plan, both net sales and operating income reached record highs, achieving substantial profit growth.

In FY2026 (ending March 2026), net sales were ¥103,728 million (up 5.6% year on year) and operating income was ¥8,178 million (up 26.2% year on year), representing increased revenue and a substantial increase in profit. Operating income and ordinary income both set record highs for the fourth consecutive period. In the Equipment business, orders received expanded rapidly, up 24.3%, driven by the acquisition of large-scale projects for government and financial clients, and the order backlog also grew to ¥16,904 million, up 62.7%. The company entered into an AI partnership with IBM Japan and enhanced the functionality of TCloud for SCM. On the other hand, the company recorded extraordinary losses of ¥956 million related to the rebuilding of core systems and an impairment loss of ¥367 million. For the following fiscal year (FY2027, ending March 2027), the company forecasts net sales of ¥107,000 million and operating income of ¥8,700 million, and has launched a new medium-term management plan, "Trust & Challenge 2029." The dividend policy has been significantly raised to a consolidated payout ratio of 60% and DOE of 6.0%, with an annual dividend of ¥190 planned (versus ¥126 in the prior period).

Key Products

Growth Drivers

• Continued expansion of the information and communication services market driven by accelerating DX and the rapid societal penetration of generative AI technology
• Acquisition of large-scale equipment projects for government and financial clients and substantial buildup of order backlog (¥26,902 million, up 32.9% year on year)
• Strengthening of a stable revenue base through expanded contracts in recurring-revenue businesses such as cloud solutions
• Acquisition of high-value-added projects through resource shifts toward focus areas such as logistics-oriented DX services and managed services
• Strengthened capability to provide AI-related solutions through the AI partnership concluded with IBM Japan
• Accelerated growth investment and enhanced corporate value under the new medium-term management plan "Trust & Challenge 2029"

Risks

• Adverse impact on the domestic economy from geopolitical risks such as U.S. trade policy and Middle East tensions
• Risk of cost increases and delivery delays in the equipment business due to memory supply constraints and price surges
• Risk of sales fluctuation in the equipment business due to the drop-off of large one-time special demand projects
• Risk of order losses in system development and network construction projects due to specification changes, cost overruns, and other factors
• Risk of constraints on business expansion due to labor shortages and difficulty securing personnel
• Risk of additional costs arising from the rebuilding of core systems (an extraordinary loss of ¥956 million was already recorded in FY2026, ending March 2026)
• Profit attributable to owners of parent is expected to decrease 11.2% in FY2027 (ending March 2027) due to the rebound effect from gains on sale of securities recorded in the prior period