Earnings Call: Q4 2026

Apr 28, 2026

Good afternoon. I'm Kondo from Fuji Electric. Thank you very much for joining us for the earnings announcement briefing for the full year FY 2025 and management plan for FY 2026 in spite of your busy schedule. I'd like to get right into the explanation of the full year results for FY 2025. The year FY 2025 is the midpoint of the management plan, which concludes in FY 2026. We have spent a year focusing on the profit-oriented management, which has been our focus in the medium-term management plan. We are going to explain the numbers in detail later on, so I'd like to highlight the key points. Net sales, operating profit, and profit attributable to owners of parent all renewed record highs. Operating profit ratio reached 11% mark. Originally, we have been targeting at 11% level in the final year of the plan, FY 2026. However, we were able to achieve it one year ahead of schedule. In terms of ROE and ROIC, we achieved 13.1% and 12.6% respectively. medium-term plan targets are 12% or more and 10% or more respectively, which means actual levels are now within the range. However, since equity ratio has increased, further improvement of ROE is getting harder, which is a challenge we need to address. I'd like to touch on the changing business structure of Fuji Electric. This chart breaks our business down into Plant Systems and components. Plant Systems include Energy, automation systems, and IT solutions in industry. Components include FA Components, ED&C, Semiconductors, as well as Vending Machines. In FY 2023, the final year of the previous medium-term management plan, out of the total net sales of around JPY 1.1 trillion, Plant Systems represented 54% and components represented 46%. Components, which was 46% of net sales, generated 51% of profit. However, the mix has changed in FY 2025. Not only the mix of Plant Systems in net sales increased to 58%, it generated as much as 70% of profit. Even if you look at the operating profit ratio, it increased from 8.6% in FY 2023 to 13.3% in FY 2025. Fuji Electric has long mentioned that our value creation spans a wide range of power generation and a stable supply to the demand side of automation, energy conservation, and electric and electrification. We view the growth in Plant Systems, which we tackle social challenges in these fields, deliver values directly to customers as clear evidence that we have been on the right path to our vision. However, I don't mean that components are less important. We are a manufacturer, therefore, components are absolutely necessary as a base for value creation. We make unique components, combine them, and further combine them with digital technologies to create new values for customers. We think this is a path forward we should be on and will continue to pursue the best business mix in the medium to long term. I'd like to move on to explain FY 2026 management plan. I omit reading out numbers, but net sales, operating profit, and profit attributable to owners of parent are projected to all achieve the medium-term targets and continue to set new record highs. We plan to achieve the targets we set in the medium-term management plan. As I mentioned earlier, we project ROE and ROIC to be 12.8% and 12.6% respectively. They are within the range we have set in the medium-term management target, but still, sluggish growth in ROE remains a challenge. With that, let me explain our shareholders' return. For FY 2025, we set the year-end dividend at JPY 109, making the annual dividend JPY 200 and a dividend payout ratio of 30.1%. On the other hand, for FY 2026, we plan the total payout to be 50%. We continue dividend payout of 30%, interim dividend is projected to be JPY 107. In addition, to achieve total payout ratio of 50%, we will implement the share buyback up to JPY 21 billion in total. This fiscal year is the final year of our current medium-term management plan, and a new plan will begin in FY 2027. Recognizing the critical importance of financial strategy, we have decided on this shareholders' return initiative as a measure that can be implemented promptly and will serve as a stepping stone toward the next medium-term management plan. Let me go over the last theme. This graph plots the trend of results from FY 2023. After hitting the bottom in the pandemic year of FY 2020, in fact, net sales, operating profit, and profit attributable to owners of parent have been breaking the record highs every year to present. Towards sustainable growth, FY 2026 is going to be the important year to finish up the current medium-term management plan surely and finalize the next medium-term management plan. Incorporating growth investment, human capital investment, and shareholders' returns well in the plan, we would like to generate virtuous cycle of growth and investment and growth and shareholders' return. I'd like to finish FY 2026 well-positioned by driving both business strategies and financial strategies forward, ensuring a solid foundation for a fresh start beginning in FY 2027. I appreciate your continued support. This completes my presentation. Thank you very much.