Thank you all for taking the time to join us today, especially given the intense summer heat. I would like to begin by reviewing our third-quarter financial results. First, let me highlight three key points from the third quarter. The first topic is the recovery progress of DIA-BUR sales in China. As we have explained in previous earnings presentations, sales of our DIA-BURs in China have continued to recover steadily following the resumption of sales. As shown in the table on the upper right, sales for the third quarter reached approximately JPY 580 million, representing a recovery to 87% of pre-recall levels. We believe this recovery phase will be largely completed within the current fiscal year. Looking ahead, we are preparing to move the DIA-BUR business into its next stage of growth, and we are focusing on two key initiatives.
First, we will expand our product lineup in high-growth segments such as aesthetic dentistry and orthodontics. Second, we will further enhance our products by improving both quality and cost competitiveness. With these initiatives, we are preparing to develop new markets with stronger and more competitive products from fiscal year 2027 onward. Our second topic covers the progress of our new product, JIZAI. We have been expanding sales primarily in Japan, India, and Vietnam, reaching cumulative sales of 220,000 pieces in the third quarter year to date. While this may appear to be a slower pace compared with the 180,000 pieces reported at the end of the second quarter, we have already achieved approximately a 10% market share in both Japan and Vietnam. Thanks to its excellent centering ability, JIZAI I is achieving solid market penetration. Looking ahead, we are now moving into the next phase of growth to further accelerate sales.
The first initiative is our launch in the Chinese market, where we obtained regulatory approval in May. We are currently preparing to begin shipments to logistic dealers in August, with sales to end users beginning in September. We are targeting a rapid rollout in fiscal year 2027 and have set a sales target of 200,000 pieces for the Chinese market. As shown on the bottom left, the second initiative in this phase is expanding our product lineup with JIZAI II, which features enhanced cutting efficiency. By combining our hand files with JIZAI I and JIZAI II, we will provide a comprehensive lineup that better supports dentists’ endodontic procedures from start to finish. The third initiative, shown in the bottom right, is the transition to mass production at our Smart Factory. While production has previously been carried out at the Takanezawa Factory, mass production at the Smart Factory will begin in September.
This transition is designed to unlock significant cost reductions. Although the production line is currently operating at around 40% utilization and depreciation expenses remain a burden in the near term, our ultimate goal is to cut costs in half compared to our operations at the Takanezawa Factory. Let’s now move on to our third topic: accelerating growth in India. As you know, India is one of the fastest-growing markets in the world and, together with China, represents a very large volume market. We view India as a strategically important market and intend to continue investing aggressively. This year marks the 10th anniversary of our Indian subsidiary. Since fiscal year 2020, following the COVID-19 pandemic, we have achieved sustained high growth with a sales CAGR above 20%. We intend to maintain this momentum and will continue to invest for growth, positioning India as a key growth driver.
Currently, more than 25% of our sales are generated in China, and we see India as an important growth engine that can help reduce our dependence on the Chinese market. Looking at our progress so far, the Dental segment has led the way as we are now the market leader in endodontic products with over 40% market share. Additionally, with MANI products already integrated into university training programs, we believe there is still significant room for further growth. We are also expanding our product portfolio across other business segments, starting with Eyeless Needles. While there are roughly 30- 40 suture manufacturers in India, we currently cover only about 1/2 of that market. To close that gap, we plan to localize our operations further and expand sales through a more locally driven approach. Turning to the Surgical segment, India is the world’s largest cataract surgery market in terms of procedure volume.
However, it is common practice for ophthalmic knives to be used multiple times, and as a result, our shipment volume ranks only around fifth or sixth globally. In other words, this is a highly cost-conscious and challenging market for us. At present, our products are mainly positioned in the premium segment, but we are working to expand our reach beyond that segment gradually. From a geographic perspective, India is a vast country, but we currently cover the market through eight locations nationwide, supported by a sales force of approximately 40 people. By further expanding this team and strengthening our sales capabilities, we aim to build India into a major pillar of our business. This concludes our three key topics. Next, let us review our consolidated financial results. For the third quarter, specifically, we achieved record quarterly sales of JPY 8.29 billion, representing an 11% year-on-year growth rate.
Our operating income margin was 28.8%, which was in line with the first quarter. As a result, we achieved the highest quarterly sales in our history. The key drivers of revenue growth were strong sales growth in China and favorable foreign exchange effects. On the profitability side, the key factors were higher gross profit generated from that revenue growth, an improved product mix, and better SG&A efficiency. These are essentially the same factors we discussed in the second quarter, and this favorable business environment has continued to support our growth. Turning to our year-to-date cumulative figures shown in the table, if you look at the progress ratios on the far right, net sales have reached nearly 75% of our full-year target, while all profit indicators have exceeded 80%. Given this strong progress, which is ahead of our original plan, we have revised our full-year forecast upward.
I will explain the details later in the presentation. Let us now turn to the next page, where we cover the details from operating income down to profit before income taxes. As in previous quarters, depreciation related to the Hanaoka Factory, which has not yet commenced operations, was recorded as non-operating expenses of approximately JPY 400 million. The new item on this slide is iRIS EYE, a German distributor of ophthalmic knives. Following our minority investment in the company, we recognized approximately JPY 10 million in equity method income during the third quarter. Let us now move on to the net sales status by segment. As illustrated in the waterfall chart, about half of our sales growth came from favorable foreign exchange effects, particularly the stronger euro and Chinese yuan. All three business segments delivered growth.
In particular, MANI Dental made a significant contribution driven by strong growth in DIA-BUR sales in China. Turning to our sales status by region, as I mentioned earlier, China made a significant contribution to growth, adding approximately JPY 1.2 billion in sales. India and Thailand also achieved growth, primarily driven by Eyeless Needles. Moving on to our operating income status, foreign exchange contributed approximately JPY 591 million, while higher gross profit contributed JPY 1.25 billion. These positive factors were partially offset by an increase in SG&A expenses of approximately JPY 663 million. The SG&A ratio for the quarter was 38%, which was somewhat higher than usual. This was primarily due to temporary expenses, including M&A advisory fees and audit costs. Excluding these temporary factors, our spending continues to be directed towards strategic initiatives, including the transformation of MMG and the strengthening of our business in the U.S. market.
Let's now take a closer look at each of our business segments. As you can see, we have maintained our standard format for quarterly net sales and operating income over the past three years. However, we have slightly adjusted the revenue growth rates table on the bottom right. Because our quarterly results can fluctuate significantly, we wanted to provide a clearer view of the underlying trend. The second column from the left shows the three-year CAGR based on a linear regression analysis, while the right-hand column shows year-to-date growth through the third quarter of fiscal year 2026 versus the previous year. Looking at these figures, global sales in our Surgical business continued to grow by 6%-7%, driven primarily by Europe, Japan, and India. In China, excess inventory and weak market conditions have negatively affected performance over the past several quarters.
However, these issues have largely been resolved, and we believe the business is now on a recovery trend. Distribution inventory has been reduced to 4.8 months and is approaching a normalized level. In addition, following the introduction of the DRG system in 2025, cataract procedure volumes declined as treatment costs were reduced. However, we are now seeing those volumes return to a normalized run rate. Against this backdrop, we will continue to strengthen our position in public hospitals, where we already have a strong presence, while also enhancing our sales channels serving private hospitals. In other developments, construction of our factory in China is well underway. Two weeks ago, we signed an agreement with the Nanhai district government in Foshan, Guangdong Province. As noted on the city's website, this area has a high concentration of Japanese companies.
We will build our facility there with mass production of ophthalmic knives planned from 2028. Looking ahead, our key priorities include expanding our businesses in Europe and the United States. One new development is that we have been registered as a supplier to U.S. Department of Veterans Affairs, VA hospitals, and we are now working to expand sales through this channel. Moving on to the Eyeless Needles segment, the overall market is growing at around 5%, and our goal is to consistently outgrow it by acquiring approximately 10 new customer projects annually. In the third quarter, we gained two new projects in Brazil and Italy, keeping us right on schedule. Another growth driver is the successful acquisition of GPO contracts in China by our customers.
With contracts now signed in 12 out of the 23 target provinces, a partial impact on sales is already factored in, and full-scale shipments will begin from the fourth quarter. Additionally, rather than controlling our Eyeless Needles business from Japan, we want to operate closer to the local markets. Specifically, as part of this effort, we have transferred nine customers in Asia to our subsidiary, MANI ASIA, during fiscal year 2026. Going forward, we will focus on expanding sales of specialty needles that leverage our technological advantages, while also enhancing customer support through solutions such as resin trays. Moving on to the Dental segment. Circling back to what I touched on at the beginning, DIA-BUR sales in China continues to perform well. Looking at the longer-term trend over the past three years, excluding the special factors related to China and MMG, our CAGR is approximately 6%.
Given that the market itself is growing at around 5%, we believe there is still room to accelerate growth. To achieve this, we are focused on rolling out new products. Specifically, we will drive the expansion of JIZAI sales, while also putting more effort into high-growth areas by expanding our portfolio of aesthetic and orthodontic burrs. Looking at MMG, third quarter cumulative sales reached JPY 1.5 billion, with an operating loss of JPY 290 million. The top three customers account for a significant portion of MMG's business. While demand from the major customer in North America remained solid, sales to customers in Europe were weaker than expected. This shortfall led to a slight year-on-year decline in profit. Our goal remains to achieve profitability this fiscal year, but we recognize that the path has become somewhat more challenging. That said, our strategy remains unchanged.
We will continue to prioritize our OEM customers while simultaneously accelerating the launch of proprietary brand products. That concludes my overview of our three business segments. Turning to our balance sheet, we saw an increase in cash and deposits due to increased free cash flow alongside an increase in retained earnings. Lastly, we have revised our full year forecast upward. Specifically, we raised our net sales forecast by JPY 100 million and our operating income forecast by JPY 500 million. Subtracting our year-to-date results from these figures implies fourth quarter net sales of JPY 8.5 billion and an operating income margin of 26%. While this points to record- high sales, you might look at that profit margin and wonder if our guidance is overly conservative. To clarify, we have factored in a few specific items. First, production volume was relatively high in the third quarter.
As we adjust production levels back to a more appropriate level, we expect an impact of approximately JPY 160 million on profit. Second, we factored in roughly JPY 80 million for the disposal of long-term stagnant inventory, specifically products held for over five years. Finally, we have built in a profit buffer of approximately JPY 200 million. This accounts for potential revenue risks, as well as the possibility of various external expenses, such as potential M&A activities. If these risks do not materialize, we expect to achieve further upside at year-end. This concludes my presentation. Thank you for your time today.