Tokyo Electron (8035) investor relations material

Executive summary

• Third quarter net sales were JPY 552.0 billion, down 12.4% quarter-over-quarter and 15.7% sequentially, with expectations for a rebound in the fourth quarter.

• Gross profit margin declined to 42.7%, impacted by product mix and increased fixed costs, but is expected to improve in the next quarter.

• Net income attributable to owners was JPY 118.5 billion, a 4.3% decline quarter-over-quarter and 24.6% year-over-year, with extraordinary income of JPY 37.2 billion from strategic share sales.

• The company operates in a single segment: semiconductor production equipment.

Financial highlights

• Operating income for the quarter was JPY 116.1 billion, down 26.7% from the previous quarter and 41.8% year-over-year.

• Cash and cash equivalents stood at JPY 418.4 billion, down JPY 36.7 billion from the previous quarter.

• Free cash flow was positive at JPY 84.3 billion.

• Capital expenditures in the quarter were JPY 30.3 billion, down 39.6% year-over-year.

• R&D expenses for Q3 FY2026 were JPY 66.2 billion, up 7.2% year-over-year.

Outlook and guidance

• FY2026 full-year net sales forecast revised upward to JPY 2,410 billion, with gross profit margin at 45.3% and operating profit margin at 24.6%.

• Net income for the year is expected to reach JPY 550 billion, a 12.7% increase from the previous forecast.

• Fourth quarter SPE new equipment sales projected to grow over 30% from the third quarter, mainly driven by logic and foundry customers.

• Full-year dividend per share forecast raised to JPY 601, an all-time high, with a payout ratio of around 50%.

• Share repurchase of up to JPY 150 billion (up to 7.5 million shares) announced for Q4 FY2026.