Kokusai Electric (6525) Q2 2026 earnings summary

Executive summary

• Second-quarter revenue and profit increased year-over-year and sequentially, surpassing forecasts due to strong equipment sales, especially for NAND and upgrades, with some sales pulled forward from the second half.

• The semiconductor device market is seeing robust investment in high-performance Logic and DRAM for generative AI, while NAND investments focus on generation shifts; demand recovery in consumer electronics and industrial sectors remains moderate.

• Gross profit margin for the first half was 42.2%, down year-over-year, mainly due to product mix changes and concentration of shipments to China.

• Interim dividend of JPY 18 per share was confirmed as previously forecasted.

• Net income attributable to owners of the parent fell 13.8% year-over-year to ¥15,558 million.

Financial highlights

• Second-quarter revenue grew 33% year-over-year to JPY 65.4 billion, driven by equipment and service sales to Chinese manufacturers; net income up 85% year-over-year to JPY 8.8 billion.

• First-half revenue increased 2.3% year-over-year to ¥117,205 million, but adjusted operating profit fell 17% due to lower gross margin and higher R&D and SG&A expenses.

• Gross profit for the six months was ¥49,497 million, down from ¥51,366 million a year earlier.

• Service sales ratio increased to 38% as upgrades and modifications replaced some new equipment sales.

• Free cash flow for Q2 was JPY 7.1 billion; net debt stood at JPY 10.6 billion.

Outlook and guidance

• Full-year sales and profit forecasts were revised downward: sales revenue cut by 6% to JPY 230.0 billion and adjusted operating profit by 20% to JPY 44.4 billion, due to delayed equipment sales shifting into FY2027.

• Operating profit is projected to decline 24.4% to ¥38,800 million, with net income expected to fall 22.5% to ¥27,900 million.

• Despite lower forecasts, annual dividend guidance remains unchanged at JPY 36–37 per share.

• For FY2027, sales growth of over 10% is expected (including delayed sales), with at least 5% growth even excluding delays.

• WFE market growth for 2026 is projected at 5% year-over-year, with company sales expected to match or exceed this pace.