Kokusai Electric (6525) Q3 2026 earnings summary

Executive summary

• Third quarter and cumulative nine-month revenue and profits declined year-on-year, but results were in line with revised forecasts, with service revenue rising due to DRAM upgrade modifications and equipment sales to China falling sharply.

• The semiconductor market is driven by generational shifts and capacity expansion in high-performance Logic and DRAM, with moderate recovery in consumer, auto, and industrial demand.

• Orders in Q3 exceeded expectations, with similar trends anticipated for Q4.

• Full-year earnings and dividend forecasts remain unchanged, with production increases planned for FY March 2027.

Financial highlights

• Q3 revenue was JPY 55.9 billion, down 7.1% year-on-year and 14.6% quarter-on-quarter; cumulative nine-month revenue was JPY 173.1 billion, down 0.9% year-on-year.

• Q3 adjusted operating profit was JPY 11.3 billion, down 18.6% year-on-year; cumulative adjusted operating profit was JPY 36.6 billion, down 17.8% year-on-year.

• Service revenue ratio rose to 40% for the cumulative three quarters.

• Free cash flow in Q3 was JPY 7.3 billion; operating cash flow exceeded investment outflows.

• R&D expenses for Q3 were JPY 4.2 billion (7.4% of revenue); capex was JPY 4.0 billion; depreciation was JPY 3.6 billion.

Outlook and guidance

• Full-year earnings and dividend forecasts are unchanged; revenue forecast is JPY 230.0 billion, with adjusted operating profit of JPY 44.4 billion and adjusted net income of JPY 31.8 billion.

• Service revenue ratio expected to rise to 39% as upgrade modifications increase.

• Non-China revenue forecast to rise 9% year-on-year; China revenue to fall 20% year-on-year.

• FY March 2027 revenue growth target revised upward to at least 20%, with WFE market expected to grow 10% in CY26.