NGK Insulators (5333) Q2 2026 earnings summary

Executive summary

• Net sales for the first half of FY2025 rose 9.3% year-over-year to ¥326.2B, with operating income up 22.7% to ¥48.7B and ordinary income up 21.6% to ¥46.7B, all reaching record highs.

• Net income decreased 7.7% year-over-year to ¥23.87B due to extraordinary losses of approximately ¥11.7B from discontinuing NAS battery manufacturing and sales.

• Comprehensive income surged to ¥52.4B, up 682.6% year-over-year, driven by foreign currency translation and securities valuation gains.

• Business restructuring and portfolio transformation are underway, focusing on high-growth, high-profit domains and discontinuing unprofitable businesses.

Financial highlights

• FY2025 full-year net sales forecast raised to ¥650B, operating income to ¥85B, and ordinary income to ¥82B, all expected to be record highs.

• Net income forecast remains at ¥55B, unchanged due to offsetting extraordinary loss and gain on strategic shareholdings.

• Gross profit increased to ¥95.89B from ¥85.6B year-over-year.

• Extraordinary losses totaled ¥14.36B, including ¥11.69B in restructuring expenses and ¥2.49B in impairment losses.

• Free cash flow remains positive despite aggressive investment, with cash and equivalents projected at ¥189B at FY2025 end.

Outlook and guidance

• Sales and operating income are expected to reach record highs for FY2025, driven by strong demand in Digital Society and Energy & Industry segments.

• Market conditions are expected to cool in the second half, especially in the U.S., with a deceleration in growth.

• Extraordinary loss of approximately ¥18B to be recognized in FY2025 due to NAS battery business discontinuation.

• Assumed exchange rates for the second half: ¥145/USD and ¥170/EUR.