Tokyo Electron (8035) Q1 2026 earnings summary

Executive summary

• Q1 net sales were JPY 549.5 billion, down 16.1% sequentially and 1.0% year-over-year, with operating income at JPY 144.6 billion and net income at JPY 117.8 billion.

• Field solution sales grew to JPY 141.2 billion, driven by advanced node demand, while strategic product development and customer evaluations progressed.

• The semiconductor market was supported by AI server demand, though general-purpose semiconductor demand was sluggish.

• Capital investment in mature equipment in China slowed, but memory and advanced package investments for generative AI increased.

• H1 FY2026 outlook targets JPY 1.15 trillion net sales and JPY 288.0 billion operating income.

Financial highlights

• Gross profit margin was 46.2%, with gross profit at JPY 253.97 billion, and operating margin at 26.3%, both down from previous periods.

• Net income attributable to owners was JPY 117.8 billion, a 17.6% sequential decrease and 6.6% year-over-year decline.

• Cash and cash equivalents at quarter-end ranged from JPY 356.3 billion to JPY 636.5 billion, with outflows driven by dividends and taxes.

• Free cash flow was positive at JPY 20.7 billion.

• R&D expenses for Q1 were JPY 62.1 billion, and capital expenditures were JPY 52.8 billion, both up year-over-year.

Outlook and guidance

• FY2026 full-year net sales forecast revised to JPY 2.35 trillion, with operating income at JPY 570 billion and operating margin at 24.3%.

• Gross profit expected to exceed JPY 1 trillion for the second consecutive year.

• Dividend per share forecasted at JPY 485, with a 50% payout ratio.

• R&D investment planned at JPY 295 billion; CapEx at JPY 240 billion.

• WFE market for calendar 2025 expected to reach $115 billion, but FY2026 WFE market outlook revised to -5% year-over-year.