Japan Process Development (9651) FY2026 Earnings Deep Dive Report: Record Performance and Early Achievement of Mid-Term Plan

Japan Process Development Co., Ltd. (Securities Code: 9651) achieved record-high net sales and operating income in its consolidated financial results for the fiscal year ended May 2026, marking five consecutive years of revenue and profit growth . The company also reached a Return on Equity (ROE) of 10.0% and achieved key targets of its mid-term management plan ahead of schedule, demonstrating robust business performance.

FY2026 Consolidated Earnings Highlights and Key Indicators

For the fiscal year ended May 2026, consolidated net sales reached 12,119 million yen (up 15.7% year-on-year) , and operating income was 1,509 million yen (up 31.8% year-on-year) . Ordinary income amounted to 1,525 million yen (up 19.0% year-on-year). Net income attributable to owners of the parent was 1,138 million yen, which was primarily due to the absence of the 841 million yen gain on sale of investment securities recorded in the previous fiscal year. Excluding this special gain, net income effectively increased. Against the initial plan, net sales achieved 105.4%, operating income 119.8%, and net income 120.5%, indicating that all key metrics surpassed the company's initial projections .

The Return on Equity (ROE), a measure of management efficiency, reached 10.0% , an improvement of 1.8 percentage points year-on-year even when excluding special gains. Regarding shareholder returns, the company implemented a dividend increase for the seventh consecutive year , with an annual dividend of 76 yen per share (up 14 yen from the previous year). Employee returns were also prioritized, with an average wage increase of 3.7% for all employees for the fourth consecutive year. Performance-linked bonuses reached a record high for the ninth consecutive year, and the average annual income in 2025 increased for the ninth consecutive year to 8.85 million yen. As part of its social contribution activities, the company donated a total of 10.9 million yen to three organizations.

These key highlights are summarized in the following slide: This slide succinctly illustrates that the FY2026 financial results were not merely strong in terms of financial figures, but also represented a multi-faceted success in returning value to shareholders, employees, and society as a whole . Specifically, the five consecutive years of revenue and profit growth, the achievement of 10.0% ROE, and seven consecutive years of dividend increases are crucial indicators of the company's sustainable growth and management stability.

Analysis of Operating Income Increase Factors

The primary reason for the 364 million yen (31.8%) increase in operating income year-on-year was a significant 716 million yen increase in operating income accompanying higher sales . While strategic human resource investments led to an increase in expenses of 366 million yen , this investment was absorbed through improvements in productivity and control over selling, general, and administrative expenses, ultimately resulting in an overall profit increase. This suggests that the company successfully balanced aggressive investments for future growth with efficient management to secure profits.

Quarterly Performance Trends

Quarterly net sales showed a steady upward trend from the beginning to the end of the fiscal year. Operating income and ordinary income also increased with the expansion of net sales, although increased personnel recruitment costs in the fourth quarter temporarily weighed on profits. Net income, excluding the gain on sale of investment securities from the previous fiscal year, showed a consistent increase.

Segment-Specific Performance Overview

All segments achieved revenue growth:

• Control Systems: Net sales of 1,945 million yen (up 14.0%), profit of 487 million yen (up 20.9%). Large-scale development projects related to power grids and railway ATOS progressed smoothly.
• Automotive Systems: Net sales of 2,632 million yen (up 9.3%), profit of 649 million yen (up 7.8%). CASE AD/ADAS and in-vehicle information systems performed well, but the segment experienced slower growth in the second half due to the impact of EV development cancellations.
• Specific Information Systems: Net sales of 2,013 million yen (up 12.3%), profit of 523 million yen (up 5.6%). Increased development volume in crisis management and new project acquisitions in aerospace contributed to growth.
• Embedded Systems: Net sales of 1,838 million yen (up 24.6%), profit of 371 million yen (up 38.9%). This segment recorded the highest growth rate among all segments . The company expanded its structure against the backdrop of a recovering semiconductor market, and IoT construction machinery-related projects also performed strongly.
• Industrial & ICT Solutions: Net sales of 3,689 million yen (up 19.4%), profit of 764 million yen (up 28.2%). This is the largest segment in terms of both sales and profit , driven by government-向け cloud development and social infrastructure station equipment development.

Consolidated Financial Position and Management Efficiency

Total assets amounted to 14.5 billion yen (up 120 million yen year-on-year), and the equity ratio remained very high at 79.7% , indicating a strong financial foundation . This healthy financial position is expected to support future business expansion and investment capacity.

The trend of Return on Equity (ROE), a critical indicator of management efficiency, is detailed in the following slide: This slide demonstrates that ROE has steadily improved from 6.9% in May 2023 to 10.0% in May 2026 . Even when excluding the impact of special gains (gain on sale of investment securities) in May 2025, ROE improved from 8.2% to 10.0%, indicating that profitability from core operations is increasing . This signifies that the company's ability to generate profits by efficiently utilizing capital has strengthened, which is an important factor for investors.

Long-Term Growth Trend

Looking at the trend of consolidated net sales and operating income over the past few fiscal years, net sales have consistently grown from 7,947 million yen in May 2022 to 12,119 million yen in May 2026, and operating income from 775 million yen to 1,509 million yen. Notably, the net sales growth rate for May 2026 was 15.7%, and the operating income growth rate was 31.8%, significantly exceeding the average annual growth rate of the previous mid-term management plan, confirming an acceleration in growth .

Progress and Achievement of the 7th Mid-Term Management Plan

The 7th Mid-Term Management Plan, covering May 2025 to May 2027, set targets of consolidated net sales of 12.0 billion yen or more, consolidated operating income of 1.2 billion yen or more, and an ROE of 8% or more for May 2027. However, in the fiscal year ended May 2026, the company achieved consolidated net sales of 12.11 billion yen, consolidated operating income of 1.50 billion yen, and an ROE of 10.0% , thereby achieving its mid-term management targets two years ahead of schedule .

This remarkable progress is clearly illustrated in the following slide: This slide clearly shows that Japan Process Development's actual performance for May 2026 has already significantly surpassed its mid-term management targets, strongly endorsing the management team's ability to achieve goals and the effectiveness of its business strategy . In particular, achieving all targets for consolidated net sales, consolidated operating income, and ROE ahead of schedule suggests that the company's growth momentum is very strong, providing crucial information that raises expectations for further future growth.

Growth Strategy and Focus Areas

The pillars of the mid-term management plan's growth strategy are human resource development and securing engineers . By improving T-SES (Technical Engineer Skill Evaluation System) levels, increasing the number of personnel capable of new design, and sharing know-how in AI-driven development (such as GitHub Copilot), the company is enhancing productivity and increasing orders for large-scale and new design projects. In May 2026, the company hired 12 mid-career and 65 new graduate engineers, with a turnover rate remaining around 3%, indicating smooth progress in its human resource strategy.

Key focus areas include DX in social infrastructure , with an emphasis on developing new systems using cutting-edge technologies such as IoT, cloud, and AI. Specifically, the company aims to expand its scale in AD/ADAS for automotive systems, cloud systems like government cloud, and aerospace/crisis management in specific information systems.

FY2027 Earnings Outlook and Shareholder Returns

For the fiscal year ending May 2027, consolidated earnings are projected to be net sales of 13.38 billion yen (up 10.4% year-on-year) and operating income of 1.665 billion yen (up 10.3% year-on-year) , anticipating continued revenue and profit growth. Growth is expected to be driven by power grids and railway-related projects in Control Systems, AD/ADAS in Automotive Systems, aerospace/crisis management in Specific Information Systems, semiconductor market recovery and storage development in Embedded Systems, and social infrastructure DX and government-related development in Industrial & ICT Solutions.

Regarding shareholder returns, the company conducted a share buyback (883,000 shares) in July 2026. For the fiscal year ending May 2027, the annual dividend is projected to be 92 yen per share (42 yen for interim, 42 yen for year-end, and 8 yen special dividend), which would mark the eighth consecutive year of dividend increases . This is based on a progressive dividend policy aiming for stable dividend continuation and a consolidated dividend payout ratio of 66%.