Ebara Jitsugyo (6328) H1 FY2026 Earnings Deep Dive: Analyzing Record-Breaking Performance, Upward Revisions to Mid-Term Plan, and Enhanced Shareholder Returns

Ebara Jitsugyo Co., Ltd. (Securities Code: 6328) reported strong financial results for the first half of the fiscal year ending December 2026, with both revenue and profit at all levels exceeding the same period last year against a backdrop of a robust market environment. This report provides a detailed analysis of the company's performance trends, segment-specific developments, upward revisions to the mid-term management plan, and the significantly expanded shareholder return policy, focusing on 10 key topics derived from the earnings supplementary materials.

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1. H1 FY2026 Earnings Highlights and Overview

For the cumulative first half of the fiscal year ending December 2026, the company reported revenue of 21.225 billion yen (up 0.1% YoY) , operating profit of 3.767 billion yen (up 7.5% YoY) , ordinary profit of 3.868 billion yen (up 7.4% YoY) , and net income of 2.675 billion yen (up 7.9% YoY) . Despite an increase in selling, general, and administrative expenses primarily due to higher personnel costs (up 122 million yen YoY to 3.799 billion yen), the growth in gross profit (up 384 million yen YoY to 7.566 billion yen) successfully absorbed these costs, ensuring profit growth.

The slide above summarizes the H1 earnings highlights and market environment. As shown, the company not only achieved growth in revenue and profit but also demonstrated strong momentum in orders received, which reached 21.952 billion yen (up 13.4% YoY) , and order backlog, which rose to 36.862 billion yen (up 15.5% YoY) . This substantial accumulation of order backlog provides high transparency and confidence regarding performance for the second half and beyond.

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2. Favorable Business Environment: Dual Drivers of Public Infrastructure and Private Capital Investment

Three primary trends are supporting the company's strong performance:

1. Steady demand for renewal and maintenance of aging public water infrastructure, as well as disaster prevention and mitigation measures.
2. Robust demand for equipment upgrades at domestic factories in the private sector.
3. Expanding demand for high-precision measuring instruments, particularly in the semiconductor industry.

The company's strength lies in a business structure capable of capturing demand from both public infrastructure investment backed by government budgets and private capital investment led by the manufacturing sector.

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3. Significant Expansion of Orders and Backlog: Factor Analysis

In terms of orders, orders received increased by 2.587 billion yen (+13.4%) YoY to 21.952 billion yen , driven significantly by the acquisition of large-scale projects in the Manufacturer segment. Consequently, the order backlog at the end of the second quarter reached 36.862 billion yen (up 4.960 billion yen / +15.5% YoY) , maintaining a record-high level.

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4. Segment Trends ①: Exceptional Growth in the Manufacturer Segment

The Manufacturer segment, which handles proprietary products, is a high-margin segment and the company's growth engine.

• Orders Received : 6.699 billion yen ( +105.3% YoY )
• Revenue : 4.038 billion yen ( +9.0% YoY )
• Gross Profit : 1.770 billion yen ( +9.2% YoY , gross margin of 43.8%)

By field, growth was driven by the Measurement field (revenue of 909 million yen, +78 million yen YoY), including ozone monitors for the semiconductor industry; the Deodorization field (revenue of 1.115 billion yen, +145 million yen YoY), which saw increased demand for deodorants and filters; and the Water Treatment Plant field (revenue of 1.655 billion yen, +328 million yen YoY), supported by water feature construction and land-based aquaculture projects.

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5. Segment Trends ②: Engineering and Trading Business Status

【Engineering Business】

Responsible for the design, construction, and maintenance of public water infrastructure, this segment saw orders of 8.162 billion yen (down 10.0% YoY) and revenue of 11.210 billion yen (down 6.5% YoY) due to the timing of orders and selective bidding. However, progress on high-margin projects maintained gross profit at 3.965 billion yen (up 0.1% YoY) , with the gross margin rising to 35.4% (+2.4 percentage points YoY) .

【Trading Business】

This segment, which acts as an agent for pumps and fluid machinery primarily from the Ebara Corporation group, achieved revenue and profit growth against the backdrop of steady domestic capital investment in the manufacturing sector, with orders of 7.089 billion yen (+0.8% YoY) , revenue of 5.976 billion yen (+8.3% YoY) , and gross profit of 1.831 billion yen (+14.4% YoY) .

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6. Progress and Outlook for FY2026 Full-Year Business Plan

The full-year plan remains unchanged from the initial forecast:

• Revenue : 44.000 billion yen (+6.8% YoY)
• Operating Profit : 6.300 billion yen (+2.9% YoY)
• Ordinary Profit : 6.500 billion yen (+2.9% YoY)
• Net Income : 4.500 billion yen (+2.6% YoY)

Progress through the second quarter stands at 48.2% for revenue and 59.8% for operating profit. Given the company's business model, which is typically weighted toward the second half (especially Q4), the company is on track to achieve record-high performance for the fourth consecutive year . The impact of longer lead times and price increases for certain materials due to Middle Eastern tensions is currently described as limited.

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7. Upward Revision of Mid-Term Management Plan "EJ2027"

Following the steady expansion of performance and alignment with market conditions, the company announced an upward revision to the performance targets for the final year (FY2027) of its mid-term management plan, "EJ2027."

This slide is a critical document showing the changes to the final-year targets and their background. Initially, the company aimed for an operating profit of 5.5 billion yen by FY2025; however, it achieved 6.121 billion yen in operating profit in FY2025, reaching the goal ahead of schedule . In response, the FY2027 operating profit target was raised by 1 billion yen (+18.2%) from 5.5 billion yen to 6.5 billion yen , and the revenue target was revised upward from 45 billion yen to 46 billion yen . With improved profitability, the company is targeting a high operating margin of 14.1%.

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8. Trajectory Toward the Long-Term Vision: "Total Environmental Solution Company"

For the fiscal year ending December 2030, the company has set long-term goals of 60 billion yen in revenue , 8 billion yen in operating profit , an operating margin of 13.0% , and an ROE of 15.0% or higher . The upward revision of "EJ2027" solidifies the milestones toward these goals, with further evolution expected in solution development across the "Environment," "Disaster Prevention," and "Fisheries" sectors.

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9. Significant Changes to Shareholder Return Policy and Trends in Dividends/Share Buybacks

In line with performance expansion and improved capital efficiency, the shareholder return policy has been significantly strengthened.

The graph and table above are key slides visualizing the company's dividend track record and future return plans. Key points include:

• Change in Basic Dividend Policy : The policy, previously targeting a "payout ratio of 35%," has been raised to a "payout ratio of 40%" starting from FY2026.
• Dividend Increase Plan : The annual dividend forecast for FY2026 is 75 yen per share , representing a 15 yen increase from the previous fiscal year (60 yen adjusted for the stock split; equivalent to a 30 yen increase to 150 yen pre-split).
• Share Buybacks : The company completed a share buyback totaling approximately 1 billion yen (402,900 shares) between February 10 and July 9, 2026, with the expected total return ratio reaching 61.9%.

The trend of consecutive dividend increases clearly reflects management's proactive stance toward shareholder returns.

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10. Notable Business Topics: Large-Scale Land-Based Aquaculture Order and New Disaster Prevention Product "Eba-Gates™"

Two major topics have been announced as new seeds for future growth:

1. Large-Scale Order for Land-Based Aquaculture (Seedling Production) Facilities

   • Received an order for facility renewal and the construction of red sea bream and tiger puffer seedling production facilities at the Futtsu Production Development Office in Futtsu City, Chiba Prefecture.
   • The construction period runs from March 2026 to March 2028, with a contract value of 2.7 billion yen (excluding tax) . This project represents a significant fruition of the company's comprehensive engineering business, leveraging technical expertise accumulated since the 1990s to meet growing needs for land-based aquaculture amid declining marine resources and changing ocean environments.

2. Launch of "Eba-Gates™," a New Product for Disaster Prevention and Mitigation

   • A groundbreaking system that integrates batteries and IoT technology to enable remote monitoring and operation of sluice gates.
   • In response to the increasing frequency of localized heavy rain and downpours, this system allows for real-time, accurate gate operation while avoiding the risks associated with workers traveling to sites. It is expected to be deployed as a niche-top product in the disaster prevention and mitigation sector.

---*This report is a neutral summary of disclosed information and does not constitute a recommendation to buy or sell any specific securities.