Hakudo Co., Ltd. (7637) Q1 FY2027 Earnings Analysis Report

Hakudo Co., Ltd. delivered a stellar performance in the first quarter of the fiscal year ending March 2027, with net sales and all profit levels reaching record highs for a first quarter . Driven by the global surge in demand for semiconductors related to generative AI, the company saw a significant recovery and improvement in demand from its core semiconductor manufacturing equipment industry. Furthermore, the return to profitability in the North American segment and the continued impact of price revisions significantly boosted earnings.

This report provides a comprehensive analysis of the performance drivers, detailed breakdowns by industry, product type, and segment, the upward revision of full-year earnings forecasts, and the progress of mid-to-long-term growth strategies.

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1. Earnings Highlights and P&L Overview

Consolidated results for Q1 FY2027 were as follows: net sales of 21,934 million yen (+28.6% YoY) , operating profit of 1,378 million yen (+257.7% YoY) , ordinary profit of 1,476 million yen (+210.7% YoY) , and net profit attributable to owners of the parent of 1,017 million yen (+250.1% YoY) .

The significant profit growth was driven by a substantial increase in sales volume for both standard inventory and custom-made products, rising product unit prices due to higher raw material market conditions, and the continued effect of price revisions for small-lot orders implemented in the previous fiscal year. Additionally, the company achieved a major increase in operating profit by keeping the growth rate of selling, general and administrative (SG&A) expenses (+11.7%) well below the growth rate of gross profit (+51.6%).

[Significance of Slide 5 and Analysis of P&L Structure]

The consolidated P&L summary above illustrates the dramatic improvement in Hakudo's profitability this quarter. The gross profit margin rose by 2.5 percentage points, from 13.9% in the same period last year to 16.4% . Furthermore, sales of "standard inventory products," a key strength of the company, reached 12,614 million yen (+32.5% YoY), accounting for 57.5% of total sales and serving as a primary growth driver. At the ordinary profit level, even excluding the impact of inventory valuation, profit reached 1,123 million yen (+205.7% YoY), indicating extremely high growth. This suggests that the company's core earning power has improved dramatically , transcending temporary market factors.

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2. Analysis of Sales and Profit Drivers and Trends by Product Type

Factors Affecting Net Sales

Net sales increased by 4,875 million yen compared to the same period last year. The breakdown for Hakudo (non-consolidated) is as follows:

• Standard Inventory Products (Non-consolidated) : +997 million yen due to higher unit prices, +2,087 million yen due to increased volume (Total: +3,084 million yen)
• Custom-made Products (Non-consolidated) : +828 million yen due to higher unit prices, +867 million yen due to increased volume (Total: +1,695 million yen)
• For Hakudo's standard inventory products, total sales weight increased by 21.6% YoY, and unit prices rose by 8.6% .

Sales by Product Type

All major product categories outperformed the previous year:

• Aluminum : 13,662 million yen ( +30.7% YoY ) — Significant contribution from the recovery in demand for semiconductor manufacturing equipment.
• Copper Alloy : 3,548 million yen ( +51.3% YoY ) — Driven by increased demand from machine tools, data centers, and the automotive sector.
• Stainless Steel : 3,690 million yen ( +11.2% YoY ) — Success in strengthening sales of thin sheets.
• Other : 1,032 million yen (+9.9% YoY).

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3. Domestic Industry Sales Composition and Demand Trends

In terms of the industry composition of domestic sales, the share of the semiconductor and FPD manufacturing equipment industry has expanded significantly .

[Significance of Slide 8 and Changes in Industry Structure]

This slide shows the portfolio transition of demand industries in the company's domestic sales. The sales composition ratio of the semiconductor and FPD manufacturing equipment industry surged by 9.5 percentage points, from 36.9% in the same period last year to 46.4% . This upward trend has continued since Q3 FY2026, visualizing how the increased capacity utilization and capital investment by semiconductor manufacturing equipment makers—fueled by the global expansion of generative AI needs—are directly boosting the company's performance. While maintaining a diversified customer base including machine tools (15.1%), office equipment (7.2%), and pneumatic/hydraulic equipment (6.7%), the semiconductor sector has clearly become the primary driver.

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4. Performance by Regional Segment

Strong performance was observed across all regional segments:

• Japan : Net sales of 19,321 million yen (+32.3% YoY), operating profit of 1,213 million yen (+212.6% YoY). Strong growth driven by the semiconductor manufacturing equipment industry.
• North America : Net sales of 1,358 million yen (-15.7% YoY), operating profit of 51 million yen (compared to a 51 million yen loss in the same period last year) . Despite a decline in sales, the segment turned profitable due to improved margins resulting from a review of sales strategies.
• China : Net sales of 667 million yen (+57.7% YoY), operating profit of 54 million yen (turned profitable). Contributed by increased demand in the semiconductor manufacturing equipment-related industry.
• Other (Thailand) : Net sales of 587 million yen (+40.4% YoY), operating profit of 59 million yen (+25.5% YoY). Contributed by increased demand from data centers, molds, and the automotive industry.

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5. Upward Revision of FY2027 Earnings and Dividend Forecasts

Based on the strong Q1 progress and current demand trends, the company announced an upward revision to its interim and full-year earnings forecasts.

[Significance of Slide 17 and Review of Revised Plan]

This slide provides detailed data on the announced upward revision of earnings forecasts . Key changes from the previous forecast are as follows:

• Full-year Net Sales : 84,000 million yen → 92,200 million yen (+9.8% revision, +35.4% YoY)
• Full-year Operating Profit : 4,310 million yen → 5,060 million yen (+17.4% revision, +76.2% YoY)
• Full-year Ordinary Profit : 4,700 million yen → 5,190 million yen (+10.4% revision, +62.7% YoY)
• Full-year Net Profit : 3,210 million yen → 3,590 million yen (+11.8% revision, +67.3% YoY)

The revision incorporates the global semiconductor demand exceeding initial expectations and the steady trend in raw material market prices. The interim earnings forecast has also been revised upward, with ordinary profit projected to increase by 16.9% to 2,700 million yen.

Dividend Increase

In line with the upward revision of earnings, the annual dividend forecast has been increased by 15 yen to 143 yen per share (75 yen interim, 68 yen year-end) . The company maintains a policy of paying the higher of either a "full-year dividend payout ratio of 45% or more" or a "minimum annual dividend of 80 yen." The revised full-year projected dividend payout ratio is 45.1% .

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6. Mid-to-Long-Term Key Strategies and Implementation Status

Hakudo is promoting the following three key strategies to further strengthen its earnings base:

1. Evolution of Hakudo Net Service and DX Strategy

   • The proprietary "Hakudo Net Service" web system allows for 24/7/365 quoting and ordering. It handles approximately 5,800 standard items in-house and approximately 296,000 items sourced from other companies.
   • The number of user companies has reached approximately 15,000, with approximately 31,000 registered users, showing steady growth in both metrics. Convenience is being enhanced through screen renewals and improved quoting functions for processed drawings.

2. Expansion of Growth Areas

   • Semiconductor Area (46.4% of sales): Promoting centralized support through specialized departments and the accumulation of industry knowledge.
   • Automotive Area (4.4% of sales): Acquiring new customers through metal 3D printing and expanding sales of other products.
   • Aerospace Area (4.2% of sales): Strengthening import capabilities for aerospace-standard products from overseas manufacturers through collaboration with WCAS.

3. Expansion of Overseas Business

   • Following the introduction of EC packages in Thailand, China, and the U.S., the company is preparing for implementation at its equity-method affiliate in Vietnam and is considering implementation in Malaysia and Indonesia.
   • In India, the company has signed a contract with a sales partner and begun market research. The global sales network is being actively expanded, with the overseas sales ratio rising to 20.2% .

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Conclusion

Hakudo's Q1 FY2027 results were exceptionally strong, benefiting from the powerful tailwind of the semiconductor industry supported by generative AI demand, combined with operational efficiency gains through price optimization and the utilization of its net services. Structural reforms, such as the return to profitability in North American operations and the expansion of overseas e-commerce, are steadily yielding results. The company's full-year performance and the progress of its mid-term growth strategies remain key points to watch.