OHARA Inc. Q3 FY2026 Earnings Deep Dive: Surging Demand for Generative AI and Data Centers Drives Optical Business Restructuring; Full-Year Revenue Set to Reach Record Highs

Executive Summary

For the first nine months of the fiscal year ending October 2026, OHARA Inc. (Securities Code: 5218) , a leading manufacturer of optical glass, reported net sales of ¥24.23 billion (+15.0% YoY) , operating profit of ¥1.395 billion (-11.2% YoY) , ordinary profit of ¥1.808 billion (-7.5% YoY) , and net profit attributable to owners of the parent of ¥1.149 billion (+1.7% YoY) .

Although operating profit was weighed down in the first half by inventory adjustments for semiconductor lithography equipment and rising raw material costs, performance rebounded sharply in the third quarter (May-July). In particular, shipments of products for optical communication equipment —driven by increased data center investment—and low-dielectric glass used in printed circuit boards for AI servers surged. Consequently, the company has revised its full-year consolidated earnings forecast upward, projecting record-high revenue of ¥33.7 billion (+16.6% YoY) and operating profit of ¥2.1 billion (+17.0% YoY) .

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1. Q3 FY2026 Cumulative Performance Highlights and Quarterly Momentum

During the first nine months, both the Optical and Electronics segments achieved double-digit revenue growth. While cumulative operating profit declined due to temporary first-half inventory adjustments and cost increases, the quarterly trend shows a clear V-shaped recovery.

Quarterly Trends: Bottoming Out and Rapid Expansion

As shown in the quarterly trend graph above, net sales expanded from ¥7.175 billion in Q1 and ¥7.956 billion in Q2 to a record quarterly high of ¥9.098 billion in Q3 . Correspondingly, operating profit recovered sharply from the sluggish levels of ¥329 million in Q1 and ¥203 million in Q2 to ¥862 million in Q3 alone (significantly exceeding the ¥520 million recorded in the same period last year) .

The rapid growth in quarterly profit is attributed to two factors:

1. Increased volume and improved product mix in the Electronics segment : Full-scale shipments of high-value-added glass for data centers and AI servers.
2. Price revisions and growth in high-unit-price products in the Optical segment : Increased sales and optimized pricing for downstream digital camera products (lens blanks, polished lenses, etc.).

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2. In-depth Analysis by Segment

(1) Optical Business: Resilience in Digital Camera Demand and Profitability Improvements

Q3 cumulative net sales for the Optical business reached ¥13.123 billion (+18.4% YoY) , with an operating loss of ¥178 million (compared to a loss of ¥415 million in the same period last year) , marking a significant reduction in the deficit.

• Improvement in Volume and Product Mix (+¥362 million profit impact) : Driven by steady demand in the digital camera market, both optical press products (¥10.565 billion, +16.7% YoY) and optical block products (¥2.557 billion, +25.8% YoY) grew. Notably, the sales ratio of high-unit-price downstream products for digital cameras increased.
• Cost Factors and Price Pass-through (-¥80 million profit impact) : Despite headwinds such as rising raw material costs, rare earth procurement risks, and the abolition of VAT refunds in China, the company implemented product price revisions to secure appropriate margins, partially offsetting the impact of rising costs.

(2) Electronics Business: Driven by Generative AI and Data Center Demand

Q3 cumulative net sales for the Electronics business reached ¥11.106 billion (+11.3% YoY) , with an operating profit of ¥1.574 billion (-20.8% YoY) .

• Volume Increase (+¥464 million) : Sales of products for optical communication equipment increased significantly due to the surge in data center investment following the global adoption of generative AI.
• Cost Fluctuations and Product Mix (-¥762 million) : While product mix temporarily deteriorated in the first half due to customer-side inventory adjustments for semiconductor lithography glass, demand for both semiconductor and FPD lithography equipment is now on a recovery trajectory as of Q3.

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3. Revision of Full-Year Earnings Forecast: Significant Upward Adjustment

Capturing the favorable business environment since the start of the year, the company has incrementally revised its full-year earnings forecast. With this Q3 earnings announcement, the company has further raised its outlook in its third revision (announced September 11, 2026).

Key Points of Revision and Assessment of Business Environment

As shown in the "Summary of Earnings Forecast Revisions" slide above, the transition from the initial forecast shows a dramatic upward shift:

• Net Sales : Initial forecast ¥28.9 billion → Revision ① ¥29.9 billion → Revision ② ¥31.9 billion → Revision ③ ¥33.7 billion (+¥4.8 billion from initial)
• Operating Profit : Initial forecast ¥1.1 billion → Revision ① ¥1.6 billion → Revision ② ¥1.8 billion → Revision ③ ¥2.1 billion (+¥1.0 billion from initial, nearly doubling)

Background of Segment Revisions

• Optical Business : Net sales were revised upward to ¥17.8 billion (+¥0.9 billion from previous) as demand for high-unit-price downstream digital camera products and optical equipment exceeded expectations. However, operating profit was revised downward to -¥0.5 billion (-¥0.1 billion from previous) , accounting for one-time expenses related to the reorganization of optical glass production bases and inventory adjustments in Q4.
• Electronics Business : Driven by increased demand for optical communication equipment due to data center expansion, net sales were raised to ¥15.9 billion (+¥0.9 billion from previous) and operating profit to ¥2.6 billion (+¥0.4 billion from previous) , directly benefiting from revenue growth and an improved product mix.

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4. Future Growth Strategy and Mid-to-Long-Term Drivers: Breakthrough in Advanced Electronics Materials

OHARA’s mid-to-long-term growth drivers are clearly shifting from traditional camera-related optical glass to advanced electronic glass materials centered on generative AI, advanced semiconductors, and optical communications .

Key Products Driving Next-Generation Markets

As indicated in the "Electronics Business Outlook" slide, full-year net sales are expected to reach a record high of ¥15.9 billion (+17.0% YoY) . The trends for core advanced materials are as follows:

1. Products for Optical Communication Equipment (e.g., DWDM filter materials)
   • Due to rising demand for high-speed communication between cloud providers and data centers, sales are expected to reach approximately ¥1.0 billion, roughly double the previous year .
2. Low-Dielectric Glass for AI Servers
   • Adoption is progressing for printed circuit board materials that minimize signal loss during high-speed transmission, with sales also expected to reach approximately ¥1.0 billion, roughly double the previous year .
3. Specialty Glass and Quartz Glass for Semiconductor Lithography Equipment
   • Having passed the first-half inventory adjustments as a one-time event, demand for lithography equipment components is recovering, particularly in Japan and Asia.
4. Ultra-Low Expansion Glass-Ceramics "Clearceram™-Z" and High-Hardness Material "Nanoceram™"
   • These extreme technologies, which bring thermal expansion close to zero, have established an indispensable position in advanced industries such as semiconductor mask substrates, space, astronomy, and advanced structural components.

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5. Capital Investment, R&D, and Financial/Dividend Policy

Continued Aggressive Capital Investment and R&D

• Capital Expenditure : Planned at ¥2.3 billion for the full fiscal year ending October 2026 (¥1.528 billion in Q3 cumulative). The company is promoting efficiency through the expansion of production lines for advanced materials and the reorganization of production bases.
• Depreciation : Expected to be ¥1.5 billion for the full year, establishing a structure to generate cash flow while absorbing high levels of investment.
• R&D Expenses : ¥0.8 billion (2.4% of net sales) will be invested for the full year, accelerating the development of lithium-ion conductive glass-ceramics (LICGC™) for all-solid-state batteries and new glass types for next-generation communications.

Shareholder Returns

• The annual dividend is planned at ¥25.0 per share (same as the previous year's ¥25.0) . The company maintains a policy of sustaining stable dividends while restructuring its business foundation and investing in growth in advanced fields.

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Conclusion: Summary of Earnings

OHARA’s Q3 FY2026 earnings demonstrate a departure from the first-half impacts of semiconductor inventory adjustments and high raw material costs, showing a return to a robust trend of increasing revenue and profit with each passing quarter .

In the core Optical business, the profit structure is being normalized through production base reorganization and price revisions. In the Electronics business, which serves as the growth engine, optical communication components and low-dielectric glass for generative AI and data centers are expanding at double the pace of the previous year . The portfolio shift toward high-value-added fields is steadily bearing fruit, clarifying the path toward achieving record-high sales and profit recovery.