Explanation of the Financial Results for Q1 Fiscal Year Ending October 2026 (IR Materials)

Overview of Performance

The Q1 financial results for the fiscal year ending January 2026 saw net sales increase by approximately 26,000 million yen due to the new consolidation effect of Hilex Act, reaching 105,571 million yen, up 36.2% YoY. Operating income declined 12.3% to 1,189 million yen affected by delayed customs duty recovery, temporary issues in Mexico, and reduced sales of major products in Korea. However, ordinary income rose 37.7% to 2,431 million yen, and quarterly net income significantly increased by 4,335.8% to 33,355 million yen, influenced by gains on sale of securities and goodwill recognition.

Regional Segment Trends

In Japan, net sales rose 48.9% YoY driven by increased sales from Act and growth in existing businesses, though operating income was in the red due to Act's impact. The Americas experienced a 47.0% sales increase benefiting from Act despite semiconductor shortage-related declines, with operating income deficit widening. China showed strong performance with net sales up 42.9% and operating income up 119.1%. Korea saw net sales decrease by 14.2% and operating income fall 24.8%. Sales and operating income in other Asian regions and Europe & Africa showed growing trends.

Full-Year Earnings Forecast for 2026

The full-year net sales forecast remains unchanged at 401,000 million yen. Operating income forecast is also maintained at 5,400 million yen. Ordinary income forecast was revised upward to 7,400 million yen from the previous 6,500 million yen, and net income attributable to owners of parent was revised up to 36,850 million yen from 28,500 million yen. Exchange gains or losses are not included. The assumed exchange rates are 148 yen to the US dollar, 21 yen to the Chinese yuan, and 165 yen to the euro.

Impact of Exchange Rates and Tariffs

Currency fluctuations have minimal business risk due to the Group's local production and local delivery structure. However, Thai currency volatility is expected to impact annual operating income by approximately 100 million yen. Tariff impact on North American operations is about 3.7 million USD, of which approximately 59% has been recovered to date. Negotiations with customers to improve recovery rates will continue.