Event Summary
| Company Name | Kyocera Corporation |
| Company ID | 6971 |
| Event Language | JPN |
| Event Type | Earnings Announcement |
| Event Name | Financial Presentation for the Three Months Ended June 30, 2025 |
| Fiscal Period | FY2026 1Q |
| Date | July 30, 2025 |
| Time | 16:45 – 17:26 (Total: 41 minutes, Presentation: 14 minutes, Q&A: 27 minutes) |
| Venue | Webcast |
| Number of Speakers | 2 |
| Speakers | Hideo Tanimoto (President and Representative Director), Hiroaki Chida (Director, Managing Executive Officer, Executive General Manager of Headquarters (CFO)) |
Presentation Overview
Moderator: Thank you for your patience. Thank you for taking time out of your busy schedule to participate in today's Kyocera Corporation webinar. We will now hold a financial results briefing for the three months ended June 30, 2025. Please refer to our website for the materials that will be used today. Today's webinar is being recorded. Please understand this in advance. Let me first introduce today's attendees: Hideo Tanimoto, President and Representative Director; Hiroaki Chida, Director, Managing Executive Officer, Executive General Manager of Headquarters. We will now begin the explanation. President Tanimoto, please.
Tanimoto: I would like to take this opportunity to thank everyone for their continued support. Thank you very much for taking time out of your busy schedule to attend our financial results briefing today. I will now explain our financial results for 1Q of fiscal 2026 in accordance with the presentation materials.
Financial Results for 1Q of Fiscal 2026
Today, we will explain the items listed here in order. First, I will provide an overview of the financial results for 1Q of fiscal 2026.
Sales revenue for 1Q decreased by 4.2% YoY to JPY478 billion. Operating profit decreased by 11.5% to JPY18.6 billion, profit before income taxes decreased by 6.7% to JPY44.6 billion, and profit attributable to owners of the parent increased by 0.9% to JPY37.1 billion.
The average exchange rate was JPY145 against the US dollar, appreciated JPY11 YoY, and JPY164 against the euro, appreciated JPY4. This exchange rate change pushed down sales revenue by about JPY22 billion and operating profit and profit before income taxes by about JPY1.7 billion.
In addition, operating profit and profit before income taxes decreased by approximately JPY2.1 billion due to a one-time loss associated with the execution of an agreement to transfer the silicon diode power semiconductor business. On the other hand, the adjustment of tax expenses due to the sale of KDDI shares contributed to an increase in profit attributable to owners of the parent of approximately JPY4 billion.
Financial Results for 1Q of Fiscal 2026 (Summary)
Here is a summary of the 1Q results.
Sales revenue decreased due to lower sales in the Electronic Components Business and the Solutions Business, mainly because of the yen's appreciation against the US dollar.
The decrease in profits was due to the impact of lower sales and a one-time loss associated with the execution of an agreement to transfer the silicon diode power semiconductor business, despite the effect of improved profitability in each business.
Financial Results for 1Q of Fiscal 2026 (Capital & R&D)
This page shows capital expenditures, depreciation charge of property, plant and equipment, and R&D expenses.
Capital expenditures increased significantly, mainly due to the completion of new factory buildings constructed in Japan from previous years to expand production capacities and to promote automation.
Depreciation charge of property, plant and equipment decreased mainly due to the recording of a loss for impairment in the Organic Packages and Boards Business in fiscal 2025.
R&D expenses decreased due to the inception of selection and concentration of R&D activities from fiscal 2026.
Sales Revenue by Reporting Segment for Fiscal 2026 1Q
Page six lists sales revenue by segment.
| Fiscal 2025 1Q | Fiscal 2026 1Q | Change | ||||
|---|---|---|---|---|---|---|
| Amount | Component Ratio | Amount | Component Ratio | Amount | % | |
| Core Components Business | 145,088 | 29.1% | 145,856 | 30.5% | 768 | 0.5% |
| Industrial & Automotive Components Unit | 65,722 | 13.2% | 65,270 | 13.6% | -452 | -0.7% |
| Semiconductor Components Unit | 73,597 | 14.7% | 74,519 | 15.6% | 922 | 1.3% |
| Others | 5,769 | 1.2% | 6,067 | 1.3% | 298 | 5.2% |
| Electronic Components Business | 89,712 | 18.0% | 83,864 | 17.6% | -5,848 | -6.5% |
| Solutions Business | 269,042 | 53.9% | 253,007 | 52.9% | -16,035 | -6.0% |
| Industrial Tools Unit | 85,865 | 17.2% | 80,038 | 16.7% | -5,827 | -6.8% |
| Document Solutions Unit | 115,037 | 23.0% | 107,415 | 22.5% | -7,622 | -6.6% |
| Communications Unit | 51,318 | 10.3% | 45,586 | 9.5% | -5,732 | -11.2% |
| Others | 16,822 | 3.4% | 19,968 | 4.2% | 3,146 | 18.7% |
| Others | 4,214 | 0.8% | 3,430 | 0.7% | -784 | -18.6% |
| Adjustments and Eliminations | -9,188 | -1.8% | -8,119 | -1.7% | 1,069 | - |
| Sales Revenue | 498,868 | 100.0% | 478,038 | 100.0% | -20,830 | -4.2% |
Business Profit (Loss) by Reporting Segment for Fiscal 2026 1Q
Page seven is a list of profits by segment.
| Fiscal 2025 1Q | Fiscal 2026 1Q | Change | ||||
|---|---|---|---|---|---|---|
| Amount | % to Sales Revenue | Amount | % to Sales Revenue | Amount | % | |
| Core Components Business | 12,917 | 8.9% | 14,188 | 9.7% | 1,271 | 9.8% |
| Industrial & Automotive Components Unit | 6,172 | 9.4% | 7,777 | 11.9% | 1,605 | 26.0% |
| Semiconductor Components Unit | 6,472 | 8.8% | 6,236 | 8.4% | -236 | -3.6% |
| Others | 273 | 4.7% | 175 | 2.9% | -98 | -35.9% |
| Electronic Components Business | 1,055 | 1.2% | -3,008 | - | -4,063 | - |
| Solutions Business | 19,569 | 7.3% | 18,879 | 7.5% | -690 | -3.5% |
| Industrial Tools Unit | 6,010 | 7.0% | 6,551 | 8.2% | 541 | 9.0% |
| Document Solutions Unit | 11,340 | 9.9% | 9,753 | 9.1% | -1,587 | -14.0% |
| Communications Unit | 679 | 1.3% | 206 | 0.5% | -473 | -69.7% |
| Others | 1,540 | 9.2% | 2,369 | 11.9% | 829 | 53.8% |
| Others | -11,388 | - | -10,129 | - | 1,259 | - |
| Total Business Profit | 22,153 | 4.4% | 19,930 | 4.2% | -2,223 | -10.0% |
| Corporate Gains and Others | 25,612 | - | 24,633 | - | -979 | -3.8% |
| Profit Before Income Taxes | 47,765 | 9.6% | 44,563 | 9.3% | -3,202 | -6.7% |
Core Components Business Analysis (1Q FY2026)
See page eight. First, the Core Components Business.
Sales revenue for 1Q was JPY145.9 billion and business profit was JPY14.2 billion. On a YoY basis, sales revenue of both the Industrial & Automotive Components Unit and the Semiconductor Components Unit remained almost flat.
Business profit increased due to the effect of structural reforms in the Organic Packages and Boards Business and the contribution of profit growth in the Automotive Components Business, although the Ceramic Packages Business did not reach the level of the same period of the previous year.
On a QoQ basis, sales revenue decreased due to lower sales in the Organic Packages and Boards Business, the Display Business, and the Fine Ceramic Components Business. Business profit increased due to cost reductions in each business and improved profitability in the Ceramic Packages Business.
Electronic Components Business Analysis (1Q FY2026)
See page nine. Next is the Electronic Components Business.
Sales revenue for 1Q was JPY83.9 billion, and business loss was JPY3 billion. Both YoY and QoQ comparisons show a decrease in sales revenue, mainly due to the appreciation of the yen against the US dollar.
Despite the positive effects of structural reforms in KAVX Group, business profit decreased due to the impact of lower sales and a one-time loss of approximately JPY2.1 billion associated with the execution of the agreement to transfer the silicon diode power semiconductor business.
Solutions Business Analysis (1Q FY2026)
See page 10. Finally, the Solutions Business.
Sales revenue for 1Q was JPY253 billion, and business profit was JPY18.9 billion. On a YoY basis, sales in the Printing Devices Business, etc. increased, but sales in the Industrial Tools Unit and the Document Solutions Unit, etc. declined, mainly due to the impact of appreciation of the yen.
Business profit remained mostly unchanged as cost reduction efforts in each business absorbed the impact of lower sales.
On a QoQ basis, the Document Solutions Unit and the Communications Unit reported lower sales and profits due to seasonal factors.
Financial Forecasts for Fiscal 2026
Next, I will explain the financial forecast for fiscal 2026.
There is no change in the full-year forecast from the figures announced in May of this year.
| Fiscal 2025 | Fiscal 2026 | Change | ||||
|---|---|---|---|---|---|---|
| Amount | % | Amount | % | Amount | % | |
| Sales Revenue | 2,014,454 | - | 1,900,000 | - | -114,454 | -5.7% |
| Operating Profit | 27,299 | 1.4% | 55,000 | 2.9% | 27,701 | 101.5% |
| Profit Before Income Taxes | 63,631 | 3.2% | 95,000 | 5.0% | 31,369 | 49.3% |
| Profit Attributable to Owners of the Parent | 24,097 | 1.2% | 70,500 | 3.7% | 46,403 | 192.6% |
| EPS (Yen) | 17.11 | - | 50.04 | - | - | - |
| Average Exchange Rates | US$ | 153 yen | 135 yen | - | - | |
| Euro | 164 yen | 150 yen | - | - | ||
| Capital Expenditures | 141,932 | 7.0% | 180,000 | 9.5% | 38,068 | 26.8% |
| Depreciation Charge of PP&E | 112,077 | 5.6% | 120,000 | 6.3% | 7,923 | 7.1% |
| R&D Expenses | 116,087 | 5.8% | 120,000 | 6.3% | 3,913 | 3.4% |
Sales Revenue by Reporting Segment for Fiscal 2026
There are no changes to the reporting segment forecasts shown on pages 13 and 14.
| Fiscal 2025 | Fiscal 2026 | Change | ||||
|---|---|---|---|---|---|---|
| Amount | Component Ratio | Amount | Component Ratio | Amount | % | |
| Core Components Business | 591,720 | 29.4% | 547,000 | 28.8% | -44,720 | -7.6% |
| Industrial & Automotive Components Unit | 267,028 | 13.3% | 250,000 | 13.2% | -17,028 | -6.4% |
| Semiconductor Components Unit | 300,765 | 14.9% | 272,000 | 14.3% | -28,765 | -9.6% |
| Others | 23,927 | 1.2% | 25,000 | 1.3% | 1,073 | 4.5% |
| Electronic Components Business | 354,646 | 17.6% | 330,000 | 17.4% | -24,646 | -6.9% |
| Solutions Business | 1,086,367 | 53.9% | 1,041,000 | 54.8% | -45,367 | -4.2% |
| Industrial Tools Unit | 305,876 | 15.2% | 292,000 | 15.4% | -13,876 | -4.5% |
| Document Solutions Unit | 479,964 | 23.8% | 455,000 | 23.9% | -24,964 | -5.2% |
| Communications Unit | 225,497 | 11.2% | 214,000 | 11.3% | -11,497 | -5.1% |
| Others | 75,030 | 3.7% | 80,000 | 4.2% | 4,970 | 6.6% |
| Others | 17,114 | 0.9% | 12,000 | 0.6% | -5,114 | -29.9% |
| Adjustments and Eliminations | -35,393 | -1.8% | -30,000 | -1.6% | 5,393 | - |
| Sales Revenue | 2,014,454 | 100.0% | 1,900,000 | 100.0% | -114,454 | -5.7% |
Business Profit (Loss) by Reporting Segment for Fiscal 2026
| Fiscal 2025 | Fiscal 2026 | Change | ||||
|---|---|---|---|---|---|---|
| Amount | % to Sales Revenue | Amount | % to Sales Revenue | Amount | % | |
| Core Components Business | -1,889 | - | 40,400 | 7.4% | 42,289 | - |
| Industrial & Automotive Components Unit | 24,673 | 9.2% | 16,000 | 6.4% | -8,673 | -35.2% |
| Semiconductor Components Unit | -27,824 | - | 23,000 | 8.5% | 50,824 | - |
| Others | 1,262 | 5.3% | 1,400 | 5.6% | 138 | 10.9% |
| Electronic Components Business | -818 | - | 10,000 | 3.0% | 10,818 | - |
| Solutions Business | 73,696 | 6.8% | 64,000 | 6.1% | -9,696 | -13.2% |
| Industrial Tools Unit | 15,707 | 5.1% | 9,000 | 3.1% | -6,707 | -42.7% |
| Document Solutions Unit | 49,038 | 10.2% | 40,000 | 8.8% | -9,038 | -18.4% |
| Communications Unit | 9,347 | 4.1% | 9,500 | 4.4% | 153 | 1.6% |
| Others | -396 | - | 5,500 | 6.9% | 5,896 | - |
| Others | -46,990 | - | -49,000 | - | -2,010 | - |
| Total Business Profit | 23,999 | 1.2% | 65,400 | 3.4% | 41,401 | 172.5% |
| Corporate Gains and Others | 39,632 | - | 29,600 | - | -10,032 | -25.3% |
| Profit Before Income Taxes | 63,631 | 3.2% | 95,000 | 5.0% | 31,369 | 49.3% |
Progress of Business Portfolio Restructuring
Next, I will explain the progress of structural reforms and capital strategies, etc.
First, I would like to explain the progress of business portfolio restructuring amounting to approximately JPY200 billion sales revenue size.
Transfer of Power Semiconductor Business: As announced in May of this year, Kyocera will transfer its silicon diode power semiconductor business to Shindengen Electric Manufacturing Co., Ltd.
Review of Strategic Options for U.S. Distributor: Kyocera has begun to review strategic options for SouthernCarlson, Inc., a U.S. distributor of materials for construction and industries, which is in the Solutions Business, including potential divestiture. SouthernCarlson is headquartered in the US and has approximately 120 branches and 1,500 employees throughout the US, with sales of approximately JPY140 billion in fiscal 2025. SouthernCarlson joined the Kyocera Group in 2019 through an acquisition, and strategic options are now being reviewed.
Progress of Improvement in Challenging Businesses
Next, I would like to explain the progress of improvement in challenging businesses.
Organic Packages and Boards Business: Initiatives are being implemented to change the cost structure, focusing on selection and concentration of products and production plants, and reduction of fixed costs. Orders of multi-layer packages with high layer count for network ASICs are expanding. Negotiations with customers to end low-margin products have been initiated for consolidating production plants. Fixed costs have been reduced, with depreciation decreasing by approximately JPY2.5 billion YoY due to structural reforms. The relocation of 370 production personnel has been completed.
KAVX Group: Initiatives are being implemented to promote cooperation with Kyocera’s electronic component business for annual profitability. Ceramic capacitors have returned to profitability due to strengthened technological and equipment capabilities and improved yields. For tantalum capacitors, efforts are being made to expand high-value-added polymer products, with newly certified products increasing from 18 to 48, and yield improvement is ongoing.
Progress of Capital Strategies
I will then explain the progress of capital strategies.
Reduction of Cross-shareholdings: In June 2025, approximately 108 million shares of KDDI were sold (worth approx. 250.0 billion yen), with settlement completed in July 2025 (received 211.1 billion yen on an after-tax basis). This sale reduced Kyocera's cross-shareholdings by approximately 17%, contributing to the three-year reduction target. The ratio of cross-shareholdings to net assets decreased from 51.6% (as of March 31, 2025) to 44.9% (as of June 2025). The future target is less than 20%.
Repurchase of Own Shares: At a Board of Directors meeting on May 14, 2025, Kyocera resolved a share buyback program of up to 200 billion yen for up to 136 million common shares. Actual execution was postponed due to business portfolio restructuring but is expected to commence promptly.
Strengthening Corporate Governance
Finally, I would like to explain the strengthening of corporate governance.
Key initiatives include: 1. Shortened Term of Office of Directors (2 years to 1 year) to enhance responsiveness and clarify responsibilities. 2. Reduced Maximum Number of Directors (20 to 12) for flexibility and efficient decision-making. 3. Appointed Noriko Oi (Attorney-at-law) as a New Independent Outside Director to provide legal perspective and supervision. 4. Appointed Eiji Kakiuchi as Chairperson of the Nomination and Remuneration Committee to enhance transparency and corporate governance.
Kyocera believes these initiatives are the first step toward enhancing corporate value and looks forward to continued support.
Question & Answer
<Questioner 1>
[Q]: Regarding the review of strategic options for the U.S. distributor (SouthernCarlson), what is the impact on business performance other than sales? Is there a possibility of revisions to the JPY200 billion business portfolio restructuring target?
Tanimoto [A]: SouthernCarlson's sales are JPY140 billion, with assets decreasing by about JPY90 billion. Eliminating it is estimated to increase the Solutions Business profit margin by about 1 percentage point. The company is considering adding more businesses to the restructuring plan.
[Q]: Are you considering a wider range of possibilities beyond the JPY200 billion mark?
Tanimoto [A]: Yes, exactly.
[Q]: What are you considering or discussing, beyond just quitting or selling?
Tanimoto [A]: Kyocera is considering both selling and buying. For organic growth, the Core Components Business will focus on ceramics for semiconductor processing equipment. For semiconductor packages, joint development using ceramic or glass as core material is planned. For the Electronic Components Business, support for KAVX Group is being strengthened, including dispatching engineering teams to Thailand for tantalum capacitor production. The Solutions Business is launching new initiatives, including textile printers.
[Q]: Regarding the Organic Packages and Boards Business and KAVX, when do you expect them to post profit? KAVX was profitable in June, and the Organic Packages and Boards Business is on track to make up for delays.
Tanimoto [A]: The original plan was to turn a profit in 3Q and break even for the full year. KAVX is expected to consistently turn a profit from the end of 2Q. The Organic Packages and Boards Business is on track to make up for 1Q delays and expects to turn a profit in 3Q as planned.
<Questioner 2>
[Q]: Regarding business portfolio restructuring (JPY200 billion), will long-standing Kyocera businesses also be improved through cost structure reforms? Are acquired businesses not producing expected results the target?
Tanimoto [A]: Kyocera targets companies that can generate profits independently, regardless of their history. Recent acquisitions are being reviewed, but the focus is on profitability.
[Q]: Are acquired businesses the primary subject of review?
Tanimoto [A]: While many cases involve acquired businesses, the focus is on performance.
[Q]: What is the market situation for electronic components? Was there front-loaded demand in 1Q? What is the outlook for 2Q and beyond?
Tanimoto [A]: There was no front-loaded demand for ceramic components for semiconductor processing equipment. For semiconductor packages, there was a slight request for advance orders for cell phones, but the situation has calmed. Demand for cell phone products in the Electronic Components Business has settled.
[Q]: Did tax expense adjustments from KDDI share sales boost operating profit by JPY4 billion?
Chida [A]: The adjustment to tax expenses affected profit attributable to owners of the parent, not operating profit.
<Questioner 3>
[Q]: Regarding the power semiconductor business, there was a JPY2.1 billion one-time expense in 1Q. Will SouthernCarlson yield a one-time gain?
Tanimoto [A]: While exact details cannot be provided, SouthernCarlson is not expected to have a significant negative impact and may yield a positive outcome.
[Q]: What is the impact of tariffs? The initial estimate was negative JPY17 billion. How has this changed?
Tanimoto [A]: The actual impact for 1Q was a few hundred million yen. The impact is expected to be much less than JPY17 billion. Products from the Document Solutions Unit, not made in Japan, may face up to 20% tariff rates, but the overall impact is expected to decrease slightly.
[Q]: With Vietnam's tax rate changing from 46% to 20%, is the tariff impact significantly less?
Tanimoto [A]: Regarding printer pricing, Kyocera is looking at the possibility of raising prices on about half of its products.
<Questioner 4>
[Q]: When will concrete measures for business portfolio restructuring, like for SouthernCarlson, be announced? What is the timing for an overall explanation?
Tanimoto [A]: An explanation is planned for the 4Q financial briefing.
[Q]: What is the possible impact on cash flow from SouthernCarlson and the power device business? How will cash from sales be used?
Tanimoto [A]: Funds from sales will be used for acquisitions or investments in projects that align with the business portfolio strategy.
<Questioner 5>
[Q]: Regarding the Organic Packages and Boards Business, when will the expansion of orders for multi-layer packages for network ASICs affect sales?
Tanimoto [A]: Packages for ASICs for switches are increasing, and profitability is expected to improve from the latter half of Q2.
[Q]: Regarding ceramic or glass core materials, will Kyocera use them internally or supply them to manufacturers?
Tanimoto [A]: The industry does not support a single supplier for core materials. Kyocera may sell cores directly to substrate manufacturers.
<Questioner 6>
[Q]: Were cost reductions implemented in R&D expenses? The 1Q amount was low.
Tanimoto [A]: Overall R&D expenses decreased due to a slight decrease in storage battery-related expenses from business transfer. Development of millimeter wave base stations was cancelled, contributing to the decrease.
[Q]: Were these cancellations in the 'Others' category?
Tanimoto [A]: Yes, they were in the 'Others' category. Repeaters are still being continued.
[Q]: Regarding acquisitions, what is the approach? If ROE is the priority, are domestic businesses with cost reduction potential preferred?
Tanimoto [A]: Kyocera is targeting companies that can generate profits independently. Recent acquisitions did not contribute significantly to earnings. The focus is on companies with a strong corporate culture and profitability. For ROE, businesses like the Solutions Business might be easier to achieve results with.
[Q]: Is valuation or solid profit as a business entity more important?
Tanimoto [A]: Solid profit as a business entity is more important than high valuation.
Notes and Cautionary Statement
Notes:
- This document was edited from the original recording and transcripts provided by SCRIPTS Asia, Inc.
- In this document, the year ended March 31, 2025 is referred to as “fiscal 2025,” six months ended/ending September 30 is referred to as “1H,” three months ended/ending June 30 is referred to as “1Q.” Other fiscal years, half-year and quarterly periods are referred to in a corresponding manner.
Cautionary statement:
This is an English translation of the Japanese original. This translation is prepared for the reference and convenience solely for those who do not use Japanese. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail. Except for historical information contained herein, the matters set forth in this document are forward-looking statements that involve risks and uncertainties including, but not limited to, product demand, competition, regulatory approvals, the effect of economic conditions and technological difficulties, and other risks detailed in the cautionary statements with respect to forward-looking statements on the company's website.
