AGC Inc.

FY25 net sales were JPY 2.0588 trillion, down JPY 8.8 billion year on year. Operating profit was JPY 127.5 billion, up JPY 1.6 billion, and profit before tax was JPY 124.8 billion, up JPY 174.8 billion. Profit attributable to owners of the parent improved significantly, ROE rose to 4.7%, total assets were JPY 2.9501 trillion, D/E was 0.37, operating cash flow was JPY 274.5 billion, investment cash flow was minus JPY 178.4 billion, and free cash flow was JPY 96.1 billion. FY26 guidance is for net sales of JPY 2.2 trillion, operating profit of JPY 150 billion, and ROE of 5.2%; CapEx is planned at JPY 190 billion, depreciation at JPY 183 billion, and R&D at JPY 62 billion. The company also said it expects the FY26 dividend to stay flat versus FY25.

CEO Yoshinori Hirai said the company may have “hit the bottom to some extent,” but the key issue now is a fuller recovery in profitability and ROE. He framed the strategy around higher productivity, disciplined pricing, better product value, tighter investment selection, lower inventory, and willingness to exit weak businesses when needed. He highlighted Electronics growth from next-generation optoelectronics and semiconductor materials, Automotive margin improvement through higher-value products and structural reform, and a long-term opportunity in semiconductor packaging materials such as glass interposers and glass cores.

CFO Yoshio Takegawa emphasized that FY25 operating profit rose modestly despite higher raw materials and fuel costs, with improvement measures in Display and contributions from Automotive and pricing actions offsetting weaker Electronics, Chemicals, and Life Science. He noted capital spending of JPY 251.3 billion in FY25 versus planned FY26 CapEx of JPY 190 billion, saying major expansion investment concluded in 2025. He also pointed to operating cash flow of JPY 274.5 billion and free cash flow of JPY 96.1 billion, and said FY26 sales and profit should rise on recovery in Life Science, higher shipments in Chemicals and Architectural Glass, and continued productivity and pricing actions. On capital allocation and buybacks, he said no decision has been made and any return action will depend on investment opportunities and cash conditions.

Analysts focused on the weak areas in Life Science and Essential Chemicals, asking whether AGC would make drastic business reviews and when profitability could recover. Management said Life Science could return to profitability only around 2027 given the lag between orders and production, while Essential Chemicals would likely take longer because low-priced imports from China are pressuring Southeast Asia markets. Questions also probed the credibility of the JPY 150 billion FY26 operating profit target; Hirai called it a commitment, while Shiokawa said downside risk is largely already factored in. On Electronics, management said FY26 profit pressure is mainly due to transitional product mix in display and optoelectronics, not a structural market collapse, and on EUV mask blanks Hirai said development is complete with some customer certifications completed and others still underway.