Yokogawa Electric Corporation

Q1 orders received were JPY149.1 billion, up JPY1.6 billion or 1% excluding FX. Sales were JPY130.2 billion, up JPY9.2 billion or 7.1% excluding FX. Operating profit was JPY16.2 billion, up JPY1.4 billion YoY in nominal terms, and net income was JPY15.2 billion, up JPY5.1 billion YoY. Excluding FX, operating profit increased JPY2.7 billion from JPY14.8 billion YoY; gross profit increased JPY4.3 billion and gross margin improved slightly by JPY0.5 billion, while SG&A rose JPY2.1 billion. The company said backlog continued to build, with more than JPY15 billion added over the past three months. Full-year guidance was unchanged from the May forecast.

The lead executive said Q1 was a better-than-expected start on orders relative to the risk case embedded in the May forecast, but sales and profit were broadly in line with expectations. Strategy-wise, she emphasized that the company is still winning orders in areas it was uncertain about, rather than seeing a dramatically stronger probability profile. Her tone was cautious but constructive, repeatedly noting that the business pipeline remains solid even if timing of large orders can be uneven.

Nakajima highlighted that FX was a major headwind, with the yen strengthening to JPY144.11 per dollar from JPY158.15 a year earlier, pressuring the comparison. Excluding FX, sales rose JPY9.2 billion and gross profit increased JPY4.3 billion, while SG&A increased JPY2.1 billion due to personnel inflation, upfront investment costs including BaxEnergy goodwill write-off, and higher recurring expenses. On tariffs, she said the Q1 import-duty impact was about JPY0.3 billion, while the annual plan had assumed about JPY3 billion of tariff payments, roughly half borne by customers; she also said the corporate tax adjustment reflected deferred tax asset recognition as domestic earnings improved.

Analysts focused on whether orders were ahead of plan, and management said Q1 orders were better than expected versus the May risk case, but not enough yet to conclude the full-year order plan will be exceeded. Questions also centered on tariffs, with management saying the direct Q1 hit was modest but that customer pass-through and indirect effects such as investment delays were still being assessed. On demand, management pointed to strong energy-related activity in UAE, ASEAN, and North America, alongside CCUS and LNG, while acknowledging China-driven weakness in Materials and a wait-and-see attitude in some markets.