■Medium- to long-term outlook

(3) Leveling occupancy rates (avoidance of lost opportunities)

Since most of the linear motion equipment of Heheist ＜6433＞ is sold to THK, it goes without saying that sales of the company's direct motion equipment are influenced by THK's industrial equipment order trends. THK's past order trends peaked in 2017 and 2022.

Meanwhile, the company's sales and capital investment trends also rose in 2017 and 2022, and there is a high correlation with THK's order acceptance trends. However, the company stated, “There is certainly a correlation, but in these past two mountains, production capacity was insufficient, and considerable loss of opportunity occurred.” In order to avoid such loss of opportunity, the company decided to expand production capacity a few years in advance in line with THK's 2026 plan (described above), and is actively investing in capital. It is our policy to continue this policy in the future.

On the other hand, in general, when production capacity increases, when orders and production fall, the operating rate declines and the cost ratio per unit rises. However, in response to the future, the company has stated that “even if orders drop slightly, we will maintain a certain operating rate centered on standard products and avoid future loss of opportunity.” However, of course, if a certain operating rate is maintained when order acceptance is sluggish, inventory will expand. Nevertheless, the company has stated that “even if it bears some inventory burden, it will challenge such a policy in preparation for the future.” Exactly what President Ozaki stated, “no success without challenge,” will be implemented, but I would like to pay attention to the company for 2026.

(4) Product group review (scrap & build)

Many of the company's products are close to special orders, and there are many small-lot products. Therefore, the profitability of these product groups is not necessarily the same, and there are high and low ones. For example, hybrid flange linear ball bushes (JFK), etc. are rather unprofitable. In the future, these product groups will be reviewed, and withdrawal will also be considered while proceeding with negotiations with customers for low-profit ones. Meanwhile, concentrating those resources on highly profitable products will also proceed. The plan is to improve profitability by proceeding with “scrap and build” of the product group.

(Written by FISCO Visiting Analyst Noboru Terashima)