SCREEN Q1 FY2027: Operating profit sinks 41%, lifts full-year outlook on AI boom

SCREEN's consolidated revenue for the April-June period came to ¥121,775 million, a 10.3% decline from the previous year's ¥135,785 million. Operating profit plunged to ¥14,368 million (down 41.1%), and net income attributable to owners of the parent fell 37.1% to ¥10,490 million. The operating margin shrank from 18.0% to 11.8%.

The profit drop was driven by lower foundry and logic chip equipment sales in the Semiconductor Manufacturing Equipment (SPE) segment, along with higher fixed costs. By region, shipments to China and Taiwan weakened. On the brighter side, DRAM-related equipment and post-sales service revenue expanded, supported by generative AI demand.

Reflecting confidence in a second-half recovery, management raised its full-year forecasts, now projecting revenue of ¥743,000 million and operating profit of ¥156,500 million, both up sharply from the prior fiscal year. The assumptions assume dollar-yen of ¥150 and euro-yen of ¥175.

Semiconductor Manufacturing Equipment (SPE), the core division accounting for roughly 76% of total revenue, saw sales slide 15.0% to ¥93,133 million and operating profit tumble 44.0% to ¥14,388 million. An increase in DRAM-related tools and after-sales services was more than offset by a drop in equipment for foundry and logic customers, while fixed expenses rose. Geographically, U.S. sales expanded but China and Taiwan declined.

Graphic Arts Equipment (GA) posted a strong quarter, with revenue up 7.1% to ¥13,832 million and operating profit surging 150.7% to ¥1,421 million, thanks to robust recurring ink sales and a better product mix.

Display Manufacturing and Film Deposition Equipment (FT) grew revenue by 8.0% to ¥10,857 million and operating profit jumped 54.4% to ¥1,276 million. The improvement reflects higher equipment deliveries, better profitability, and the integration of the semiconductor advanced packaging business from the previous quarter.

Printed Circuit Board Equipment (PE) eked out a 2.0% revenue rise to ¥3,132 million, but post-sales gains could not overcome heavy fixed costs, pushing the operating loss to ¥299 million, a wider deficit than a year ago.

Total assets at quarter-end stood at ¥769,203 million, up 6.5% from the prior fiscal year-end, as cash and inventories (driven by higher work-in-progress linked to advance payments received) increased. Net assets were ¥497,339 million, with an equity ratio of 64.6%.

Operating cash flow improved to an inflow of ¥9,023 million (up from ¥6,999 million a year earlier), reflecting a ¥40,689 million increase in contract liabilities. Investing cash flow showed an outflow of ¥10,000 million due to expanded capex, while financing activities consumed ¥16,256 million, mainly for dividends. Cash and cash equivalents consequently fell ¥14,505 million from the previous year-end to ¥211,228 million.

In a sign of confidence, SCREEN raised its dividend forecast: an interim dividend of ¥60 and a year-end ¥123 give a full-year payout of ¥183 per share (post-stock-split basis). That represents a 24.9% increase from the prior year’s split-adjusted ¥146.50.

SCREEN’s revised FY2027 forecast, announced on May 13, has been upgraded, driven by accelerating shipments from the second quarter onward on the back of insatiable semiconductor production equipment demand.

• Revenue: ¥743,000 million (+22.7% vs. prior year)
• Operating profit: ¥156,500 million (+27.7%)
• Ordinary profit: ¥156,500 million (+25.9%)
• Net profit: ¥115,000 million (+25.0%)

By segment, the full-year projection is SPE ¥620,000 million (+27.6%), GA ¥60,000 million (+4.4%), FT ¥43,000 million (-4.7%), and PE ¥16,500 million (+13.4%). The company’s heavy reliance on SPE will increase further. Foreign exchange assumptions are kept at ¥150 per dollar and ¥175 per euro: any sharp yen appreciation would pose a downside risk.

First-quarter R&D spending jumped 18.8% to ¥10,140 million, while capital expenditure soared 299.9% to ¥17,870 million, as SCREEN rushes to expand production capacity and develop advanced chip manufacturing equipment for AI applications. For the full year, the company plans R&D spending of ¥43,000 million (up roughly 14%) and capex of ¥43,000 million (up about 55%), underscoring an aggressive investment phase aimed at medium-to-long-term growth.

• Geopolitical risks: Escalating Middle East tensions or deepening U.S.-China friction could hurt customers’ capex plans.
• Semiconductor market volatility: An unexpected slowdown in AI-driven demand could trigger order cancellations or inventory corrections, especially in the China and Taiwan markets.
• Currency: SCREEN derives over 85% of sales overseas; a significant yen appreciation beyond assumed rates would directly squeeze earnings.
• Technology competition: Intensifying rivalry in cutting-edge etching and cleaning equipment puts pressure on R&D efficiency.
• New business development: The “Other” segment, including life sciences and hydrogen-related initiatives, has been slow to generate profit, leaving portfolio diversification a lingering challenge.