Company Reports

Daifuku is the world’s leading player in material handling, the automation that powers the transport, storage, and control of goods in factories, semiconductor clean rooms, warehouses, distribution centers, and airports. Beyond simply supplying equipment, Daifuku acts as a full system integrator, designing and delivering complete material handling solutions. Its portfolio spans automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software to manage and optimize these processes. Having worked with industry leaders such as Toyota, TSMC, Intel, Dell, and Fanuc, Daifuku is now leveraging its deep expertise to expand further into warehouse and logistics automation, a market set to grow rapidly on the back of rising e-commerce demand.

Daifuku’s June-quarter sales grew 10% year on year to JPY 183 billion, with operating margin of 16.6%. Orders grew 14% to JPY 219 billion. The company raised fiscal 2026 sales guidance by 5% to JPY 735 billion and orders guidance by roughly 10%. Shares remain flat from preresult levels.

Daifuku's March-quarter sales rose 8% to JPY 172 billion, and operating margin was 15.2%. Orders grew 55% to JPY 221 billion, lifting backlog above JPY 700 billion while fiscal 2026 (ending December 2026) sales guidance remained at JPY 700 billion. Shares fell 6% the next trading day, May 15.

Daifuku is the world’s leading player in material handling, the automation that powers the transport, storage, and control of goods in factories, semiconductor clean rooms, warehouses, distribution centers, and airports. Beyond simply supplying equipment, Daifuku acts as a full system integrator, designing and delivering complete material handling solutions. Its portfolio spans automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software to manage and optimize these processes. Having worked with industry leaders such as Toyota, TSMC, Intel, Dell, and Fanuc, Daifuku is now leveraging its deep expertise to expand further into warehouse and logistics automation, a market set to grow rapidly on the back of rising e-commerce demand.

Daifuku is the world’s leading player in material handling, the automation that powers the transport, storage, and control of goods in factories, semiconductor clean rooms, warehouses, distribution centers, and airports. Beyond simply supplying equipment, Daifuku acts as a full system integrator, designing and delivering complete material handling solutions. Its portfolio spans automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software to manage and optimize these processes. Having worked with industry leaders such as Toyota, TSMC, Intel, Dell, and Fanuc, Daifuku is now leveraging its deep expertise to expand further into warehouse and logistics automation, a market set to grow rapidly on the back of rising e-commerce demand.

Daifuku posted record JPY 660 billion in sales in fiscal 2025 (ending December 2025), up 3% year over year on a comparable basis, with an operating margin of 15.3%, above its 10-year average of 10%. It guides JPY 700 billion in sales and 15% margin for 2026. Shares are up 27% year-to-date.

Daifuku's September-quarter sales grew 1.3% year on year while operating margin rose 1.3 percentage points to 15.1%. The company maintained fiscal 2025 (ending December 2025) sales guidance but raised the operating profit forecast by 12% to JPY 97.5 billion. Shares rose 3% after the announcement.

Daifuku is the world’s leading player in material handling, the automation that powers the transport, storage, and control of goods in factories, semiconductor clean rooms, warehouses, distribution centers, and airports. Beyond simply supplying equipment, Daifuku acts as a full system integrator, designing and delivering complete material handling solutions. Its portfolio spans automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software to manage and optimize these processes. Having worked with industry leaders such as Toyota, TSMC, Intel, Dell, and Fanuc, Daifuku is now leveraging its deep expertise to expand further into warehouse and logistics automation, a market set to grow rapidly on the back of rising e-commerce demand.

Daifuku's June-quarter sales and operating profit rose 15% and 70% year on year on a comparable basis. It maintained fiscal 2025 (ending December 2025) sales and orders guidance but raised operating profit by 7% to JPY 87 billion. Shares rose 14% the next trading day after the result.

Daifuku is the world’s leading player in material handling, the automation that powers the transport, storage, and control of goods in factories, semiconductor clean rooms, warehouses, distribution centers, and airports. Beyond simply supplying equipment, Daifuku acts as a full system integrator, designing and delivering complete material handling solutions. Its portfolio spans automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software to manage and optimize these processes. Having worked with industry leaders such as Toyota, TSMC, Intel, Dell, and Fanuc, Daifuku is now leveraging its deep expertise to expand further into warehouse and logistics automation, a market set to grow rapidly on the back of rising e-commerce demand.

Daifuku reported March-quarter sales of JPY 160 billion and orders of JPY 143 billion, down 8% and 17% compared with the previous March quarter, respectively. Operating margin was 14.5%, flat from the previous March quarter's level.

Daifuku is the global market leader in material handling, which involves the automation behind transport, storage, and control of products/materials in factories, clean rooms for semiconductor production, distribution centers/warehouses, and airports. The company not only adds value to customers as an equipment supplier but also serves as a system integrator providing material handling solutions based on its products, which include automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software systems that manage the material handling process. Having supplied to market leaders across various industries, including Toyota, TSMC, Intel, Dell, and Fanuc, the company is leveraging its established know-how in material handling into the warehouse/logistics automation market, which is expected to grow backed by rising e-commerce demand.

Wide-moat Daifuku reported fiscal 2024 (a transitional period of nine months from April to December 2024 for its Japan business and 12 months from January to December 2024 for non-Japan business) companywide revenue of JPY 563 billion, above our previous estimate of JPY 555 billion, thanks to outperformance in the airport industry, with a record-high JPY 71 billion in sales despite being one quarter short for the Japan business. We continue to see the airport industry as being the most significant driver for fiscal 2025, given the solid orders of JPY 110 billion received in fiscal 2024. On the other hand, orders from the e-commerce industry dropped significantly by 35% year on year to JPY 91 billion in 2024, after a 26% decline in 2023. The e-commerce industry is experiencing a correction after the overheating investment activities in 2021 and 2022 driven by covid-19. Orders from the automobile and auto parts industry passed the peak and dropped by 10% to JPY 83 billion in 2024, reflecting the sluggish end-market needs and more cautious capital expenditure plan by original equipment manufacturers.

Daifuku is the global market leader in material handling, which involves the automation behind transport, storage, and control of products/materials in factories, clean rooms for semiconductor production, distribution centers/warehouses, and airports. The company not only adds value to customers as an equipment supplier but also serves as a system integrator providing material handling solutions based on its products, which include automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software systems that manage the material handling process. Having supplied to market leaders across various industries, including Toyota, TSMC, Intel, Dell, and Fanuc, the company is leveraging its established know-how in material handling into the warehouse/logistics automation market, which is expected to grow backed by rising e-commerce demand.

While wide-moat Daifuku’s September-quarter revenue growth of 7% was in line, its operating margin of 13.8% was up from 11.3% in the June quarter and 7.4% in the previous September quarter, again exceeding our estimate of 11.5%. Daifuku has successfully passed on material and labor costs in sales prices, improving gross margin to 23.2% in the September quarter from 16.6% a year earlier. We believe the solid profitability is indicative of Daifuku’s pricing power, which is supported by high switching costs for its customers and Daifuku’s long-term track record of providing solutions to its customers. As we expect the price pass-through effect to continue for at least one more quarter, we raise our fiscal 2024 operating margin assumption to 12% from 10.5% and our fair value estimate for Daifuku to JPY 3,660 from JPY 3,500. Although Daifuku’s shares have jumped by more than 10% since the announcement last Friday, we believe the shares are still undervalued as the market is overly concerned about the maintainability of the current margin in the longer term.

Daifuku is the global market leader in material handling, which involves the automation behind transport, storage, and control of products/materials in factories, clean rooms for semiconductor production, distribution centers/warehouses, and airports. The company not only adds value to customers as an equipment supplier but also serves as a system integrator providing material handling solutions based on its products, which include automated storage and retrieval systems, pallet racks, conveyors, sorting systems, automated guided vehicles, and software systems that manage the material handling process. Having supplied to market leaders across various industries, including Toyota, TSMC, Intel, Dell, and Fanuc, the company is leveraging its established know-how in material handling into the warehouse/logistics automation market, which is expected to grow backed by rising e-commerce demand.

While Daifuku’s June-quarter revenue growth of 8% was in line, its operating margin of 11.3% was up from 6.1% in the year-ago quarter and exceeded our expectations. This was a positive surprise as the June quarter is typically a low season for the company. In addition to the price hike and cost-cutting initiatives for the clean room segment, we believe profitable deals in China for legacy chip investments helped improve the product mix. As a result, we raise our fiscal 2024 operating margin assumption to 10.5% from 9.5% as we expect this trend to continue for at least one more quarter. The strong June-quarter results support our view that the market is overly concerned about the slowdown in legacy chip investment in China, while high-end chip investment remains sluggish. We think that China will continue to invest in expanding domestic chip production capacity and demand for high-performance computing will pick up in 2025. We maintain our fair value estimate of JPY 3,500 for Daifuku and believe the stock is undervalued.

We maintain our fair value estimate for Daifuku of JPY 3,500, as our demand outlook is unchanged, and the adjusted fiscal 2024 operating income guidance of JPY 65.5 billion is in line with our projections before the fiscal year-end change announcement. As expected, the order guidance for the first half of 2024 suggests a mild demand recovery, as the company assumes cleanroom orders to increase 4% year on year and intralogistics orders to increase 2% year on year. We believe Daifuku’s shares are fairly valued.

Although Daifuku’s December-quarter operating margin of 11.5% was above our expectations, we estimate that it was largely in line with our forecast, excluding the impact of a one-time improvement in product mix from high-margin projects. Daifuku’s share price surged more than 10% after the earnings announcement, which we attribute to revised expectations of margin expansion. However, we believe the market was overly pessimistic about the margin recovery in the second half of fiscal 2023 (ending March 2024), driven by cost pass-through and structural reforms, which we had anticipated. Therefore, while we fine-tune our near-term earnings forecasts, our medium- to long-term outlook is largely intact, and we maintain our fair value estimate at JPY 3,500. As a result of the rally after earnings were announced, Daifuku’s share price has approached our fair value estimate; therefore, we believe the current stock price is fairly valued.

We maintain our fair value estimate of Daifuku at JPY 3,500, after adjusting our projection based on the September-quarter results. The warehouse/cleanroom automation space has been facing headwinds, as the total September-quarter orders declined 13% year on year. However, we think orders have bottomed, as this was still a 26% sequential increase. Quarterly orders for the intralogistics, or IL, segment were stronger than expected with a 34% year-on-year increase, compared with negative 37% in the June quarter. While global warehouse automation demand continues to be sluggish, the impact was mitigated by large-scale seasonal renovation/upgrade projects by existing customers in North America and the weak Japanese yen. We maintain our outlook that automation investments will pick up in the first half of fiscal 2024, and project Daifuku’s revenue to grow 7.4% year on year in 2024 (up from 6.7% previously) after remaining flat in 2023, followed by 6.6% CAGR between 2023 and 2027. We believe the market is underestimating Daifuku’s medium-term growth potential, driven by secular trends such as the shortage of skilled labor in Japan and the further penetration of warehouse automation in the U.S./Asia.