ASAHI KASEI CORPORATION

Business Details

This segment comprises the Electronics business (electronic materials, LSI), Essential Chemicals business (petrochemical products), Car Interior business (automotive interior materials), Energy & Infrastructure business (ion exchange membranes, separators), Comfort Life business (textiles), and Performance Chemicals business (engineering plastics), among others. As a large-scale segment accounting for approximately 42% of consolidated net sales, its performance is highly susceptible to trends in petrochemical market conditions and the semiconductor and electronic device markets.

Recent Overview

Net sales and profit declined due to overlapping factors of petrochemical periodic maintenance, inventory valuation differences, and business divestitures; structural transformation accelerated

In FY2026 (ending March 2026), the Material segment recorded net sales of ¥1,306,240 million (down ¥62,530 million year on year) and operating profit of ¥68,321 million (down ¥11,584 million year on year), representing a decline in both revenue and profit. While the Electronics business achieved higher profit driven by robust demand for AI and high-end smartphone applications, this was offset by the large-scale periodic maintenance and inventory valuation differences at the Mizushima Works in the Essential Chemicals business, the transfer of the Daramic® (separator for lead-acid batteries) business in December 2025 (net sales of ¥26,601 million and operating profit of ¥2,820 million recorded in the current period), and weakness in the Car Interior business in China and North America. Additionally, an impairment loss of ¥18,748 million was recorded, including ¥10,849 million mainly related to general-purpose petrochemical and resin asset groups. As a subsequent event, the company decided to end production of styrene monomer, polyethylene, and other products by around FY2030, and to restructure the acrylonitrile supply system.

Key Products

Growth Drivers

• Continued robust demand for electronic materials (Pimel, Glass Cloth, etc.) for AI servers and high-end smartphones
• Recovery in profitability in the Essential Chemicals business as the impact of prior-period periodic maintenance dissipates (FY2027, ending March 2027)
• Contribution to increased profit from solid sales to North America and Europe in the Car Interior business
• Profitability improvement in the Performance Chemicals business through increased engineering plastics sales volume and progress in structural transformation
• Fixed cost reduction and improved profit structure through the restructuring of the derivatives business at the Mizushima Works (ending production of styrene monomer, polyethylene, etc.)
• Continued sales of electrolysis plants in the ion exchange membrane chlor-alkali electrolysis business

Risks

• Changes in Asian export demand for petrochemical products and pressure for domestic complex reorganization due to China's expansion of petrochemical facilities and progress in in-house production
• Risk of worsening inventory valuation losses and inventory valuation differences due to a sharp decline in petrochemical market conditions (Essential Chemicals, Performance Chemicals)
• Erosion of net sales and profit due to business divestitures such as the transfer of the Daramic® business and the exclusion of Asahi Kasei Advance from consolidation
• Risk of additional impairment losses and equipment removal cost recognition, mainly in general-purpose petrochemical and resin asset groups (removal costs from FY2030 onward associated with the restructuring of the Mizushima Works)
• Risk of declining sales volume in the Car Interior business due to sluggish automobile demand in China and North America
• Risk of rising raw material costs and declining sales volume of ion exchange membrane chlor-alkali electrolysis plants in the Energy & Infrastructure business (a decline is expected in the next fiscal year as a reaction to the prior period's strong performance)
• Risk of additional recognition of business structure improvement expenses (impairment losses, losses on transfer, etc.)

Business Details

This segment operates the Housing business (construction contracting for detached and multi-family housing, real estate-related services, rental management and real estate distribution, renovation, and overseas businesses in North America and Australia) and the Building Materials business (ALC, insulation materials, foundation piles, etc.). With Asahi Kasei Homes at its core, the company is pursuing higher average unit prices through larger, higher value-added properties and strengthening profitability through fixed cost reductions domestically, while continuing business expansion in North America and Australia overseas. In FY2026 (ending March 2026), the segment achieved increased revenue and profit, recording the largest operating profit among the Group's three segments.

Recent Overview

Achieved increased revenue and profit in FY2026 (ending March 2026); segment assets expanded significantly due to increased inventories

In FY2026 (ending March 2026), the Housing segment achieved net sales of ¥1,077,394 million (up ¥41,534 million year on year) and operating profit of ¥99,781 million (up ¥3,869 million year on year), representing increases in both revenue and profit. The Construction Contracting business benefited from higher average unit prices due to larger, higher value-added properties; the Real Estate Development business benefited from fixed cost reductions; the Rental Management & Real Estate Distribution business benefited from an increase in managed units and brokerage transactions; and the Building Materials business benefited from progress in price pass-through. On the other hand, the North American business saw a decline in profit due to a decrease in volume from weakening housing demand and the impact of pricing responses. Segment assets increased by ¥112,187 million year on year to ¥800,318 million, mainly due to an increase in inventories.

Key Products

Growth Drivers

• Higher average unit prices in construction contracting through larger, higher value-added properties
• Stable increase in profit in the real estate division through expansion in the number of managed units in the rental management business
• Continued progress in price pass-through in the Building Materials business
• Increased volume of contracted housing and higher sales of spec-built homes in the Australian business
• Increased volume against a backdrop of gradual recovery in housing demand in the North American business
• Expanded sales of high-value-added products against a backdrop of growing demand for ZEH and energy-efficient housing

Risks

• Risk of declining domestic housing demand due to a rising trend in housing loan interest rates
• Risk of rising construction costs due to soaring material prices and increased labor costs (a factor causing declining profit in construction contracting and real estate development in FY2027, ending March 2027)
• Risk of declining consumer sentiment due to price increases
• Impact of economic conditions and interest rate policy on housing demand in the U.S. and Australia
• Risk of structural contraction in the domestic detached housing market (declining birthrate and population decline)
• Foreign exchange risk in overseas operations
• Risk of deterioration in property mix in condominium sales

Business Details

This segment comprises three businesses: the Pharmaceuticals business (Asahi Kasei Pharma, Veloxis, Calliditas Therapeutics AB), the Life Sciences business (the virus removal filter Planova™, bioprocessing, etc.), and the Critical Care business (ZOLL Medical). The Group is pursuing global expansion in specialized fields such as immunology, transplantation, IgA nephropathy, and cardiopulmonary resuscitation. The blood purification business (Asahi Kasei Medical) and diagnostics business (Nagase Diagnostics) were excluded from consolidation during the current period, reflecting progress in portfolio selection and concentration.

Recent Overview

Profit growth in the pharmaceuticals business drove significantly increased revenue and profit, while the blood purification and diagnostics businesses were divested to restructure the portfolio

In FY2026 (ending March 2026), the Healthcare segment recorded net sales of ¥664,146 million (up ¥48,245 million year on year) and operating profit of ¥83,452 million (up ¥19,426 million year on year), representing a substantial increase in profit. The effect of newly consolidating Calliditas Therapeutics ABand increased sales volume of flagship products drove growth in the Pharmaceuticals business. Meanwhile, Asahi Kasei Medical (blood purification business) was transferred to IA Holdings, and Nagase Diagnostics (diagnostics business) was transferred to Nagase & Co., resulting in the exclusion of 21 companies from consolidation. As a subsequent event, in April 2026 the company acquired all shares of Aicuris Anti-infective Cures AG (Germany) for €783 million, gaining a development pipeline in the field of severe infectious diseases.

Key Products

Growth Drivers

• Expanded sales volume of Tarpeyo™ (IgA nephropathy treatment) through the consolidation effect of Calliditas Therapeutics AB
• Growth in sales volume of Veloxis's kidney transplant immunosuppressant Envarsus XR™ in the U.S. market
• Increase in new LifeVest® patients and sales driven by ZOLL Medical's new defibrillator product (increased profit expected in Critical Care in the next fiscal year)
• Increased demand for the virus removal filter Planova™ driven by growth in the biologics market
• Acquisition of a development pipeline in the severe infectious disease field and strategic synergies with the transplantation and renal fields through the acquisition of Aicuris Anti-infective Cures AG
• Portfolio concentration and reallocation of management resources to high-growth areas through the divestiture of the blood purification and diagnostics businesses

Risks

• Risk of impairment of the substantial goodwill (balance of ¥272,220 million at period-end) associated with the Calliditas acquisition
• Increased amortization expenses related to goodwill and other assets from the Aicuris acquisition (€783 million), and a factor causing declining profit in the Healthcare segment in the next fiscal year (including increased R&D expenses related to license introduction costs)
• Reduced business scale due to the exclusion of Asahi Kasei Medical, Nagase Diagnostics, and others from consolidation
• Profit pressure in the Life Sciences business due to increased SG&A expenses and the impact of the blood purification business transfer
• Risk of slowing market growth due to pressure to reduce domestic healthcare costs
• Uncertainty regarding the integration and monetization of M&A transactions (Calliditas, Aicuris, etc.)
• Risk of profit pressure in the Critical Care business due to increased SG&A expenses

Business Details

The "Others" segment includes the Plant Engineering business, Environmental Engineering business, Various Research & Information Provision Business, Staffing & Recruitment Business, and other operations. It serves a complementary function to the Group's three core segments (Healthcare, Housing, and Material). Net sales to external customers in FY2026 (ending March 2026) increased substantially to ¥26,725 million from ¥16,781 million in the prior period, expanding its share of consolidated net sales to approximately 0.9%.

Recent Overview

Net sales to external customers expanded significantly, up approximately 59% year on year, and operating profit also increased

In FY2026 (ending March 2026), net sales to external customers increased substantially to ¥26,725 million (from ¥16,781 million in the prior period), and total segment net sales also expanded to ¥71,437 million (from ¥62,330 million in the prior period). Operating profit turned to an increase, reaching ¥3,932 million (from ¥2,929 million in the prior period). Segment assets also increased to ¥141,149 million (from ¥123,024 million in the prior period). On the other hand, the increase in tangible and intangible fixed assets declined significantly to ¥697 million (from ¥1,787 million in the prior period), indicating that new investment has been restrained.

Key Products

Growth Drivers

• Increased demand for engineering and information provision services in line with the Group's overall business expansion
• Increased investment in equity-method affiliates to ¥25,047 million (from ¥24,335 million in the prior period), expanding the related profit contribution
• Expansion of the earnings base through a substantial increase in net sales to external customers (from ¥16,781 million to ¥26,725 million)

Risks

• The segment remains small in scale, with external sales accounting for approximately 0.9% of the total; its impact on overall Group performance is limited, and the transparency of earnings fluctuations is low
• The segment reorganization in April 2025 (transfer of research organizations to the "Material" segment and changes to the allocation ratio of common corporate expenses) has partly impaired the continuity of year-on-year comparisons
• The increase in tangible and intangible fixed assets declined significantly to ¥697 million (from ¥1,787 million in the prior period), potentially indicating restrained future growth investment
• High dependence on internal sales (intersegment transactions), meaning fluctuations in intra-Group demand directly affect segment performance