NIPPON KODOSHI CORPORATION

Business Details

The Group manufactures and sells Separators for Aluminum Electrolytic Capacitors as well as functional materials such as separators for lithium-ion batteries and electric double-layer capacitors. Its main customer is Oji F-Tex Co., Ltd. (66.4% of net sales). Domestic sales account for over 90% of the total, with production distributed across three plants in Kochi Prefecture, the Yonago Plant, and a Malaysian facility. By capturing rising demand for AI server-related applications amid the spread of generative AI and increasing demand for power stabilization applications, net sales for FY2026 (ending March 2026) reached ¥18,624 million (up 16.2% year on year).

Recent Overview

Both net sales and operating income reached record highs driven by AI-related demand, with a substantial dividend increase implemented

In FY2026 (ending March 2026), the company achieved substantial growth in both revenue and profit, with net sales of ¥18,624 million (up 16.2% year on year), operating income of ¥3,533 million (up 43.6% year on year), and net income of ¥2,642 million (up 48.4% year on year). Separators for Aluminum Electrolytic Capacitors posted ¥14,024 million on strong AI server-related demand, while functional materials posted ¥4,600 million driven by expanding demand for power stabilization applications. Although raw material cost increases and higher depreciation expenses from the Yonago Plant expansion weighed on results, these were absorbed by the increase in sales. The annual dividend was raised by ¥30 year on year to ¥90 (payout ratio of 35.9%), and a further increase of ¥20 to ¥110 is planned for FY2027 (ending March 2027). Full-year forecasts for FY2027 (ending March 2027) call for net sales of ¥21,000 million (up 12.8% year on year) and operating income of ¥4,400 million (up 24.5% year on year).

Key Products

Growth Drivers

• Continued expansion of demand for Separators for Aluminum Electrolytic Capacitors used in AI servers and data centers amid the spread of generative AI
• Increasing demand for separators for electric double-layer capacitors used in power stabilization applications
• Strengthening of the mass-production system for high-value-added separators through the full-scale operation of newly installed production equipment at the Yonago Plant
• Establishment of a stable supply system through expansion of raw material warehouses and construction of a new automated warehouse at the head office plant
• Improved production efficiency and cost reduction through optimization of manufacturing processes and supply chains
• Promotion of research and development of products that meet customer and market needs, with a focus on the AI market segment

Risks

• Risk of rising cost ratios due to persistently high prices for raw materials (pulp) and energy
• Risk of profit pressure from increased depreciation expenses associated with the expansion of the Yonago Plant
• Risk of sales concentration in Oji F-Tex Co., Ltd. (dependence on a single customer accounting for 66.4% of net sales)
• Risk of delayed recovery in demand related to industrial equipment and automotive applications
• Uncertainty in market conditions due to geopolitical risks (prolonged invasion of Ukraine, escalating tensions in the Middle East) and fluctuations in trade policy among various countries
• Risk of damage to production facilities from natural disasters such as a Nankai Trough earthquake
• Foreign exchange rate fluctuation risk (earnings forecast assumption: 1 US dollar = ¥150)