DAIICHI KIGENSO KAGAKU KOGYO CO.,LTD.

Business Details

A single-segment company engaged in the manufacture and sale of zirconium compounds centered on zirconium oxide. The company operates both dry and wet production methods, having established an integrated production system from ore to final products. Its primary application is Automotive Exhaust Gas Purification Catalyst Materials (approximately 62.7% of sales composition), while it is cultivating semiconductors & electronics, energy (SOFC / secondary batteries), and healthcare (dental materials, etc.) as strategic growth fields. The company maintains a global sales network spanning Japan, North America, Europe, East Asia, and the Global South, and has a raw material manufacturing subsidiary in Vietnam.

Recent Overview

In FY2026 (ending March 2026), both sales and operating profit exceeded the company's earnings forecast, achieving substantial profit growth.

For the full year of FY2026 (ending March 2026), sales were ¥35,751 million (up 6.3% year-on-year) and operating profit was ¥3,479 million (up 52.4% year-on-year), representing substantial profit growth. The main factors were the resolution of profit pressure from high-cost inventory amid surging raw material market prices, and reduced cost burden following the full-scale operation of the Vietnamese subsidiary. Ordinary profit recovered sharply to ¥3,255 million (up 414.8% year-on-year), driven by the recording of ¥609 million in foreign exchange gains related to foreign-currency-denominated assets held for the Vietnamese subsidiary. All indicators exceeded the earnings forecast announced in February 2026. For FY2027 (ending March 2027), the company expects increased research and development expenses, personnel costs, and maintenance and repair expenses, forecasting a decline in operating profit to ¥3,000 million (down 13.8% year-on-year). The exchange rate assumption is ¥151 to the US dollar.

Key Products

Growth Drivers

• Expansion in sales volume of Automotive Exhaust Gas Purification Catalyst Materials, driven by steady growth in hybrid vehicle sales (up 6.3% year-on-year) and tightening emissions regulations
• Surge in demand for SOFC (solid oxide fuel cell) materials (up 35.5% year-on-year) driven by growing demand for stable power supply for AI data centers
• Demand shift toward the company's products driven by moves to reduce dependence on specific-country supply chains in response to geopolitical risk
• Stabilization of raw material procurement and strengthened cost competitiveness through the continued stable operation of the Vietnamese subsidiary (ZOC manufacturing)
• Partial recovery in the semiconductors & electronics field driven by growing demand for capacitor-related electronic component materials (up 16.1% year-on-year)
• Focused investment in strategic fields (semiconductors, energy, healthcare) and creation of new products and applications under the medium-term management plan "DK-One Next"

Risks

• Risk of long-term demand decline in the Automotive Exhaust Gas Purification Catalyst Materials field (62.7% of sales composition) due to structural contraction of the internal combustion engine vehicle market
• Decline in sales to Japanese and European customers due to expanding market share of Chinese automakers
• Structural decline in demand for SiC wafer polishing materials due to continued growing influx of low-priced Chinese-made SiC wafers into the market
• Fluctuations in foreign exchange gains/losses arising from foreign-currency-denominated assets and liabilities at the Vietnamese subsidiary (significant impact on ordinary profit)
• Rising raw material procurement costs and supply instability due to geopolitical risks such as China's tightening of export controls related to rare earths
• Anticipated decline in operating profit for FY2027 (ending March 2027) due to increased research and development expenses, base pay increases, and maintenance and repair expenses (forecast of ¥3,000 million, down 13.8% year-on-year)
• Changes in the market environment not yet factored into earnings forecasts, including the materialization of geopolitical risks such as tensions in the Middle East, and changes in raw material procurement conditions and foreign exchange rates