Toho Acetylene Co., Ltd.

Business Details

The company manufactures and sells purchased high-pressure gases such as Dissolved Acetylene, oxygen, nitrogen, argon, hydrogen, and Liquefied Petroleum Gas (LPG). It operates the Tagajo Plant (manufacturing oxygen, nitrogen, and argon), and subsidiaries Kita Nippon Acetylene (manufacturing Dissolved Acetylene) and Toho Sakata Hydrogen (manufacturing hydrogen). Through a network of branches and sales offices centered on the Tohoku and Hokkaido regions, the segment supplies customers or distributors directly via tank trucks and other means. It is the group's largest segment, accounting for approximately 60% of consolidated net sales.

Recent Overview

Net sales declined due to falling LPG prices and the disappearance of spot demand, but the business is shifting into an investment phase with the start of hydrogen equipment operations.

In FY2026 (ending March 2026), net sales in the Gas-Related Business were ¥20,638 million (down ¥522 million, or 2.5%, year on year), and operating income was ¥1,909 million (down ¥8 million, or 0.4%, year on year). While demand increased for carbon dioxide (for automotive-related applications), hydrogen (for quartz processing), and petroleum products (for industrial use), oxygen and nitrogen declined due to the disappearance of the prior year's spot demand, and LPG net sales declined as the selling price fell due to import price fluctuations despite an increase in shipment volume. On the profit side, gross profit increased as cost of sales declined following the absence of the prior year's large-scale periodic maintenance at the Tagajo Plant, but operating income declined slightly due to increased selling, general and administrative expenses from rising personnel costs and transportation costs. Segment assets increased to ¥20,130 million (up ¥1,511 million year on year) due to the new installation of hydrogen generation equipment and other factors, and the increase in fixed assets expanded to ¥1,528 million, approximately double the prior year, indicating that growth investment is now in full swing.

Key Products

Growth Drivers

• Expansion of hydrogen business supply capacity through the new installation of hydrogen generation equipment (operations began in FY2026, ending March 2026) and the capture of demand for quartz processing applications
• Increased demand for carbon dioxide gas in automotive-related applications
• Recovery in demand for petroleum products for industrial use
• Business expansion leveraging the group's overall strength through complementary synergy with food additive gases (Espuma-related)
• Normalization of cost of sales following completion of large-scale periodic maintenance at the Tagajo Plant (continuation of the cost reduction effect versus the prior period)
• Productivity improvement and functional strengthening of the core business based on the new Medium-Term Management Plan (scheduled for announcement in June 2026)

Risks

• Rising procurement costs due to persistently high raw material and energy prices
• Risk of fluctuations in LPG import prices (including delays in passing costs through to selling prices)
• Fluctuations in net sales due to temporary changes in demand, such as the disappearance of spot demand for oxygen and nitrogen
• Structural contraction of industrial demand due to population decline in the Tohoku and Hokkaido regions
• Profit pressure from increased fixed costs, such as rising personnel and transportation costs
• Risk of production stoppages due to equipment trouble or periodic maintenance at the Tagajo Plant and other facilities
• Uncertainty regarding pricing and demand development in the hydrogen business