Hodogaya Chemical Co., Ltd.

Business Details

This is the core segment manufacturing and selling charge control agents for toner, organic photoconductor materials, organic EL materials, bio materials, and various dyes. In addition to the Company itself, the Korean subsidiary SFC CO., LTD. handles manufacturing and sales (REXCEL CO., LTD. was excluded from consolidation in the current period). The organic EL materials business saw solid demand not only from smartphones and similar devices but also steady demand for bio materials used in PCR diagnostic kits and health functional foods. The dye materials business saw a significant increase in revenue due to increased demand for dyes for aluminum coloring, among others. The imaging materials business saw a significant decline in revenue due to reduced demand for printer-related materials caused by inventory adjustments at some customers.

Recent Overview

A significant increase in revenue from dye materials offset flat performance in organic EL materials; the segment overall saw increased revenue but decreased operating income.

Segment net sales for FY2026 (ending March 2026) increased ¥908 million (up 3.6%) year on year to ¥26,049 million. By business, the dye materials business posted a significant revenue increase due to increased demand for dyes for aluminum coloring and other products, while the organic EL materials business maintained performance roughly in line with the prior year, supported by steady demand from smartphones as well as bio materials. Meanwhile, the imaging materials business saw a significant decline in revenue due to reduced demand for printer-related materials caused by inventory adjustments at some customers. Operating income decreased by ¥326 million to ¥3,512 million from ¥3,838 million in the prior period. Note that REXCEL CO., LTD. has been excluded from the scope of consolidation in the current period.

Key Products

Growth Drivers

• Continued adoption of organic EL materials in smartphones and tablets, and expectations of demand recovery
• Continuation of the increasing demand trend in the dye materials business, including dyes for aluminum coloring
• Steady demand trends for bio materials (materials for PCR diagnostic kits and health functional foods)
• Development of new themes such as bio materials (oligonucleic acids for nucleic acid drug raw materials) and perovskite solar cell materials
• Capture of overseas demand through global expansion via SFC CO., LTD.
• Expansion of production capacity and strengthening of competitiveness through capital expenditure (¥5,084 million in FY2026, ending March 2026)

Risks

• Risk of demand fluctuations in organic EL materials: concentration and subsequent decline of demand for smartphones and tablets can significantly affect performance
• Structural contraction of the imaging materials business: long-term demand contraction due to paperless trends and similar factors continues
• Risk of customer inventory adjustments: as seen in the imaging materials business, inventory adjustments by major customers can cause significant short-term revenue declines
• Intensifying development competition with competitors: in the organic EL materials field, high performance and cost reduction are required, and competition is intense
• Foreign exchange risk: overseas operations with sales to Korea, China, North America, and Europe are affected by yen depreciation or appreciation
• Geopolitical risk: escalating tensions in the Middle East causing raw material and fuel price increases and supply chain disruptions affecting manufacturing costs

Business Details

This segment is handled by the Company (Hodogaya Chemical Industry) itself and its consolidated subsidiary, Hodogaya Building Materials Co., Ltd., which are responsible for manufacturing, sales, and construction work. Main products include urethane raw materials, adhesives, release agents, urethane-based building and civil engineering materials (including waterproofing and water sealing works), and various intermediates for pharmaceuticals, resin materials, and electronic materials. The segment consists of three businesses—resin materials, building materials, and specialty chemicals—leveraging domestic and overseas sales networks. Affected by sluggish demand for urethane materials and inventory adjustments, the segment continued to post an operating loss in FY2026 (ending March 2026).

Recent Overview

All three businesses posted revenue declines, and the operating loss expanded significantly year on year.

Net sales for FY2026 (ending March 2026) decreased ¥747 million (down 8.8%) year on year to ¥7,702 million. All three businesses posted revenue declines: the resin materials business due to decreased demand for urethane materials, the building materials business due to a decline in orders for urethane waterproofing works, and the specialty chemicals business due to inventory adjustments at sales destinations for release agent and pharmaceutical applications. The operating loss expanded significantly from ¥51 million in the prior period to ¥589 million, marking a notable deterioration in profitability within the segment.

Key Products

Growth Drivers

• Improved supply capability in the specialty chemicals business through the completion of capacity expansion for phosgene derivatives (ODI) for release agents
• Launch of a new polyol (PTG-SOFTENA) and PR and adoption expansion activities toward domestic and overseas customers
• Expansion of new product sales in the building materials business and promotion of development and launch of next-generation waterproofing materials
• Overseas market development leveraging sales bases in Europe and the United States (HODOGAYA CHEMICAL (U.S.A.), INC. and HODOGAYA CHEMICAL EUROPE GmbH)

Risks

• Continued pressure on profitability in the resin materials business due to sustained sluggishness in the urethane materials market
• Risk of recurring inventory adjustments by sales destinations in specialty chemicals for release agent and pharmaceutical applications
• Risk of declining orders for urethane waterproofing works in the building materials business
• Deterioration of cost structure due to rising raw material and fuel prices (against the backdrop of worsening Middle East conditions)
• High uncertainty of returning to profitability, as the operating loss expanded significantly to ¥589 million for the full year in FY2026 (ending March 2026)

Business Details

This is the basic chemicals segment manufactured and sold by Hodogaya Chemical Industry. Main products are hydrogen peroxide and its derivatives (sodium percarbonate, peracetic acid, etc.) and other basic industrial raw materials. The segment supplies a wide range of applications including paper and pulp, semiconductors, bleaching agents, and food additives, and is pursuing profitability improvement through an efficient production system and correction of sales prices. In FY2026 (ending March 2026), increased demand for semiconductor applications provided support, but revenue declined due to the impact of inventory adjustments for sodium percarbonate.

Recent Overview

Increased demand for semiconductor applications provided support, but inventory adjustments led to decreased revenue and profit.

Net sales for FY2026 (ending March 2026) were ¥7,258 million (down ¥256 million, or 3.4%, year on year), and operating income was ¥323 million (down ¥91 million year on year). While sales of hydrogen peroxide for paper and pulp applications decreased, increased demand for semiconductor applications helped maintain performance roughly in line with the prior period. Meanwhile, sodium percarbonate saw a revenue decline due to the impact of inventory adjustments at sales destinations, dragging down overall segment profitability. Capital expenditure increased year on year to ¥258 million, continuing to maintain and strengthen the production system.

Key Products

Growth Drivers

• Increased demand for hydrogen peroxide for semiconductor applications (a supporting factor offsetting the decrease in paper and pulp demand)
• Sales expansion through acquisition of new markets and new customers for peracetic acid for food additive applications, among others
• Profitability improvement through promotion of various cost reduction measures
• Improvement of profit margins through efficient production systems and correction of sales prices

Risks

• Risk of decreased sales for paper and pulp applications (due to management issues or demand contraction at major customers)
• Risk of sluggish sales due to delayed recovery in semiconductor-related demand
• Risk of production and inventory adjustments by major customers for sodium percarbonate and similar products
• Risk of continued pressure on profitability from elevated raw material prices
• Risk of raw material and fuel price increases and logistics network disruptions due to escalating Middle East tensions

Business Details

Hodogaya Chemical Industry's Agroscience segment is a business in which the Company and its consolidated subsidiaries, Hodogaya UPL Co., Ltd. and Hodogaya Agrotech Co., Ltd., manufacture and sell herbicides, insecticides, and oxygen supply agents (agricultural peroxides). The segment's primary markets are domestic golf courses, railways, home gardening, and agriculture. Its share of consolidated net sales was approximately 10.6% (FY2026, ending March 2026), positioning it as a mid-sized segment.

Recent Overview

Sales and profit both decreased significantly due to the impact of inventory adjustments.

In the Agroscience segment for FY2026 (ending March 2026), herbicides saw a revenue decline due to the impact of inventory adjustments at sales destinations for golf course and home gardening applications. Net sales decreased ¥402 million (down 7.3%) year on year to ¥5,108 million, and operating income fell significantly by ¥237 million year on year to ¥65 million. Segment assets also decreased by ¥1,524 million from the end of the prior period to ¥6,666 million.

Key Products

Growth Drivers

• Continued strong demand for herbicides for railway and home gardening applications
• Recovery in demand for golf course herbicides once inventory adjustments have run their course
• Expansion of supply capacity for agricultural peroxides through capital investment
• Introduction of new products through joint development of combined agricultural materials with Asahi Agria
• Utilization of overseas sales channels through HODOGAYA CHEMICAL (U.S.A.), INC.

Risks

• Risk of demand fluctuations due to inventory adjustments at sales destinations (golf courses, home gardening, etc.)
• Risk that new products such as agricultural peroxides may take time to penetrate the market
• Risk of cost increases due to persistently high raw material prices
• Risk of demand fluctuations for agricultural and golf course applications due to climate change and abnormal weather
• Risk of raw material and fuel price increases and increased logistics costs due to escalating Middle East tensions

Business Details

This segment, handled by the consolidated subsidiary Hodogaya Logistics Co., Ltd., is responsible for the transportation and storage of goods entrusted by various business partners as well as products and raw materials of the Company's group. The segment is centered on warehousing, freight forwarding, and the ISO tank container storage business, promoting customer acquisition by leveraging know-how in handling hazardous materials. Recorded net sales, including intra-group sales, were ¥3,213 million (FY2026, ending March 2026), making it a small but stably profitable segment within the consolidated group.

Recent Overview

Despite a slowdown in import/export cargo movement, performance was maintained at a level roughly in line with the prior period due to increased ISO tank container handling.

In the Logistics-Related segment for FY2026 (ending March 2026), although import/export cargo movement was sluggish, this was offset by increased handling of ISO tank containers, and net sales to external customers decreased by only ¥4 million (down 0.2%) year on year to ¥1,775 million, maintaining a level roughly in line with the prior period. Meanwhile, operating income increased by ¥10 million from ¥351 million to ¥361 million, a modest improvement in profitability. Segment assets decreased from ¥2,451 million to ¥2,377 million.

Key Products

Growth Drivers

• Continued expansion of handling volume in the ISO tank container storage business
• Acquisition of new customers by leveraging hazardous material handling know-how
• Expansion of handling volume in the domestic hazardous material storage business
• Securing stable intra-group logistics demand for group products and raw materials as internal sales

Risks

• Risk of sales fluctuations due to slowdown in import/export cargo movement (a slowdown was observed in import/export cargo movement even in FY2026, ending March 2026)
• Dependence on intra-group sales (inter-segment sales of ¥1,437 million, second only in scale to external sales of ¥1,775 million)
• Fluctuations in logistics demand due to international instability and geopolitical risk (such as escalating Middle East tensions)
• Constrained investment capacity for business expansion, with capital expenditure at a low level of ¥31 million

Business Details

The "Other" segment is a category of supplementary businesses not included in the reportable segments (Functional Dyes, Functional Resins, Basic Chemicals, Agroscience, and Logistics-Related), primarily consisting of contract research operations. Although the scale of sales is small and its share of consolidated net sales is minor, it plays a role in supporting the group's overall R&D functions and maintains stable profitability.

Recent Overview

Net sales decreased, but operating income improved, and asset scale expanded.

In the "Other" segment for FY2026 (ending March 2026), net sales to external customers decreased to ¥144 million (down ¥36 million, or 19.8%, year on year). Meanwhile, operating income improved significantly to ¥37 million (up ¥17 million year on year). Segment assets expanded to ¥730 million (up ¥75 million year on year), and the increase in property, plant and equipment and intangible assets also continued at ¥68 million (up ¥10 million year on year), indicating ongoing investment.

Key Products

Growth Drivers

• Stable securing of contract R&D demand
• Room for expansion of contract operations as the group's internal R&D functions are strengthened
• Promotion of early commercialization of new product creation and R&D themes under the new medium-term management plan "CODE 2030," underpinning group-wide contract research demand

Risks

• Although the segment scale is small and has minor impact on the group overall in terms of sales and profit, there is a risk that revenue could fluctuate due to reduced R&D investment by contracting clients
• As a category not included in the reportable segments, it tends to receive lower priority in resource allocation
• Risk that changes in the scope of consolidation (such as the exclusion of REXCEL CO., LTD.) could alter the segment composition