NIPPON SHOKUBAI CO., LTD.

Business Details

Manufactures and sells Acrylic Acid, Acrylate Esters, Ethylene Oxide, Ethylene Glycol, ethanolamine, specialty esters, Superabsorbent Polymer (SAP), maleic anhydride, Process Catalysts and other products. In addition to domestic manufacturing sites, this globally deployed segment has overseas manufacturing sites in the United States, Indonesia, Singapore, Belgium, China, and South Korea. External customer revenue accounted for approximately 70% of consolidated revenue in FY2026 (ending March 2026). Under the new medium-term management plan (FY2025-2027), the company aims to strengthen profitability through reorganization and efficiency improvement of the production system and enhanced product sales in growth markets.

Recent Overview

Revenue and profit declined due to falling overseas product market conditions and raw material prices, while Superabsorbent Polymer (SAP) revenue increased on higher volume

In the Materials Business for FY2026 (ending March 2026), revenue decreased 5.2% year on year to ¥278,810 million, and operating profit decreased 20.7% year on year to ¥10,234 million. Sales prices declined for most products due to falling overseas market conditions for products and falling raw material prices (domestic naphtha prices fell ¥10,400/kl year on year to ¥65,200/kl). On the other hand, Superabsorbent Polymer (SAP) secured higher revenue due to increased sales volume. An increase in fixed manufacturing costs and a swing from an inventory valuation gain in the prior period to a valuation loss in the current period were also factors behind the profit decline. Share of profit of investments accounted for using the equity method also decreased from ¥2,986 million in the prior period to ¥1,709 million, and segment profit decreased 24.8% year on year to ¥11,943 million.

Key Products

Growth Drivers

• Increased sales volume of Superabsorbent Polymer (SAP) (expanded production at global sites including the United States, Belgium, and China)
• Profit improvement effect from increased production and sales volume for certain products
• Boosting effect on yen-denominated revenue at overseas manufacturing sites from the progression of yen depreciation
• Potential for inventory valuation gains during periods of falling raw material prices
• Cost reductions through reorganization and efficiency improvement of the production system under the new medium-term management plan (FY2025-2027)
• Expanding demand for Superabsorbent Polymer for growth markets (hygiene materials, agriculture, etc.)

Risks

• Risk of declining sales prices due to falling overseas market conditions for products (Acrylic Acid, Superabsorbent Polymer, etc.)
• Risk of narrowing spreads due to fluctuations in raw material (naphtha, etc.) prices
• Risk of inventory valuation losses (inventory valuation losses during periods of falling raw material prices)
• Risk of cost increases due to rising fixed manufacturing costs and selling, general and administrative expenses
• Risk of deteriorating product market conditions due to softening supply-demand balance, primarily in Asia
• Risk of impact on raw material supply conditions and costs due to escalating tensions in the Middle East
• Risk of economic slowdown and demand contraction at overseas manufacturing sites in China, Europe, and elsewhere
• Foreign exchange risk (erosion of overseas revenue when translated into yen upon a shift to yen appreciation)
• Risk of declining investment gains/losses and impairment losses at equity-method affiliates

Business Details

Manufactures and sells a wide range of high-performance chemical products including polymers for concrete admixtures, glycol ethers, iodine compounds, Electronic & Information Materials, automotive catalysts, denitration catalysts, exhaust gas treatment systems, and battery materials. The company newly consolidated E-TEC Co., Ltd. as a subsidiary, expanding its business domain. Under the new medium-term management plan (FY2025-2027), the company positions aggressive investment in growth areas such as specialty products, electronics, and batteries to expand segment profit as its top priority strategy.

Recent Overview

Revenue and operating profit increased, but segment profit slightly declined due to an impairment loss on an equity-method investment

In the Solutions Business for FY2026 (ending March 2026), revenue increased 5.1% year on year to ¥121,088 million, and operating profit increased significantly, up 27.1% year on year to ¥6,503 million, driven by the consolidation of E-TEC Co., Ltd., increased sales volume of Electronic & Information Materials and denitration catalysts, higher iodine compound prices, and the launch of a new high-performance cleaning polymer. On the other hand, an impairment loss was recognized on an investment accounted for using the equity method, resulting in a share of loss of investments accounted for using the equity method of ¥507 million, and segment profit came in at ¥5,996 million, down 2.4% year on year. Capital expenditure increased substantially from ¥5,688 million in the prior period to ¥26,373 million, as growth investments such as lithium-ion battery electrolyte manufacturing facilities move into full swing.

Key Products

Growth Drivers

• Higher revenue effect from increased sales volume of Electronic & Information Materials and denitration catalysts
• Earnings contribution from higher iodine compound sales prices
• Expansion of the water-soluble polymer business through the launch of a new high-performance cleaning polymer
• Higher revenue from improved product sales mix in battery materials
• Expansion of business scale through the consolidation of E-TEC Co., Ltd.
• Aggressive capital investment in lithium-ion battery electrolyte manufacturing facilities and other projects (new medium-term management plan FY2025-2027)
• Improved profitability from widening spreads (the gap between raw material costs and sales prices)

Risks

• Risk of decreased sales volume for polymers for concrete admixtures, ethyleneimine derivatives, coating resins, and other products
• Risk of impairment losses on equity-method affiliates (an impairment loss of ¥1,480 million was recognized in the current period)
• Profit pressure from increased selling, general and administrative expenses
• Risk of cost fluctuations due to raw material price movements and inventory valuation differences
• Impact on raw material supply and costs from escalating tensions in the Middle East (a primary reason the forecast for the next fiscal year has not been determined)
• Impact of economic slowdown and the sluggish real estate market in China
• Risk related to increased depreciation and investment recovery associated with large-scale capital expenditure (¥26,373 million)