SUGAI CHEMICAL INDUSTRY CO., LTD.
4120・Standard Market・Chemicals
Business
SUGAI CHEMICAL INDUSTRY CO., LTD. is a long-established chemical manufacturer founded in 1928 that manufactures and sells Agrochemical Intermediates, Pharmaceutical Intermediates, Functional Intermediates, and Surfactants based on its organic synthesis technology platform. Centered on its core Agrochemical Intermediates (net sales of ¥4,316 million in FY2026 (ending March 2026), 67% of sales ratio), the company also develops Functional Intermediates for photosensitive resins and generative AI-related semiconductors (¥1,168 million), and Pharmaceutical Intermediates (¥411 million). Major domestic customers include Nissei Sangyo (25.1% of sales ratio), Sumitomo Chemical (16.6%), and ITOCHU Chemical Frontier (10.2%). The company operates a two-plant system in Wakayama and Fukui, adopting a made-to-order production method based on expected orders, with its subsidiary Sugai Chemie Co., Ltd. handling sales and production support. The company is listed on the Tokyo Stock Exchange Standard Market.
Business Model
Leveraging organic synthesis technology and unit process technology accumulated over many years, the company manufactures and sells a wide variety of chemical intermediates for the agrochemical, pharmaceutical, and functional materials fields. It maintains a flexible production switching system through multi-purpose plants, balancing product diversification with profitability management. The gross profit margin was 21.9% (FY2026 (ending March 2025)), and the company invests ¥268 million in R&D expenses with 23 researchers, continuing to develop proprietary new products to enhance added value.
Company Strengths
Agrochemical Intermediates achieved a 19.2% year-on-year increase in revenue in FY2026 (ending March 2026), driven by increased demand for veterinary drug and acaricide applications, among others. Functional Intermediates achieved a 46.2% year-on-year increase in revenue, led by new products for photosensitive resins and generative AI-related semiconductors. With R&D expenses of ¥268 million and a team of 23 researchers, the company continues to develop proprietary products such as high-refractive-index materials and calixarene derivatives.
The company operates multipurpose plants at its two factories in Wakayama and Fukui, enabling flexible production switching between product items. This allows it to maintain utilization rates while responding to demand fluctuations in the agrochemical, pharmaceutical, and functional fields. In FY2026 (ending March 2026), the company continued to improve productivity and expand facilities with capital expenditures of ¥576 million.
Net assets at the end of FY2026 (ending March 2026) stood at ¥8,365 million, with an equity ratio of 68.6% (up 3.7 percentage points from 64.9% at the end of the previous fiscal year). Borrowings were reduced to ¥1,385 million (from ¥1,845 million at the end of the previous fiscal year), while operating cash flow of ¥1,698 million was secured. A ¥759 million increase in the market value of investment securities also contributed to the rise in net assets.
ENVALITH's Perspective
Performance Trend
Net sales peaked at ¥7,617 million in FY2024 (ended March 2024), then declined for two consecutive periods to ¥6,622 million in FY2025 (ended March 2025) and ¥6,432 million in FY2026 (ending March 2026). The main cause was a sharp decline in Pharmaceutical Intermediates (¥411 million in FY2026, down 75.4% year on year), driven by a steep drop in exports to Europe (export sales of ¥492 million, down 49.9% year on year). Increases in Agrochemical Intermediates (+19.2%) and Functional Intermediates (+46.2%) offset this to some extent, but not fully. The operating margin declined to 7.6% (from 8.2% in the prior period). On the other hand, operating cash flow improved significantly to ¥1,698 million, driven by decreases in inventory and trade receivables, strengthening the company's financial position. As an external factor, escalating tensions in the Middle East and rising crude oil prices have emerged as downside risks to earnings for the next period.
Growth Strategy
Revenue diversification and structural reinforcement through expansion of new functional products, export recovery, and cost reduction
New products for photosensitive resins and semiconductors for generative AI were introduced on-site during FY2026 (ending March 2026), achieving Functional Intermediates sales of ¥1,167 million (up 46.2% year on year). Continued growth is expected in FY2027 (ending March 2026), with the company pursuing proprietary product development to reduce dependence on Agrochemical Intermediates.
Sales of Pharmaceutical Intermediates to Europe, which had been subject to inventory adjustments, are expected to recover, with export sales for FY2027 (ending March 2026) forecast at ¥874 million (up 77.6% year on year). The export ratio is targeted to recover to 13.4% (from 7.7% in the previous fiscal year). However, raw material procurement risk stemming from the situation in the Middle East remains an uncertainty affecting realization of this forecast.
The company has continuously pursued productivity improvement and cost reduction, maintaining an operating margin of 7.6% even amid a decline in sales. Flexible production switching using multi-purpose plants reduced inventory by ¥245 million, contributing to a substantial improvement in operating cash flow (from ¥71 million to ¥1,698 million).
Interest-bearing debt was reduced by a net ¥460 million, improving the equity ratio to 68.6%. The dividend per share was increased from ¥70 to ¥90 (payout ratio of 25.5%), and a dividend of ¥90 is planned for FY2027 (ending March 2026) as well. The company maintains a policy of balancing profit distribution with strengthening internal reserves.
Last updated: July 19, 2026