SANWAYUKA INDUSTRY CORPORATION

Business Details

The only segment operated by the Sanwa Yuka Kogyo Group. It collects used chemicals and industrial waste generated by manufacturing customers and provides an integrated offering spanning material recycling, thermal recycling, chemical product manufacturing and sales, and engineering. The Group positions the electronics field—including semiconductors, batteries, and electronic components—as a mid-to-long-term growth driver, with contribution to forming a circular economy as its business concept. In October 2025, the company made A&H Japan Co., Ltd. a wholly owned subsidiary, expanding its business into precious metal and rare metal recycling.

Recent Overview

Sales up 26% and operating profit up 85%, driven by the A&H Japan subsidiarization and other factors

In FY2026 (ending March 2026), the segment achieved sales of ¥20,263 million (up 26.3% year on year), operating profit of ¥1,543 million (up 84.6%), ordinary profit of ¥1,701 million (up 89.6%), and profit attributable to owners of parent of ¥1,071 million (up 81.2%), with substantial profit growth across all profit line items. The main drivers were a sharp increase in precious metal/rare metal recycling handling volume in the Reuse Business following the October 2025 acquisition of A&H Japan as a wholly owned subsidiary (acquisition cost ¥700 million, goodwill ¥213 million), which lifted Reuse Business sales by 82.2%, and a substantial increase in PCB treatment projects in the Engineering Business (up 63.7%). Meanwhile, in connection with the construction of a recycling plant in Kitakyushu (scheduled to commence operation in FY2027), expenditure on acquisition of tangible fixed assets reached ¥3,887 million, construction in progress surged to ¥3,218 million, and long-term borrowings expanded to ¥6,459 million (from ¥3,737 million in the prior period). The equity ratio declined to 51.2% (from 59.7% in the prior period). For FY2027 (ending March 2027), the company forecasts sales of ¥23,500 million (up 16.0%) and operating profit of ¥1,700 million (up 10.1%).

Key Products

Growth Drivers

• Full incorporation of the precious metal/rare metal recycling business through the A&H Japan subsidiarization (Reuse Business sales up 82.2%, contributing for the full FY2026 (ending March 2026) period)
• Capture of demand for recycling semiconductor-related waste in Kyushu through Sanwa Material Solutions (Kitakyushu), scheduled to commence operation in FY2027
• Increase in Engineering Business projects driven by approaching PCB treatment deadlines (FY2026 (ending March 2026) sales up 63.7%)
• New customer acquisition through increased handling volume of waste acid and waste alkali at Sanwa Nankai Recycle (Recycling Business up 6.3%)
• Growing demand for recycling driven by increasing domestic resource circulation needs amid ESG/SDGs adoption and heightened Middle East tensions
• Continued pursuit of business area expansion through M&A and business alliances

Risks

• Risk of operating rate fluctuations in the semiconductor and battery industries (the Chemicals Business again saw demand fall short of plan in the current period, following a 34.7% decline in operating profit in the prior period)
• Risk of impairment of goodwill (¥213 million, amortized equally over 5 years) related to the A&H Japan integration and risk that integration synergies are not achieved
• Increased financial leverage and interest rate risk from a substantial increase in long-term borrowings (from ¥3,737 million to ¥6,459 million)
• Deterioration in financial soundness accompanying the decline in the equity ratio (from 59.7% to 51.2%)
• Capital investment recovery risk associated with the sharp increase in construction in progress (from ¥426 million to ¥3,218 million; the Kitakyushu plant is scheduled to commence operation in FY2027)
• Compliance risk related to environmental regulations such as the Waste Management Act (there have been past incidents of explosions and fires)
• Geopolitical risks such as U.S. trade policy and heightened tensions in the Middle East, leading to rising raw material costs, price increases, and downside economic risk
• Shrinking demand in the traditional parts-processing field within the Automobile Business (sales down 1.3% in the current period)