ZEON CORPORATION

Business Details

This segment produces and sells Synthetic Rubber (NBR, SBR, etc.), Synthetic Latex (for medical and hygiene gloves, etc.), and Chemical Products (C5 petroleum resin, thermoplastic elastomers, etc.). Its main customer base spans the automotive industry, medical/hygiene, and the adhesive tape and label markets, and it operates globally through manufacturing and sales sites both in Japan and overseas. The basic strategy emphasizes profitability and global expansion of production and sales, and in Phase 3 of the medium-term management plan, the company is promoting a shift from low-profitability products to high-profitability products.

Recent Overview

Net sales declined, but cost reductions and a change in depreciation method led to an increase in operating profit

In FY2026 (ending March 2026), the Elastomer Materials Business recorded net sales of ¥221,756 million (down ¥12,879 million, or 5.4%, year on year), a decrease. Synthetic Rubber was affected by sluggish overseas demand and a decline in selling prices resulting from lower raw material prices; Synthetic Latex was affected by the continuation of supply-demand slack in the medical and hygiene glove market; and Chemical Products was affected by sluggish demand for overseas adhesive tape and label applications. Meanwhile, operating profit increased to ¥11,665 million (up ¥734 million year on year), securing a profit increase. In addition to the effect of reductions in selling, general and administrative expenses and lower raw material prices, the change in the depreciation method for property, plant and equipment from the declining-balance method to the straight-line method also contributed, boosting segment profit by ¥1,083 million. Furthermore, as a subsequent event, on May 11, 2026, the company entered into an agreement to transfer the coatings business of its subsidiary Toupe Co., Ltd. to Natoco Co., Ltd. (scheduled for November 2, 2026), and decided on a policy to transfer the acrylic rubber business to a wholly owned subsidiary.

Key Products

Growth Drivers

• Improved profitability through thorough cost reduction and production innovation activities under the "ZΣ Movement"
• Improved profitability through reductions in selling, general and administrative expenses
• Profit-boosting effect from the change in depreciation method for property, plant and equipment from the declining-balance method to the straight-line method (increase of ¥1,083 million impact on segment profit)
• Portfolio shift from low-profitability products to high-profitability products under Phase 3 of the medium-term management plan
• Strengthening of the profit base through an emphasis on profitability and global expansion of production and sales
• Business concentration and efficiency gains through the transfer of the acrylic rubber business to a wholly owned subsidiary

Risks

• Risk of continued sluggish overseas Synthetic Rubber market conditions, mainly in China
• Downward pressure on product selling prices due to declining raw material prices
• Prolonged supply-demand slack in the medical and hygiene glove market
• Decline in Synthetic Rubber demand due to production halts and cutbacks in the automotive industry
• Risk of supply chain disruption due to a potential closure of the Strait of Hormuz stemming from military conflict involving Iran
• Spillover effects on certain industries from U.S. trade policy
• Risk of impairment losses associated with the withdrawal from low-profitability products under Phase 3 of the medium-term management plan (¥2,296 million recorded in FY2026, ending March 2026)
• Occurrence of a consolidated loss on sale (approximately ¥1.9 billion expected) associated with the sale of shares of Toupe Co., Ltd.