Carlit Co.,Ltd.

Business Details

The Chemical Products segment consists of six fields: the Explosives segment (industrial explosives, signal flares, etc.), the Chemical Products segment (ammonium perchlorate [raw material for rocket and defense propellants], sodium chlorate, etc.), the Electronic Materials segment (organic conductive materials, etc.), the Contract Testing segment (hazard evaluation testing, battery testing), the Ceramic Materials segment (abrasives), and the Silicon Wafer segment (silicon wafers for semiconductors). It is the core business accounting for approximately 57.9% of the Group's consolidated net sales (to external customers), with Japex Co., Ltd. and Carlit (Shanghai) Trading Co., Ltd. as its main affiliated companies.

Recent Overview

Despite lower sales, operating profit rose significantly by ¥380 million year on year, driven by strength in explosives, chemical products, and electronic materials.

In the Chemical Products segment for FY2026 (ending March 2026), net sales decreased to ¥21,977 million (down ¥446 million year on year), but operating profit increased substantially to ¥1,858 million (up ¥380 million year on year). This was driven by the Explosives segment (appropriate price pass-through), the Chemical Products segment (strength in ammonium perchlorate and electrodes), and the Electronic Materials segment (increased sales of high-value-added products for high-end servers). Meanwhile, the Silicon Wafer segment continued to see lower profit due to inventory adjustments and reduced utilization, and an impairment loss of ¥132 million was recorded. The Contract Testing segment and the Ceramic Materials segment also saw lower profit. In FY2027 (ending March 2027), inventory adjustments in the Silicon Wafer segment are expected to continue, while ammonium perchlorate and the Electronic Materials segment are expected to continue supporting growth.

Key Products

Growth Drivers

• Steady expansion of demand for ammonium perchlorate in space rocket and defense applications (production capacity expansion investment underway as a priority area under the medium-term management plan "Challenge2027")
• Increased sales of high-value-added electronic materials such as capacitor materials for high-efficiency circuits for high-end servers and AI servers
• Improved profitability from the continued reflection of appropriate pricing for highway signal flares and industrial explosives
• Increased sales and profit in the Chemical Products segment driven by strong replacement demand for electrodes (seawater electrolysis applications)
• Execution of production facility expansion, energy-saving, and labor-saving investments during the investment promotion phase of the medium-term management plan "Challenge2027"

Risks

• Prolonged excess inventory and production adjustments among customers in the Silicon Wafer segment (lower plant utilization expected to continue in FY2027, ending March 2027)
• Continued impact of decreased sales of electrolyte solutions for capacitors due to the slowdown in EV demand
• Impact of EV demand slowdown and customer adjustments on battery testing in the Contract Testing segment
• Continued sluggish demand for abrasive grains for automobile and steel applications (Ceramic Materials segment)
• Decreased sales of sodium chlorate due to lower demand for paper and pulp bleaching applications
• Sluggish overseas demand (continued weak overseas demand for perchloric acid)
• Risk of increased manufacturing costs due to rising labor and energy costs and uncertainty in raw fuel procurement stemming from the situation in the Middle East
• Pressure on profitability in the Contract Testing segment from increased depreciation expenses related to new equipment