ENVALITH
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NOF CORPORATION

4403・Prime Market・Chemicals

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日油株式会社 logo
NOF CORPORATION4403

Business

NOF Corporation is a comprehensive chemical manufacturer founded in 1921, comprising the company itself along with 30 subsidiaries and 9 affiliated companies. It centers on three core segments: the Functional Chemicals Business (Fatty Acid Derivatives, Surfactants, Special Rust Preventive Agents, electronic materials, etc.), the Pharmaceuticals, Medical & Health Business (DDS Pharmaceutical Formulation Raw Materials, Biocompatible Materials (MPC Polymer), Processed Edible Oils & Functional Food Materials, etc.), and the Explosives Business (Industrial Explosives, Space-Related Products, Defense-Related Products), with manufacturing and sales bases both in Japan and overseas. Under its management philosophy of "From Bio to Space," the company is expanding its business domains with a focus on three priority fields: Life & Healthcare, Environment & Energy, and Electronics & Information.

Business Model

A manufacturing and sales model that supplies product groups centered on oil chemistry, petrochemistry, and explosives technology to domestic and overseas industrial, pharmaceutical, and defense markets. Functional Chemicals and pharmaceuticals adopt a build-to-forecast production approach, while explosives are produced on a build-to-order basis, and in defense-related operations, fund efficiency is also secured through receipt of advance payments. While maintaining an operating margin on sales of 18.4% (FY2026 (ending March 2026)), the company implements shareholder returns targeting a dividend payout ratio of 40% and a total return ratio of 70% or more.

Company Strengths

The company holds proprietary technology in DDS Pharmaceutical Formulation Raw Materials such as activated PEG, functional lipids, and pharmaceutical surfactants, and has built a sales network for Europe, the US, and Asia through NOF AMERICA CORPORATION and NOF EUROPE GmbH. With new equipment at the LS Aichi Plant now operating, supply capacity for the nucleic acid pharmaceutical and biopharmaceutical markets has been expanded, and the operating margin of the Pharmaceuticals, Medical & Health Business reached 31.7% in FY2026 (ending March 2026).

Against the backdrop of the Defense Buildup Program, the order backlog of the Explosives Business reached ¥118,396 million (up 100.9% year on year), and the company has already received ¥13,914 million in advances related to defense products. It holds technology licensing agreements with the UK, Germany, the US, and Norway, and has carried out ¥25,733 million in capital investment to accelerate deployment of equipment. In FY2026 (ending March 2026), sales of the Explosives Business rose 59.1% year on year to ¥61,675 million, and operating profit increased 154.9% year on year to ¥7,979 million.

As the NOF Metal Coatings Group, the company operates manufacturing and sales bases in Japan, North America, Europe, South Korea, and China, and has built an international customer base for zinc flake coating agents used in automotive fasteners. While the Functional Chemicals Business overall saw a 3.4% decrease in sales year on year, Special Rust Preventive Agents maintained solid demand both domestically and overseas, achieving an increase in sales. The company is also advancing the development of environmentally friendly products such as PFAS-free coating agents.

ENVALITH's Perspective

In FY2026 (ending March 2026), the Explosives Business showed outstanding growth, with net sales of ¥61,675 million (up 59.1% year on year) and operating profit of ¥7,979 million (up 154.9% year on year). However, transactions related to Defense-Related Products equipment for early deployment have adopted, from this fiscal year, a method of "recognizing revenue in accordance with the performance obligation satisfied over a certain period," which includes a special treatment whereby the acquisition cost of fixed assets is recorded as cost of sales. This is also the background behind the sharp increase in depreciation expense, from ¥7,965 million in the previous fiscal year to ¥22,116 million in the current fiscal year. Investors need to closely examine the relationship between revenue recognition timing and construction progress.

In the Pharmaceuticals, Medical & Health Business, net sales of ¥50,200 million (up 0.5% year on year) and operating profit of ¥12,300 million (down 22.2% year on year) are forecast for FY2027 (ending March 2027), representing a substantial decline in profit. This is due to a combination of factors, including delays beyond expectations in the market rollout of certain customers' launched products using DDS Pharmaceutical Formulation Raw Materials, as well as an increase in fixed costs such as depreciation expense at the LS Aichi Plant. The company states that it "expects a recovery from the latter half of the 2028 Medium-Term Management Plan," but the risk of the delay becoming prolonged requires continued monitoring.

In FY2026 (ending March 2026), the company implemented share buybacks of ¥20,006 million and dividend payments of ¥11,546 million, substantially strengthening shareholder returns, with a dividend payout ratio of 34.6% and an annual dividend of ¥61 (up 35.6% from ¥45 in the previous fiscal year). For FY2027 (ending March 2027), an annual dividend of ¥70 (dividend payout ratio forecast at 41.3%) is planned. As a subsequent event, an additional share buyback of up to 1,700,000 shares and ¥5.0 billion was also resolved in May 2026. On the other hand, the equity ratio declined from 78.0% in the previous fiscal year to 74.0%, and from the perspective of financial discipline, attention is focused on how the company balances large-scale capital investment in the Explosives Business (increase in fixed assets of ¥25,733 million) with shareholder returns.

Growth Strategy

Advancing 'NOF VISION 2030' and transitioning to the next mid-term plan, 'FY2028 Mid-Term Management Plan,' through strategic investment in the Explosives and Pharmaceutical businesses

Promoting investment in defense-related facilities to support the early deployment of Defense-Related Products. Fixed asset additions in the Explosives Business reached ¥25,733 million in FY2026 (ending March 2026), and the FY2027 (ending March 2027) forecast anticipates continued revenue and profit growth, with sales of ¥112,800 million and operating profit of ¥15,400 million. Revenue recognition under the performance obligation progress method is structured to expand in line with construction progress.

The launch of the LS Aichi Plant has expanded supply capacity for DDS Pharmaceutical Formulation Raw Materials used in nucleic acid and biopharmaceutical products. Due to delays in the market launch of certain customers' products, operating profit in the Pharmaceuticals, Medical & Health Business is expected to temporarily decline to ¥12,300 million (down 22.2% year on year) in FY2027 (ending March 2027). A recovery is anticipated from the latter half of the 'FY2028 Mid-Term Management Plan.'

Under the basic policy of 'Practice and Advance' in the FY2025 Mid-Term Management Plan (final year: fiscal 2025), the company is promoting a shift toward a solutions-based business model centered on these three fields. In the electronics field, the 'Industry-Academia Commissioned Research Open Innovation Program 2025' was implemented to accelerate the development of next-generation materials and technologies. This initiative will continue under the next 'FY2028 Mid-Term Management Plan.'

Against the 50% total payout ratio target set for the final year of the FY2025 Mid-Term Management Plan (fiscal 2025), FY2026 (ending March 2026) saw total shareholder returns of approximately ¥33,913 million, comprising ¥13,907 million in dividends and ¥20,006 million in share buybacks, achieving a payout ratio of 34.6% and an annual dividend of ¥61. As a subsequent event, an additional share buyback of up to ¥5.0 billion was resolved. The company intends to continue stable profit distribution under the FY2028 Mid-Term Management Plan.

Last updated: July 19, 2026