ENVALITH
ハリマ化成グループ株式会社 logo

HARIMA CHEMICALS GROUP,INC.

4410・Prime Market・Chemicals

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ハリマ化成グループ株式会社 logo
HARIMA CHEMICALS GROUP,INC.4410

Business

Harima Chemicals Group traces its roots to a specialized Pine Chemicals manufacturer founded in 1947, which refines and processes crude tall oil obtained from pine trees to manufacture and sell resins for coatings, resins for printing inks, papermaking chemicals, and electronic bonding materials. Domestically, the company operates Resins & Chemical Products (net sales of ¥21,420 million), Papermaking Chemicals (¥28,716 million), and Electronic Materials (¥13,718 million), while overseas, the Rotor business (¥35,931 million), centered on its subsidiary LAWTER B.V., supplies resins for adhesives, resins for road marking paint, and other products across 8 countries worldwide. Its major customers span a wide range of industries including paper, coatings, printing, automotive, and semiconductor manufacturers, and consolidated net sales for FY2026 (ending March 2026) are projected to reach ¥103,763 million.

Business Model

The company refines and chemically synthesizes crude tall oil, a renewable biomass raw material, to supply functional chemical materials to diverse industries including coatings, papermaking, electronics, and adhesives. Domestic manufacturing subsidiary Harima Chemicals handles high-value-added products, while overseas local manufacturing sites under LAWTER B.V. serve each respective market. The company adopts a build-to-forecast production approach and invests ¥2,868 million in R&D to differentiate products, maintaining an earnings structure that absorbs raw material cost fluctuations through price pass-through and improvements in product mix.

Company Strengths

Since commencing operation of Japan's first continuous vacuum precision fractional distillation equipment for crude tall oil in 1958, the company has deepened its technology in the Pine Chemicals field. In February 2025, the tall oil distillation pilot plant was certified as a Chemical Heritage by the Chemical Society of Japan, publicly recognizing the industry's technological pioneering role. This accumulated expertise forms the foundation for ISCC certification acquisition and the development of biomass-alternative products.

Triggered by the 2011 acquisition of the rosin-related business of Momentive (US), the company has expanded manufacturing bases across North America, Europe, South America, and Asia, now operating in 10 countries. The Rotor business boasts the largest scale within the group, with sales of ¥35,931 million, securing market share in Resins for Road Marking Paint in North America and Resins for Printing Inks in Europe. This geographic diversification reduces the risk of dependence on any specific market.

The Papermaking Chemicals segment boasts the group's highest level of profitability, with sales of ¥28,716 million and an operating margin of 8.8%. Sales volume of Sizing Agents has increased through the expansion of customers via the US subsidiary Plasmine Technology, Inc., and in China, the company addresses local demand through a three-site network. It has commercialized chemicals for food packaging that comply with major regulations such as FDA, BfR, and China GB9685, with regulatory compliance capability serving as a barrier to entry.

ENVALITH's Perspective

In FY2026 (ending March 2026), profit attributable to owners of parent surged to ¥2,345 million (up 207.5% YoY), and the operating margin also improved to 3.2%. However, operating profit in the Rotor business plunged to ¥38 million (down 93.9% from ¥622 million in the prior period) due to rising manufacturing costs including raw material and fuel expenses, and the earnings stability of the segment with the group's largest sales scale remains a structural challenge. Whether the FY2027 (ending March 2027) Rotor sales plan of ¥393,000 million (up 9.4% YoY) can be achieved will determine the level of profit.

The equity ratio at the end of FY2026 (ending March 2026) improved to 39.7% (from 37.3% in the prior period), and net assets also increased to ¥41,506 million. Meanwhile, in exchange for reducing short-term borrowings by ¥70,950 million, long-term borrowings increased by ¥41,430 million, and interest expenses rose to ¥1,099 million (from ¥987 million in the prior period). As an external factor, amid the continuing rise in domestic interest rates, the risk of increased refinancing costs for interest-bearing debt warrants continued attention. The interest coverage ratio improved to 7.2x (from 6.5x in the prior period), indicating that a certain degree of financial flexibility is currently secured.

The company's forecast for FY2027 (ending March 2027) anticipates increased revenue and profit, with sales of ¥110,000 million (up 6.0% YoY), operating profit of ¥3,500 million (up 6.6%), and net income of ¥2,650 million (up 13.0%). However, management commentary explicitly cites as major risks the trajectory of US tariff policy, delays in China's economic recovery, rising energy prices due to the situation in the Middle East, and the prolonged yen depreciation keeping raw material and energy prices elevated. As a global company with an overseas sales ratio of 58.9%, the impact of exchange rate fluctuations is also significant, and stability in the external environment is a precondition for achieving the forecast.

Growth Strategy

Under "NEW HARIMA 2026," the company is advancing focused investment in Papermaking Chemicals and Electronic Materials, together with overseas business expansion

Increased sales volume of Sizing Agents driven by growth in customer base in the U.S. materialized as actual results in FY2026 (ending March 2026) (net sales of ¥28,716 million, operating profit of ¥2,538 million). The FY2027 (ending March 2027) plan calls for net sales of ¥299,000 million (+4.1% year on year), with continued expansion of the customer base in the North American and Asian growth markets.

Favorable market conditions for Resins for Semiconductor Resists and increased overseas demand for Brazing Materials for Heat Exchangers drove FY2026 (ending March 2026) net sales of ¥13,718 million (+3.2% year on year). However, operating profit declined slightly to ¥374 million (-2.1% year on year) due to soaring raw material prices and increased personnel costs. The FY2027 (ending March 2027) plan calls for net sales of ¥165,000 million (+20.3% year on year), representing substantial growth.

FY2026 (ending March 2026) operating profit in the Rotor business fell sharply to ¥38 million (-93.9% year on year) due to rising raw material and fuel costs. While Resins for Road Marking Paint performed well in North and South America, declining prices and sales volume of Resins for Printing Inks weighed on results. The FY2027 (ending March 2027) plan calls for net sales of ¥393,000 million (+9.4% year on year), but recovering profitability remains the top priority.

SunPine AB recorded equity-method investment profit of ¥452 million in FY2026 (ending March 2026), turning profitable from a loss (-¥329 million) in the previous fiscal year. This contributed significantly to the improvement in the Group's overall ordinary profit. Continued stabilization of biomass raw material procurement and sustained profit contribution are expected going forward.

Capital expenditure in FY2026 (ending March 2026) totaled ¥4,660 million (acquisition of tangible fixed assets: ¥3,580 million). Machinery, equipment, and vehicles (net) increased by ¥1,571 million year on year, reflecting progress in enhancing the production system. The FY2027 (ending March 2027) capital expenditure plan is ¥4,700 million, maintaining a level similar to the previous fiscal year, aimed at continuing to strengthen production capacity.

Last updated: July 19, 2026