Dai Nippon Toryo Company,Limited

Business Details

The core business in which Dai Nippon Toryo and the Shinto Paint Group manufacture and sell paints domestically. It consists of three fields: general-purpose (for construction and civil engineering), industrial (for automotive parts, metal building materials, etc.), and ink & dispersion technology related products. The segment relies on contract manufacturing at manufacturing subsidiaries (Chiba Kako, Nitto Sanwa Toryo, Okayama Kako, etc.) and a sales network through regional sales subsidiaries (Dai Nippon Toryo Hokkaido, DNT Sanyo Chemical, etc.). From FY2026 (ending March 2026), BONFLON Corporation was newly consolidated as a subsidiary, strengthening the technology base for fluororesin coatings.

Recent Overview

Revenue increased significantly due to Shinto Paint consolidation, but operating profit fell 37.4% due to sluggish sales and higher personnel costs

In the Domestic Paints Business for FY2026 (ending March 2026), revenue increased substantially to ¥71,870 million (up 41.1% year on year) due to the consolidation of the Shinto Paint Group. On the other hand, sales in the general-purpose, industrial, and ink & dispersion technology fields all remained sluggish, leading to lower profitability. In addition, personnel costs increased for talent acquisition and development, and operating profit fell substantially to ¥1,231 million (down 37.4% year on year). The Domestic Paints segment also recognized an impairment loss of ¥996 million. The consolidation of BONFLON Corporation (acquisition expenditure of ¥804 million) strengthened the technology base for fluororesin coatings.

Key Products

Growth Drivers

• Expansion of segment revenue and assets through the consolidation of the Shinto Paint Group (segment assets +¥5,415 million)
• Strengthening of the fluororesin coatings technology base through the consolidation of BONFLON Corporation as a subsidiary
• Expected recovery in sales in the general-purpose field following the lifting of the JIS mark labeling suspension (November 2025)
• Continued progress in improving product mix and correcting prices in the industrial field
• Stable demand and enhanced customer appeal in the industrial field for various metal products and machinery
• Improved profitability through optimization of the production system (a key priority in the 2026 Medium-Term Management Plan)

Risks

• Damage to customer trust stemming from the JIS mark labeling issue and delays in the recovery of sales in the general-purpose field
• Declining profitability due to increased fixed costs such as personnel expenses and depreciation (depreciation increased 34.6% year on year to ¥2,055 million)
• Structural challenges of labor shortages in the construction and civil engineering fields and the long-term slump in housing starts
• Delayed realization of synergies with the Shinto Paint Group (limited contribution to profit)
• Cost pressure from persistently high raw material, energy, and logistics costs
• Risk of continued recognition of quality-related losses (a quality-related loss of ¥389 million was recognized as an extraordinary loss in FY2026, ending March 2026)
• Inventory adjustments at major customers and delays in acquiring new customers in the ink & dispersion technology field
• Recognition of an impairment loss of ¥996 million in the Domestic Paints segment (a substantial increase from ¥243 million in the previous period)

Business Details

A segment in which the subsidiary DN Lighting Co., Ltd. manufactures and sells various lighting equipment and undertakes store construction, etc. Manufacturing of some parts and products is outsourced to Akita DN Lighting Co., Ltd. The segment consists of three fields: Commercial LED Lighting, UV Lamps, and Fluorescent Lamps, with commercial facilities and lodging facilities as the main customers. Commercial LED Lighting has been the driving force, backed by urban redevelopment projects, and the company has established a technology center within its new head office completed in fiscal 2024, working on strengthening its product lineup and expanding and renovating its factory.

Recent Overview

Revenue increased slightly, but operating profit fell 6.6% year on year due to higher costs

Revenue for FY2026 (ending March 2026) was ¥10,424 million (up 0.1% year on year), and operating profit was ¥1,928 million (down 6.6% year on year). While the LED lighting field drove revenue, supported by demand for commercial and lodging facilities centered on redevelopment projects, this was partially offset by declining demand from specific customers in the UV lamp field and market contraction in the fluorescent lamp field. On the profit side, the increase in depreciation (from ¥360 million to ¥463 million) associated with the head office relocation implemented in the previous period, as well as increased personnel costs for talent acquisition and development, were pressuring factors. Improvement in product profitability through pricing strategies, among other measures, is steadily progressing, and the company has begun expanding and renovating its factory in preparation for the next period.

Key Products

Growth Drivers

• Continued solid demand for LED lighting for commercial and lodging facilities backed by urban redevelopment projects
• Strengthening of the product lineup and enhancement of customization capability utilizing the technology center within the new head office completed in fiscal 2024
• Improvement in product profitability in commercial LED lighting through pricing strategies, among other measures
• Strengthening of the supply system through factory expansion and renovation aimed at production efficiency improvements and future capacity increases
• Increased capital expenditure demand at lodging and commercial facilities due to growing inbound consumption

Risks

• Pressure on profit from increased depreciation associated with the head office relocation (a structural cost increase, up ¥103 million year on year)
• Increased personnel costs for talent acquisition and development
• Risk of declining demand from specific customers in the UV lamp field
• Continued decline in revenue due to market contraction in the fluorescent lamp field
• Risk of fluctuations in LED lighting demand due to a leveling-off of redevelopment projects or an economic downturn

Business Details

The subsidiary Shinloihi Co., Ltd. manufactures and sells Fluorescent Pigments and Specialty Coating Materials (Processed Products). In the pigment field, demand for overseas markets such as the EU region and new adoption for stationery applications support demand, while in the processed products field, the loss of large-scale projects has had an impact. Although the segment accounts for a small share of the group's overall revenue (approximately 1.2% in FY2026, ending March 2026), profitability continues to improve through growth in sales of high-value-added products and expense reductions.

Recent Overview

Revenue fell 6.1% year on year, but operating profit increased 8.5% due to growth in high-value-added products and expense reductions

Revenue for FY2026 (ending March 2026) was ¥1,088 million (down 6.1% year on year). The pigment field exceeded the previous period due to a recovery in overseas demand in regions such as the EU and new adoption for stationery applications, but the loss of a large-scale project in the processed products field that had occurred in the previous period caused the overall figure to fall below the previous period. On the other hand, operating profit increased to ¥64 million (up 8.5% year on year). Efforts to grow sales of high-value-added products and to reduce expenses were successful, improving the operating margin from 5.1% to 5.9%.

Key Products

Growth Drivers

• Recovery in overseas demand for pigments in regions such as the EU
• Expansion of sales channels through new customer adoption of fluorescent pigments for stationery applications
• Improvement in product mix through growth in sales of high-value-added products
• Improved profitability through thorough expense reduction and cost management

Risks

• Risk of the loss of large-scale projects in the processed products field and declining demand for tape products
• Limited allocation of management resources within the group due to the small scale of the segment (revenue of ¥1,088 million)
• Overseas pigment demand is susceptible to exchange rate fluctuations and geopolitical risks (such as EU regulatory trends)
• Risk of demand fluctuation due to dependence on specific applications such as safety-related coatings

Business Details

The segment manufactures and sells paints primarily in Asia (Thailand, Malaysia, Indonesia, China) and North/Central America (Mexico). Its main product is industrial paints for Japanese automakers, and it also offers building materials paints. The company has manufacturing and sales subsidiaries in Thailand, Malaysia, Indonesia, China, and Mexico, and with the consolidation of the Shinto Paint Group, an Indonesian subsidiary (PT. Shinto Paint Manufacturing Indonesia), among others, has been added. In FY2026 (ending March 2026), while demand continued to decline in Southeast Asia, cost containment in China was successful, and operating profit increased 54.1% year on year.

Recent Overview

Revenue increased 5.6% year on year and operating profit increased 54.1%, with profitability improving

Revenue to external customers for FY2026 (ending March 2026) was ¥8,590 million (up 5.6% year on year), and operating profit was ¥368 million (up 54.1% year on year). In Southeast Asia, demand continued to decline due to sluggish production by Japanese automakers, but revenue exceeded the previous period due to the consolidation of the Shinto Paint Group. In Mexico, revenue declined due to the effects of curbing sales of low-margin products and inventory adjustments. China contributed to profit through cost containment. Separately, an equity transfer agreement was concluded for the Chinese manufacturing subsidiary, and a loss on the reorganization of affiliated companies was recognized; deconsolidation is planned for the interim period of FY2027 (ending March 2027).

Key Products

Growth Drivers

• Expansion of revenue scale and strengthening of the business foundation through utilization of the Shinto Paint Group's overseas business (Indonesia, etc.)
• Resolution of the operating loss in the China business through deconsolidation of the Chinese manufacturing subsidiary (planned for the interim period of FY2027, ending March 2027)
• Policy of expanding the overseas paints business foundation through acquisition of external resources, M&A, and business alliances under the 2026 Medium-Term Management Plan
• Improved profitability in Southeast Asia through cost containment and curbing sales of low-margin products
• Reallocation of resources toward future business growth by utilizing the overseas business resources of the Shinto Paint Group

Risks

• Declining demand due to production adjustments and sluggish production by Japanese automakers (Southeast Asia, Mexico)
• Impact on exchange rates, demand, and the supply chain from trends in U.S. trade policy (protectionist policies)
• Cost increase pressure from the continued weak yen and persistently high energy and raw material prices
• Structural decline in demand for various industrial applications in the Chinese market and transition risk associated with the deconsolidation of the Chinese manufacturing subsidiary
• Risk that the profit contribution from the consolidation of the Shinto Paint Group remains limited
• Tightening of raw material supply and supply chain disruption associated with heightened geopolitical risk

Business Details

Other Businesses consists of two businesses: the Painting Construction Business, conducted by the subsidiary Nitto Engineering Co., Ltd., and the Logistics Business, in which Knit Service Co., Ltd. handles logistics operations for group products, among other items. This is a supplementary business segment not included in the reportable segments, and its share of the group's overall revenue is small. The segment contributes to group earnings through expanded orders for high-profitability painting construction projects and logistics efficiency improvements. The affiliated company Yumi Kogyo Co., Ltd. manufactures and sells building materials.

Recent Overview

Painting construction remained solid, but the segment fell into a loss due to one-time expenses in logistics

Full-year revenue for FY2026 (ending March 2026) was ¥1,785 million (down 5.0% year on year), and segment profit was ¥-37 million (compared with a profit of ¥79 million in the previous period). In the Painting Construction Business, orders for high-profitability projects increased and revenue exceeded the previous period, but in the Logistics Business, revenue fell below the previous period due to a decline in the volume handled, and the recognition of one-time expenses associated with facility consolidation pushed down the segment's overall profit and loss, resulting in an operating loss.

Key Products

Growth Drivers

• Continued increase in orders for high-profitability projects in the Painting Construction Business
• Improvement in the cost structure in the Logistics Business following the completion of facility consolidation
• Increase in logistics volume handled in line with a recovery in the group's overall paint sales

Risks

• Continued decline in the volume handled in the Logistics Business
• Pressure on profitability from persistently high costs such as energy and personnel expenses in the logistics industry
• Risk of fluctuation in orders in the Painting Construction Business
• Risk of spillover effects on logistics volume handled due to a slump in the group's overall paint sales
• Occurrence of one-time expenses associated with structural reforms such as facility consolidation