SHINTO PAINT COMPANY, LIMITED

Business Details

Manufactures and sells synthetic resin paints and other products across four fields: Industrial Paints, Infrastructure & Anti-corrosion Paints, Automotive Paints, and Other Paints. Domestically, the company maintains a sales network through subsidiaries (Shinto Family Co., Ltd., Kyushu Shinto Co., Ltd., Hayashin Co., Ltd., etc.), and also engages in contract manufacturing and product supply to Japan Carboline Co., Ltd. and Shinto Axalta Coating Systems Co., Ltd. Overseas, a local subsidiary in Indonesia conducts manufacturing and sales. Major customers include Daito Kentaku Partners Co., Ltd. (net sales of ¥4,824 million in FY2026 (ending March 2026)) and Shinto Axalta Coating Systems Co., Ltd. (¥2,883 million in the same period).

Recent Overview

Net sales and operating profit increased, but a ¥552 million impairment loss led to a sharply wider net loss.

In FY2026 (ending March 2026), net sales increased 3.5% year-on-year to ¥21,481 million and operating profit increased 10.8% to ¥255 million, achieving higher sales and profit. On the other hand, ordinary profit declined 16.5% to ¥393 million, due in part to a ¥181 million increase in commission fees paid. As a result of recording an impairment loss of ¥552 million as an extraordinary loss related to the decision to sell welfare facilities, net loss attributable to owners of the parent expanded significantly to ¥593 million from ¥59 million in the prior period, marking the fifth consecutive fiscal year of net losses. The company has continued to forgo dividend payments for four consecutive fiscal years. For FY2027 (ending March 2027), the company forecasts net sales of ¥19,000 million (down 11.6% year-on-year), operating profit of ¥200 million, ordinary profit of ¥450 million, and net income of ¥200 million.

Key Products

Growth Drivers

• Increased demand for anti-corrosion paints (for heavy machinery and factory equipment repair) in the infrastructure field, and strong subsidiary construction sales
• Maintenance and increase of sales in automotive paints due to price revision effects
• Strong shipments in the track materials product field (ballast stabilizers)
• Efforts toward early realization of synergies from the business alliance with Dai Nippon Toryo Company, Limited
• Continued reduction of fixed costs to improve operating profit
• Stabilization of the financial base through a syndicated commitment line agreement concluded on December 22, 2025

Risks

• Continued cost pressure from persistently high raw material prices (FY2027 (ending March 2027) forecast is based on a domestic naphtha price assumption of ¥64,000/kl)
• Financial burden from high short-term borrowings of ¥5,068 million and total interest-bearing debt (total borrowings of ¥5,100 million)
• Litigation risk related to inappropriate quality practices (discovered in FY2022 (ended March 2022)) (total damages claims of ¥703 million, of which ¥670 million relates to a lawsuit from Haz Co., Ltd.) and the possibility of additional compensation costs
• Material doubt regarding going concern assumptions due to five consecutive fiscal years of net losses attributable to owners of the parent (currently assessed as not involving material uncertainty)
• Risk to automotive paint shipment volumes due to fluctuations in automaker production
• Further escalation of geopolitical risks (Middle East and Ukraine situations) leading to surging raw material prices and unstable procurement
• Sluggish paint demand in Japan due to population decline, along with labor shortages and rising labor costs
• Risk of deteriorating business environment given the forecast of a significant sales decline to ¥19,000 million (down 11.6% year-on-year) in FY2027 (ending March 2027)