Nihon Tokushu Toryo Co., Ltd.

Business Details

This segment's principal businesses are the manufacture and sale of coatings and contracted construction work, undertaken by Nippon Tokushu Toryo, Nittoku Maintenance Co., Ltd., Nittoku Shoko Co., Ltd., and Umei Sangyo Co., Ltd. The core products are coatings for buildings & structures, centered on waterproofing materials, marketed through a sales network centered on paint retailers and painting contractors. Contracted construction work such as large-scale renovation work for apartment buildings, etc. is also an important source of revenue, with the domestic market as the primary target. Building on the high technical capabilities cultivated in aircraft coatings, the segment seeks differentiation through the development of environmentally friendly and energy-saving coatings.

Recent Overview

Net sales declined 18.6% and segment profit declined 40.6%, a significant deterioration due to the rebound effect from large-scale renovation work

In the Paint & Coatings-Related Business for FY2026 (ending March 2026), sales of coatings for buildings & structures remained broadly at the level of the prior year, but the segment was directly impacted by the rebound effect from large-scale properties in large-scale renovation work for apartment buildings, resulting in a significant decline in net sales to ¥19,314 million (down 18.6% year on year). On the profit side, despite efforts to reduce cost of sales and expenses, the decline in net sales could not be absorbed, and segment profit fell to ¥566 million (down 40.6% year on year). The operating margin declined 1.1 percentage points, from 4.0% in the prior period to 2.9%. The earnings forecast for FY2027 (ending March 2027) is net sales of ¥20,400 million (up 5.6% year on year) and segment profit of ¥350 million (down 38.2% year on year), with sales expected to recover while profit is projected to decline further.

Key Products

Growth Drivers

• Recovery and expansion of construction-related sales such as large-scale renovation work for apartment buildings, etc. (net sales expected to increase 5.6% year on year in FY2027, ending March 2027)
• Strengthening of the earnings base through optimization of the product portfolio
• Product differentiation through the development of new products centered on environmentally friendly and energy-saving coatings
• Expansion and strengthening of the sales network centered on paint retailers and painting contractors
• Improvement of profit margins through continued cost reduction activities and expense reduction measures

Risks

• Year-on-year fluctuation in net sales due to variability in orders for large-scale construction projects (in FY2026, ending March 2026, a decline of 18.6% due to the rebound effect from a large-scale property)
• Segment profit is forecast to decline a further 38.2% to ¥350 million in FY2027 (ending March 2027), posing a risk of further deterioration in profitability
• Structural contraction of the market due to the trend of population decline in Japan
• Intensifying fierce sales competition and new product development competition among numerous large and small coatings manufacturers
• Elevated raw material and energy prices, and rising logistics and labor costs
• Uncertainty in the operating environment due to exchange rate fluctuations, US tariff policy, and heightened tensions in the Middle East