ARAKAWA CHEMICAL INDUSTRIES, LTD.
4968・Prime Market・Chemicals
Business
Arakawa Chemical Industries is a specialty chemicals manufacturer founded in 1876, operating as a group including 15 consolidated subsidiaries. Its core businesses comprise four segments: the Functional Coatings Business, handling photo-curable resin and thermosetting resin; the Paper & Environment Business, centered on paper strength additive and sizing agent; the Adhesives & Biomass Business, dealing in hydrogenated petroleum resin and rosin-based resin for adhesives; and the Fine Electronics Business, covering precision polishing agents and fine chemical products. The company has manufacturing and sales bases in Japan, China, Taiwan, Thailand, Vietnam, and the West, with a customer base spanning a wide range of industries such as semiconductors, electronic components, papermaking, and adhesive tape. The company will mark its 150th anniversary in FY2026 (ending March 2026), and under its 6th medium-term management plan, has also begun new expansion into the life sciences field.
Business Model
In response to customers' needs for improved manufacturing processes and product performance, the R&D Division (R&D expenses of ¥3,043 million, 247 R&D staff, 922 patents held domestically and internationally) conducts proposal-based product development, with production and supply carried out at proprietary manufacturing sites in Japan and overseas. The company adopts a build-to-forecast production approach, securing continuous orders from a customer base diversified across multiple industries such as electronic materials, paper, and adhesives. It maintains a diversified portfolio-type earnings structure, focusing investment on the high value-added electronic materials domain while generating cash flow from the stable earnings of the Paper & Environment and Adhesives & Biomass businesses.
Company Strengths
In the Functional Coatings Business, photo-curable resin saw growing demand for AI servers, smartphones, and displays, achieving record-high sales in FY2025 (fiscal year ended March 2025). Net sales reached ¥18,206 million, with a segment profit margin of 12.1%. Development of materials for nanoimprint lithography is also progressing, and the company's track record as a supplier of coating agents for electronic material manufacturing processes continues to expand.
In addition to domestic manufacturing sites in Fuji, Onahama, and Mizushima in Japan, the company operates consolidated subsidiaries in China (Nantong, Wuzhou, Shanghai), Taiwan, Thailand, Vietnam, Europe (Germany), and the United States. Chiba Arkon Manufacturing Co., Ltd. has begun stable supply of Hydrogenated Petroleum Resin (Arkon) to the U.S. market in addition to Europe, building a global supply framework.
Precision Polishing Agent for Hard Disks handled by Yamaguchi Seiken Kogyo Co., Ltd. continued to see strong demand backed by expanding data center investment, achieving record-high sales again in FY2025 (fiscal year ended March 2025). Development of polishing agents for SiC substrates and glass disks is also underway, maintaining technological differentiation in the semiconductor and storage fields.
ENVALITH's Perspective
Performance Trend
Revenue bottomed out at ¥72,222 million in FY2024 (ended March 2024) and has increased for three consecutive periods, reaching ¥82,135 million in FY2026 (ending March 2026), up 2.4% year on year. Operating profit turned positive at ¥1,057 million in FY2025 (ended March 2025) after two consecutive years of losses in FY2023 and FY2024, and improvement accelerated further in FY2026 with operating profit rising 136.4% to ¥2,500 million. As an external factor, expanding investment in generative AI and data centers boosted demand in the Functional Coatings Business and the Fine Electronics Business. On the other hand, sluggish domestic production volume in the paper industry, continued oversupply in China, and the impact of US tariff policy have weighed on the Paper & Environment Business and the Adhesives & Biomass Business, and the recovery of overall company profitability remains only halfway complete. For FY2027 (ending March 2027), the company forecasts revenue of ¥87,000 million and operating profit of ¥3,300 million.
Growth Strategy
Three pillars: concentrated investment in electronic materials and life sciences, resolution of losses in the Adhesives & Biomass segment, and improvement of capital efficiency
Investment to expand production capacity for photo-curable resin, fine chemical products, and precision polishing agents for AI servers and semiconductors was completed under the 5th Medium-Term Management Plan. Mass production at the new facility for advanced semiconductor-related materials is planned to begin in the second half of FY2026, following customer certification, and expansion of profitability in the Fine Electronics Business is expected. 6th Medium-Term Management Plan FY2030 targets: Fine Electronics net sales of ¥18,500 million, profit margin of 7.6%.
The problem-resolution framework was strengthened under the leadership of the "Arkon Special Committee," and the utilization rate in FY2026 (ending March 2026) improved from the previous year, achieving increased production volume. Stable supply to the U.S. market began, following Europe. However, the target utilization rate has not yet been reached, and a segment loss of ¥1,400 million continues. Improvement in the profitability of rosin-based resins is also underway through the consolidation of manufacturing sites. 6th Medium-Term Management Plan FY2028 target: segment profit of ¥600 million (turning profitable).
Commercialization is being promoted across three fields: Healthcare (launch of EC sales of the pine needle extract supplement "Pino Fleur\u00ae" and the transfer of the microalgae business from SoPros Co., Ltd.), Agriculture (launch of EC sales of the agricultural material "EcoRosin\u00ae"), and Cosmetics (making Natural Wave Co., Ltd. a subsidiary). The business is transitioning from the "exploration and joint research" phase to the "commercialization and social implementation" phase. 6th Medium-Term Management Plan FY2028 targets: Life Sciences net sales of ¥500 million, profit of ¥40 million.
Under the 6th Medium-Term Management Plan, ROIC was added as a business evaluation metric, and continuous review of low-profitability and non-core businesses is being conducted. ROIC for FY2026 (ending March 2026) stood at 2.0% (FY2025 actual results), with targets of 3.5% or higher for FY2028 and 5% or higher for FY2030. Progressive dividends are the principle, with the dividend payout ratio target raised to 50%, aiming to strengthen cash generation capacity and improve PBR. The dividend forecast for FY2027 (ending March 2027) is ¥55 per share annually (ordinary dividend of ¥52 plus a commemorative dividend of ¥3 for the 150th anniversary of the company's founding).
Last updated: July 19, 2026