Showa Chemical Industry Co., Ltd.
4990・Standard Market・Chemicals
Business
Showa Chemical Industry Co., Ltd. (Diatomaceous Earth & Perlite Business) is a company listed on the Tokyo Stock Exchange Standard Market, founded in 1933, operating as a single-segment business that manufactures and sells Filter Aids, Building Materials & Fillers, Chemical Products, and Other Products using diatomaceous earth and perlite as primary raw materials. The company has three consolidated subsidiaries (Hakusan Kogyo, Nissho, and Beijing Ruilaite Trading) and two equity-method affiliates (Hakusanshi Chofuen Tsu Mining and Obex), building a production and sales network both domestically and overseas. Its major customers span the food and industrial sectors, including beer, soft drinks, pharmaceuticals, and chemical industries, as well as housing materials and water treatment-related businesses. Filter Aids, its core product line, accounts for 61.7% of net sales, with Building Materials & Fillers at 16.1% and Chemical Products at 16.2%, reflecting a diversified product portfolio.
Business Model
Building on diatomaceous earth and perlite production at the company's own plants (Akita, Okayama, Tochigi, etc.), the company has established a vertically integrated supply chain that combines manufacturing outsourcing to consolidated subsidiaries with raw material procurement from equity-method affiliates. In addition to product sales, the company promotes continued customer usage through technical proposals and solutions leveraging its Research & Analysis Center. Chemical Products adopts a purchase-and-resale model, and the company has a composite earnings structure in which investment gains from equity-method affiliate Auvex also contribute to ordinary profit.
Company Strengths
Since its founding in 1933, the company has consistently engaged in the manufacture and sale of diatomaceous earth and perlite filter aids, accumulating domestic and overseas verification data for agricultural products, obtaining related patents, and receiving certification as a Ministry of the Environment "Nature Symbiosis Site" in December 2025. This long-accumulated technical and quality control know-how forms an entry barrier that is difficult for competitors to replicate in a short period.
In addition to domestic plants in Akita, Okayama, and Tochigi, the company operates overseas bases in China, Singapore, and Dalian (established October 2025). By combining outsourced manufacturing to consolidated subsidiary Hakusan Kogyo with raw material procurement from equity-method affiliates, the company has secured a stable supply system and BCP capability. Capital expenditures for FY2026 (ending March 2026) reached ¥375 million, reflecting continuous renewal of production facilities.
As of the end of FY2026 (ending March 2026), the equity ratio stood at 64.4% (improved from 59.5% in the previous fiscal year), with net assets of ¥9,387 million against total assets of ¥14,569 million. The company held cash and cash equivalents of ¥2,873 million, and its financial base was further strengthened by an expansion of unrealized gains on investment securities (valuation difference on available-for-sale securities increased by ¥643 million). The medium-term management plan also sets a policy of maintaining an equity ratio of 50% or above.
ENVALITH's Perspective
Performance Trend
Revenue expanded sharply from ¥7,780 million in FY2022 (ending March 2022) to ¥9,226 million in FY2023 (ending March 2023), then remained flat in the range of ¥9,197–9,273 million from FY2024 (ending March 2024) through FY2026 (ending March 2026). Operating profit peaked at ¥601 million in FY2023 (ending March 2023) before declining to ¥346 million in FY2025 (ending March 2025), then recovered to ¥446 million in FY2026 (ending March 2026), up 29.0% year on year. This was supported by an improvement in the cost of sales ratio (from 69.2% to 68.2%) and normalization of provision for doubtful accounts. Ordinary profit rose 40.3% year on year to ¥801 million, driven by a substantial increase in equity in earnings of affiliates (from ¥43 million to ¥163 million), while net income for the period rose 51.7% year on year to ¥625 million on higher gains on sales of investment securities and lower extraordinary losses. However, the operating profit forecast for FY2027 (ending March 2027) suggests a sharp drop to ¥200 million, down 55.2% year on year, raising concerns about the sustainability of core business profitability. External factors such as geopolitical risk, yen depreciation, and rising prices are increasing uncertainty in the business environment.
Growth Strategy
Sustainable growth through deepening existing businesses, cultivating new businesses, cost reductions, and the new medium-term management plan
Executed tangible fixed asset acquisitions of ¥390 million (FY2026 (ending March 2026)) to strengthen business earnings from a long-term perspective. Aims to maintain and reinforce the production base through renewal investment in buildings and machinery and equipment.
In addition to promoting continued product use through technical support provided to customers, new business activities are being developed. Sales increases in Chemical Products (up 2.1% year on year) and Building Materials & Fillers (up 4.8% year on year) show some tangible results.
A new medium-term management plan was formulated and announced on May 15, 2026. The policy is to promote various measures including aggressive sales expansion activities, cultivation of new businesses, company-wide cost reductions, and reduction of disaster risk. Please refer to separately disclosed materials for specific numerical targets.
Equity in earnings of affiliates expanded to ¥163 million (approximately 3.8 times year on year) in FY2026 (ending March 2026). Diversification of earnings through the business contribution of affiliated companies continues, but difficulty in reasonably estimating the next period's earnings forecast remains a challenge.
Last updated: July 19, 2026