NIPPON SEIRO CO., LTD.

Business Details

The Nippon Seiro Group is Japan's only wax specialty manufacturer, engaged in the manufacture, processing, and sale of Petroleum Wax (Paraffin and Microcrystalline), various modified waxes, and Heavy Oil. The company conducts domestic sales and exports (primarily to Asia and North America), with its main customer being Ando Parachem Co., Ltd. (13.1% of net sales). Its basic policy is to provide materials for an information-oriented society, environmental compliance, and comfortable living, and it is promoting a shift toward high-value-added products. FY2026 (ending December 2026) is positioned as a "foundation-strengthening period," with efforts focused on concentrating on new high-value-added waxes and renewing the core plant.

Recent Overview

In Q1 FY2026, operating profit rose sharply, up 97% year on year to ¥479 million

In Q1 FY2026 (January to March), an increase in the average selling price of domestic and export wax (up 2.6% year on year) and an improvement in cost of sales resulting from the completion of inventory reduction efforts (cost of sales of ¥3,440 million, down ¥57 million from ¥3,497 million in the prior-year period) contributed to operating profit rising ¥236 million year on year to ¥479 million. Heavy Oil sales volume increased 195% year on year due to the absence of periodic maintenance, expanding revenue to ¥236 million (from ¥92 million in the prior-year period). Meanwhile, the company recorded ¥46 million in loss on disposal of fixed assets associated with the renewal of its core plant as an extraordinary loss. The full-year earnings forecast remains unchanged from the figures announced on February 16, 2026 (net sales of ¥21,100 million, operating profit of ¥1,800 million).

Key Products

Growth Drivers

• Rise in average selling price through concentration of sales on high-value-added wax and price revisions (Q1 FY2026 actual: up 2.6% year on year)
• Improvement in cost of sales as inventory reduction efforts reach completion (Q1 FY2026 cost of sales: down ¥57 million year on year)
• Introduction of new product manufacturing equipment and improvement in production efficiency and quality through the renewal of the core plant (Tokuyama Plant) starting in FY2026
• Development and expanded sales of new high-value-added products such as Rice Wax and Water-based Wax Emulsion
• Expansion of export wax sales (Q1 FY2026: volume up 104 tons year on year, revenue up ¥90 million year on year)
• Reduction in financial costs through early repayment of the subordinated capital loan (interest expense: ¥121 million in Q1 FY2026, down ¥33 million from ¥154 million in the prior-year period)

Risks

• Downward pressure on the global economy and risk of demand contraction due to geopolitical risks, including the sudden change in the situation in Iran (end of February 2026)
• Impact of crude oil price fluctuations on wax raw material costs
• Risk of decline in the average selling price of Heavy Oil (Q1 FY2026: down 13% year on year) and its effect on production efficiency amid shrinking volume
• Continued upward trend in labor costs (persistently high wage increase rates from the spring labor negotiations) leading to higher selling, general and administrative expenses
• Risk of continued recording of loss on disposal of fixed assets associated with the renewal of the core plant (¥46 million recorded in Q1 FY2026)
• Risk of continued suspension of dividends and uncertainty regarding shareholder returns due to distributable amount restrictions under Article 461 of the Companies Act
• Potential dilution risk from subordinated capital loans with stock acquisition rights (diluted EPS: ¥10.44 vs. basic EPS: ¥13.61)