Nippon Electric Glass Co., Ltd.

Business Details

The Group's business consists of a single segment, the Glass Business, comprising two divisions: "Electronics and Information" (specialty glass for displays and electronic devices) and "Functional Materials" (glass for composite materials, medical, heat-resistant, and architectural applications). The company manufactures and sells through a network of domestic and overseas consolidated subsidiaries, selling to a wide range of regions including China, the United States, South Korea, Taiwan, and Europe. In Q1 FY2026 (ending December 2026), Electronics and Information accounted for 57% of sales composition, with solid demand in the display business driving overall performance.

Recent Overview

Q1 net sales roughly flat year-on-year, but operating profit down 17.9% due to increased equipment costs

Net sales for Q1 FY2026 (ending December 2026) (January-March 2026) were ¥75,101 million (+0.3% year-on-year), roughly flat. While solid demand in the display business continued, with the Electronics and Information division up 6% year-on-year, the Functional Materials division was down 6% year-on-year due to difficulties in the composite materials and medical businesses. Operating profit was ¥6,481 million (down 17.9% year-on-year), mainly due to increased costs from the conversion to all-electric melting furnaces and periodic maintenance in the display business, as well as increased equipment launch costs at the Malaysian medical subsidiary. On the other hand, ordinary profit increased significantly to ¥8,968 million (up 47.0% year-on-year) due to the recording of foreign exchange gains (¥1,650 million) related to overseas subsidiary borrowings. Quarterly net profit attributable to owners of parent increased significantly to ¥8,333 million (up 66.4% year-on-year), due to the recording of extraordinary gains (¥3,627 million) from the sale of investment securities associated with the reduction of policy-held shares. The full-year earnings forecast (net sales of ¥320,000 million, operating profit of ¥33,000 million) remains unchanged from the previous forecast (announced February 6, 2026).

Key Products

Growth Drivers

• Continued solid demand in the display business (net sales increased year-on-year even in Q1 FY2026, ending December 2026)
• Favorable demand trends for electronic device products for data centers
• Productivity improvement and cost reduction through horizontal deployment of all-electric melting technology (being promoted in the display and medical businesses)
• Improved financial efficiency through reduction of policy-held shares based on the medium-term management plan EGP2028 (Q1 recorded gain on sale of investment securities of ¥3,627 million)
• Development and sales expansion of new products for growth areas such as low-dielectric glass fiber (D2 fiber) and inorganic core substrates
• Development of new electronic device products such as substrates for probe cards and panel-type support glass for semiconductors
• Increase in foreign currency translation adjustments due to yen depreciation (Q1 recorded foreign exchange gain of ¥1,650 million)

Risks

• Pressure on operating profit from increased costs related to conversion to all-electric melting furnaces and periodic maintenance in the display business (full-year FY2026, ending December 2026 operating profit forecast is down 3.3% year-on-year)
• Continuing severe competitive environment and profit stagnation in the functional resin reinforcement application of the composite materials business (Functional Materials division down 6% year-on-year even after the UK subsidiary's business suspension)
• Impact on the electronic devices business from the deteriorating business environment for semiconductor-related products
• Increased costs for launching all-electric melting equipment at the Malaysian medical subsidiary
• Demand fluctuations due to global economic uncertainty, including US-China tariff policy and Middle East geopolitical risks (a factor behind maintaining the full-year forecast unchanged)
• Foreign exchange fluctuation risk (a foreign exchange loss of ¥2,662 million was recorded in the same period of the previous year, reversing to a gain of ¥1,650 million in the current period, but fluctuation risk continues)
• Risk of impairment of fixed assets (due to changes in estimated future cash flows from business plans and market environment changes)
• Decrease in cash and deposits due to share buybacks (15,554,022 treasury shares held at end of Q1, acquisition amount of ¥55,984 million)