NOZAWA CORPORATION

Business Details

Nozawa Corporation is a construction materials manufacturer whose core product is the extruded cement panel "Asrock" (Asrock (Extruded Cement Panel)). Its single reportable segment includes two consolidated subsidiaries (Nozawa Shoji Co., Ltd. and Nozawa Trading Co., Ltd.), and the company engages not only in manufacturing and sales of products but also in construction contracting, design, and supervision. Its major customers are Sekisui House, Ltd. (35.8% of net sales) and Itochu Kenzai Corporation (12.1% of net sales). Amid the continued year-on-year decline in construction floor area started, growth in housing-related products and construction sales has offset the decline in volume of the core Asrock product.

Recent Overview

Net sales and operating profit increased, but net profit fell 47.7% year on year due to ¥1,557 million in extraordinary losses

In FY2026 (ending March 2026), the company achieved net sales of ¥22,312 million (up 1.6% year on year) and operating profit of ¥1,993 million (up 18.7% year on year), representing an increase in both revenue and profit. Growth in Lightweight Exterior Wall Materials for Housing (up 19.1% year on year) and construction sales offset the decline in volume of the core Asrock product. On the other hand, the company recorded extraordinary losses including ¥1,124 million in asbestos litigation losses, ¥271 million in impairment losses (related to land and other assets at the Furano business site in Furano City, Hokkaido), and ¥91 million in inventory valuation losses, resulting in profit before income taxes of only ¥715 million and profit attributable to owners of parent of ¥605 million (down 47.7% year on year). For FY2027 (ending March 2027), the company forecasts net sales of ¥22,700 million, operating profit of ¥2,170 million, and net profit of ¥1,560 million. The company formulated its medium-term management plan "NOZAWA NEXT3," setting a goal of achieving a price-to-book ratio (PBR) exceeding 1x.

Key Products

Growth Drivers

• Continued high growth in Lightweight Exterior Wall Materials for Housing (up 19.1% year on year to ¥5,575 million in the fiscal year), supporting the entire extruded cement product lineup
• Expanded sales of high-value-added products such as "Asrock factory-coated panels" and "factory pre-processed panels," improving unit prices and addressing needs for shortened construction periods
• Development of the new construction method "Millefia" (a multi-colored on-site finishing coating method), driving new market development in the coating construction business of subsidiary Nozawa Shoji
• Increase in sales to Sekisui House, Ltd. (¥7,988 million in the fiscal year, up ¥790 million year on year, accounting for 35.8% of sales), providing a stable demand base
• Productivity improvement, cost reduction, and construction of a flexible production system through NNPS (Nozawa New Production System) improvement activities
• Accumulation of construction order backlog of ¥3,410 million (up ¥101 million from the end of the prior fiscal year), contributing to future sales
• Strengthening of sales and production efficiency through AI and DX utilization, and enhancement of talent acquisition and development, based on the medium-term management plan "NOZAWA NEXT3"

Risks

• Decline in sales volume of the core Asrock product due to the continued year-on-year decline in construction floor area started (down 4.7% year on year to ¥10,099 million in the fiscal year)
• Chronic impact on product sales from intensified supply constraints in building work, construction delays, and cancellations or postponements of construction plans caused by labor shortages
• Continued occurrence of losses related to litigation concerning asbestos-containing building materials (¥1,124 million in extraordinary losses recorded in the fiscal year, with a litigation loss provision balance of ¥512 million, and cases pending in 18 courts)
• Risk of cost increases and concerns over stagnation in construction work due to volatility in crude oil prices and difficulty in procuring materials stemming from the deteriorating situation in the Middle East
• Customer concentration risk due to sales concentration in Sekisui House, Ltd. and Itochu Kenzai Corporation (the top two customers account for approximately 48% of net sales)
• Risk of declining profitability in certain businesses, as seen in the impairment loss (¥271 million in the fiscal year) recorded due to deteriorating business conditions at the Furano business site (Furano City, Hokkaido)
• Risk of inventory valuation losses associated with changes in the business structure of products such as "Mainmag" (¥91 million recorded in the fiscal year)