NGK Corporation

Business Details

Manufactures and sells automotive exhaust gas purification components (Honeycomb Ceramics, etc.), sensors, corrosion-resistant equipment for the chemical industry, liquid/gas membrane separation equipment, and heating equipment/refractories. Primary customers are domestic and overseas automakers, with manufacturing and sales bases spanning the US, Europe, and Asia. Sales account for approximately 60% of consolidated total, making this a core segment. From FY2027 (ending March 2027), the Low-Level Radioactive Waste Treatment Equipment business will be transferred to the Energy & Industry Business.

Recent Overview

Sales increased due to front-loaded demand and steady second-half performance in the automotive-related business, but higher development expenses limited growth in operating profit to a slight increase

In FY2026 (ending March 2026), Environment Business (former classification) sales were ¥391,484 million (up 0.3% year on year), and operating profit was ¥67,040 million (down 1.8% year on year). Sales increased due to front-loaded demand in the first half in anticipation of US tariff hikes, combined with continued steady demand in the second half, while increased R&D expenses in carbon-neutral areas such as DAC / Sub-nano Ceramic Membrane weighed on profit. For FY2027 (ending March 2027), sales are forecast at ¥400,000 million (up 2% year on year) and operating profit at ¥67,000 million (flat).

Key Products

Growth Drivers

• Capturing demand for automotive exhaust gas purification components through continued tightening of exhaust gas regulations in various countries
• Improved profitability by passing on higher US tariff rates and precious metal price increases to sales prices
• Market launch of the new gasoline sensor and expanded sales of GPF (Gasoline Particulate Filter)
• Strengthening the profit base through productivity improvements and optimization of the global production system
• Early commercialization of new carbon-neutral related products such as DAC / Sub-nano Ceramic Membrane

Risks

• Medium- to long-term decline in demand for internal combustion engine-related products due to the progress of electric vehicle (EV) adoption
• Negative impact on automobile sales and production due to US tariff measures
• Decline in shipments due to slowing automobile sales and weakening demand in China and Europe
• Profit pressure from increased R&D expenses in carbon-neutral areas such as DAC
• Rising raw material and fuel (energy) costs due to worsening conditions in the Middle East (a cost increase of ¥20,000 million is reflected in the FY2027 (ending March 2027) forecast)
• Geopolitical risks related to global production bases

Business Details

Manufactures and sells semiconductor manufacturing equipment products, electronic industry products (ceramic packages, insulated heat-dissipation circuit boards, piezoelectric micro-actuators for HDDs, etc.), Beryllium Copper Products, and Mold Products. The primary demand drivers are increased demand for AI-related semiconductors and robust expansion in data center investment, making this the strategic growth segment with the highest growth rate within the group. In FY2026 (ending March 2026), the segment achieved a 19.7% increase in sales and a 63.5% increase in profit year on year.

Recent Overview

Achieved a 19.7% increase in sales and a 63.5% increase in profit year on year, driven by full-scale AI semiconductor demand led by HPC

In FY2026 (ending March 2026), sales were ¥205,402 million (up 19.7% year on year) and operating profit was ¥28,105 million (up 63.5% year on year), representing substantial growth in both sales and profit. Increased semiconductor demand centered on AI applications and inventory build-up by some customers pushed up demand for Semiconductor Manufacturing Equipment Products (HPC). Meanwhile, electronic devices saw increased sales but decreased profit due to upfront costs associated with capacity expansion for high-ceramic carriers. An impairment loss of ¥3,682 million was recorded on assets related to the insulated heat-dissipation circuit board and package businesses. For FY2027 (ending March 2027), Digital Society Business sales are forecast at ¥245,000 million (up 19.3% year on year) and operating profit at ¥36,000 million (up 28.1% year on year).

Key Products

Growth Drivers

• Increased shipments of Semiconductor Manufacturing Equipment Products (HPC) driven by expanding demand for advanced semiconductors, primarily for AI applications
• Steady shipments of piezoelectric micro-actuators for HDDs due to continued robust data center investment
• Approximately 20% increase in domestic production capacity through construction of a new plant in Ishikawa Prefecture (investment of over ¥70 billion, decided in March 2026)
• Capturing demand through increased production investment in high-ceramic carriers, with a return to profitability expected in FY2027 (ending March 2027)
• Creation of new digital society-related products through a five-year R&D plan of approximately ¥200 billion starting in 2026
• Strengthened competitiveness through restructuring of the ceramic package business (succession of NGKED's sales division via company split)

Risks

• Risk of fluctuations in semiconductor market conditions (possibility of a sharp decline in demand due to changes in the AI investment cycle)
• Deteriorating profitability in the insulated heat-dissipation circuit board and ceramic package businesses (an impairment loss of ¥3,682 million was recorded)
• Short-term profit pressure from upfront costs associated with capacity expansion for high-ceramic carriers, etc.
• Impact on the global supply chain from changes in protectionism and trade policy in various countries (including US tariff policy)
• Risk of increased fixed costs and profitability deterioration in the event of demand fluctuations due to large-scale capital investment (such as new plant construction)
• Business operation risk during the transition period associated with the restructuring of the ceramic package business

Business Details

Manufactures and sells Power Insulators, Transmission, Substation & Distribution Equipment, insulator cleaning devices, and disaster prevention devices. In October 2025, a decision was made to discontinue manufacturing and sales activities for the NAS® Battery (Sodium/Sulfur Battery), and business restructuring costs were recorded. From FY2027 (ending March 2027), the Low-Level Radioactive Waste Treatment Equipment business will be transferred from the Environment Business, and a new Energy Plant Business division will be established as part of an organizational restructuring. Demand for insulators has remained steady against a backdrop of power infrastructure renewal and data center investment both domestically and overseas.

Recent Overview

Decided to discontinue manufacturing and sales activities for the NAS® Battery, recording business restructuring costs of ¥19,959 million; insulators remained steady but the loss reduction was limited

In FY2026 (ending March 2026), sales increased 12.9% year on year (¥73,238 million under the former classification), but the continued loss in the NAS® Battery business resulted in an operating loss of △¥1,322 million (former classification). Business restructuring costs of ¥19,959 million associated with the discontinuation of the NAS® Battery were recorded as an extraordinary loss. Under the new segment classification, the transfer of the Low-Level Radioactive Waste Treatment Equipment business resulted in a return to profitability, with operating profit of ¥254 million. For FY2027 (ending March 2027), operating profit of ¥4,000 million (new classification) is expected due to the elimination of the NAS® Battery impact and continued steady performance in insulators.

Key Products

Growth Drivers

• Resilient demand for insulators due to continued strengthening of transmission and distribution networks and power infrastructure renewal investment both domestically and overseas
• Expansion of power-related capital investment domestically and overseas, driven by factors such as data center expansion
• Elimination of the profit and loss drag from the loss-making NAS® Battery business following the discontinuation of its manufacturing and sales activities
• Integration synergies between Low-Level Radioactive Waste Treatment Equipment and insulator cleaning devices through the establishment of the new Energy Plant Business division

Risks

• Business restructuring provision of ¥12,270 million (recorded as a fixed liability) and risk of additional costs associated with the discontinuation of NAS® Battery manufacturing and sales activities
• Risk of reduced operations as the last-buy period for substation insulators reaches its final stage (increased sales but decreased profit expected in FY2027, ending March 2027)
• Risk of rising raw material and energy costs due to worsening conditions in the Middle East (a cost increase of ¥2,000 million is expected in FY2027, ending March 2027)
• Risk of declining profit margins due to the conclusion of certain highly profitable export projects, among other factors
• Fluctuations in business scale due to segment changes (compositional changes resulting from the incorporation of the transferred Low-Level Radioactive Waste Treatment Equipment business)