SHINAGAWA REFRA CO.,LTD.

Business Details

The core segment manufacturing and selling Shaped & Unshaped Refractories, Mold Powder, Calcined Lime & Chemical Products, and other products. Domestically, manufacturing and sales are handled by the Company, Seratechno Co., Ltd., and Shinagawa General Co., Ltd., while overseas, manufacturing and sales are conducted by Gouda Refractories Group B.V. of the Netherlands (consolidated in October 2024), Dynamix Casting Fluxes, LLC of the U.S. (newly consolidated in the current period), and subsidiaries in Brazil, Indonesia, Australia, and other countries. This is the largest segment, accounting for approximately 62% of the Group's total sales.

Recent Overview

Sales rose 15.7% due to full-year contribution from Gouda and newly consolidated Dynamix, while a large-scale impairment loss was recorded.

In FY2026 (ending March 2026), the Refractories segment recorded sales of ¥110,803 million (up 15.7% year on year) and segment profit of ¥8,575 million (up 11.5% year on year). The main factor was the full-year contribution of Gouda Refractories Group B.V.'s results. On the other hand, an impairment loss of ¥8,234 million was recorded on domestic and overseas assets, including the Ako Plant. The new consolidation of Dynamix Casting Fluxes, LLC increased goodwill by ¥5,476 million, expanding goodwill amortization to ¥898 million (from ¥329 million in the prior period). Domestic crude steel production declined 3.2% year on year to 80.33 million tons, remaining sluggish, but profitability was maintained through expanded sales of high-value-added products, price optimization, and cost reductions.

Key Products

Growth Drivers

• Strengthening of the European and global network through the full-year earnings contribution of Gouda Refractories Group B.V. (Netherlands) (goodwill balance of ¥19,838 million)
• Expansion into the North American mold powder market and broadening of the product lineup through the new consolidation of Dynamix Casting Fluxes, LLC (U.S.) (goodwill of ¥5,476 million recorded in the current period)
• Expansion of the China market and strengthening of global sales through the launch of the functional refractories business for continuous casting at Liaoning Shinagawa Hefeng Metallurgical Materials Co., Ltd. starting in FY2026
• Maintenance of profitability in existing businesses through domestic and overseas sales expansion focused on high-value-added products, price optimization, improved sales mix, and ongoing cost reductions
• Expansion of refractories and insulation materials sales through Reframax's (Brazil) engineering network (intra-group collaboration)
• Reorganization of the sales and development departments aimed at expanding domestic market share in the non-ferrous and industrial furnace fields

Risks

• Structural decline in refractory sales volume due to the continued decrease in domestic crude steel production (down 3.2% year on year to 80.33 million tons in FY2026)
• Downward pressure on sales volume and prices due to reduced activity levels among overseas customers and intensifying competition
• Significant increase in goodwill amortization (¥898 million in the current period) and impairment risk (an impairment loss of ¥8,234 million recorded in the current period) associated with M&A activities such as Gouda and Dynamix
• Risk of one-time expenses associated with the closure and relocation of the Ako Plant, and operational risk associated with production system restructuring
• Foreign exchange risk (as the proportion of overseas sales increases, the impact on earnings during yen appreciation phases expands)
• Rising raw material procurement costs and destabilization of the supply chain due to prolonged uncertainty in U.S. trade policy trends and geopolitical risk