Godo Steel,Ltd.

Business Details

This segment centers on the manufacture and sale of wire rods, various large and medium-sized shapes, rails, structural bars, and rebar, and also handles the sale of Processed Bar and Wire Rod Products, screw-thread rebar, machinery, steelmaking raw materials, and other items. In addition to Godo Steel's own operations, the segment encompasses multiple manufacturing sites including Asahi Kogyo Co., Ltd., Sanshin Metal Industry Co., Ltd., and Tokai Co., Ltd., forming an integrated group-wide optimal production and shipping system. Major customers include Hanwa Co., Ltd., ITOCHU Marubeni-Sumisho Techno-Steel Corporation, and MM Kenzai Co., Ltd. Over 90% of sales are domestic.

Recent Overview

Segment ordinary income declined 32.5% year on year amid the triple burden of sluggish demand, falling prices, and surging scrap prices.

In the Steel Business for FY2026 (ending March 2026), in addition to declining sales prices and lower sales volume caused by sluggish demand in the domestic construction sector, the price of iron scrap, the main raw material, surged in the latter half of the fiscal year, narrowing the metal spread. Segment sales decreased by ¥14,218 million year on year to ¥174,307 million, and segment ordinary income decreased by ¥4,970 million year on year to ¥10,289 million. On the other hand, capital expenditure increased by ¥3,098 million year on year to ¥7,814 million, becoming more aggressive as growth investment toward the Mid-term Vision 2030 gathers momentum. Non-consolidated export sales rose by ¥1,915 million year on year to ¥3,663 million, partially offsetting the sluggish domestic demand.

Key Products

Growth Drivers

• Expansion of exports of steel billets and steel products by utilizing surplus production capacity (non-consolidated export sales of ¥3,663 million in FY2026, up ¥1,915 million year on year)
• Improved profitability through promotion of integrated operations at the three Kanto mills and the top-runner approach at the four rebar mills
• Improved profitability through expanded sales of high value-added products such as screw-thread rebar and high-strength rebar
• Promotion of quality improvement in wire rods and structural steel in response to increasingly sophisticated customer needs
• Reduction of energy costs and response to carbon neutrality through continued energy-saving capital investment (manufacture and sale of "GODO Green" steel products using non-fossil-fuel electricity)
• Expansion of the business foundation through ongoing consideration of M&A
• Strengthening of competitiveness through a capital expenditure plan of ¥400 million per year over five years under Mid-term Vision 2030

Risks

• Continued sluggish demand in the domestic construction sector (prolonged construction periods, rising logistics costs, and the normalization of postponements and cancellations of construction projects)
• Narrowing of the metal spread due to a sharp rise in the price of iron scrap, the main raw material (a surge that is continuing at present)
• Rising energy costs due to persistently high electricity prices and the continued weak yen
• Increases in various costs due to the impact of the situation in the Middle East
• Impact on the export environment due to uncertainty over US trade policy (tariffs, etc.)
• Deterioration in market conditions due to geopolitical risks (the Russia-Ukraine situation, the Middle East situation) and the slowdown of the Chinese economy
• Sluggish domestic demand is expected to continue in the first half of FY2027 (ending March 2027) as well, and the profit environment for the Steel Business is expected to deteriorate further