ENVALITH
大和工業株式会社 logo

YAMATO KOGYO CO.,LTD.

5444・Prime Market・Iron & Steel

Official website
大和工業株式会社 logo
YAMATO KOGYO CO.,LTD.5444

Business

Yamato Kogyo Co., Ltd. is a holding company established in 1944 that operates a global steel business centered on section steel products such as H-beams, Channels, and Steel Sheet Piles, through consolidated subsidiaries in Japan (Yamato Steel), Thailand (SYS), and Indonesia (GYS), as well as equity-method affiliates in the United States (NYS), Vietnam, and South Korea. In addition, the company operates a Track Materials Business for railway infrastructure (Daiwa Kidosha), along with complementary businesses including Transportation Services, Medical Waste Disposal, real estate, and Counterweight Manufacturing & Sales. Its main customers are businesses related to construction, civil engineering, and railway infrastructure. Consolidated net sales for FY2026 (ending March 2026) were ¥160,389 million.

Business Model

An integrated manufacturing system from electric-arc-furnace steelmaking using steel scrap as the primary raw material through to rolling and sales has been established at bases in each country, with the main source of earnings being the spread between product sales prices and raw material prices (steel margin). Equity-method investment gains and dividends from equity-method affiliates (particularly NYS in the United States) substantially boost consolidated ordinary income, and equity in earnings of affiliates reached ¥47,490 million in FY2026 (ending March 2026). Working capital and capital expenditures are, in principle, funded from internal funds, and growth investments are made while maintaining financial soundness (equity ratio of 85.5%).

Company Strengths

The company has manufacturing and sales sites in Japan, Thailand, Indonesia, the United States, Vietnam, and South Korea, achieving risk reduction through regional diversification and entry into growth markets. In particular, NYS in the United States secured high-level steel margins on the back of demand for large-scale projects such as data centers and stadiums as well as strengthened government tariff measures, driving consolidated performance in FY2026 (ending March 2026) as well.

At the end of FY2026 (ending March 2026), the equity ratio stood at 85.5% and net assets totaled ¥581,417 million. The company maintains a policy of funding working capital, capital expenditures, and strategic investments in principle from internal funds, and has also set up a ¥30,000 million commitment line agreement with three financial institutions. The company has high financial flexibility and possesses a financial structure capable of accommodating large-scale M&A and capital equipment renewals.

The Track Materials Business, operated by Daiwa Kidou Seizo, has a stable order base backed by demand for the maintenance and renewal of domestic railway infrastructure. In FY2026 (ending March 2026), the business achieved increased revenue and profit, with net sales of ¥9,674 million (up ¥948 million year on year) and segment profit of ¥1,731 million (up ¥300 million year on year), contributing to the stabilization of earnings within the group while the steel business segments struggled amid deteriorating market conditions.

ENVALITH's Perspective

In FY2026 (ending March 2026), net sales came to ¥160,389 million (down 4.7% year on year) and operating profit to ¥4,495 million (down 60.9% year on year), showing a sharp deterioration in the core business. However, backed by strong performance at NYS in the US, equity in earnings of affiliates swelled to ¥47,490 million (up 71.0% year on year), pushing ordinary profit up to ¥65,235 million (up 19.9% year on year) and net profit attributable to owners of the parent up to ¥62,389 million (up 96.0% year on year), effectively doubling net profit. The reversal of ¥22,212 million in foreign currency translation adjustments associated with withdrawal from Middle East operations also boosted net profit. The low profitability of the core business, reflected in an operating margin of just 2.8%, remains an ongoing challenge.

Cheap steel exports driven by China's excess production capacity have continued at high levels, simultaneously squeezing profitability at all three consolidated operating bases: Japan (deteriorating steel margins), Thailand (falling export prices), and Indonesia (expanding inflows of cheap Chinese steel materials). Even in the FY2027 (ending March 2027) forecast, operating profit is expected to remain at just ¥4,500 million (roughly flat year on year). In Thailand, anti-dumping tariff measures (effective November 2025) are beginning to help curb inflows of Chinese steel, but in Indonesia, further intensification of price competition is anticipated, leaving the path to recovery in the core business unclear.

The forecast for net profit attributable to owners of the parent in FY2027 (ending March 2027) is ¥47,000 million (down 24.7% year on year), a substantial decline. The company plans to maintain the annual dividend at ¥400, which would push the payout ratio up from 39.0% to 50.9%. The policy of setting a minimum annual dividend of ¥300 and continuing share buybacks demonstrates stability in shareholder returns, but maintaining a high dividend amid a phase of significantly declining net profit entails consuming financial capacity. Against net assets per share of ¥9,066.50, the level of dividend yield and the timing of recovery in the core businesses in Japan, Thailand, and Indonesia will be key factors in the stock's valuation.

Growth Strategy

Following withdrawal from the Middle East, the company is advancing a three-pole concentration strategy centered on Japan, ASEAN, and the US, deepening ASEAN operations, maximizing US profitability, and renewing domestic equipment

In March 2026, the company acquired an additional 5.82% stake in SYS shares, raising its equity stake to 70.00%. Supported by the anti-dumping tariff measures (effective November 2025) that reduced inflows of Chinese steel materials, the company expects an increase in profit in FY2027 (ending March 2027) driven by higher sales volume and expanded steel margins.

A share transfer agreement was concluded in June 2025, and the share transfer was completed in February 2026. While recording an equity-method loss of ¥4,973 million and a loss on transfer of receivables of ¥914 million, the company reversed foreign currency translation adjustments of ¥22,212 million. Through the consolidation of unprofitable operations, the company has completed its concentration on the three poles of Japan, ASEAN, and the US.

As preparatory work for the renewal of rolling equipment at Yamato Steel, operations are scheduled to be suspended for two months, May and June, in FY2027 (ending March 2027). While this will be a factor reducing profit in the short term, the company aims to improve profitability over the medium to long term through enhanced cost competitiveness and quality resulting from equipment renewal. Collaboration on the H-beams business with the JFE Steel group is also being pursued in parallel.

Against a backdrop of steady demand for section steel for data center and semiconductor-related applications and high import tariff levels, the company continues to strengthen the manufacturing and sale of high-value-added products. It expects further profit growth in FY2027 (ending March 2027) driven by increased sales volume and expanded steel margins, positioning this business as the primary contributor to group profitability.

Performance has continued to fall short of expectations set at the time of the share acquisition decision. The company is working to achieve a structural recovery in profitability through a shift toward high-value-added products (such as earthquake-resistant construction steel materials) and a review of market strategy. While capturing the year-on-year increase in infrastructure investment, including the resumption of transmission tower projects, the company is also responding to intensifying price competition from inexpensive Chinese steel materials.

Last updated: July 19, 2026