Daido Steel Co., Ltd.
5471・Prime Market・Iron & Steel
Business
Daido Steel traces its origins to its founding in 1916 and is a comprehensive specialty steel group comprising five segments: Specialty Steel, Functional Materials & Magnetic Materials, Automotive Parts & Industrial Machinery Parts, Engineering, and Distribution & Services. The company supplies Structural Steel, Tool Steel, stainless steel, high-alloy products, rare earth magnets, titanium, precision castings, and other materials to a wide range of industries including automotive, industrial machinery, semiconductor manufacturing equipment, aerospace, and medical. The group's consolidated revenue, including 67 consolidated subsidiaries and 8 equity-method affiliates, totaled ¥578,129 million (FY2026, ending March 2026). In addition to domestic manufacturing sites, the company has established global bases in Thailand, Singapore, Malaysia, Taiwan, China, the United States, Indonesia, Mexico, and other locations, building a framework to capture diverse demand.
Business Model
The company engages in vertically integrated operations spanning material melting, secondary processing, parts manufacturing, distribution, and engineering services, responding to customers' diverse specification requirements. It maintains an integrated value chain from raw material procurement (steel scrap, nickel, etc.) to product sales, securing margins while appropriately passing on cost increases to selling prices. Backed by technological development capabilities supported by R&D expenses of ¥6,623 million (FY2026 (ending March 2026)), the company aims to improve profitability through the expansion of high-value-added products and product deployment into growth markets.
Company Strengths
In response to China's tightened export restrictions on heavy rare earths (Dy and Tb), the company developed grain boundary diffusion technology for heavy-rare-earth-free neodymium-iron-boron hot-worked magnets, improving demagnetization resistance by approximately 10%. In April 2026, it established a new production line for magnets used in electric vehicle drive motors, possessing proprietary process technology and a track record of capital investment that competitors would find difficult to replicate in the short term.
The company established a process for manufacturing large discs of the nickel-based superalloy Waspaloy using a 7,000-ton press, and received the Japan Society for Steel Castings and Forgings Best Paper Award. It is proceeding with a strategic investment of ¥36.0 billion as part of the High-Alloy Process Reform Project, implementing capacity expansion for high-alloy production for aerospace and energy applications at the Shibukawa Plant and the Chita No. 2 Plant.
Centered on the Technology Development Research Institute, the group as a whole employs 300 R&D staff, with R&D expenditure of ¥6,623 million. The company has accumulated a track record of development combining digital and materials technologies, including AI-based magnetic particle inspection technology, forging process optimization using machine learning surrogate models, and utilization of the ICMD platform.
ENVALITH's Perspective
Performance Trend
Revenue peaked at ¥578,564 million in FY2023 (ending March 2023), declined slightly to ¥574,945 million in FY2025 (ending March 2025), and then recovered slightly to ¥578,129 million in FY2026 (ending March 2026), up 0.6% year on year. Operating profit increased to ¥42,081 million (+6.8% year on year), but adjusted operating profit fell to ¥39,920 million (-9.2% year on year), indicating deterioration on an underlying basis. As an external factor, scrap steel prices remained elevated throughout the year, keeping raw material and fuel costs high, and the company worked to appropriately pass these costs through to selling prices. Profit attributable to owners of the parent increased to ¥32,605 million (+15.2% year on year). For FY2027 (ending March 2027), the company expects revenue of ¥630,000 million (+9.0%), while profit attributable to owners of the parent is forecast to decline sharply to ¥27,500 million (-15.7%), weighed down by higher fixed costs from increased capital expenditure and sluggish automotive-related demand.
Growth Strategy
Transforming the business portfolio toward growth markets such as semiconductors, electrification, aerospace, and energy
A large-scale capital investment of approximately ¥36.0 billion in anticipation of future growth in high-alloy demand in the aerospace, space, and energy-related fields. Temporary costs associated with production allocation changes weighed on Automotive Parts & Industrial Machinery Parts segment profit in FY2026 (ending March 2026), but the aim is to strengthen medium- to long-term competitiveness.
In fiscal year 2024, two vacuum arc remelting (VAR) furnaces were installed at the Chita No.2 Plant (Chita City, Aichi Prefecture) to enhance supply capacity for highly corrosion-resistant materials for semiconductor manufacturing equipment. Since January 2026, inventory build-up in response to expanding AI-related demand has become pronounced, and an increase in orders is expected.
To respond to rising demand for Rare Earth Magnets (Heavy Rare Earth Free) amid tightened Chinese export restrictions on heavy rare earths, a new manufacturing line for electric vehicle drive motor magnets was established in April 2026. As a growth driver for the Functional Materials & Magnetic Materials segment, it is expected to drive adjusted operating profit of ¥18,600 million (up ¥5,211 million year on year) in FY2027 (ending March 2027).
Nippon Koshuha Steel was newly consolidated in FY2026 (ending March 2026), expanding the product and customer base of the Specialty Steel segment. The increase in inventories (up ¥16,018 million) includes the impact of this new consolidation, and future earnings contribution is expected to draw attention.
In October 2025, a new shareholder return policy was introduced, setting a DOE (Dividend on Equity) of 2.5% as a floor indicator in addition to a consolidated payout ratio of 30% or more. For FY2026 (ending March 2026), annual dividend is planned at ¥49 (payout ratio of 30.3%), and ¥52 is planned for FY2027 (ending March 2027). Share buybacks will also continue to improve capital efficiency.
Last updated: July 19, 2026