ENVALITH
愛知製鋼株式会社 logo

AICHI STEEL CORPORATION

5482・Prime Market・Iron & Steel

Official website
愛知製鋼株式会社 logo
AICHI STEEL CORPORATION5482

Business

Aichi Steel is a special steel and forged products manufacturer that was spun off from Toyoda Automatic Loom Works in 1940, and is positioned as a core materials supplier within the Toyota Group, with Toyota Motor Corporation at its apex. The business is organized into four companies—Hagane (Steel), Stainless, Kitaeru (Forging), and Smart—which manufacture and sell Special Steel (Hot Rolled Products), Die Forged Products, stainless steel and titanium, and electronic functional materials and magnet application products. Major customers are Toyota Tsusho (23.7% of revenue), Aisin (8.4%), and Toyota Motor Corporation (7.6%), reflecting a high degree of dependence on the automotive industry. In addition to its domestic operations, the company has manufacturing and sales bases in the Philippines, Thailand, Indonesia, China, the United States, South Korea, and Germany, and conducts business on a global scale.

Business Model

The company adopts a vertically integrated model that completes the entire production process in-house, from melting steel scrap in electric furnaces through continuous casting, rolling, and forging. Since fluctuations in the market prices of steel scrap and purchased billets—which account for the bulk of raw material costs—directly affect profitability, the company secures profit through two complementary approaches: factory cost reduction activities (thorough implementation of TPS) and expansion of sales volume. The Smart Company develops high value-added products such as electronic components and magnet application products, aiming to lock in customers through combined supply of materials and components.

Company Strengths

The company possesses an integrated forging-steel production system that handles everything from special steel manufacturing to die forged product forming within its own group. It began mass production of warm forging technology in 2022, achieving CO2 reduction and cost reduction through near-net shape forming and elimination of heat treatment steps. Through innovative process development utilizing a servo-type forging press line for R&D purposes, it has also achieved significant reductions in development lead time.

The company has continuously participated in NEDO hydrogen projects since 1993, developing "AUS316L-H2" for hydrogen stations in 2013 and the low-Mo variant "AUS305-H2" in 2020, with adoption track records in both the first and second generation Toyota MIRAI. In electrification, it achieved the world's first demonstration of next-generation electric axle technology at 34,000 rpm (2022), and has accumulated substantial leading-edge technology, including establishing a co-creation research institute with Tohoku University.

The magnetic marker system utilizing the company's uniquely developed ultra-compact, ultra-high-sensitivity Amorphous MI Sensor has achieved practical implementation in autonomous buses on the JR East Kesennuma Line BRT (December 2022), and in FY2024, full-scale operational use of automated towing vehicles on a Toyota Group mass production line officially began. The company has built up a track record in both public road and in-factory logistics applications, forming a proprietary technology base that is difficult for competitors to replicate in a short period.

ENVALITH's Perspective

Operating profit for FY2026 (ending March 2026) was ¥17,371 million (+44.6% YoY), with an operating margin of 5.7%, reaching the highest level in the past five periods. However, looking at the breakdown of profit increase factors, the decline in purchase prices for iron scrap, energy, and other inputs (an external factor) contributed the most, at approximately ¥6.2 billion, which absorbed the decline in selling prices (-¥5.6 billion). The risk of profit erosion should raw material market conditions reverse remains substantial, and the pace of accumulation from self-driven efforts—factory cost reductions (¥1.8 billion) and volume increases (¥0.4 billion)—will be key to sustainability.

The Kitaeru (Forging) Company, which accounts for 44.3% of revenue, is centered on die forged products for automotive use, and is directly affected by the global shift toward BEVs and by U.S. tariff policy. The management overview in the earnings report explicitly states that the business is "significantly affected by tariff policy," and the forecast for cumulative operating profit through the second quarter of FY2027 (ending March 2027) is ¥6,000 million (-31.7% YoY), anticipating a substantial profit decline. There is also a risk that intensifying competition among automakers, driven by the rise of Chinese manufacturers, could spread as pricing pressure on parts and materials suppliers.

In FY2026 (ending March 2026), the company carried out share buybacks totaling ¥26,258 million, and the number of shares outstanding declined significantly from 76,436 thousand shares to 64,520 thousand shares. Total dividends paid surged to ¥9,300 million (dividend payout ratio of 85.0%) from ¥3,101 million (40.2%) in the previous period, with a special dividend of ¥76 (post-split) paid in addition to the ordinary dividend. For FY2027 (ending March 2027) as well, the company forecasts a dividend payout ratio of 85.0% and an annual dividend of ¥150 (including a special dividend of ¥78), clearly indicating a strengthened stance on shareholder returns. On the other hand, capital expenditure is set to increase to ¥16,928 million (with a forecast of ¥20,000 million for the next fiscal year), and how the company balances growth investment with shareholder returns warrants attention from the standpoint of financial discipline.

Growth Strategy

Mid- to long-term growth strategy targeting FY2030 revenue of ¥400,000 million, operating profit of ¥28,000 million, and ROE of 8%

Continuing to expand sales volume of die forged products for automotive parts rough forms from 241 thousand tons in FY2026 (ending March 2026) to 244 thousand tons in FY2027 (ending March 2026) (+1.1%). Profit contribution from consolidated subsidiaries (Asia and North America bases) amounted to approximately ¥2.5 billion in profit increase in FY2026 (ending March 2026), with the profit contribution of the global production system becoming evident.

Promoting the construction of a next-generation steelmaking process that achieves overwhelming quality, cost, and delivery performance. The medium-term management plan positions the acquisition of new demand through resource-circulating manufacturing expansion into the Global South (India) market, and continued volume growth is expected, with sales volume forecast at 716 thousand tons in FY2027 (ending March 2026) (+3.2% year on year).

Promoting the expansion of GMPS adoption in in-plant logistics for the Toyota Group, expansion of improved MAGFINE® (Neodymium Anisotropic Bonded Magnet) products into the battery and home appliance markets, and establishment of an increased production system for electronic components. Revenue of ¥22,107 million in FY2026 (ending March 2026) (+7.4% year on year) is on a growth trajectory, and the segment is being developed as a high-value-added segment capturing expanding demand for electrified vehicles.

In FY2026 (ending March 2026), the company implemented share buybacks of ¥26,258 million and dividends of ¥9,300 million (payout ratio of 85.0%). For FY2027 (ending March 2026), a payout ratio of 85.0% and an annual dividend of ¥150 (including a special dividend of ¥78) are forecast. The company continues to pursue proactive capital policy aimed at achieving its ROE target of 8%, with the significant reduction in shares outstanding (down approximately 16%) also expected to boost EPS.

Last updated: July 19, 2026