Nippon Denko Co., Ltd.
5563・Prime Market・Iron & Steel
Business
Nippon Denko was founded in 1925 as a ferroalloy manufacturer, and in 2014 merged with Chuo Denki Kogyo, adopting its current company name. Its core business is the manufacture and sale of ferroalloys such as Ferromanganese/Silicomanganese (approximately 63% of consolidated net sales), alongside five business segments: functional materials such as Zirconium Oxide/Boron Oxide and Hydrogen Storage Alloy, incineration ash melting and solidification treatment using electric furnaces, water treatment equipment, and hydroelectric power generation. Its major customers include steel manufacturers led by Nippon Steel Corporation (56.6% of net sales), as well as electronic components and battery materials manufacturers, and local governments. The company is listed on the Prime Market of the Tokyo Stock Exchange. Consolidated net sales were ¥77,277 million (FY2025, ending December 2025).
Business Model
The core Ferroalloy Business supplies products for steel production, generating earnings from the spread between raw material market prices (manganese ore, etc.) and product market prices. The Incineration Ash Recycling Business, on the other hand, is a stable model that receives treatment fees from municipalities while earning additional revenue from recovering precious metals from molten metal. The Functional Materials Business sells high-performance materials for electronic components and battery materials, while the Electric Power Business secures stable earnings through long-term fixed-price electricity sales under the FIT (Feed-in Tariff) system. Building a portfolio less susceptible to ferroalloy market fluctuations is a core challenge in the medium-term management plan.
Company Strengths
The Incineration Ash Recycling Business maintained high profitability with net sales of ¥8,886 million and ordinary income of ¥2,074 million (ordinary income margin of 23.3%). In FY2025 (ending December 2025), it achieved a 46.9% year-on-year increase in both revenue and profit. A plan to expand melting furnaces from the current 4 units to a 7-unit system by 2030 has already been decided, with the construction of a new No. 5 furnace and shared facilities for a No. 6 furnace becoming concrete.
The company holds only-one products such as Zirconium Oxide/Boron Oxide, Ferroboron, and Hydrogen Storage Alloy, which contribute to avoiding geopolitical risk. In FY2025 (ending December 2025), driven by the resolution of inventory adjustments for electronic components and an increase in automotive hydrogen storage alloys, the company achieved net sales of ¥14,819 million (up 6.0% year-on-year) and ordinary income of ¥1,923 million (up 16.1% year-on-year).
Cash flow from operating activities in FY2025 (ending December 2025) was ¥14,569 million, a substantial increase from ¥5,958 million in the previous year. Inventory reduction (a decrease of ¥7,840 million in inventories) was successful, and interest-bearing debt was reduced to ¥13,826 million. With net assets of ¥71,025 million against total liabilities of ¥22,388 million, financial leverage remains at a low level.
ENVALITH's Perspective
Performance Trend
Over the past five fiscal periods, revenue has ranged between ¥65,978 million and ¥79,341 million, with FY2025 revenue at ¥77,277 million, remaining flat. Operating profit peaked at ¥8,815 million in FY2022 before declining to ¥5,161 million in FY2025, and net income fell to ¥1,418 million in FY2025, the lowest level in five years. In Q1 of FY2026 (ending December 2026), revenue was ¥19,422 million (+0.2% YoY), operating profit was ¥1,998 million (+97.0% YoY), and ordinary profit was ¥1,126 million (+194.2% YoY), showing a sharp recovery in profitability. As an external factor, European high-carbon ferromanganese market prices reached $1,291/t in Q1 FY2026, exceeding the $1,151/t seen in the same period the previous year, and yen depreciation to ¥157/$ also provided a tailwind. As internal factors, increased processing volume in the Incineration Ash Recycling Business and improved operations in the Ferroalloy Business drove profit expansion. The full-year ordinary profit forecast of ¥7,000 million represents an ambitious target of +158.9% YoY, premised on a positive swing in inventory valuation effects driven by rising manganese ore market prices.
Growth Strategy
Aiming for sales of ¥110,000 million and ordinary income of ¥13,000 million by 2030 through reducing dependence on ferroalloys and accelerating growth in the environmental and functional materials businesses
Decided on a capital investment plan to expand melting furnaces from the current 4 to a 7-furnace system by 2030. Currently advancing construction of the new No. 5 furnace and shared facilities for the No. 6 furnace. Sales in 1Q FY2026 (ending March 2026) surged to ¥2,718 million, with real-basis ordinary income of ¥889 million, and full-year real-basis ordinary income is projected at ¥3,500 million (up ¥1,400 million year on year).
Continued increase in sales volume of electronic component-related products (Zirconium Oxide/Boron Oxide), driven by growth in the AI data center market. On the other hand, OEM contract manufacturing will end in March 2026 due to weak demand for battery materials. Concretizing the results of R&D on next-generation battery materials is key to achieving the medium-term plan. Full-year real-basis ordinary income is projected to decrease by ¥900 million year on year to ¥1,300 million.
Promoting R&D toward carbon-free ferroalloy production to strengthen long-term competitiveness. In the overseas ferroalloy business (Pertama Ferroalloys), pursuing market development and profitability improvement measures that leverage the advantage of green power from hydroelectric generation. Full-year FY2026 real-basis ordinary loss is expected to narrow from ¥1,000 million in the previous year to ¥700 million.
Revised the full-year earnings forecast in response to ferroalloy product market conditions and foreign exchange rates exceeding initial assumptions, as well as increased incineration ash treatment volume and a shift to a positive inventory impact due to rising manganese ore market prices. Projecting sales of ¥80,000 million (up 3.5% year on year) and ordinary income of ¥7,000 million (up 158.9% year on year). The exchange rate assumption from the second quarter onward is ¥155/$.
Last updated: July 17, 2026