THE JAPAN STEEL WORKS, LTD.
5631・Prime Market・Machinery
Business
The Japan Steel Works Group centers on the Industrial Machinery business, which handles Resin Manufacturing & Processing Machinery, Molding Machines, Defense-Related Equipment, and electronic device-related equipment, and the Materials & Engineering business, which manufactures cast and forged steel components and clad steel plates for power generation and nuclear applications. The group as a whole, including 32 consolidated subsidiaries, recorded net sales of ¥274,852 million (FY2026, ending March 2026). Major customers include the Acquisition, Technology & Logistics Agency (net sales of ¥30,471 million for the same period, accounting for 11.1% of the total), as well as domestic and overseas electric power companies, automotive and electronic component manufacturers, among others. As a long-established heavy industry company founded in 1907, it operates main plants in Muroran, Hiroshima, and Yokohama, and has developed a global sales and service network.
Business Model
Both the Industrial Machinery and Materials & Engineering businesses are fundamentally build-to-order, and the fiscal year-end order backlog of ¥431,477 million (up 8.7% year on year) enhances visibility into future revenue. In Industrial Machinery, after-sales and maintenance services complement product sales, while in Materials & Engineering, high-value-added large forged steel components achieve a high operating margin of approximately 19.4%. Having multiple sources of demand for defense, energy, and semiconductor applications secures resilience against economic fluctuations.
Company Strengths
The consolidated order backlog at the end of FY2026 (ending March 2026) reached ¥431,477 million (up 8.7% year on year), with Industrial Machinery at ¥360,910 million and Materials & Engineering at ¥70,246 million, up 6.5% and 21.4% year on year, respectively. This backlog corresponds to roughly 1.6 times annual net sales, representing a company-specific competitive advantage that underpins the certainty of medium-term revenue recognition.
In Defense-Related Equipment, the company holds exclusive domestic manufacturing rights based on technology transfer agreements with BAE Systems, Northrop Grumman, and others. In the electronic devices field, it holds JSW Aktina System, which handles ELA equipment for FPDs and other products, while in Materials Products it has accumulated manufacturing technology for large forged steel components. The fact that its core "melting, mixing, and solidifying" technologies can be applied across all three fields is a key differentiating factor versus competitors.
Materials & Engineering posted net sales of ¥45,795 million and operating profit of ¥8,874 million (operating margin of approximately 19.4%) in FY2026 (ending March 2026). Barriers to entry for large forged steel components are high, with orders received up 17.8% year on year to ¥58,184 million and the order backlog also increasing to ¥70,246 million (up 21.4% year on year), confirming the sustainability of this high-profitability structure.
ENVALITH's Perspective
Performance Trend
Revenue, after a slight decline in FY2024 (ending March 2024), expanded at an accelerating pace to ¥248,556 million in FY2025 (ending March 2025) and ¥274,852 million in FY2026 (ending March 2026). Operating profit has been on a recovery trend since bottoming at ¥13,846 million in FY2023 (ending March 2023), with FY2026 (ending March 2026) operating profit of ¥25,306 million marking the highest level in the past five periods. The operating profit margin remained at 9.2%, roughly in line with the previous period. Externally, a sharp expansion in defense demand (Defense-Related Equipment revenue up 45.6% year on year) and growing power-related investment driven by the spread of AI and data centers have driven performance. On the other hand, operating cash flow was negative at ¥(16,893) million, marking two consecutive periods of negative cash flow, as increased working capital and expanded capital expenditure (fixed asset acquisitions of ¥23,693 million) have put pressure on funds.
Growth Strategy
Under the medium-term plan "JGP2028", the company aims for revenue of approximately ¥500 billion in FY2034 (ending March 2034), capturing demand in defense and energy sectors
Amid the government's policy to strengthen defense capabilities, demand for Defense-Related Equipment has remained at a high level. Net sales of ¥46,930 million (up 45.6% year on year) were achieved in FY2026 (ending March 2026), and the order backlog continues to accumulate. High-level sales are expected to continue over the medium term.
On April 1, 2026, the company absorbed M&E through merger, establishing an integrated operating structure. Backed by robust demand for Materials Products for high-efficiency thermal and nuclear power applications, the order backlog reached ¥70,246 million (up 21.4% year on year). Capital expenditures of ¥6,306 million (up 38.7% year on year) are being used to expand production capacity.
The company is advancing efforts to resolve materiality issues and enhance sustainable corporate value toward achieving its financial targets for FY2029 (ending March 2029). Projected net sales of ¥310,000 million for FY2027 (ending March 2027) demonstrate steady progress toward the medium-term plan targets, though recovery in orders and improvement in working capital management remain challenges.
Resilient demand is expected for various plastics processing machinery aimed at realizing a low-carbon society and a circular economy for plastic resources. While investment delays due to U.S. tariff policy are a near-term headwind, the company continues to promote overseas expansion of Molding Machines by leveraging its global sales and service network.
Last updated: July 19, 2026