TOHO TITANIUM COMPANY, LIMITED

Business Details

The company's core business, manufacturing and selling Titanium Sponge, Titanium Ingot, High-Purity Titanium, and Processed Titanium Products. Major customers are Titanium Metals Corporation (approximately 36% of sales) and Nippon Steel Corporation. Production is carried out domestically (Wakamatsu and Chigasaki plants) as well as at the joint venture ATTM in Saudi Arabia. Export Titanium Sponge for aircraft applications forms the core of earnings, with High-Purity Titanium for semiconductor applications also being developed. In FY2026 (ending March 2026), sales to external customers were ¥54,429 million, accounting for approximately 65.3% of consolidated sales.

Recent Overview

Prolonged inventory adjustments stemming from Boeing's issues caused a sharp decline in aircraft-related sales, with operating income down 39.2% year on year.

In the Titanium Metal Business for FY2026 (ending March 2026), sales were ¥54,429 million (down 17.0% year on year) and operating income was ¥4,382 million (down 39.2% year on year), representing a significant decline in both revenue and profit. Inventory adjustments across the supply chain, stemming from Boeing's quality issues and strikes, lasted longer than initially expected, causing sales of export Titanium Sponge for aircraft applications to fall below the previous year's level. Sales for general industrial applications also declined due to oversupply from Chinese manufacturers. On the other hand, demand for High-Purity Titanium for semiconductor applications remained relatively firm, with sales volume slightly exceeding the previous year's level. On the earnings side, in addition to the decline in sales volume, foreign exchange fluctuations and market-linked price adjustments also had an impact.

Key Products

Growth Drivers

• Steady trend in demand for MRO (maintenance, repair, and overhaul) of aircraft engines
• Expectations for a recovery in demand for aircraft-related Titanium Sponge as Boeing's supply chain inventory adjustments normalize
• Continued demand for High-Purity Titanium for semiconductor applications (sales volume in FY2026, ending March 2026, maintained a level slightly above the previous year)
• Expansion of supply capacity through the transition of the Saudi Arabian joint venture ATTM to full production
• Plans to expand production capacity at the domestic Wakamatsu and Chigasaki plants (continued capital investment through new plant construction)
• Medium- to long-term demand expansion driven by structural shifts in titanium demand in Europe and the United States

Risks

• Prolonged supply chain inventory adjustments (longer than initially expected) stemming from Boeing's quality issues and strikes
• Overproduction and intensifying price competition in Titanium Sponge for general industrial applications by Chinese manufacturers
• Sustained high levels of imported raw material prices (such as titanium ore) and electricity prices (having peaked but still remaining at high levels)
• Foreign exchange fluctuation risk (deterioration in export profitability due to yen appreciation)
• Risk of sales concentration in specific customers (Titanium Metals Corporation and Nippon Steel Corporation)
• Impact of U.S. tariff policy on the entire supply chain, including the aircraft industry
• Uncertainty in the demand environment due to concerns over the future of the Chinese economy
• Risk in the business integration process associated with the share exchange with JX Metals Corporation (effective date scheduled for June 1, 2026)