NIPPON SHINDO CO.,LTD

Business Details

NIPPON SHINDO CO.,LTD. operates in the single segment of the Copper Alloy Products-Related Business. In addition to its core copper alloy products (bars, plates, strips, etc.), the company handles processed copper alloy products and other metal materials (resale of copper alloy product raw materials). It pursues synergies with its sister companies San-Etsu Metals Co., Ltd. and Mitani Shindo Co., Ltd. to build an optimal division-of-labor structure. Its performance is directly affected by international copper and zinc market prices, and the company utilizes derivative transactions to hedge against price fluctuation risk.

Recent Overview

Sales revenue and operating profit increased, but a derivative loss of ¥1,703 million significantly weighed on ordinary profit and net income

In FY2026 (ending March 2026), against a backdrop of surging LME copper prices (rising to ¥2.19 million per ton) and a weaker yen, sales revenue rose sharply to ¥30,145 million (up 15.4% year on year) and operating profit increased to ¥2,694 million (up 46.8% year on year), achieving substantial growth in both revenue and profit. On the other hand, derivative transactions used to hedge copper price fluctuation risk resulted in a derivative loss of ¥1,703 million and a derivative valuation loss of ¥23 million, causing total non-operating expenses to swell to ¥1,744 million. As a result, ordinary profit fell to ¥1,028 million (down 27.2% year on year) and net income declined to ¥742 million (down 23.1% year on year). In addition, due to increases in inventories and trade receivables, operating cash flow was negative ¥975 million, and the company secured funds through a net increase of ¥1,110 million in short-term borrowings. For FY2027 (ending March 2027), the company forecasts sales revenue of ¥36,800 million (up 22.1% year on year), operating profit of ¥1,320 million (down 51.0% year on year), ordinary profit of ¥1,310 million (up 27.4% year on year), and net income of ¥910 million (up 22.6% year on year). The significant decline in operating profit is based on the assumption that the market-related gains generated in the current period will not recur in the next period.

Key Products

Growth Drivers

• Rising product sales prices driven by high international copper and zinc market prices (boosting sales revenue)
• Expansion of sales of processed copper alloy products (up 31.4% year on year in FY2026, ending March 2026)
• Enhanced competitiveness and corporate value through pursuit of synergies with San-Etsu Metals Co., Ltd. and Mitani Shindo Co., Ltd.
• Continued expansion of sales volume (21,176 tons in FY2026, ending March 2026, up 6.3% year on year)
• Expansion of unrealized gains on investment securities (valuation difference on available-for-sale securities increased from ¥155 million to ¥247 million)

Risks

• Risk of large-scale losses from derivative transactions used to hedge copper price risk (a derivative loss of ¥1,703 million occurred in FY2026, ending March 2026, significantly weighing on ordinary profit)
• Risk of recording inventory valuation losses and declines in sales revenue and operating profit during downturns in international copper and zinc market prices
• Risk of deteriorating cash flow due to increased working capital during periods of surging market prices (operating cash flow turned negative due to increases in inventories and trade receivables, and short-term borrowings increased)
• Impact on raw material procurement and transportation costs from geopolitical risks (U.S. protectionist trade policy, closure of the Strait of Hormuz, etc.)
• Risk of various cost increases due to surging resource and energy prices and rising policy interest rates (0.75%)
• Risk of long-term shrinking equilibrium and industry restructuring in the domestic copper alloy products market
• Impact on financial soundness from the decline in the equity ratio (from 72.3% to 68.7%)