ARE Holdings, Inc.

Business Details

The business recycles gold, silver, palladium, platinum, rhodium, and other precious metals from scrap containing precious metals (electronic materials, dental materials, jewelry, automotive catalysts), and sells them as high-purity bullion to trading companies, jewelry manufacturers, semiconductor manufacturers, and others. Domestically, Asahi Pretec and Asahi Metal Fine are the core operators. Overseas, North America (Asahi Refining USA/Canada) handles gold and silver refining, processing, and warehousing, while recycling operations are also conducted in Asia (Malaysia, South Korea, Thailand, India). Sales of premium-priced recycled precious metals and retail precious metal products are also expanding.

Recent Overview

Operating profit increased significantly, up approximately 93% year on year, driven by rising precious metal prices and expansion of the North America refining business.

Operating profit in the Precious Metals segment for FY2026 (ending March 2026) was ¥35,424 million (prior period: ¥18,339 million), a substantial increase of approximately 93% year on year. Domestically, profitability improved in the jewelry, dental, and electronics fields, while in the North America refining business, in addition to increased receipts of gold and silver raw materials, profits expanded across the trading, warehousing, and product segments by taking advantage of fluctuations in gold and silver supply and demand associated with changes in U.S. trade policy. Impairment loss decreased substantially from ¥2,038 million in the prior period to ¥494 million (associated with disposal and retirement related to the closure of the Nagano plant and restructuring of the Ijuin plant). Sales volume of premium recycled precious metals and retail products also increased year on year.

Key Products

Growth Drivers

• Expansion of sales amounts driven by rising prices of gold, silver, platinum, and other precious metals (gold ¥450,530 million, platinum up 168.9%, silver up 188.2%)
• Increased receipt volume of gold and silver raw materials in the North America refining business and profit expansion across the product, warehousing, and trading segments
• Increased trading profit through flexible response to fluctuations in gold and silver supply and demand arising from changes in U.S. trade policy and global financial conditions
• Improved profitability and cost structure in the jewelry, dental, and electronics fields
• Expansion of sales volume of premium-priced recycled precious metals and retail precious metal products
• Geographic expansion of the precious metals recycling business in Asia (Thailand, India, etc.)

Risks

• Precious metal price volatility risk (market fluctuations in gold, silver, palladium, platinum, rhodium, etc. directly affect earnings; hedging instruments for rhodium are limited)
• Foreign exchange risk (a high proportion of overseas operations in North America, Asia, and elsewhere means the business is affected by yen depreciation/appreciation)
• Risk of changes in international trade policy and regulations (changes to U.S. tariff systems, etc. affect gold and silver distribution, supply and demand, and North American operations)
• Geopolitical risk and economic security risk (supply chain disruption due to tightened export/import restrictions on strategic materials)
• Impairment risk related to goodwill and fixed assets (potential for impairment losses due to deteriorating profitability of acquired assets or fixed assets used in operations)
• Compliance risk related to responsible precious metals management (issues such as human rights violations or money laundering in the supply chain could hinder certification maintenance and continuity of transactions)

Business Details

The Environmental Conservation Business segment is primarily engaged in the collection, transport, and intermediate treatment of industrial waste. With the holding company Waste System Japan Co., Ltd. at its core, the segment promotes a recycling-oriented society through upstream-downstream collaboration via its equity-method affiliate, Renatus Co., Ltd. The segment's standalone external sales revenue is zero, with earnings primarily composed of equity-method investment gains/losses (the contribution of Renatus), giving it the characteristics of a stable-earnings business structure.

Recent Overview

Equity-method investment gains/losses remained at a similar level to the prior period, while segment profit declined slightly

For full-year FY2026 (ending March 2026), operating profit in the Environmental Conservation Business segment was ¥1,845 million (prior period: ¥1,919 million, a decrease of ¥74 million year on year). The company explains that equity-method investment gains/losses of ¥1,857 million (prior period: ¥1,931 million) remained at a similar level to the prior period. The structure in which the segment's standalone external sales revenue is zero continues, and the substantive source of earnings continues to depend on the performance of the equity-method affiliate Renatus.

Key Products

Growth Drivers

• Stable contribution of equity-method investment gains/losses from the equity-method affiliate Renatus Co., Ltd. (¥1,857 million for full-year FY2026, ending March 2026)
• Expansion of digital platform functions and services driven by DX promotion in the industrial waste industry
• Expansion of the customer base through the promotion of a recycling-oriented society via upstream-downstream collaboration
• Efforts toward a medium- to long-term vision with the mission of "decarbonization-minded waste management"

Risks

• Since the segment's external sales revenue structure is zero and the majority of earnings depend on equity-method investment gains/losses, fluctuations in Renatus's performance directly affect segment profit, with limited control by the Group
• Equity-method investment gains/losses for full-year FY2026 (ending March 2026) decreased year on year (from ¥1,931 million to ¥1,857 million), making it unclear whether this level can be sustained going forward
• Impact on profitability from regulatory changes or intensifying competition in the industrial waste treatment industry
• Risk of business constraints arising from the introduction of new regulations or tightened standards related to environmental and climate change measures by governments in various countries

Business Details

The "Other" segment is a category primarily consisting of the Group-wide strategy and management functions carried out by ARE Holdings Co., Ltd., a pure holding company, and includes business activities that do not fall under either the Precious Metals Business or the Environmental Conservation Business. Sales revenue accounts for less than 0.1% of the consolidated total, and the segment structurally has the character of a cost center that records operating losses. A small loss continued to be recorded in FY2026 (ending March 2026) as well.

Recent Overview

In FY2026 (ending March 2026), sales revenue increased and the operating loss narrowed year on year

In FY2026 (ending March 2026) (the fiscal year under review), the "Other" segment recorded sales revenue of ¥129 million (prior period: ¥80 million, up 61.3% year on year) and an operating loss of △¥181 million (prior period: △¥273 million), with the loss narrowing by ¥92 million year on year. While the segment's character as a cost center remains unchanged, an improving trend in losses was confirmed. It appears that efficiency improvements in holding company functions are progressing alongside the expansion of overall Group performance.

Key Products

Growth Drivers

• Reduction of Group management costs through greater efficiency in holding company functions (a narrowing trend in operating losses)
• Potential increase in holding company income (dividends, management fees, etc.) accompanying expansion of overall Group sales revenue

Risks

• The "Other" segment structurally records operating losses as a cost center, which pushes down overall Group profitability to a certain extent
• Risk of increased losses due to rising holding company costs (personnel expenses, professional fees, etc.)
• Limited disclosure regarding the segment's business content and composition makes detailed analysis difficult for investors