CORONA CORPORATION

Business Details

The Group's main businesses are the manufacture, sale, and installation of heating equipment, air conditioning & home appliances, and housing equipment, with operations centered on the domestic market and expanding into the Middle East, Europe, and other regions. Manufacturing is handled by the Company and its subsidiaries (Arai Corona Co., Ltd., Imamachi Corona Co., Ltd., Tochio Corona Co., Ltd., etc.), while sales are conducted by the Company as well as through Daiwa Kogyo Co., Ltd. and Kanetatsu Shoji Co., Ltd. Ancillary businesses such as after-sales service, logistics, renovation, and insurance agency operations are also handled by the subsidiary group, forming a single-segment structure. Net sales for FY2026 (ending March 2026) were ¥85,338 million (up 0.1% year on year).

Recent Overview

Net sales flat, but operating profit down 36.6% due to higher SG&A expenses and weakness in heating and air conditioning

In FY2026 (ending March 2026), net sales were ¥85,338 million (up 0.1% year on year), essentially flat, as strong performance in housing equipment (up 5.7% year on year) was offset by weakness in heating equipment (down 2.1%) and air conditioning & home appliances (down 8.3%). SG&A expenses expanded to ¥17,510 million (up 2.7% year on year) due to rising raw material procurement costs, personnel expenses, and operational rationalization-related expenses, causing operating profit to decline to ¥852 million (down 36.6% year on year). The forecast for FY2027 (ending March 2027) anticipates net sales of ¥86,000 million (up 0.8% year on year) and operating profit of ¥600 million (down 29.6% year on year), indicating a further squeeze on profit. A decrease in accounts payable of ¥3,880 million associated with the shortening of payment terms pushed operating cash flow down to negative ¥731 million, and the cash and cash equivalents balance declined to ¥9,930 million.

Key Products

Growth Drivers

• Expanding sales of housing equipment (EcoCute) and capturing replacement demand through utilization of government subsidy programs (promotion of GX-oriented housing)
• Rationalization of production and capacity expansion for heat pump equipment against the backdrop of decarbonization and energy-saving demand (introduction of new products such as the Corona Eco Heating System 6.0)
• Improved profitability in the housing equipment segment through progress in price pass-through for oil water heaters and electric water heaters
• New market development through the OUTFIELD brand (Night Black Edition, etc.) and capturing infectious-disease-related demand for humidifiers
• Promotion of operational efficiency through DX talent development and data utilization (10th Medium-Term Management Plan)
• Expansion of oil heater exports (to the Middle East and Europe)

Risks

• Risk of demand fluctuations for heating and air conditioning equipment due to temperature and climate variability (in FY2026 (ending March 2026), persistently high temperatures during the demand season directly impacted heating equipment sales)
• Rising cost of sales ratio and increased SG&A expenses due to persistently high raw material and energy prices (the FY2027 (ending March 2027) forecast also factors in rising procurement prices)
• Medium- to long-term decline in new housing starts (impact of declining household numbers, longer housing lifespans, rising construction costs, and higher interest rates)
• Intensifying competition among manufacturers in the room air conditioner market (difficulties in separate-type sales) and temporary demand fluctuations associated with the tightening of energy-saving standards in April 2027
• Deterioration of operating cash flow due to a decrease in accounts payable associated with the shortening of payment terms (in FY2026 (ending March 2026), a decrease in accounts payable of ¥3,880 million was the main factor behind negative cash flow of ¥731 million)
• Prolonged geopolitical risk (Middle East situation) leading to rising prices of petroleum-derived raw materials, difficulty in procuring materials, and supply chain disruption
• Outlook for further profit decline, with full-year operating profit forecast for FY2027 (ending March 2027) of ¥600 million (down 29.6% year on year), and financial sustainability concerns regarding continued dividend payments at a forecast payout ratio of 136.5%, significantly exceeding net profit