Toyo Kanetsu K.K.

Business Details

Develops, designs, manufactures, and maintains logistics systems centered on IT-integrated sorting, picking, and conveyance systems. Captures demand for automation and labor-saving equipment from e-commerce, 3PL, wholesale, retail, manufacturing, and consumer co-op customers. Key group companies are Scrum Software Co., Ltd. (computer system design and development) and Toyo Kanetsu (Malaysia) Sdn. Bhd. Demand continues against a backdrop of worsening labor shortages, but FY2026 (ending March 2026) saw a temporary lull due to the absence of large-scale projects, resulting in a revenue decline.

Recent Overview

Revenue and profit declined amid a lull from the absence of large-scale projects, but orders received recovered, up 4.4% year on year

As expected at the start of the fiscal year, FY2026 (ending March 2026) faced a lull due to the absence of large-scale projects, resulting in revenue of ¥34,957 million (down 7.5% year on year) and operating profit of ¥3,425 million (down 8.0% year on year), a decline in both revenue and profit. On the other hand, orders received recovered to ¥35,860 million (up 4.4% year on year), and the order backlog also grew to ¥34,447 million (up 2.7% year on year). Amazon Japan G.K. (¥7,254 million) was the only key customer subject to disclosure, while ASKUL Corporation, disclosed in the prior period (¥7,638 million in the prior period), fell below the disclosure threshold. The company expects to emerge from the lull and achieve growth in both revenue and profit in FY2027 (ending March 2027). Additionally, a material subsequent event has been disclosed regarding the corporate split (absorption-type split) of the Logistics Solutions Business into "Toyo Kanetsu Solutions Co., Ltd.," effective April 1, 2027.

Key Products

Growth Drivers

• Continued expansion of demand for automation and labor-saving equipment from e-commerce, 3PL, wholesale, consumer co-op, and manufacturing customers against a backdrop of worsening labor shortages
• Expected revenue contribution in future periods from accumulated orders received of ¥35,860 million (up 4.4% year on year) and order backlog of ¥34,447 million (up 2.7% year on year)
• Expansion of equipment demand and new customer acquisition opportunities amid diversifying customer needs
• Accumulation of recurring (stock-type) revenue through expansion of the maintenance business
• Faster decision-making tailored to business characteristics and enhanced post-M&A integration and growth support following the transition to a holding company structure in April 2027
• Promotion of business structure restructuring, productivity improvement, and human capital strengthening under the medium-term management plan (FY2025-FY2027)

Risks

• Risk of quarter-to-quarter revenue and profit fluctuations due to uneven timing of completion and acceptance of large-scale projects
• Risk of revenue concentration on a specific customer (Amazon Japan): ¥7,254 million in FY2026 (ending March 2026), approximately 20.7% of segment revenue
• Structural risk inherent in project-based business, where performance is affected by trends in large-scale project orders
• Risk of rising manufacturing costs due to surging raw material prices and supply chain disruptions
• Impact on customers' capital expenditure appetite from global economic disruption caused by US-China trade policy, Middle East tensions, and other factors
• Risks related to organizational transition costs and the integration process associated with the corporate split (absorption-type split)

Business Details

Centers on maintenance services for storage tanks used for gaseous and liquid substances such as LNG, LPG, and crude oil, with domestic oil refineries as its primary customers. The business is operated by the Company and TKK Plant Engineering Co., Ltd., and profitability has continued to improve through the pursuit of operational efficiency, including welding automation. Overseas subsidiaries (in Malaysia and Indonesia) also continue to actively pursue repair projects, functioning as a stable revenue base for the group as a whole.

Recent Overview

Both revenue and profit increased, with operating margin improving due to better profitability, though orders received declined sharply

In FY2026 (ending March 2026), the segment achieved revenue of ¥12,799 million (up 2.5% year on year) and operating profit of ¥1,002 million (up 11.2% year on year), an increase in both revenue and profit, centered on tank maintenance projects for domestic oil refineries. Improved profitability contributed to the profit growth. On the other hand, orders received declined sharply to ¥12,734 million (down 26.8% year on year), and the order backlog also remained largely flat at ¥11,634 million. The overseas subsidiaries (in Malaysia and Indonesia) also continued to actively pursue repair projects.

Key Products

Growth Drivers

• Continued firm trend in demand for tank maintenance for domestic oil refineries
• Improved profit margin through operational efficiency improvements such as welding automation
• Revenue expansion through active pursuit of repair projects at overseas subsidiaries (Malaysia and Indonesia)
• Improved revenue visibility through accumulation of an order backlog of ¥11,634 million
• Expansion of business scope leveraging the company's track record and expertise as a tank manufacturer

Risks

• Risk of order fluctuations due to changes in capital expenditure and maintenance plans at domestic oil refineries (orders received declined significantly by 26.8% year on year in the current period)
• Risk of declining construction capacity and mobilization capability due to the aging of technicians and personnel shortages
• Risk of deteriorating profitability due to rising raw material prices and increasing outsourcing costs
• Geopolitical risk and foreign exchange fluctuation risk at overseas subsidiaries (Indonesia and Malaysia)
• Risks related to business operations and the integration process associated with the planned transition to a holding company structure (corporate split) in April 2027

Business Details

The main business is the design, fabrication, and construction of storage tanks for LNG, LPG, crude oil, and other gaseous and liquid substances. While focusing research and development on next-generation energy in response to carbon neutrality demands in Japan and overseas, the segment also pursues order-taking activities for new tank construction and repair projects through overseas subsidiaries in Indonesia and Malaysia. The segment has continued to post operating losses due to upfront R&D investment, but the order backlog has expanded rapidly, and the segment is at a stage where future revenue contribution is expected. Key group companies are PT Toyo Kanetsu Indonesia and Toyo Kanetsu (Malaysia) Sdn. Bhd.

Recent Overview

Segment discontinued from fiscal 2025 and transitioned to the Next-Generation Energy Development Center

In fiscal 2024 (FY2025, ending March 2025), the segment achieved revenue of ¥2,158 million (up 44.2% year on year), aided by the completion of a new spherical tank construction project in Indonesia. The operating loss improved to ¥433 million from ¥481 million in the prior period. Orders received expanded rapidly to ¥6,869 million (up 345.9% year on year), and the order backlog reached ¥5,579 million (up 642.4% year on year). Following an organizational change effective April 1, 2025, the "Next-Generation Energy Development Division" was dissolved in a developmental manner and transitioned to the "Next-Generation Energy Development Center," reporting directly to the President and Representative Director. Reportable segments were reorganized into three categories, and this segment was discontinued as an independent segment. The company has transitioned to a structure aimed at accelerating decision-making toward establishing manufacturing technology for large liquid hydrogen tanks.

Key Products

Growth Drivers

• Large-scale orders for low-temperature tank refurbishment projects in Indonesia and Malaysia (orders received of ¥6,869 million in fiscal 2024, up 345.9% year on year)
• Growing demand for next-generation energy infrastructure amid carbon neutrality policies in Japan and overseas
• Increased revenue from the completion of a new spherical tank construction project in Indonesia (up 44.2% year on year)
• Expectation of future revenue contribution from the accumulated order backlog of ¥5,579 million (up 642.4% year on year)
• Accelerated decision-making for large liquid hydrogen tank development through transition to an organization reporting directly to the President and Representative Director

Risks

• Continued operating losses due to upfront R&D investment (-¥433 million in fiscal 2024, -¥481 million in fiscal 2023)
• Reduced visibility into business progress due to discontinuation as an independent segment and integration into the Plant Business from fiscal 2025
• Geopolitical risk, foreign exchange fluctuation risk, and supply chain disruption risk at overseas subsidiaries (Indonesia and Malaysia)
• Uncertainty and risk of prolongation in R&D toward establishing manufacturing technology for large liquid hydrogen tanks
• Risk of deteriorating construction profitability and impact on cash flow due to extended construction periods (exceeding three and a half years) for order projects

Business Details

The main businesses are the manufacture and sale of industrial equipment and machinery (winches, balancers, etc.), construction contracting, asbestos and other surveys, measurement and analysis, and maintenance management of environmental measurement equipment and environmental surveys. Group companies include Toyo Koken, Maxpull Industry, Toyo Kanetsu Build Tech, Kankyo Research, Kankyo Keisoku, and Sakata Denki. The company actively pursues business expansion through M&A, with the establishment of the Environmental & Disaster Prevention Solutions Business as a medium- to long-term goal.

Recent Overview

Revenue increased due to new consolidations, but operating profit fell 46.6% due to a concentration of one-time expenses

In FY2026 (ending March 2026), revenue increased significantly to ¥11,459 million (up 17.1% year on year), driven by revenue contributions from new consolidated subsidiaries in the Environmental & Disaster Prevention Solutions Business and Industrial Machinery Business (Sakata Denki and four other companies) and an increase in completed construction projects. On the other hand, operating profit fell significantly to ¥466 million (down 46.6% year on year), due to a combination of factors including reduced profit from intensified competition in the asbestos survey and analysis field, upfront expenses including strategic investments in the Industrial Machinery Business, and M&A-related and integration process expenses for new consolidated subsidiaries. The Mirai Sosei Business also recorded an impairment loss of ¥43 million and a gain on negative goodwill of ¥77 million (from the acquisition of Sakata Denki).

Key Products

Growth Drivers

• Expansion of segment scale through new consolidation of Sakata Denki and four other companies (revenue up 17.1%) and future creation of integration synergies
• Stable market expansion in the Industrial Machinery Business driven by increasing capital expenditure related to construction, semiconductors, and secondary batteries
• Growth in measurement demand for civil engineering works driven by infrastructure renewal and heightened disaster prevention awareness
• Continued firm demand in the private-sector asbestos countermeasure market
• Restructuring of the business portfolio and promotion of selection and concentration, including M&A, under the medium-term management plan (FY2025-FY2027)
• Strengthening of group governance and accelerated decision-making tailored to business characteristics following the transition to a holding company structure in April 2027

Risks

• Profit pressure from continued surges in construction material and labor costs in the Construction Business
• Short-term downward pressure on profit from one-time expenses (integration costs, M&A-related expenses) associated with M&A and upfront strategic investments (operating profit down 46.6% in FY2026, ending March 2026)
• Deteriorating profitability due to intensified competition in the asbestos survey and analysis field
• Challenges in creating group synergies and strengthening governance given the structure of bundling multiple businesses across different industries
• Continued cost and personnel burden risk related to the integration process for new consolidated subsidiaries
• Downside risk in FY2027 (ending March 2027) profit forecasts, which assume no one-time expenses, if integration costs exceed expectations

Business Details

The "Other" segment is a complementary group of businesses outside the reportable segments, mainly comprising Real Estate Leasing & Management and leasing operations. Although it accounts for only about 1% of group-wide revenue, it is small in scale but generates stable earnings. In FY2026 (ending March 2026), revenue was ¥641 million (including internal segment revenue of ¥242 million), revenue from external customers was ¥399 million, and operating profit was ¥162 million.

Recent Overview

Both revenue from external customers and operating profit declined slightly year on year, and segment assets also shrank

In the "Other" segment for FY2026 (ending March 2026), revenue from external customers was ¥399 million (versus ¥401 million in the prior period) and operating profit was ¥162 million (versus ¥174 million in the prior period), both slightly down year on year. Segment assets also shrank to ¥5,005 million (versus ¥5,713 million in the prior period). On the other hand, inter-segment internal revenue increased to ¥242 million (versus ¥212 million in the prior period), reflecting an expanding contribution from intra-group transactions.

Key Products

Growth Drivers

• Capturing demand for logistics system equipment in the leasing business
• Stable recognition of real estate leasing income
• Contribution from internal revenue including intra-group transactions (¥242 million in FY2026, ending March 2026)

Risks

• Although the segment is small in scale (external revenue accounting for approximately 1%) and its impact on overall group performance is limited, revenue fluctuations are difficult to predict
• Impact on rental income from fluctuations in the real estate leasing market
• Risk of obsolescence and declining residual value of leased equipment