NIPPON CERAMIC CO., LTD.

Business Details

NIPPON CERAMIC CO., LTD. is a single-segment company whose principal business is the research and development, and manufacture and sale, of various sensor products, module products, and other electronic components and related products. The company operates through a domestic and overseas group structure, with automotive (ADAS), security, lighting, and home appliance applications as its main markets. It has production bases in Japan, China, and the Philippines, with approximately 57% of sales generated domestically and the remainder directed toward Asia, Europe, and North and South America.

Recent Overview

Sales dipped slightly, but margins improved and ordinary profit rose sharply on foreign exchange gains

In the first quarter of FY2026 (ending December 2026) (January to March), although sales of ADAS-related automotive safety products and Security Products remained solid, net sales came to ¥6,566 million (down 1.1% year on year) due to a partial reorganization of the product lineup aimed at improving capital efficiency. On the other hand, ongoing cost reductions and selection and concentration of businesses and projects improved the gross profit margin to 33.2% (31.1% in the same period of the prior year), and operating profit rose to ¥1,597 million (up 5.7% year on year). Furthermore, the recording of ¥131 million in foreign exchange gains led to a substantial increase in ordinary profit to ¥1,838 million (up 25.3% year on year). As a subsequent event, on May 8, 2026, the company resolved to acquire treasury shares with an upper limit of 700,000 shares and ¥2.0 billion. There has been no change to the full-year earnings forecast, which remains at net sales of ¥28,000 million, operating profit of ¥6,500 million, and net income of ¥4,700 million. Sales by region were as follows: Japan ¥3,744 million, Europe ¥554 million, China ¥588 million, other Asia ¥1,594 million, and North and South America ¥82 million.

Key Products

Growth Drivers

• Solid performance of automotive products: sales of ADAS-related in-vehicle safety products continued to perform solidly
• Expansion of Security Products sales: sales expanded on the back of growing demand in the safety and security field
• Improved profitability through selection and concentration of businesses and projects: gross profit margin improved by 2.1 percentage points year on year to 33.2%
• Continued cost reductions: operating margin improved through reductions in cost of sales (from ¥4,575 million in the same period of the prior year to ¥4,384 million in the current period)
• Expansion of sales to Europe: sales to Europe increased 57% year on year, from ¥353 million to ¥554 million
• Improved capital efficiency through share buybacks: continuation of proactive shareholder returns aimed at improving ROE

Risks

• Geopolitical risk and trade friction: the impact of US tariff policy and rising geopolitical risk could adversely affect external demand
• Slowdown in the Chinese market: continued weakness in the real estate market and the resulting slowdown in domestic demand pose a risk to sales to China (¥588 million)
• Foreign exchange risk: the earnings forecast is based on certain foreign exchange rate assumptions, and fluctuations in exchange rates could affect results
• Dependence on a specific customer: risk related to customer concentration, with sales concentrated on the major customer Chugai Co., Ltd.
• Disappearance of one-time gains related to the liquidation of the Kunshan subsidiary: the ¥3,445 million gain on liquidation of an affiliated company recorded in FY2025 (ended December 2025) will not recur in FY2026 (ending December 2026), and net income is forecast to decline 32.9% year on year to ¥4,700 million
• Decline in cash and cash equivalents: the balance at the end of the first quarter stood at ¥14,675 million, a significant decrease from ¥20,156 million in the same period of the prior year, reflecting continued cash outflows for share buybacks and dividend payments
• Impact on sales from the reorganization of the product lineup: the partial reorganization of the product lineup with an emphasis on capital efficiency is a factor behind the slight decline in net sales, and progress in the future restructuring of the product portfolio warrants attention