EIKEN INDUSTRIES CO.,LTD.

Business Details

Domestically manufactures automotive replacement filters such as oil filters and air filters, engaging in domestic sales and overseas exports under the "VIC" brand. Major customers are Union Motor Co., Ltd. (45.1% of net sales) and Nippatsu Hanbai Co., Ltd. (11.3%). Domestically, the division is promoting expanded sales of Large Vehicle Filters / High-Performance Oil Filters and Press Parts, while overseas it is strengthening sales to markets for Japanese vehicles, primarily in Asia. The division adopts a build-to-forecast production method, with its strength lying in integrated domestic production capable of handling small-lot, high-variety orders.

Recent Overview

Production volumes declined due to delayed procurement of petrochemical products, and a drop in exports weighed heavily on net sales and profit

In the interim period of FY2026 (ending October 2026) (November 2025 to April 2026), delays in the procurement of petrochemical products caused by the closure of the Strait of Hormuz pushed production volumes below plan, resulting in Filter Division net sales of ¥3,722 million, down 4.9% year on year. Overseas net sales fell approximately 14% year on year to ¥1,838 million, mainly due to a decline in exports to Asia, while domestic net sales increased approximately 6% year on year to ¥1,885 million, driven by growth in sales to fellow manufacturers and trading companies. Due to deteriorating production efficiency stemming from the decline in production volume, the cost of sales ratio for products rose, and operating profit declined sharply by 35.7% year on year to ¥258 million.

Key Products

Growth Drivers

• Expansion of export sales through recovery in exports to Asia and development of new countries beyond the main export destinations
• Expansion of domestic sales to trading companies and fellow manufacturers, and development of new business partners
• Shift toward high value-added products through expanded sales of filters for large vehicles and construction machinery
• Improvement in the cost of sales ratio through enhanced production efficiency accompanying increased production volume
• Strengthening of proposal-based sales activities leveraging the strength of the "VIC" brand

Risks

• Long-term decline in domestic demand due to stagnant growth in the number of vehicles owned and rising awareness of maintenance cost reduction
• Intense price competition (both domestically and in exports) due to an increase in inexpensive overseas products
• Risk of long-term contraction in demand for filters for gasoline and diesel vehicles as electric vehicles become more widespread
• Risk of delayed procurement and rising prices of petrochemical products due to instability in the Middle East (such as closure of the Strait of Hormuz)
• Impact on export markets and geopolitical risk associated with reviews of US tariff policy
• Risk of rising cost of sales ratio due to increases in purchase prices of raw materials, packaging materials, etc.
• Risk of sales concentration in a major customer (Union Motor Co., Ltd.) (45.1% of net sales)

Business Details

The Combustion Equipment Division is a segment primarily engaged in the manufacture and sale of burner parts, handling Coin Laundry Burners, Kitchen Equipment Burners, Boiler Burner Parts, and Heat Exchangers. Although it is a small segment accounting for approximately 4% of consolidated net sales, it is positioned as the second business pillar following the Filter Division. Sales are domestic only, and the business is based fundamentally on order-based product development in response to customer requests.

Recent Overview

Increase in coin laundry burners drove higher sales and profit, with margins also improving

In the interim period of FY2026 (ending October 2026) (November 2025 to April 2026), the Combustion Equipment Division recorded net sales of ¥166 million (up 7.7% year on year) and operating profit of ¥14 million (up 35.4% year on year). The main driver was an increase in net sales of burners for coin laundries. While the Filter Division experienced a sharp decline in profit due to delayed procurement of petrochemical products, the Combustion Equipment Division achieved higher sales and profit, contributing to supporting overall company performance. The operating margin improved from 7.0% in the prior interim period to 8.8%.

Key Products

Growth Drivers

• Expansion of sales through increased demand for coin laundry burners
• Improved profit margins through increased demand for kitchen equipment burners and revisions to selling prices
• Securing orders through new burner development in response to customer requests
• Efforts to establish production systems for pipe-type burners and expand sales
• Expansion of sales channels through development of new business partners

Risks

• Small net sales scale at approximately 4% of consolidated net sales, resulting in low fixed-cost absorption capacity and large earnings volatility
• Risk of rising manufacturing costs due to elevated resource and raw material prices
• Risk of long-term changes in demand for gas equipment as electric vehicles become more widespread
• High dependence on specific customers and products, meaning fluctuations in orders directly affect business performance

Business Details

The "Others" segment consists of business segments not included in the reportable segments (Filter Division and Combustion Equipment Division), engaged in the sale of Garage Sauna and Ashtrays, etc. The sales scale is extremely small, at approximately 0.03% of consolidated net sales, and the segment has continuously recorded operating losses due to the burden of research and development expenses and other costs, although the loss has been trending smaller in the interim period of FY2026 (ending October 2026).

Recent Overview

Operating loss narrowed year on year due to increased net sales and reduced research and development expenses

In the interim period of FY2026 (ending October 2026) (November 2025 to April 2026), net sales were ¥1,091 thousand (up 14.8% year on year). The operating loss was ¥1,958 thousand, an improvement of ¥1,022 thousand from the ¥2,980 thousand loss recorded in the same period of the prior year. The financial results report states that this improvement was attributable to both the increase in net sales and the decrease in research and development expenses. The segment's share of consolidated net sales remains extremely small, at approximately 0.03%.

Key Products

Growth Drivers

• Narrowing of operating loss through reduction of research and development expenses and other costs (interim period of FY2026, ending October 2026: △¥1,958 thousand, improved from △¥2,980 thousand in the same period of the prior year)
• Increase in sales of Garage Sauna and Ashtrays, etc. (net sales of ¥1,091 thousand in the interim period of FY2026, ending October 2026, up 14.8% year on year)

Risks

• Extremely small sales scale (approximately 0.03% of consolidated net sales), resulting in low viability as an independently profitable business
• Continuous operating losses due to the fixed cost burden of research and development expenses and other costs
• Because the absolute amount of sales is small, even minor fluctuations have a large impact ratio on profit and loss, resulting in low stability
• The development of new businesses in response to structural changes such as the spread of electric vehicles is considered a challenge, and the establishment of new revenue sources within the Others segment remains uncertain