ARAYA INDUSTRIAL CO., LTD.

Business Details

The core business manufacturing and selling Ordinary Steel Pipe, Stainless Steel Pipe, Various Section Steel & Precision Machined Products, Bicycle Rims, and other products. Domestically, New-Ya Giken (the parent company) itself, Daiei Steel Industry, Araya Special Metal, and Stainless Pipe Kogyo handle manufacturing and sales, while overseas, PT. Araya Steel Tube Indonesia manufactures and sells products for the ASEAN market. The segment addresses a wide range of demand areas including construction, logistics, automotive, shipbuilding, food and pharmaceuticals, and water treatment. From the current period, the Bicycle Related rim business has been integrated into this segment. Miyake Kinzoku Co., Ltd. was newly consolidated as a subsidiary, generating goodwill of ¥164 million.

Recent Overview

Both net sales and operating profit declined year on year. Profitability showed an improving trend due to review of unprofitable operations.

In FY2026 (ending March 2026), the Steel Pipe Related segment recorded net sales of ¥39,592 million (down 5.6% year on year) and operating profit of ¥1,290 million (down 12.0% year on year). This reflected the impact of postponed or cancelled construction-related projects and intensified price competition from an influx of cheap overseas materials. On the other hand, profitability improved through the review of unprofitable divisions. Miyake Kinzoku Co., Ltd. was newly consolidated as a subsidiary (generating goodwill of ¥164 million), and segment assets increased by ¥1,528 million year on year to ¥39,187 million. Capital investment in fixed assets also increased significantly year on year to ¥2,503 million, reflecting progress in restructuring the production system.

Key Products

Growth Drivers

• Relatively steady trend in demand for logistics-related applications (warehouses, data centers, pallets)
• Recovery in inbound demand for automotive-related applications (tourist buses)
• Steady order intake for stainless steel products for shipbuilding applications
• Strengthened group collaboration through consolidation of Miyake Kinzoku Co., Ltd. as a subsidiary
• ASEAN market development centered on the Indonesian local subsidiary (growth strategy under the Medium-Term Management Plan 2026)
• Gathering and evaluating information on new technology and sales channel acquisition through M&A (Medium-Term Management Plan 2026)
• Securing profits through sales price revisions reflecting market trends and strengthened manufacturing-sales collaboration

Risks

• Decline in order volume due to persistently high material prices, overtime work regulations, and cautious attitudes among ordering parties in the construction-related field
• Weak outlook and buying restraint in the domestic market due to an influx of cheap imported materials (particularly stainless steel)
• Profit pressure from fluctuations in international prices of raw materials such as nickel
• Delayed recovery in demand for large-scale equipment projects for semiconductor equipment, construction machinery, and building materials
• Downward pressure on sales prices due to intensifying price competition with competitors
• Risk of downturn in automotive-related demand due to an unclear export environment toward North America
• Foreign exchange risk (increased manufacturing costs due to yen depreciation)

Business Details

The company withdrew from its complete bicycle import and sales business at the end of December 2025, and during the current period only incurred costs related to after-sales service handling following the withdrawal. Net sales of ¥124 million represented only about 0.3% of consolidated total sales, and the operating loss narrowed significantly to ¥17 million from the prior period's operating loss of ¥301 million. Note that as of the current consolidated fiscal year, the rim business has been transferred to the Steel Pipe Related segment, and the Bicycle Related segment is effectively in a wind-down phase.

Recent Overview

Withdrew from the complete bicycle sales business at the end of December 2025; losses narrowed significantly

In the prior period, the company recorded an operating loss of ¥301 million due to valuation losses on complete bicycle inventory, but in the current period, only after-sales service handling costs following the withdrawal were incurred, and the operating loss narrowed significantly to ¥17 million. Net sales also fell sharply to ¥124 million (down 48.4% year on year). Note that the rim business has been transferred to the Steel Pipe Related segment as of the current consolidated fiscal year, and substantive business activity in the Bicycle Related segment has ended. Segment assets also fell to zero from ¥205 million in the prior period.

Key Products

Growth Drivers

• End of loss recognition following completion of business withdrawal (declining residual costs)
• Resolution of cost burden through early completion of after-sales service handling

Risks

• Risk of additional costs arising from prolonged after-sales service handling following withdrawal from the complete bicycle business
• Risk of brand value impairment related to management of ARAYA brand licensees
• Risk of weak demand for Bicycle Rims within the Steel Pipe Related segment following the transfer of the rim business

Business Details

The "Others" segment comprises business segments not included in the reportable segments (Steel Pipe Related, Bicycle Related, and Real Estate Leasing, etc.), and engages in the manufacture and sale of Disc Wheels, Machinery & Equipment, and Welfare Equipment. Due to a change in business management classification from FY2026 (ending March 2026), the Disc Wheels business, previously part of Bicycle Related, was transferred to this segment. Its scale relative to the consolidated total is extremely small, and it holds a supplementary position.

Recent Overview

Net sales declined, but profit turned positive, improving profitability

Net sales for FY2026 (ending March 2026) contracted to ¥37 million (down 28.8% from ¥52 million in the prior period), but operating profit/loss turned positive to ¥2 million from an operating loss of ¥7 million in the prior period. The prior period had recorded a loss due partly to the immediate impact of the transfer of the Disc Wheels business from Bicycle Related, but profitability improved in the current period. Segment assets decreased from ¥27 million to ¥22 million, and the business scale remains small.

Key Products

Growth Drivers

• Expansion of the product lineup following the transfer of the Disc Wheels business from Bicycle Related to the "Others" segment from FY2026 (ending March 2026)
• Continuation of manufacturing and sales of Disc Wheels and other competition-use products even after the withdrawal from the complete bicycle sales business, maintaining a highly distinctive product group
• Stable demand base for Machinery & Equipment and Welfare Equipment

Risks

• The segment scale is extremely small (net sales of ¥37 million), and while the impact on consolidated results is limited, business continuity depends on demand trends
• Segment assets have declined from ¥27 million in the prior period to ¥22 million, continuing a trend of contraction in the business base
• Demand trends in the competition-use bicycle market could affect performance of the Disc Wheels business
• Risk of price competition with competitors in the Machinery & Equipment and Welfare Equipment markets

Business Details

A segment engaged in leasing land, buildings, warehouses, and other real estate. Main revenue sources are land rent income in Ota-ku, Tokyo, land rent income from the former Kansai Plant rim plant site, rental income from the company's own building "Araya Kiyosumi-Shirakawa Building" in Koto-ku, Tokyo, and land rent income in Ibaraki City, Osaka Prefecture. While the Steel Pipe Related segment is affected by market fluctuations, this segment functions as a provider of stable cash flow. Revenue has trended upward due to rent increases and other factors.

Recent Overview

Both net sales and operating profit increased year on year due to rent increases and other factors

Full-year net sales for FY2026 (ending March 2026) were ¥692 million (up 13.1% year on year), and operating profit was ¥603 million (up 14.6% year on year). Rent increases and other factors contributed to the revenue growth, and the operating profit margin improved to 87.1% from 85.9% in the prior period. Segment assets remained flat at ¥690 million from the prior period, with the company maintaining asset scale while enhancing profitability.

Key Products

Growth Drivers

• Unit price improvement effect from rent increases and other factors
• Diversification and stabilization of revenue through rent income from multiple locations
• Strengthened management structure through establishment of a dedicated real estate department under the Medium-Term Management Plan 2026
• Initiatives to improve profitability and asset efficiency of leased real estate

Risks

• Risk of reduced income due to tenant vacancies or rent renegotiation
• Risk of decline in the asset value of held real estate
• Increased repair and renewal costs due to aging of fixed assets
• Limited room for large-scale revenue expansion due to the small segment asset scale