Shinwa Co., Ltd.

Business Details

Consists of the Company (Shinwa Corporation) and its domestic subsidiaries. Primarily sells Metal Joining Equipment & Materials, industrial machinery, and FA System-Related Products to finished vehicle manufacturers and automotive parts manufacturers, and also engages in overlay welding/thermal spraying, brazing processing, maintenance construction, and manufacturing of FA System-Related Products. Major customers are Toyota Motor Corporation and DENSO Corporation. This is the largest segment, accounting for approximately 78% of consolidated net sales.

Recent Overview

Strong inspection equipment and AMR sales drove a 2.4% year-on-year increase in cumulative third quarter sales, with profit up 15.5%

In the cumulative nine months of FY2026 (ending August 2026) (September 2025 to May 2026), the Japan segment recorded sales of ¥56,677 million (up 2.4% year on year) and segment profit of ¥3,092 million (up 15.5% year on year). Sales of various inspection equipment and AMR & network systems contributed. While the rebound effect from the previous year's certification irregularity issues on domestic automobile production volume had run its course, capital investment remained resilient, supported by technology development for next-generation vehicles and autonomous driving as well as automation and labor-saving at manufacturing sites.

Key Products

Growth Drivers

• Steady sales of production equipment, robot systems, and inspection equipment for finished vehicle manufacturers and automotive parts manufacturers
• Capture of smart factory demand through AMRs (Autonomous Mobile Robots) and associated network systems
• Expansion of demand for production equipment related to EVs and vehicle-mounted batteries
• Realization of appropriate pricing through price pass-through and provision of high-value-added products
• Expansion of existing business and development of new business areas through strengthened engineering functions

Risks

• High dependence on capital investment trends in the automotive industry (customer concentration risk: Toyota Motor Corporation 19.0%, DENSO Corporation 10.1%)
• Risk of investment postponement due to slowdown in the EV and vehicle-mounted battery markets
• Pressure on SG&A expenses from human capital investment and wage increases
• Fluctuations in domestic automobile production volume (impact of certification irregularity issues, etc.)
• Indirect impact of US foreign economic policy (tariffs, etc.) on production and investment plans of Japanese automakers

Business Details

The Americas segment consists of three sales-focused companies: SHINWA U.S.A. CORPORATION (United States), SHINWA REPRESENTAÇÃO COMERCIAL DO BRASIL LTDA. (Brazil), and SHINWA ENGINEERING S.A. de C.V. (Mexico). It sells Metal Joining Equipment & Materials, industrial machinery, FA systems, etc. to Japanese automakers and their parts manufacturers. The segment has no manufacturing function and specializes in sales activities through the procurement of goods. In the cumulative third quarter of FY2026 (ending August 2026), sales of inspection equipment for Japanese automakers contributed significantly, while the segment was affected by the rebound decline from a high-margin project recorded in the same period of the prior year and by US foreign economic policy.

Recent Overview

Sales rose 19.0% year on year, but segment profit fell 53.0% due to the rebound decline from a high-margin project and the impact of US trade policy

In the cumulative third quarter of FY2026 (ending August 2026) (September 2025 to May 2026), sales of inspection equipment and other products for Japanese automakers contributed significantly, resulting in a substantial increase in sales (including internal sales) to ¥8,929 million (up 19.0% year on year). On the other hand, segment profit fell sharply to ¥294 million (down 53.0% year on year), affected by both the rebound decline from a high-margin project recorded in the same period of the prior year and the impact of US foreign economic policy (tariff increases, etc.). This represents a structure of significantly declining profitability despite increased sales.

Key Products

Growth Drivers

• Steady demand for materials and consumables for Japanese automakers
• Orders for large-scale projects (inspection equipment, etc.) in the Americas
• Capital investment demand from Japanese manufacturers in the United States and Mexico
• Expanding needs for smart factory transformation and DX
• Expected increase in capital investment at North American production bases amid progress in supply chain localization

Risks

• Risk of fluctuations in sales and profit due to the rebound decline following the completion of large-scale projects
• Risk of restrained capital investment by Japanese automakers due to US foreign economic policy (tariff increases, etc.)
• Risk of fluctuation in the North American market share of Japanese automakers
• Risk of rising procurement costs due to exchange rate fluctuations (yen depreciation/dollar appreciation)
• Limits on value creation due to a sales-only structure without a manufacturing function

Business Details

Consists of four sales-focused bases: Thailand (SHINWA INTEC Co., Ltd.), Indonesia (PT. SANTAKU SHINWA INDONESIA), Malaysia (SHINWA INTEC MALAYSIA SDN. BHD.), and India (SHINWA (INDIA) ENGINEERING & TRADING PRIVATE LIMITED). Sells production equipment, welding materials, etc. to Japanese automakers and their parts manufacturers. The segment has no manufacturing function and is centered on sales activities through the procurement of goods. From FY2025 (ended August 2025), the segment name was changed from the former "Southeast Asia," and the Indian subsidiary was newly added to the scope of consolidation.

Recent Overview

Production equipment and welding materials for Japanese automakers and parts manufacturers contributed, resulting in a 7.2% year-on-year increase in sales and a 15.6% increase in profit

In the cumulative third quarter of FY2026 (ending August 2026) (September 2025 to May 2026), sales of production equipment and welding materials for Japanese automakers and their parts manufacturers contributed, resulting in sales of ¥4,249 million (up 7.2% year on year) and segment profit of ¥574 million (up 15.6% year on year). The rate of profit growth exceeded the rate of sales growth, confirming an improvement in profitability. Note that sales by segment include internal sales between segments.

Key Products

Growth Drivers

• New contribution to sales and profit from the consolidation of the Indian subsidiary (SHINWA (INDIA) ENGINEERING & TRADING PRIVATE LIMITED)
• Resilient capital investment demand from Japanese automakers and parts manufacturers in Southeast Asia
• Continued sales contribution from welding materials, jigs, and production line equipment
• Maintaining competitive advantage through high reliability and performance evaluation from Japanese manufacturers
• Promotion of the Fourth Medium-Term Management Plan "Change! Shinwa moving forward 2026," which calls for business expansion in the Global South

Risks

• Decline in Japanese automakers' market share due to the rise of Chinese and local companies (risk of spillover effects on the Southeast Asian market)
• Postponement or restraint of automotive-related capital investment due to a slowdown in the shift to EVs
• Risk of Japanese customers relocating production bases due to supply chain restructuring triggered by US tariff increases
• Limits on value creation due to a sales-only structure without a manufacturing function
• Uncertainty over the economic outlook due to the impact of continued price increases on personal consumption and heightened geopolitical risk

Business Details

The China segment consists of four companies: Neoya Shinwa (Shanghai) Trading Co., Ltd., Yantai Shinwa Joining Technology Co., Ltd., Yantai Suntoku Shinwa Agitation Equipment Maintenance Co., Ltd., and Shinwa (Tianjin) Automation Control Equipment Co., Ltd. The segment engages in the manufacture and sale of Heat Exchangers & Brazing Materials, maintenance of machinery and equipment for Japanese rubber manufacturers and petrochemical manufacturers, and the manufacture and sale of FA System Equipment as well as the sale of ultra-precision coating equipment. Major customers are Japanese automakers operating in China and their parts manufacturers, and the segment provides an engineering trading company function centered on metal joining technology.

Recent Overview

Sales rose 18.4% year on year, but the loss widened as profitability continued to deteriorate

Sales in the cumulative third quarter of FY2026 (ending August 2026) (September 2025 to May 2026) increased to ¥3,830 million (up 18.4% year on year), while the segment loss widened to ¥39 million (compared with a loss of ¥15 million in the same period of the prior year). The main factors cited were the slowdown of the Chinese economy and the declining market share of Japanese automakers in China, indicating an increasingly challenging profit environment.

Key Products

Growth Drivers

• Continued evaluation of highly reliable products based on metal joining technology, such as welding materials, jigs, and production line equipment
• Continued presence of demand for automation and labor-saving investment in Chinese manufacturing
• Potential for expansion into the semiconductor and electronic components fields through the ultra-precision coating equipment business
• Cost competitiveness leveraging the local production system of Yantai Shinwa Joining Technology Co., Ltd.

Risks

• Decline in Japanese automakers' market share and restrained capital investment due to the rapid rise in competitiveness of Chinese automakers
• Deterioration of the demand environment due to the slowdown of the Chinese economy and heightened geopolitical risk
• Risk of Japanese automakers withdrawing from or downsizing operations in the Chinese market
• Widening segment loss despite increased sales, making improved profitability a key challenge
• Risk of indirect spillover effects of US foreign economic policy on customer trends in the China business

Business Details

The "Other" segment consists of the business activities of a local subsidiary based in the United Kingdom. The main customer is a Japanese air conditioning equipment manufacturer in the UK, and the segment functions as a trading company selling production equipment and Alloy Materials & Welding Materials. It accounts for less than approximately 1% of consolidated sales, positioning it as a supplementary segment not included in the reportable segments. In the cumulative third quarter of FY2026 (ending August 2026), sales increased substantially by 55.2% year on year, but the segment continued to record a loss.

Recent Overview

Sales increased substantially, but the segment loss widened due to a decrease in high-margin projects

In the cumulative third quarter of FY2026 (ending August 2026) (September 2025 to May 2026), sales of production equipment and alloy materials to a Japanese air conditioning equipment manufacturer in the UK drove a substantial increase in sales to ¥699 million (up 55.2% year on year). On the other hand, the segment loss widened to ¥11 million (compared with a loss of ¥7 million in the same period of the prior year), due to a decrease in high-margin projects compared with the same period of the prior year. No revision has been made to the full-year earnings forecast.

Key Products

Growth Drivers

• Expansion of sales of production equipment and alloy materials to a Japanese air conditioning equipment manufacturer in the cumulative third quarter of FY2026 (ending August 2026) (up 55.2% year on year)
• Capturing capital investment demand from Japanese manufacturers in Europe

Risks

• Risk of performance fluctuation due to concentration of sales on a specific customer (a Japanese air conditioning equipment manufacturer in the UK) and the presence or absence of large-scale projects
• Continuing segment loss due to a decline in high-margin projects, with an uncertain outlook for profitability
• Geopolitical risk in Europe (the situation in Ukraine, etc.) and foreign exchange fluctuation risk
• Limited scope for value creation due to a pure trading function without a manufacturing division