NEPON Inc.

Business Details

This segment manufactures and sells agricultural equipment such as hot air heaters, heat pumps, and hot water boilers for horticultural facilities, as well as general-purpose equipment such as hot air heaters for buildings/factories and snow-melting boilers, and also provides installation work and after-sales service. It also develops IoT-based digital services such as the Agricultural ICT Cloud Service (Chabu-Dai) and the smartphone app "Chokotto Remocon." Major customers are agricultural producers and horticultural facility operators, with Sato Shoji Co., Ltd. serving as the primary sales agent. In FY2026 (ending March 2026), sales expanded due to an increase in large-scale orders for low-cost horticultural facilities resistant to climate disasters and increased orders for thermal equipment construction such as road heating installation work.

Recent Overview

Sales increased 2.6% year on year, driven by growth in large-scale construction orders and road heating installation work

In FY2026 (ending March 2026), Thermal Equipment segment sales were ¥6,950 million (up 2.6% year on year), and segment profit was ¥1,055 million (up 3.4% year on year). The main drivers of increased sales were large-scale orders for low-cost horticultural facilities resistant to climate disasters, and increased orders for thermal equipment construction such as road heating installation work. Meanwhile, segment assets decreased by ¥286 million from the prior period (¥3,814 million) to ¥3,528 million due to reductions in inventory, showing improved asset efficiency. The consolidated full-year sales forecast for the following period (FY2027, ending March 2027) is ¥7,450 million (up 0.4% year on year), only a slight increase, reflecting a cautious plan that takes into account downside economic risks.

Key Products

Growth Drivers

• Continued large-scale orders for low-cost horticultural facilities resistant to climate disasters and increased orders for thermal equipment construction such as road heating installation work
• Increase in corporate entry into agriculture accompanying the trend toward larger-scale, more sophisticated horticultural facility systems
• Expanding demand for decarbonization-compliant products such as heat pumps (in response to the Ministry of Agriculture, Forestry and Fisheries' "MIDORI Food System Strategy" targeting zero CO2 emissions by 2050)
• Providing fossil fuel consumption reduction solutions by promoting the spread of systems that jointly control fossil-fuel hot air heaters and heat pumps
• Enhancing added value in reducing agricultural workload and improving business profitability through digital services such as the IoT platforms "Chabu-Dai" and "Chokotto Remocon"
• Development and provision of solutions to reduce greenhouse gas emissions in the agricultural sector, including through the use of next-generation energy sources

Risks

• Deterioration in agricultural producers' profitability and reduced capital investment appetite due to supply shortages and price increases for petroleum-based products amid concerns over prolonged military conflict involving Iran
• Cost of sales increase pressure due to rising import prices amid a weakening yen
• Risk of stricter decarbonization regulations affecting hot air heaters for horticultural facilities that rely on fossil fuels
• Intensifying competition due to increased entry of other companies into the agricultural ICT cloud services market
• Shrinking demand due to the decline in small-scale farmers resulting from aging and lack of successors
• Risk of sales concentration in a major customer/sales agent (Sato Shoji Co., Ltd.), which accounted for ¥1,396 million in sales this period, approximately 18.8% of consolidated sales