CANOX CORPORATION

Business Details

The Group consists of a single segment, the steel sales business. It procures steel plates, steel pipes, bar steel, stainless steel, and other products from blast furnace and electric furnace manufacturers, processes them (cutting, punching, bending, etc.) at group subsidiaries and outsourced processing partners, and sells primarily to the automotive industry (with Toyota Motor Corporation as a major customer) and the construction/building materials industry. Its competitive advantages derive from its strength as a primary distributor with direct procurement from blast furnace manufacturers, and its end-to-end system from order receipt to small-lot delivery. "Tied sales" (continuous delivery contracts to major customers) account for a high proportion of sales, relatively suppressing market volatility risk.

Recent Overview

Net sales declined 8.2% year-on-year, but improved gross profit margin drove increases in ordinary income and net income

In FY2026 (ending March 2026) (full year), net sales decreased to ¥158,751 million (down 8.2% year-on-year), but gross profit improved to ¥8,798 million (up 6.2% year-on-year) due to reduced cost of sales, and the gross profit margin rose to 5.54% (up from 4.79% in the prior fiscal year). While operating income was roughly flat at ¥2,509 million, ordinary income increased to ¥2,965 million (up 3.8% year-on-year), and profit attributable to owners of parent increased to ¥2,104 million (up 5.9% year-on-year), securing profit growth. Note that comprehensive income was revised from the originally announced ¥2,000 million to ¥1,836 million (down 15.3% year-on-year) due to a correction in the financial results report. The reason for the correction was an error in the recording of land revaluation differences, and there is no impact on net sales, operating income, ordinary income, net income, or net assets.

Key Products

Growth Drivers

• Continued improvement in gross profit margin (5.54% in FY2026 (ending March 2026), up from 4.79% in the prior period), driving greater sophistication of the profit structure
• Maintaining a high proportion of tied sales to secure stable sales volume and value while suppressing market volatility risk
• Competitive advantage derived from strength as a primary distributor with direct procurement from blast furnace manufacturers and an end-to-end system from order receipt to small-lot delivery
• Expansion of electric furnace steel handling to address carbon neutrality and acquire new customers
• Increased free-float ratio and corporate value enhancement measures accompanying progress in the sale of treasury shares via the share supply-demand buffer trust

Risks

• Uncertainty over future automotive production due to the impact of US tariff policy (risk of fluctuations in major customers' production plans)
• Reconsideration of construction plans and construction delays in the construction materials/housing sector due to rising material costs and labor shortages
• Profit pressure from sustained high raw material/resource prices and rising expenses such as freight costs
• Risk of increased interest expense in a rising interest rate environment
• Risk of delayed response to structural changes in steel demand accompanying accelerating EV shift in the automotive industry
• Issues in internal control systems as evidenced by the correction of financial results figures (misstatement of comprehensive income)