FY2026 November Term Q1 Financial Summary Supplementary Presentation

Performance Overview

Net sales for FY2026 November Q1 increased 6.5% year-over-year to 9.072 billion yen. Sales growth was driven by the Electronic Materials and Functional Chemicals segments, while the Chemical Products segment declined. Operating income rose 34.2% year-over-year to 1.832 billion yen despite increased raw material costs due to higher sales, supported by a positive inventory valuation effect. Ordinary income was 1.904 billion yen and net income was 1.285 billion yen, up 28.6% and 24.2% respectively year-over-year.

Segment Status and Factors Affecting Changes

The Chemical Products segment posted sales of 2.8 billion yen, achieving 20.4% of the full-year forecast of 13.7 billion yen. Automotive coatings sales were sluggish, and sales for display adhesives declined due to customer production adjustments. The Electronic Materials segment recorded sales of 4.55 billion yen, achieving 26.3% of the full-year forecast of 17.3 billion yen. Demand for core ArF resist materials expanded favorably due to increased AI-related semiconductor market demand. The Functional Chemicals segment posted sales of 1.71 billion yen, 26.3% of the full-year forecast of 6.5 billion yen. Cosmetic raw materials remained firm but declined from the previous quarter due to seasonal factors. Factors affecting operating income increases included higher raw material and personnel costs driven by sales growth; however, decreases in depreciation expenses and positive inventory valuation effects contributed to an operating income increase of 460 million yen.

Capex, Depreciation, and R&D Expense Trends

In 2023, capital investment of 8.66 billion yen was made in semiconductor material manufacturing facilities. Depreciation expenses peaked in 2024 and have been decreasing, with 660 million yen recorded in Q1 2026 compared to 720 million yen in Q1 2025. R&D expenses are projected at 1.488 billion yen for Q1.

Impact and Response to Middle East Tensions

Increasing tensions in the Middle East have created uncertainty in procuring raw materials and fuel; however, there have been no significant disruptions in product supply to date. The company is collaborating closely with raw material manufacturers and customers to strengthen the supply framework through procurement diversification and inventory securing, as well as appropriate price pass-through to product prices. The company intends to promptly disclose information should any impact occur depending on future developments.