Supplementary Explanation Materials for Q3 FY2026 Earnings

Overview of Performance

Net sales for Q3 FY2026 totaled 130 billion yen (23.7% YoY increase). Despite a decline in sales volume due to a decrease in domestic crude steel production in the refractory sector and reduced activity among some overseas customers, strong contributions from Gouda in the Netherlands and Reframax in Brazil drove significant revenue growth. EBITDA was 15.2 billion yen (19.0% YoY increase), reflecting cost reduction effects and contributions from overseas group companies. Operating income was 8.9 billion yen (10.0% YoY decrease), impacted by increased goodwill amortization expenses and higher depreciation expenses associated with new plant operations. Net income attributable to owners of parent for the quarter was 29.9 billion yen (278.4% YoY increase), driven largely by substantial gains on fixed asset sales.

Segment Performance and Regional Sales Breakdown

The refractory sector posted solid results with net sales of 82.9 billion yen (19.4% YoY increase) and EBITDA of 11.0 billion yen (49.4% YoY increase). The insulation material sector recorded net sales of 13.0 billion yen (8.0% YoY decrease) and EBITDA of 2.4 billion yen (23.0% YoY decrease) due to a worsening demand environment resulting in lower revenue and profits. The advanced equipment sector saw declines with net sales of 3.0 billion yen (7.4% YoY decrease) and EBITDA of 0.0 billion yen (75.3% YoY decrease). The engineering sector delivered growth with net sales of 31.2 billion yen (66.3% YoY increase) and EBITDA of 1.5 billion yen (13.1% YoY increase), benefiting from contributions from Reframax. Overseas sales ratio expanded to 41.9%, up 14.1 points YoY, with particularly strong growth in Europe and other overseas regions.

Full-Year Earnings Outlook

The full-year FY2026 performance outlook remains unchanged with net sales of 176 billion yen, EBITDA revised down to 21.5 billion yen (15 billion yen decrease from previous forecast), operating income revised down to 13 billion yen (15 billion yen decrease), ordinary income maintained at 14.9 billion yen, and net income attributable to owners of parent at 31 billion yen. The downward revision of EBITDA and operating income reflects one-off expenses related to the acquisition of Dynamix and taxes associated with fixed asset sales, as well as worsening sales mix in the insulation materials sector. Ordinary income and net income forecasts remain unchanged due to favorable foreign exchange gains.

Global Strengthening of Mold Flux Business

In December 2025, SHINDAN in Italy was consolidated as a subsidiary, followed by consolidation of Dynamix in the United States in January 2026. These moves have strengthened the business foundation and presence in Europe, the Middle East and Africa, and the Americas regions. Construction of a new plant is planned for mid-FY2026. These initiatives aim to leverage the global network to expand sales and drive future growth.