CMP Q2 FY2027: Profit jumps 26% as price hikes gain traction

CMP reported revenue of ¥79.342 billion for the six months ended September 2026, up 15.8% from a year earlier. Operating profit rose 26.4% to ¥11.437 billion, while net income attributable to owners of the parent increased 33.5% to ¥7.892 billion. Profit growth outpaced sales growth, lifting the operating margin to 14.4% from 13.2% a year earlier.

• Price adjustments: CMP revised prices, mainly in Japan, in response to higher raw-material, transportation and labor costs, improving profitability.
• Higher-value products: The company expanded sales of environmentally responsive products, including high-performance antifouling coatings, amid demand to reduce ships' CO2 emissions.
• Benefit from raw-material inventories: Cost of sales in the first half included materials procured before prices surged, partly cushioning the impact of higher costs on earnings.
• Improved non-operating income: The absence of foreign-exchange losses, among other factors, helped lift ordinary profit 36.4% to ¥12.023 billion year on year.

Price increases and a better product mix supported profit growth. However, raw-material costs are rising amid escalating tensions in the Middle East, and earnings could come under pressure in regions and product areas where price revisions lag. Sustaining the first-half momentum through the full year will depend on continued price pass-through and growth in sales of higher-margin products.

By region, revenue and profit grew in Japan, China and Southeast Asia, while profit declined in South Korea and Europe and the U.S. Japan and Southeast Asia posted the strongest year-on-year profit growth, while the downturn in Europe and the U.S. was pronounced.

Japan: Revenue rose 21.5% year on year and segment profit increased 111.1%. Shipments of marine coatings remained firm, while price adjustments in response to higher raw-material costs and growth in heavy-duty industrial coatings also contributed.

China: Revenue increased 34.5%. Shipments for newbuild vessels rose substantially, and higher-value products for vessel repairs also grew. Segment profit, however, fell 3.7% amid higher raw-material costs and other factors.

Southeast Asia: Revenue rose 34.9% and segment profit advanced 77.2%. Demand for vessel-repair coatings and strong heavy-duty coating projects in Thailand, as well as pricing that reflected costs, boosted profit.

South Korea: Revenue declined 6.0% and profit fell 10.7%, reflecting the comparison with a year-earlier period when large projects were concentrated, as well as delays in shipyard schedules. Europe and the U.S.: Revenue fell 2.2% and profit dropped 76.8%, due to fewer vessel repairs and weaker European profitability amid a stronger euro. Growth in key regions offset declines in Europe and the U.S., but restoring profitability in those markets remains a challenge.

CMP revised its consolidated forecast for FY2027, projecting revenue of ¥160 billion, operating profit of ¥20 billion and net income attributable to owners of the parent of ¥13 billion. All three figures are forecast to increase from the previous year. First-half operating profit reached 57.2% of the full-year forecast.

The company directed investors to its separately announced notice on the revision to its earnings forecast, but did not disclose the forecast figures before the revision. This report therefore presents the revised outlook and year-on-year comparisons. Profit progress is ahead of revenue progress, but continued raw-material inflation and differences in regional profitability mean price adjustments and a better sales mix will be key to meeting the plan in the second half.

Total assets stood at ¥169.233 billion at the end of September 2026, up ¥11.672 billion from the end of March. The equity ratio rose 0.4 percentage point from fiscal year-end to 61.0%, leaving CMP with a solid financial base.

Operating cash flow fell short of the year-earlier level despite higher pretax profit, as an increase in receivables and inventories coincided with corporate tax payments. Cash and cash equivalents totaled ¥34.929 billion at the end of the first half, down ¥3.128 billion from the start of the period.

The interim dividend was ¥50 per share, up ¥2 from ¥48 a year earlier. CMP forecasts an annual dividend of ¥100. The previous year's ¥111 included a special dividend of ¥14, so the latest forecast represents a ¥3 increase from the prior year's ordinary dividend of ¥97. There was virtually no cash outlay for share repurchases in the first half, and the earnings release did not mention a large-scale buyback.

CMP plans to absorb its wholly owned subsidiary Kobe Paint on April 1, 2027. Kobe Paint also focuses on marine coatings, and CMP will remain the surviving company after the merger.

• Integrated operations: The companies plan to unify production, product brands and sales channels to streamline group management and improve operational efficiency.
• No shares or cash to be issued: As the merger is with a wholly owned subsidiary, CMP does not plan to issue new shares or provide cash consideration.
• Core corporate details unchanged: The company name, head office, representative, business activities, capital and fiscal year-end will not change.

Combining the two companies' operations is intended to eliminate duplication in manufacturing and sales and improve efficiency. Investors will be watching how far the integration delivers cost savings and strengthens the product and sales infrastructure.

Demand varies by region and application, and the ability to convert price pass-through into profit will be important as raw-material inflation and geopolitical risks persist. Trends in marine-coating demand and currency movements also warrant attention.

• Middle East tensions and raw-material prices: Continued supply uncertainty or higher material costs could weigh on margins in regions and product areas where price adjustments are delayed.
• Foreign-exchange fluctuations: A stronger euro against the U.S. dollar contributed to weaker profitability in Europe and the U.S. Continued currency moves could affect the performance of overseas operations.
• Shipyard schedules and vessel repairs: Temporary schedule delays in South Korea and fewer vessel repairs in Europe and the U.S. affected shipments. Concentration of projects and shifts in timing can make sales volatile.
• Higher working capital: Receivables and inventories increased, leaving first-half operating cash flow below the year-earlier level. If working capital continues to rise, cash generation could lag profit growth.