Inabata Q1 FY2027: Operating profit leaps 48.8% on higher materials prices

Inabata (Inabata Co., Ltd.) started fiscal year 2027 with consolidated revenue of ¥243,655 million, up 19.4% year on year. Operating profit jumped 48.8% to ¥9,835 million, ordinary profit climbed 38.0% to ¥10,167 million, and profit attributable to owners of the parent rose 5.6% to ¥6,376 million.

Net income growth was restrained by the absence of a ¥1,141 million gain on investment securities booked in the prior-year period, though underlying business profitability improved substantially. The average exchange rate of ¥159.57 per dollar, compared with ¥144.59 a year earlier, boosted export margins and the yen-translated earnings of overseas subsidiaries.

The global economy continued a gradual recovery, while escalating Middle East tensions pushed up international crude oil and petrochemical feedstock prices, providing a tailwind for a specialized trading house like Inabata where higher input costs can lift sales. Management cautioned, however, that part of the demand reflected customer inventory building, and a pullback is possible from the second quarter onward. Full-year forecasts were left unchanged: revenue of ¥890,000 million (+6.9% vs. FY2026) and operating profit of ¥27,500 million (+5.1%).

All four reporting segments delivered higher revenue and profit. Synthetic Resins and Chemicals recorded the sharpest gains.

Synthetic Resins, the largest segment accounting for about 51% of total revenue, saw revenue soar to ¥124,523 million (+25.3%) and operating profit to ¥5,427 million (+65.1%). Rising raw material prices and inventory restocking by some customers lifted both volumes and selling prices. Commodity resins managed higher revenue as cost pass-through progressed despite sluggish demand from daily goods and construction. High-performance resins were robust on global OA equipment demand, and new businesses such as carbon fiber expanded. Automotive-related sales showed stark regional differences: _India surged_, while China saw weakness among Japanese OEMs but growth with local manufacturers. The recycling raw material business also expanded steadily.

Information Electronics revenue reached ¥65,923 million (+9.5%) and operating profit ¥2,180 million (+11.5%). Semiconductor-related materials, especially advanced materials, rose sharply on the AI boom, with contributions from new products. FPD-related sales were stable for small and medium panels, automotive, and OLED applications. Photovoltaic-related sales turned up on increased production at a key customer, and the company is accelerating efforts in Europe, North America, and India. Lithium-ion battery materials were flat as EV sales slowed, though emphasis is shifting to stationary storage for data centers and next-generation anode materials.

Chemicals recorded revenue of ¥36,417 million (+21.4%) and a significant margin improvement with operating profit of ¥1,368 million (+76.1%). Across the board, higher raw material costs raised selling prices and boosted demand for substitute materials. Urethane raw materials and additives, automotive component materials (especially thermal management products), and coatings, inks, and adhesives all saw increases in both volume and price. Building materials also grew on expanded sales to housing manufacturers.

Life Industry revenue reached ¥16,744 million (+16.0%) and operating profit ¥825 million (+49.1%). In life sciences, pharmaceutical and daily-use raw material sales were strong both domestically and overseas, and regenerative medicine-related business began to show promise. Food-related sales expanded with matcha product exports and e-commerce of processed eel, while marine products for conveyor-belt sushi and mass retailers also performed well. US food-service demand remained in recovery and was roughly flat year on year.

_A minor real-estate leasing business_ contributed ¥45 million in revenue and ¥33 million in operating profit.

Total assets at quarter-end stood at ¥527,967 million, up ¥29,828 million (6.0%) from the end of the prior fiscal year, primarily due to higher trade receivables and inventories linked to revenue expansion. Current assets rose ¥28,075 million, while fixed assets increased ¥1,753 million on higher investment securities and intangible assets. Total liabilities increased ¥23,646 million to ¥275,846 million, reflecting growth in notes and accounts payable and short-term borrowings. Net assets climbed 2.5% to ¥252,120 million, and the equity ratio stood at 45.7%, down 1.6 percentage points but still at a solid level.

Cash flow statements were not prepared for the quarter, though depreciation was ¥1,153 million and goodwill amortization ¥83 million.

The dividend forecast for FY2027 calls for an increase of ¥15 to ¥143 per share (interim ¥70, year-end ¥73), up from ¥128 in the prior year. No revision to the outlook was made, signaling a steady shareholder return policy.

Management acknowledged that the Q1 performance was supported in part by inventory restocking by some customers, raising concerns about a potential correction in the coming quarters. Synthetic Resins and Chemicals are particularly susceptible to market fluctuations.

Additional risk factors include:

• Geopolitical risk: Further escalation in the Middle East could disrupt raw material procurement and logistics; conversely, a stabilization could trigger price declines.
• Exchange rate risk: The Q1 average of ¥159.57 per dollar was a tailwind, but any sharp yen appreciation would erode overseas revenue and export margins.
• EV market slowdown: Flat demand for lithium-ion battery materials means a delay in shifting to new applications such as data center storage could restrain growth in Information Electronics.
• Competitive pressure: Global price competition persists in areas like photovoltaics and semiconductor materials, making the shift to high-value-added products imperative.
• Full-year forecast risk: With Q1 operating profit already at 35.8% of the full-year target of ¥27,500 million (+5.1%), a downturn in the remaining three quarters could lead to a shortfall.

To mitigate these risks, Inabata is pushing a portfolio management approach that reduces reliance on specific markets and is expanding in growth regions such as India and North America.