Mitsui Chemicals Q1 FY2027: Core Operating Profit Soars 88%, Full-Year Forecast Unchanged

For the April-June quarter, revenue came in at ¥460.0 billion (up 10.8% year on year), core operating profit reached ¥50.1 billion (up 88.4%), operating profit stood at ¥48.4 billion (up 279.8%), and net income attributable to owners of the parent surged to ¥32.1 billion (roughly 43 times the prior year). All profit levels saw substantial growth.

The jump in core operating profit was mainly due to improved inventory valuation amid rising naphtha and feedstock costs. Steady demand in vision care and semiconductor materials, better trading conditions from a weaker yen, and fixed-cost reductions from business restructuring also contributed.

Financial income improvements pushed pre-tax profit to ¥47.7 billion (up 379.3%), marking a sharp turnaround from the prior-year net income of just ¥0.7 billion. Core operating profit hit a record high for a single quarter.

All five segments posted higher core operating profit compared to the same period last year.

Life & Healthcare Solutions saw a ¥0.6 billion increase in core operating profit, helped by strong sales of vision care (eyeglass lens materials) and agricultural chemicals.

Mobility Solutions posted a ¥0.2 billion rise in core profit, as favorable exchange-rate effects offset lower sales due to Middle East instability and higher depreciation from capacity expansions.

ICT Solutions recorded a ¥2.1 billion increase, driven by robust demand for semiconductor and optical materials, ICT films, and forex gains.

Basic & Green Materials swung from a year-earlier core loss of ¥2.9 billion to a profit of ¥19.8 billion. A sharp improvement in inventory valuation, fixed-cost savings, and higher equity-method investment income more than compensated for sluggish sales.

Every segment improved, with Basic & Green Materials’ turnaround leading the way.

Total assets at quarter-end stood at ¥2,262.3 billion, up ¥110.6 billion from the previous fiscal year-end. Interest-bearing debt totaled ¥876.4 billion, pushing the net debt-to-equity ratio to 0.75, an increase of 0.05 points.

Operating cash flow was an inflow of ¥14.0 billion (down ¥31.4 billion year on year), weighed by an increase in working capital. Investing cash flow was an outflow of ¥29.2 billion, while financing cash flow brought in ¥47.1 billion, mainly from increased borrowings. Cash and cash equivalents rose to ¥217.8 billion.

The company maintained its annual dividend forecast of ¥75 per share (post-stock-split basis), with an interim payout of ¥37.5 and a year-end ¥37.5. No new share buyback was announced. The company appears committed to balancing shareholder returns with funds needed for business integration and growth investments.

Mitsui Chemicals left its full-year forecast unchanged, targeting revenue of ¥1,900.0 billion (up 13.9% year on year), core operating profit of ¥105.0 billion (up 5.0%), operating profit of ¥83.0 billion (up 12.5%), and net income of ¥45.0 billion (up 30.9%).

For the first time, the company disclosed a first-half (April-September) forecast: revenue ¥957.0 billion, core operating profit ¥76.0 billion, operating profit ¥66.0 billion, and net income ¥34.0 billion.

Foreign exchange assumptions are ¥160 per dollar and domestic naphtha at ¥104,500 per kiloliter. The company anticipates sustaining the strong Q1 momentum and maintaining an upward profit trajectory for the full year.

Key risks highlighted in the earnings report include:

• Middle East instability: Ongoing tensions (e.g., Iran) could continue to disrupt energy supply and international logistics, also weighing on naphtha cracker utilization.
• U.S. trade policy impact: Risks of weakening demand or a slow recovery in certain regions.
• Raw material price volatility: While rising naphtha prices currently boost inventory valuation, a sudden drop could reverse the effect.
• Currency fluctuations: A weak yen improves trading conditions but raises import costs.
• Intensifying competition: Persistent structural oversupply in basic chemicals may cap sales volume growth.

Given these external factors, the company plans to strengthen its earnings structure through business restructuring and a shift toward higher-value-added products.

On July 1, 2026, Mitsui Chemicals and Sumitomo Chemical launched their joint venture, "Mitsui Chemicals & Sumitomo Chemical Polyolefin," to integrate their domestic polypropylene (PP) businesses.

The move, under discussion since 2024, consolidates Mitsui Chemical Polypro (a subsidiary of Mitsui Chemicals) with Sumitomo Chemical's PP operations. The venture is owned 51% by Mitsui Chemicals and 49% by Sumitomo Chemical.

Aimed at boosting competitiveness amid domestic overcapacity, the integration is expected to yield annual rationalization benefits of over 200,000 tonnes, optimize production, and accelerate development of high-performance and environmentally friendly products. Although not yet reflected in Q1 financials, the venture is expected to contribute to future profit improvement.