Nippon Yakin Q1 FY2027: Operating profit up 45%, full-year forecast raised

Revenue rose 7.8% year on year to ¥42.2 billion. Operating profit jumped 44.5% to ¥4.7 billion (¥4,701 million), while ordinary profit increased 49.2% to ¥4.4 billion. Net income attributable to owners of the parent climbed 39.2% to ¥2.77 billion.

The main drivers were a 6.8% increase in shipments of high-performance materials, fueled by a recovery in the semiconductor market, and a ¥1.6 billion inventory valuation gain as nickel prices rose. A year earlier, the company had recorded a ¥1.3 billion valuation loss. Excluding the inventory effect, real operating profit actually fell to ¥3.1 billion from ¥4.5 billion, underscoring the burden of higher raw material and other costs.

In response to the strong start, Nippon Yakin raised its first-half forecast and, by carrying forward the upside, lifted full-year operating profit guidance to ¥16.0 billion, a 45.8% increase from the prior year. While assumptions for nickel prices and exchange rates remain uncertain, the solid first quarter provides momentum toward the annual target.

Nippon Yakin operates a single stainless steel plate and processing segment, but breaks out high-performance and general-purpose materials. In the first quarter, high-performance materials led the way, with shipments rising 6.8% to 16,000 tonnes, while general-purpose material volumes edged up 0.3% to 29,000 tonnes.

High-performance materials benefited from robust semiconductor investment, with steady demand for press plates used in printed circuit board (PCB) manufacturing, as well as stable oil and gas applications. The average selling price rose ¥41 to ¥1,281 per kg, and estimated revenue reached roughly ¥20.5 billion, about half of the total.

General-purpose materials saw volumes almost flat, but the unit price improved ¥35 to ¥540 per kg, with estimated revenue of approximately ¥15.7 billion. However, softening demand for consumer durables in Europe and the U.S. capped volume growth.

An analysis of operating profit movements (excluding inventory valuation) showed that volume gains and price pass-through added a combined ¥1.6 billion, but this was more than offset by a ¥2.4 billion increase in raw material and other costs and a ¥0.6 billion drag from affiliates, leaving real operating profit down from a year earlier.

Total assets at the quarter end stood at ¥227.9 billion, up ¥8.4 billion from the previous year-end, largely due to a ¥5.8 billion increase in inventories (mainly raw materials and work-in-progress) reflecting higher nickel prices. Net assets were ¥102.9 billion, with an equity ratio of 45.0% (down from 46.1% at year-end), a still-healthy level. Interest-bearing debt totaled ¥79.4 billion, with short-term borrowings rising to ¥40.3 billion.

No quarterly cash flow statement was prepared, though depreciation rose to ¥1,647 million from ¥1,598 million a year earlier. The company maintained its annual dividend plan of ¥220 per share (¥110 interim, ¥110 year-end), unchanged from the prior year, and announced no new share buyback or capital policy measures.

Key risks for Nippon Yakin include energy price volatility stemming from Middle East uncertainty and wild swings in its main raw material, nickel. The full-year forecast assumes an exchange rate of ¥155/US$ and a nickel price of 7.5 US$/LB, but actual rates in Q1 were ¥159.49 and $8.24/lb. Any deterioration in these assumptions could quickly reverse inventory gains or erode margins.

On the demand side, semiconductor and oil and gas markets remain firm, but the decline in consumer durable goods bound for Europe and the U.S. continues to drag on general-purpose materials. The drop in real operating profit (ex-inventory impact) shows that cost increases have not been fully passed on to customers, making manufacturing process improvements an urgent priority. Rising protectionism and volatile stainless steel market conditions also warrant close attention.

Bolstered by the strong Q1, Nippon Yakin raised its first-half cumulative (April–September 2026) forecasts and carried the upside into the full year while leaving second-half projections unchanged. The H1 targets were lifted to revenue of ¥85.0 billion (+12.2% YoY), operating profit of ¥9.0 billion (+52.5%), ordinary profit of ¥8.0 billion (+52.2%), and net income of ¥4.5 billion (+24.1%).

For the full fiscal year ending March 2027, the company now sees revenue of ¥174.0 billion (+15.3%), operating profit of ¥16.0 billion (+45.8%), ordinary profit of ¥14.5 billion (+50.1%), and net income of ¥9.0 billion (+24.7%).

These figures assume ¥155/US$ and nickel at $7.50/lb. If market prices stay above those levels, further upside is possible, but the reverse is also true.