Nippon Yakin Q2 FY2027: Operating profit jumps 64%, outlook raised

Nippon Yakin posted higher revenue and profit in April-September 2026. Revenue rose 12.3% year on year to ¥85.042 billion, operating profit climbed 64.5% to ¥9.706 billion, and net income attributable to owners of the parent increased 52.2% to ¥5.516 billion. Ordinary profit gained 65.1% to ¥8.680 billion.

An improvement in inventory valuation gains and losses was a major contributor to the increase in operating profit. Excluding inventory valuation effects, operating profit rose by just ¥100 million year on year, as higher raw-material costs offset better selling prices. The chart below shows the profit drivers in rounded figures, in units of ¥100 million, from the earnings release's supplementary information.

Recovery in demand from semiconductor manufacturing equipment and data centers, alongside higher sales volumes and selling prices, supported revenue. Nippon Yakin plans to continue promoting high-performance materials and reducing costs, but investors should track earnings excluding inventory valuation gains rather than treating the headline profit growth as a like-for-like improvement in core profitability.

Nippon Yakin operates a single business segment covering stainless steel sheets and processed products, so its earnings release does not break out revenue or profit by segment. Sales data by business line showed growth in high-performance materials, while sales volumes of general materials declined.

High-performance materials sales volume rose 8.4% year on year. Demand was firm for press plates used in printed circuit board manufacturing and welded bellows used in vacuum components for semiconductor manufacturing equipment. Nippon Yakin also secured a large project in the oil and gas sector. The results highlight the role of this strategic business line in driving growth.

General materials sales volume fell 2.4% year on year. Underlying demand, particularly from semiconductor-related customers, remained resilient, but demand for durable consumer goods in Europe and the U.S. stagnated amid inventory adjustments. Investors will be watching for a recovery in general materials demand and whether high-performance materials can continue to support overall sales.

Total assets at the end of the interim period were ¥233.850 billion, up ¥14.439 billion from the previous fiscal year-end. The equity ratio fell 1.0 percentage point to 45.1%. Nippon Yakin expects to increase its annual dividend by ¥45 from the previous year's actual payout.

One major factor behind the decline in operating cash flow was an increase in inventories. The cash-flow impact from changes in inventories swung from a positive ¥251 million in the year-earlier period to a negative ¥11.738 billion. Investing cash flow was negative due in part to purchases of tangible and intangible fixed assets, while financing cash flow was positive ¥2.001 billion, supported by proceeds from long-term borrowings and other items.

The interim dividend was ¥110, unchanged from a year earlier, and the company forecasts a year-end dividend of ¥155. Cash outlays for share repurchases were just ¥6 million, and the earnings release did not announce a large buyback. Investors will need to weigh the planned dividend increase and business investment against the cash tied up in higher inventories.

Nippon Yakin revised its consolidated forecast for FY2027 to revenue of ¥177.0 billion, operating profit of ¥18.5 billion and net income attributable to owners of the parent of ¥10.5 billion. The earnings release did not provide the previous forecast figures, so a direct comparison is not possible, but the revision was upward.

Previous-year actuals are approximate figures inferred from the year-on-year rates in the earnings release. Because those rates are rounded, the estimates may not match the reported actuals. Nippon Yakin sees a favorable order environment for high-performance materials, supported by expanding semiconductor-related demand and large oil and gas projects.

The full-year forecast assumes a second-half exchange rate of ¥155 to the U.S. dollar and a nickel price of $7.0 per pound. Uncertainty remains over energy prices amid Middle East tensions and currency movements. The company also said it is difficult to assess the impact of antidumping duties on a recovery in domestic demand for Japanese-made products, and that it will continue to monitor developments.

Orders remain firm, particularly for high-performance materials, but resource prices, foreign exchange and regional demand trends remain uncertain. Maintaining selling prices and containing cost increases will be important to meeting the full-year forecast.

• Energy prices and Middle East tensions: Escalating tensions in the Middle East could drive energy-price volatility, pressuring profits through higher manufacturing and logistics costs.
• Foreign exchange movements: The yen remains weak, but exchange rates could fluctuate as policy interest rates are reviewed, among other factors. The full-year forecast assumes ¥155 to the U.S. dollar in the second half, and any deviation could affect results.
• Nickel prices and raw-material costs: Nickel prices in the interim period were higher than a year earlier. If selling-price increases do not keep pace with raw-material costs, improvement in earnings excluding inventory valuation gains could be delayed.
• Uneven regional demand: Semiconductor-related and oil and gas demand is favorable, while demand for durable consumer goods in Europe and the U.S. has stagnated amid inventory adjustments. Weakness in specific markets could also weigh on growth in high-performance materials.
• Impact and uncertainty of tariffs: An ordinance imposing antidumping duties on some imported materials has been promulgated, but the effect on demand for domestic products remains unclear. Nippon Yakin said it will continue to monitor developments.