Yamato Kogyo Q1 FY2027: Ordinary Profit Doubles, Full-Year Outlook Raised

Revenue came in at ¥39.2 billion, essentially unchanged year on year. However, Yamato Kogyo swung to an operating loss of ¥446 million (versus a ¥1,115 million profit a year earlier), weighed by a weak Japanese steel performance and a two-month shutdown for equipment renewal at its Yamato Steel unit. Ordinary profit surged 112.3% to ¥22.2 billion, lifted by a sharp jump in equity-method income from its US affiliate, Nucor-Yamato Steel Company (NYS). Net profit attributable to parent shareholders climbed 107.9% to ¥12.3 billion. The quarter included a special loss of ¥3.2 billion for the early repayment of a receivable related to the sale of its Middle East stake. The US business now drives the majority of earnings. Reflecting the strong equity income, management raised its full-year forecast: ordinary profit is now seen at ¥87.0 billion (up ¥19.0 billion from the previous guidance), net profit at ¥57.5 billion (up ¥10.5 billion), and revenue at ¥178.0 billion (up ¥12.0 billion). The operating profit forecast was cut to ¥3.2 billion (down ¥1.3 billion) due to the weak domestic business.

Yamato Kogyo’s business lines delivered mixed results.

Steel (Japan) revenue fell ¥450 million to ¥9.2 billion, and the segment posted an operating loss of ¥1.9 billion (vs a ¥897 million profit a year ago). Sluggish construction demand, higher ferrous scrap costs from a weaker yen, and the two-month rolling mill upgrade shutdown at Yamato Steel dragged performance.

Steel (Thailand) turned in a strong quarter. Siam Yamato Steel (SYS) capitalized on recovering domestic demand for structural steel and the imposition of anti-dumping duties of 30.86%–54.19% on Chinese imports. Revenue rose to ¥20.3 billion (up ¥3.6 billion) and operating profit jumped to ¥2.2 billion (up ¥1.6 billion).

Steel (Indonesia): Subsidiary Garuda Yamato Steel (GYS) saw a modest volume uptick from resumed private projects, but falling prices under pressure from Chinese and domestic competition limited gains. Revenue grew to ¥6.6 billion (up ¥890 million), but operating profit slid to ¥84 million (down ¥132 million), partly due to goodwill amortization.

Railway Track Products delivered steady results with revenue of ¥2.1 billion and operating profit of ¥179 million. Other (counterweight manufacturing, logistics) contributed ¥1.0 billion in revenue and ¥26 million in operating profit.

Separately, equity-method companies made an outsized contribution. US affiliate NYS posted dramatically higher earnings, benefiting from data center construction demand that lifted volumes and steel margins. Vietnam’s PY VINA and South Korea’s YKS were roughly flat but remained profitable. Total equity-method investment income surged ¥13.2 billion to ¥20.6 billion, playing a decisive role in the ordinary profit jump.

Yamato Kogyo maintained a fortress balance sheet with total assets of ¥646.7 billion at quarter-end, up ¥13.2 billion from the previous fiscal year-end. Cash and equivalents swelled to ¥155.1 billion, up ¥79.7 billion, after operating cash flow of ¥37.4 billion, boosted by distributions from equity-method affiliates, and investing cash flow of ¥50.9 billion from the withdrawal of time deposits. Total liabilities stood at ¥60.1 billion. Net assets were ¥586.6 billion, with a high equity ratio of 84.6%. The company plans an annual dividend of ¥400 per share (interim ¥200, year-end ¥200), unchanged from the prior year. No share repurchase was announced. The cash-rich position leaves ample room for future growth investments or increased shareholder returns.

Key risks flagged by management include:

• Chinese steel imports: Cheap Chinese steel continues to flood ASEAN markets, intensifying price competition in Thailand and Indonesia. While anti-dumping duties in Thailand have provided some relief, Chinese products outside the tariff scope remain a threat.
• Domestic earnings slump: In Japan, prolonged weak construction demand, high ferrous scrap prices, and rising energy costs are hammering Yamato Steel. Passing through cost increases will take time, and the shutdown related to equipment upgrades added pressure.
• Foreign exchange: A large share of overseas profits and equity-method income is sensitive to yen fluctuations. The current weak yen has been a tailwind, but a sudden appreciation could erode earnings.
• US political and economic landscape: NYS is performing well, but policy uncertainty around the midterm elections persists. The assumption of high tariffs is baked in, but any policy change would be a risk.
• Middle East receivable: While the company booked a special loss on the early repayment of the SULB stake sale receivable, it aims to collect the remaining $90 million in the current fiscal year. Recovery prospects and geopolitical risks remain in focus.

Yamato Kogyo revised its full-year forecasts upward, as detailed below. The upgrade primarily reflects stronger-than-expected results from Thailand’s SYS and continued strength at the US affiliate NYS. The domestic operating profit forecast was cut, acknowledging the Yamato Steel headwinds. Management set a forex assumption of ¥155.30 per US dollar, weaker than the previous ¥147.87.

Strategically, the early recovery of Middle East funds is a highlight. Foulath has indicated an intention for early repayment, and Yamato Kogyo plans to collect the remaining $90 million in one lump sum during the fiscal year, improving capital efficiency despite the special loss already booked. Additionally, strengthening cooperation with JFE Steel in H-beam operations is cited as a measure to shore up the domestic business.