Nippon Yakin: Lifts FY2027 operating profit forecast to ¥18.5bn

Nippon Yakin raised its forecasts for sales, operating profit, ordinary profit and net profit. All revised profit forecasts are also expected to exceed the previous year's results.

The operating profit forecast is 15.6% higher than the previous estimate, while the net profit forecast is up 16.7%. Forecast earnings per share rose to ¥757.51 from ¥649.65, above the previous-year result of ¥519.86.

The upward revision reflects a favorable order environment, particularly in semiconductor-related products and oil and gas. The increased inventory valuation gain also contributes to the operating profit forecast revision.

• Demand outlook: Nippon Yakin expects demand for high-performance materials to grow in semiconductor-related markets and sees progress on large-scale oil and gas projects. Actual demand for general stainless steel products is also expected to remain firm, led by semiconductor-related applications.
• Volume and pricing: Full-year sales volume of high-performance materials is forecast at 65,000 tonnes, down from the previous estimate of 67,000 tonnes, while the unit price is expected to rise to ¥1,370/kg from ¥1,263/kg. For general materials, the sales volume forecast increased to 122,000 tonnes from 117,000 tonnes, while the unit price remained unchanged at ¥544/kg.
• Inventory valuation gains: Of the ¥18.5 billion operating profit forecast, inventory valuation gains are expected to contribute ¥7.1 billion. Operating profit excluding inventory valuation gains is forecast at ¥11.4 billion, below the previous estimate of ¥12.4 billion.
• Cost factors: Among the factors affecting operating profit excluding inventory valuation gains, selling prices are expected to contribute ¥6.9 billion, while costs including raw materials are forecast to have a negative impact of ¥8.2 billion.

Inventory valuation gains contribute to the higher profit forecast, while operating profit excluding inventory valuation gains is expected to fall short of the previous estimate. Actual results will depend not only on demand and improved selling prices, but also on raw material costs and inventory valuation trends.

Nippon Yakin raised its annual dividend forecast for the year ending March 2027 to ¥265 from ¥220. The year-end dividend is now forecast at ¥155, up from ¥110, putting the full-year payout above the previous year's ¥220.

Nippon Yakin says it will maintain stable dividends while strengthening its financial position, taking into account business investment needs and its earnings outlook. The increase reflects the upgraded earnings forecast. The improved outlook is being passed on to shareholders through dividends.

Nippon Yakin based its revised forecasts on an exchange rate of ¥155 to the dollar and a nickel price of $7.0 per pound. The company said its projections are based on information available as of the announcement date and actual results may differ because of future developments.

The forecast upgrade and dividend increase are positive for shareholders, but operating profit excluding inventory valuation gains is below the previous estimate. To assess the durability of earnings, investors will need to watch demand in semiconductor and energy markets as well as changes in raw material costs and inventory valuations.