Komori
Earnings presentation4061Denka Company LimitedMaterials and Chemicals

Presentation Materials for the Second-Quarter Financial Results Briefing for the Fiscal Year Ending March 2027

Profit increased substantially in the first half, driven by growing demand from AI-related and electric power infrastructure applications, the effect of the DPE operating suspension, and inventory effects. Accordingly, the full-year operating profit forecast was raised from the initial forecast of ¥30 billion to ¥37 billion, while plans for some businesses, including Life Innovation, were revised downward.

Worth reading
80Important
0–100. This measures how worthwhile something is to read, not how good or bad the company is.
Direction
Mixed performance
Direction inferred from the company’s description.
Scale
70
¥100 million (increase from the initial full-year operating profit forecast)
Wording
Conditional
How definitive the wording is.

Contents of this document

Earnings presentationSecond quarter of the fiscal year ending March 202713 items taken from the company’s own explanation
Financial Results Figures (The key points of this material are explained below)
Net Sales2,087 Hundred million yen+6.1%
Operating profit247 Hundred million yen+154.6%
Ordinary income212 Hundred million yen+211.8%
Net income69 Hundred million yen+76.9%
Operating profit margin11.8
Results for the three months of the current quarter
Net Sales
1,117 Hundred million yen
Operating profit
137 Hundred million yen
Operating income by segment
Electronics & Advanced Products47
Life Innovation19
Elastomers & Infrastructure Solutions29
Polymer Solutions36
Other and eliminations6
Full-year earnings forecast
Net Sales
4,250 Hundred million yen
Operating profit
370 Hundred million yen
Ordinary income
260 Hundred million yen
Net income
160 Hundred million yen
Operating profit margin
8.7 %
Annual Dividend
¥100 /share
What the company explained in this material
Self-assessment against the planThe company's self-assessment against its own plan.
Raised from the initial forecast
Breakdown of Factors Affecting the ChangeReasons cited by the Company for the change in the figures.
  • Volume variance-27 Hundred million yen
  • Selling price variance212 Hundred million yen
  • Variable cost variance-160 Hundred million yen
  • Inventory impact81 Hundred million yen
  • Fixed-cost variance-18 Hundred million yen
  • Effect of suspending DPE operations62 Hundred million yen
Assumptions Underlying the Business OutlookThe assumptions used by the company in preparing its forecast.
  • Exchange rate¥159.2 /US$
  • Domestic naphtha¥98,400 /K liter
  • Global demand for chloroprene rubber23 10,000 tonnes
New initiatives
  • Considering doubling Snecton's capacity and an additional investment of approximately ¥1 billion
  • Plan to establish Node Chemical Co., Ltd., a sales agency for the styrene-related business, in April 2027
  • Node Chemical is scheduled to assume the manufacturing and sales divisions for styrene monomer, functional resins and sheets in April 2028
  • From July 2028 onward, the functional resin manufacturing and sales business of DSPL is scheduled to be transferred to a new Singaporean company
Key KPIsA metric the company considers important as a management benchmark.
  • Snecton revenue target (fiscal year 2028)¥200 100 million or more
  • Revenue ratio from AI-related and electric power infrastructure applications (Electronics and Advanced Products, current forecast)25 %
  • Net debt-to-equity ratio0.69 x
  • ROIC5.6 %
  • ROE5.1 %
Segment results
  • Electronics & Advanced Products
    Net Sales561 Hundred million yen
    Year-on-year change in revenue60 Hundred million yen
    Operating profit83 Hundred million yen
    Operating profit year on year20 Hundred million yen
  • Life Innovation
    Net Sales198 Hundred million yen
    Year-on-year change in revenue-17 Hundred million yen
    Operating profit22 Hundred million yen
    Operating profit year on year-17 Hundred million yen
  • Elastomers & Infrastructure Solutions
    Net Sales481 Hundred million yen
    Year-on-year change in revenue-17 Hundred million yen
    Operating profit57 Hundred million yen
    Operating profit year on year91 Hundred million yen
  • Polymer Solutions
    Net Sales767 Hundred million yen
    Year-on-year change in revenue113 Hundred million yen
    Operating profit72 Hundred million yen
    Operating profit year on year57 Hundred million yen
  • Other and eliminations
    Net Sales79 Hundred million yen
    Year-on-year change in revenue-19 Hundred million yen
    Operating profit13 Hundred million yen
    Operating profit year on year-2 Hundred million yen
Medium-term management plan targets
Plan nameMission2030 Phase 2
Target fiscal yearFY2028
Operating profit
450 Hundred million yen
ROE
8 %
Comparison with actual resultsNo change to the fiscal 2028 plan
Financial targets
ROE
Target value8 %
Current estimate/actual5.1 %
ROIC
Current estimate/actual5.6 %
Net debt-to-equity ratio
Current estimate/actual0.69 x
DOE
Current estimate/actual2.7 %
Risk amount incorporated into the outlookThe amount representing the range of variation the company expects in its forecast.
  • -30 Hundred million yen
    DetailsProduction cuts for acetylene black due to the impact of the situation in the Middle East
  • -25 Hundred million yen
    DetailsFactors expected to reduce profit under the current plan, including the impact on acetylene black and other products in Electronics and Advanced Products
Number of employees
DPE employees: approximately 250 (end-March 2025) → approximately 140 (end-December 2025) → approximately 70 (end-October 2026) → slightly more than 40 planned from January 2027 onward
Capital expenditures
¥470 100 million capital expenditures, investments and loans, current full-year forecast
Annual Dividend
Annual dividend per share¥100 /share
Interim¥50 /share
End of period¥50 /share
Payout ratio
54
Contents of this document
ItemDetails
Document typeEarnings presentation
Fiscal Period CoveredSecond quarter of the fiscal year ending March 2027
Net Sales2,087 Hundred million yen (YoY +6.1%)
Operating profit247 Hundred million yen (YoY +154.6%)
Ordinary income212 Hundred million yen (YoY +211.8%)
Net income69 Hundred million yen (YoY +76.9%)
Operating profit margin11.8
Results for the three months of the current quarterNet Sales 1,117 Hundred million yen / Operating profit 137 Hundred million yen / Operating income by segment Electronics & Advanced Products 47 / Life Innovation 19 / Elastomers & Infrastructure Solutions 29 / Polymer Solutions 36 / Other and eliminations 6
Full-year earnings forecastNet Sales 4,250 Hundred million yen / Operating profit 370 Hundred million yen / Ordinary income 260 Hundred million yen / Net income 160 Hundred million yen / Operating profit margin 8.7 % / Annual Dividend ¥100 /share
Self-assessment against the planRaised from the initial forecast
Segment resultsSegment Electronics & Advanced Products / Net Sales 561 Hundred million yen / Year-on-year change in revenue 60 Hundred million yen / Operating profit 83 Hundred million yen / Operating profit year on year 20 Hundred million yen, Segment Life Innovation / Net Sales 198 Hundred million yen / Year-on-year change in revenue -17 Hundred million yen / Operating profit 22 Hundred million yen / Operating profit year on year -17 Hundred million yen, Segment Elastomers & Infrastructure Solutions / Net Sales 481 Hundred million yen / Year-on-year change in revenue -17 Hundred million yen / Operating profit 57 Hundred million yen / Operating profit year on year 91 Hundred million yen, Segment Polymer Solutions / Net Sales 767 Hundred million yen / Year-on-year change in revenue 113 Hundred million yen / Operating profit 72 Hundred million yen / Operating profit year on year 57 Hundred million yen, Segment Other and eliminations / Net Sales 79 Hundred million yen / Year-on-year change in revenue -19 Hundred million yen / Operating profit 13 Hundred million yen / Operating profit year on year -2 Hundred million yen
Breakdown of Factors Affecting the ChangeFactors Volume variance / Amount -27 Hundred million yen, Factors Selling price variance / Amount 212 Hundred million yen, Factors Variable cost variance / Amount -160 Hundred million yen, Factors Inventory impact / Amount 81 Hundred million yen, Factors Fixed-cost variance / Amount -18 Hundred million yen, Factors Effect of suspending DPE operations / Amount 62 Hundred million yen
Key KPIsIndicator name Snecton revenue target (fiscal year 2028) / Value ¥200 100 million or more / Year on year against the same period last year Not disclosed, Indicator name Revenue ratio from AI-related and electric power infrastructure applications (Electronics and Advanced Products, current forecast) / Value 25 % / Year on year against the same period last year Not disclosed, Indicator name Net debt-to-equity ratio / Value 0.69 x / Year on year against the same period last year Not disclosed, Indicator name ROIC / Value 5.6 % / Year on year against the same period last year Not disclosed, Indicator name ROE / Value 5.1 % / Year on year against the same period last year Not disclosed
Number of employeesDPE employees: approximately 250 (end-March 2025) → approximately 140 (end-December 2025) → approximately 70 (end-October 2026) → slightly more than 40 planned from January 2027 onward
Assumptions Underlying the Business OutlookItem Exchange rate / Value ¥159.2 /US$, Item Domestic naphtha / Value ¥98,400 /K liter, Item Global demand for chloroprene rubber / Value 23 10,000 tonnes
Risk amount incorporated into the outlookAmount -30 Hundred million yen / Details Production cuts for acetylene black due to the impact of the situation in the Middle East, Amount -25 Hundred million yen / Details Factors expected to reduce profit under the current plan, including the impact on acetylene black and other products in Electronics and Advanced Products
Medium-term management plan targetsPlan name Mission2030 Phase 2 / Target fiscal year FY2028 / Operating profit 450 Hundred million yen / ROE 8 % / Comparison with actual results No change to the fiscal 2028 plan
Financial targetsROE Target value 8 % / Current estimate/actual 5.1 % / ROIC Current estimate/actual 5.6 % / Net debt-to-equity ratio Current estimate/actual 0.69 x / DOE Current estimate/actual 2.7 %
Annual DividendAnnual dividend per share ¥100 /share / Interim ¥50 /share / End of period ¥50 /share
Payout ratio54
Capital expenditures¥470 100 million (capital expenditures, investments and loans, current full-year forecast)
New initiativesConsidering doubling Snecton's capacity and an additional investment of approximately ¥1 billion, Plan to establish Node Chemical Co., Ltd., a sales agency for the styrene-related business, in April 2027, Node Chemical is scheduled to assume the manufacturing and sales divisions for styrene monomer, functional resins and sheets in April 2028, From July 2028 onward, the functional resin manufacturing and sales business of DSPL is scheduled to be transferred to a new Singaporean company
Items this document does not state (9)
Gross Profit MarginSelling, general and administrative expensesProgress against full-year forecastUnit price and quantity metricsNumber of stores and locationsAcquisition of treasury sharesOrders received and order backlogMarket Size / ShareKey points of the Q&A

These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.

The reasons the company gives

The company's own explanation, not something inferred from the numbers.

Higher sales of products for AI-related and electric power infrastructure applications, the effect of the DPE operating suspension, and positive inventory effects boosted performance. Meanwhile, sales volumes of rapid antigen diagnostic kits declined as adjustments to in-market inventories from shipments in the previous fiscal year took longer than expected.

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