Denka Company (4061) Q1 2026 earnings summary

Executive summary

• Net sales for 1Q FY2025 were 94.1 billion yen, down 1.2% year-on-year, mainly due to sales price adjustments and a stronger yen, despite increased sales in electronics and innovative products.

• Operating income declined 51.2% year-on-year to 2.3 billion yen, mainly due to inventory write-downs on chloroprene rubber.

• Net income attributable to owners of parent rose 122.2% year-on-year to 5.0 billion yen, driven by an 8.2 billion yen gain on the sale of land for the Ofuna Plant, offsetting DPE-related losses.

• Dividend forecast remains at 100 yen per share, with a total return ratio of 57%.

Financial highlights

• Operating margin decreased to 2.4% from 5.0% year-over-year.

• Ordinary income dropped to 1.7 billion yen from 3.6 billion yen year-over-year.

• Gross profit for the quarter was 20.2 billion yen, down from 22.2 billion yen year-on-year.

• Comprehensive income dropped sharply to 804 million yen from 8.4 billion yen year-on-year.

• Full-year operating income and net income forecasts remain unchanged at 25.0 billion yen and 15.0 billion yen, respectively.

Outlook and guidance

• Full-year net sales forecast remains at 410.0 billion yen, with net income projected at 25.0 billion yen, unchanged from previous guidance.

• Full-year operating income is projected at 25.0 billion yen, with a V-shaped recovery expected, including a 9.0 billion yen positive impact from fundamental measures in the chloroprene rubber business.

• Extraordinary losses from DPE are expected to be compensated by gains from asset sales.

• Dividend policy aims to maintain or increase dividends, targeting a 50% total return ratio over the management plan period.