Denka Company (4061) Q2 2026 earnings summary

Executive summary

• Operating income for 1H FY2025 was ¥9.74 billion, up 3.8% year-over-year and exceeding the initial forecast by ¥2.7 billion, driven by strong demand in Electronics & Innovative Products and offset by DPE-related extraordinary losses and gains.

• Net income for 1H FY2025 was ¥3.9 billion, up 15.7% year-over-year, aided by a gain on factory land transfer and a +¥8.6 billion impact from fundamental measures in the chloroprene rubber business.

• Extraordinary losses of ¥8.4 billion were recorded due to the DPE plant suspension, largely offset by an ¥8.2 billion gain on the sale of land.

• Net sales for 1H FY2025 were ¥196.7 billion, down 1.2% year-over-year, mainly due to price adjustments and a stronger yen, despite higher sales volumes in electronics.

• Ordinary income rose to ¥6.8 billion, up 21.8% year-over-year.

Financial highlights

• Gross profit for the period was ¥44.7 billion, with a gross margin improvement due to cost reductions.

• Basic earnings per share increased to ¥45.28 from ¥39.14 year-over-year.

• Comprehensive income turned negative at ¥(1,336) million, mainly due to foreign currency translation losses.

• Cash and cash equivalents at period end were ¥28,943 million, down from ¥37,002 million at the previous fiscal year-end.

• Operating margin improved to 5.0% from 4.7% year-over-year.

Outlook and guidance

• Full-year FY2025 operating income forecast remains at ¥25.0 billion, with net income forecast at ¥15.0 billion and basic EPS of ¥174.06.

• Full-year net sales forecast revised downward to ¥400,000 million, mainly due to lower expectations in the Polymer Solutions Division.

• Extraordinary losses from DPE are expected to continue in 2H, but further extraordinary gains (e.g., asset sales) are planned to offset these.

• Dividend forecast is unchanged at ¥100 per share, with a total return ratio of 57%.

• Mission 2030 Phase 2 (FY2026–FY2028) targets ROE of 8% or higher and record-high operating income over ¥40 billion.