Nippon Sanso (4091) Q2 2025 earnings summary

Executive summary

• Revenue for 1H FYE2025 rose 5.0% year-over-year to ¥643.0bn, with core operating income up 14.5% to ¥93.4bn; net income was flat at ¥50.7bn, supported by cost pass-through and productivity initiatives despite geopolitical and currency headwinds.

• Q2 FYE2025 revenue increased 3.3% year-over-year to ¥313.7bn, with core operating income up 10.4% to ¥45.1bn, but net income declined 15.3% to ¥21.0bn due to non-recurring losses and higher finance costs.

• Foreign exchange movements, especially JPY depreciation, favorably impacted revenue and core operating income by ¥27.9bn and ¥4.3bn, respectively.

• Price management remained solid, but volume/mix was soft, especially in Japan and the US.

Financial highlights

• Q2 core operating income margin improved to 14.4% from 13.5% year-over-year; EBITDA margin rose to 23.4%.

• Gross operating profit increased to ¥270,182 million from ¥247,985 million year-over-year.

• Non-recurring losses of ¥10.6bn in Q2, mainly from impairment on a US hydrogen project and business liquidation in Asia & Oceania.

• Free cash flow for 1H was ¥32.2bn, nearly flat year-over-year.

• Adjusted net D/E ratio at 0.71, with net interest-bearing liabilities at ¥782.5bn.

Outlook and guidance

• Full-year FYE2025 revenue forecast at ¥1,300.0bn (+3.6% YoY), core operating income at ¥177.0bn (+6.6%), and net income at ¥108.0bn (-1.2%).

• Core operating income margin expected at 13.6%, EBITDA margin at 22.4%.

• Annual dividend forecast at ¥48.00 per share.