Denka Company (4061) Q1 2027 earnings summary

Executive summary

• Operating income for FY2026 1Q rose to ¥10,993 million, up 377.6% year-over-year, driven by strong semiconductor and power infrastructure demand, DPE production suspension effects, and positive inventory impacts.

• Net income was ¥2,843 million, down 43.2% year-over-year, mainly due to extraordinary losses related to DPE business liquidation and absence of prior year land sale gains.

• Significant profit growth was observed across most segments, especially in Polymer Solutions and Elastomers & Infrastructure Solutions.

• Ordinary profit increased 466.8% year-over-year to ¥9,475 million.

• Net sales rose 3.1% year-over-year to ¥96,977 million, driven by higher sales volumes in electronics and innovative products, price revisions, and yen depreciation.

Financial highlights

• Sales increased to ¥96,977 million from ¥94,100 million year-over-year.

• Operating margin improved to 11.3% from 2.4% year-over-year.

• Extraordinary losses in 1Q totaled -¥4,800 million, mainly from DPE-related costs.

• Gross profit improved to ¥28,975 million from ¥20,155 million year-over-year.

• Basic earnings per share dropped to ¥32.98 from ¥58.04 year-over-year.

Outlook and guidance

• 1H FY2026 operating income forecast revised up to ¥17,000 million (+41.7% vs initial), with net income forecast unchanged at ¥0 due to anticipated extraordinary loss.

• Full-year forecast remains at ¥30,000 million operating income and ¥16,000 million net income, pending review in 2Q due to uncertainties in the Middle East and raw material prices.

• Dividend forecast maintained at ¥100/share, targeting a total return ratio of 54%.