Nagase (8012) Q2 2027 earnings summary

Executive summary

• H1 sales reached a record ¥572.6bn, up 19.4% YoY, and every profit measure hit a record; parent-attributable profit rose 116.7% to ¥32.7bn.

• Gross profit margin improved 0.9 percentage points YoY to 19.8%, while operating income ratio rose 2.0 points to 6.3%.

• Full-year operating income guidance rose from ¥45.0bn to ¥58.5bn, supported by semiconductor demand, Middle East-driven market prices and Prinova performance.

Financial highlights

• H1 gross profit was ¥113.5bn, up 24.8% YoY; operating income was ¥36.3bn, up 72.4%, and ordinary income was ¥36.4bn, up 75.6%.

• Profit before income taxes rose 104.0% to ¥43.3bn; comprehensive income increased to ¥44.1bn from ¥12.8bn.

• Strategic investment securities sales generated a ¥4.9bn gain; lower retirement benefit expenses also supported earnings.

• Foreign exchange contributed ¥5.4bn to gross profit and ¥1.9bn to operating income; lower retirement benefit expenses added ¥2.2bn to profit.

Outlook and guidance

• Full-year forecast: sales ¥1,085.1bn, gross profit ¥215.0bn, operating income ¥58.5bn, ordinary income ¥58.0bn and parent-attributable profit ¥48.0bn.

• Forecast ROE is 10.8%, EPS ¥118.23 and operating margin 5.4%; operating income excluding actuarial gains and losses is forecast at ¥54.4bn.

• Forecast FX assumptions are ¥157.2 per US dollar and ¥23.4 per RMB.

• H2 SG&A is expected to rise versus H1 due to relocation, personnel and R&D costs; Materials and Life Sciences income is expected below H1 levels, while Electronics is expected to remain strong.

• Full-year results are expected to exceed medium-term plan KGI targets; targets are slated for revision in May 2027.