1. Q1 FY2026 Earnings Summary and Highlights

Hodogaya Chemical Co., Ltd. announced its consolidated financial results for the first quarter of fiscal year 2026 (April 1, 2026, to June 30, 2026). Driven by increased demand in core business segments and favorable impacts from pricing and foreign exchange rates, the company achieved significant growth in both revenue and profit. Net sales reached 12,808 million yen (+12.5% YoY) , and operating profit rose to 1,609 million yen (+63.4% YoY) . Ordinary profit reached 1,875 million yen (+50.5% YoY) , and quarterly net profit attributable to owners of the parent company hit 1,014 million yen (+64.9% YoY) , reflecting a substantial improvement in profitability.

Quarterly net profit per share also saw a significant increase, rising from 38.71 yen in the same period last year to 63.72 yen .

As shown in the slide above (Earnings Overview), the progress rate against the full-year earnings forecast is exceptionally high as of the first quarter. Specifically, the operating profit progress rate is 47.3% , the ordinary profit progress rate is 56.8% , and the progress rate for quarterly net profit attributable to owners of the parent is 78.0% , meaning the company has achieved a large portion of its full-year plan in the first quarter alone.

Despite this, the company has maintained its full-year earnings forecast (Net sales: 52,000 million yen; Operating profit: 3,400 million yen; Quarterly net profit: 1,300 million yen). This cautious stance is due to uncertainties such as fluctuations in raw material prices from the second quarter onward , concerns regarding supply chain impacts , and the expected occurrence of one-time expenses associated with corporate acquisitions for future growth. While maintaining a conservative outlook, the company has clearly demonstrated a very strong start to the fiscal year.

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2. Quantitative Analysis of Earnings Fluctuations (Net Sales and Operating Profit)

A detailed examination of the year-on-year changes in Q1 performance reveals a structure where increased sales volume and foreign exchange gains were the primary drivers of growth.

Net sales increased by 1,426 million yen year-on-year. Of this, the largest contribution came from a "sales increase" of +1,571 million yen , driven by higher sales of OLED materials, construction materials, and basic chemicals. Additionally, the depreciation of the yen—with the average US dollar rate moving from 143.77 yen to 160.74 yen and the Korean won from 0.1038 yen to 0.1064 yen—resulted in a "foreign exchange gain" of +218 million yen . While a "sales decrease" of 363 million yen occurred due to lower sales of pigment materials and specialty chemicals, the growth in other areas significantly offset this decline.

Operating profit also increased by 624 million yen (+63.4%) from 985 million yen in the same period last year to 1,609 million yen.

The graph above, which illustrates the factors behind the changes in operating profit, is essential for accurately understanding the profit structure of these results. The largest positive factor was the "sales volume change" of +1,006 million yen , resulting from increased volumes in OLED materials, construction materials, and basic chemicals. In addition, the "foreign exchange gain" of +86 million yen boosted profits.

Negative factors included a "cost of goods sold variance" of 122 million yen due to raw material costs, and a "SG&A expense variance" of 346 million yen associated with future investments and business expansion. Despite the upward pressure on SG&A and production costs, the dramatic growth in sales volume of high-value-added products, particularly OLED materials, more than absorbed these costs, resulting in an operating profit margin improvement of 3.9 percentage points, from 8.7% in the same period last year to 12.6% .

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3. Segment Analysis and Key Business Trends

Hodogaya Chemical's business is composed of five segments: Functional Pigments, Functional Resins, Basic Chemicals, Agroscience, and Logistics, plus others. The status of each segment in the first quarter is as follows:

(1) Functional Pigments: The Growth Engine Driven by OLED Materials

The Functional Pigments segment, a core pillar of Hodogaya Chemical's earnings, recorded significant growth with net sales of 6,763 million yen (+12.7% YoY) and operating profit of 1,328 million yen (+76.4% YoY) . This segment accounts for over 80% of the total segment operating profit.

As can be understood from the slide above (Performance Trends and Business Trends of Functional Pigments), the strong performance of this segment was driven by the OLED materials business . Despite ongoing competitive pressures among display manufacturers, the company achieved significant revenue growth due to increased shipments for new smartphone models .

Conversely, the pigment materials business saw a significant decline in revenue due to intensified competition in environmentally friendly dyes for aluminum coloring and a decrease in sales of existing products. The imaging materials business (materials for printers) maintained performance on par with the previous year due to steady demand. While there are mixed results across the business lines, the growth of high-margin OLED materials is strongly leading the overall expansion of performance.

(2) Functional Resins: Increased Demand for Urethane and Specialty Chemical Trends

Although the Functional Resins segment saw an increase in net sales to 1,970 million yen (+19.4% YoY) , operating profit was 123 million yen (compared to 112 million yen in the same period last year) , with the deficit widening slightly.

In terms of breakdown, the resin materials business (urethane raw materials such as PTG) saw a significant increase in revenue due to higher demand for urethane materials. Furthermore, the construction materials business achieved significant revenue growth in urethane waterproofing materials, driven by rising demand amid concerns over product supply in the market due to the situation in the Middle East.

However, in the specialty chemicals business , despite some demand growth for key products, the overall segment did not see a profit improvement because sales of products for stripping agents and pharmaceuticals—which saw concentrated shipments in Q1 of the previous year—declined.

(3) Basic Chemicals: Rising Demand for Hydrogen Peroxide Supporting the Semiconductor Industry

The Basic Chemicals segment recorded net sales of 1,990 million yen (+11.8% YoY) and operating profit of 212 million yen (+66.9% YoY) , showing a steady recovery and expansion.

Although sales of sodium percarbonate , used in laundry bleach, decreased, the increase in demand for hydrogen peroxide for semiconductor and pulp/paper applications contributed to significant revenue and profit growth. The expansion in demand for high-purity chemicals used in advanced semiconductor manufacturing processes is supporting solid performance.

(4) Agroscience & Logistics: Status of Stable Revenue Bases

• Agroscience Segment : Net sales of 1,562 million yen (+7.3% YoY) , operating profit of 87 million yen (30.4% YoY) . While revenue increased due to higher demand for new home gardening herbicide products, steady performance in railway applications, and increased sales of fungicides for golf courses, profit fell below the same period last year due to cost factors.
• Logistics Segment : Net sales of 481 million yen (+2.5% YoY) , operating profit of 115 million yen (+36.9% YoY) . In addition to steady cargo movement for domestic and import/export operations, the ISO tank container storage business remained strong, achieving steady profit growth.

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4. Financial Soundness and Cash Flow Analysis

In line with business expansion, Hodogaya Chemical's financial base and cash flow are progressing steadily.

Balance Sheet (B/S) Status

Total assets at the end of Q1 FY2026 were 90,222 million yen , an increase of 3,808 million yen from the end of the previous consolidated fiscal year (86,413 million yen). Cash and deposits increased to 10,540 million yen (+403 million yen).

Net assets reached 65,752 million yen (+2,139 million yen), with equity capital expanding to 54,267 million yen due to accumulated profits. The equity ratio is 60.1% (60.8% at the end of the previous fiscal year), maintaining a high level above 60% and ensuring a sound financial structure. Interest-bearing debt decreased to 9,025 million yen (216 million yen).

Cash Flow (C/F) Status

• Cash flow from operating activities : +1,912 million yen (+1,071 million yen YoY). Operating cash inflow expanded significantly from the same period last year due to the recording of 1,861 million yen in quarterly profit before income taxes and 729 million yen in depreciation.
• Cash flow from investing activities : 401 million yen (+24 million yen YoY). This included expenditures for the acquisition of fixed assets (1,160 million yen).
• Cash flow from financing activities : 256 million yen (+388 million yen YoY).

As a result, the balance of cash and cash equivalents at the end of the quarter was 9,367 million yen , an increase of 1,879 million yen from the end of the same period last year, securing ample liquidity.

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5. Conclusion and Future Outlook

Hodogaya Chemical's Q1 FY2026 results were strong, with both net sales and various profit metrics significantly exceeding the same period last year, primarily due to increased shipments of OLED materials for new smartphone models .

While the progress rate against the full-year earnings forecast is remarkable, reaching 78.0% for net profit, the company has maintained its earnings forecast in consideration of risks such as raw material price fluctuations and the potential for one-time expenses associated with future acquisitions. The focus moving forward will shift to the sustainability of OLED material demand in the second half, the improvement of profitability in the Functional Resins segment, and the progress and effects of currently anticipated strategic investments and M&A.