Nissan Chemical Corporation: Q1 FY2026 Earnings Deep Dive Report

Nissan Chemical Corporation (Ticker: 4021) delivered a robust performance in the first quarter of fiscal year 2026 (ending March 2027), with net sales, operating profit, and net income all reaching record highs for a first quarter by a significant margin.

This report provides a comprehensive analysis based on the company's disclosed financial materials. We delve into the overall earnings highlights, detailed performance by business segment, the outlook for semiconductor materials—a key driver of medium- to long-term growth—as well as the company's financial structure and shareholder return policies.

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1. Q1 FY2026 Consolidated Earnings Summary

In the first quarter of FY2026, consolidated results showed net sales of ¥78.8 billion (+¥8.9 billion / +13% YoY), operating profit of ¥21.9 billion (+¥3.8 billion / +21% YoY), ordinary profit of ¥23.6 billion (+¥5.5 billion / +30% YoY), and net income attributable to owners of the parent of ¥16.8 billion (+¥2.9 billion / +21% YoY).

Slide Commentary and Background of Results

The slide above summarizes the comparison between Q1 FY2026 results and the same period last year. The most critical takeaway is the clear expansion trend across the entire company. The operating profit margin reached 27.8% (+1.9 percentage points YoY), demonstrating the company's ability to maintain and improve its high profitability.

Furthermore, compared to the company's initial forecasts, results exceeded expectations by ¥9.7 billion (+14%) in net sales, ¥5.1 billion (+30%) in operating profit, and ¥3.0 billion (+22%) in net income. This outperformance was primarily driven by the rapid recovery of the semiconductor market, particularly in Asia, which boosted the Performance Materials segment, as well as front-loaded shipments in the Agricultural Chemicals segment and the impact of a weaker yen (Q1 actual exchange rate: ¥160/USD vs. forecast assumption: ¥150/USD).

Despite the significant Q1 beat, the company has decided to maintain the full-year and first-half forecasts announced in May 2026 . While this reflects a cautious stance toward uncertain external conditions, it underscores the extreme resilience of the company's current business foundation.

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2. Segment Analysis: Factors for Growth

A breakdown of the ¥3.8 billion YoY increase in operating profit reveals that all segments achieved positive growth compared to the same period last year:

• Performance Materials Segment : +¥2.5 billion increase. Driven strongly by expanded sales of semiconductor materials and inorganic colloids.
• Agricultural Chemicals Segment : +¥0.2 billion increase. Supported by rising demand for herbicides such as "Roundup" and "Belder," and the insecticide "Gracia."
• Chemicals Segment : +¥0.2 billion increase. Contributed by a recovery in demand for basic chemicals and the normalization of operations following plant issues.
• Healthcare Segment : +¥0.2 billion increase. Driven by higher sales of the hyperlipidemia treatment agent "Livalo" and the Fine Tech business.

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3. Deep Dive: Performance Materials and the Semiconductor Growth Story

The Performance Materials segment is positioned as the most critical pillar of the company's growth strategy. In Q1, this segment recorded impressive growth, with net sales of ¥32.6 billion (+26% YoY) and operating profit of ¥107 billion (+30% YoY) .

Growth of Key Products and Current Demand Trends

The slide above illustrates the year-on-year growth rates and performance relative to forecasts for key products in the Performance Materials segment. Of particular note is the 49% YoY increase in total semiconductor material sales . Individual product categories showed the following trends:

1. ARC® (Anti-Reflective Coatings) : +35% YoY (exceeded forecast). Grew steadily by capturing higher factory utilization rates among Asian customers.
2. Multi-layer Materials : +96% YoY (exceeded forecast). Sales nearly doubled, driven by demand for miniaturization and increased layering in cutting-edge semiconductor manufacturing processes.
3. EUV Materials : +23% YoY (slightly below forecast). Continued high-level growth as a material for next-generation Extreme Ultraviolet lithography.
4. Inorganic Colloids (e.g., Snowtex) : +27% YoY total for the segment (exceeded forecast). Demand remained robust for CMP slurry raw materials, data center applications, and EV enameled wire.

Conversely, Display Materials saw a 4% YoY decline (in line with forecasts). While impacted by lower demand for IT devices, there are signs of resilience, such as a recovery in the smartphone market.

Medium- to Long-Term Growth Outlook for Semiconductor Materials

The slide above shows the company's medium- to long-term growth projection model for semiconductor materials. While the overall semiconductor market (wafer basis) is projected to grow at a CAGR of +10% (2024-2030) , the company is targeting a CAGR of +20% or more (up to +26% in the upside case), an ambitious plan to outperform the market growth rate by over 10 percentage points .

This is underpinned by the surge in demand for cutting-edge and advanced generations, such as those for AI servers. As generations evolve (Logic 2nm and beyond, DRAM 10nm-range and beyond, and NAND 2025 state-of-the-art), the number of material layers used is increasing. The ratio of cutting-edge and advanced materials in the product mix is expected to rise from 51% in 2024 to over 63% by 2030 , driving profitability through an improved product mix.

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4. Other Segment Trends and Topics

Agricultural Chemicals Segment

Q1 net sales were ¥26.6 billion (flat YoY) , with operating profit of ¥8.8 billion (+2% YoY) . Compared to forecasts, sales and operating profit exceeded expectations by ¥3.3 billion and ¥1.6 billion, respectively. The proprietary new rice herbicide "Belder" saw a massive 569% YoY increase in adoption. The major insecticide "Gracia" is also expanding steadily both domestically and internationally. Despite timing differences in shipments of the veterinary drug active ingredient "Fluralaner," performance exceeded expectations due to royalty income and the weak yen. The peak sales target for the new product pipeline totals ¥41 billion , making it a key future profit driver.

Chemicals Segment

Q1 net sales were ¥10.5 billion (+13% YoY) , with operating profit of ¥0.9 billion (+23% YoY) . Basic chemicals such as nitric acid products and "high-purity sulfuric acid" for semiconductor cleaning expanded due to increased demand. The company continues its strategy of limiting its domestic ammonia production share to approximately 11% and focusing resources on high-value-added products like high-purity sulfuric acid.

Healthcare Segment

Q1 net sales were ¥1.9 billion (+18% YoY) , with operating profit of ¥0.7 billion (+50% YoY) . The Fine Tech business, supporting "Livalo" and nucleic acid drug manufacturing, is growing steadily.

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5. Financial Health and Shareholder Returns

The company's financial foundation is extremely robust. As of the end of June 2026, the equity ratio stood at 69.8% , and the net D/E ratio (interest-bearing debt minus cash equivalents) was 0.04x , reflecting a clean financial position that is effectively debt-free.

Furthermore, free cash flow for Q1 was ¥15.1 billion (+¥2.1 billion YoY), demonstrating strong cash-generating capability. This was supported by an increase in cash flow from operating activities (¥21.2 billion) in line with the growth in pre-tax profit.

Regarding shareholder returns, the company has announced a plan to repurchase up to ¥10.5 billion of its own shares between May 2026 and March 2027 , clearly signaling its commitment to enhancing shareholder value alongside stable dividend payments.

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6. Conclusion

Nissan Chemical's Q1 FY2026 earnings represent an excellent start, achieving record-high results primarily driven by the significant expansion of the Performance Materials segment , which accurately captured the rapid recovery in the semiconductor market.

In the medium to long term, the company is steadily executing its growth story, aiming for a CAGR of over 20%—outperforming the market—supported by the structural tailwind of increasing demand for advanced semiconductor materials, particularly for AI. Existing businesses such as agricultural chemicals and basic chemicals are also shifting toward high-value-added products. With a solid financial foundation and high free cash flow generation, the company is well-positioned for sustainable enhancement of corporate value.