Kaneka (4118) Q1 FY2027 Earnings Analysis: Record-Breaking Quarterly Profits Driven by Growth Across All Business Units

1. Q1 FY2027 Earnings Overview: A Record-Breaking Start

Kaneka’s performance for the first quarter (Q1) of the fiscal year ending March 2027 reached record highs on a quarterly basis. Net sales were ¥223.0 billion (+12.3% YoY) , operating income was ¥14.9 billion (+83.1% YoY) , ordinary income was ¥13.8 billion (+127.7% YoY) , and net income attributable to owners of the parent was ¥8.9 billion (+109.8% YoY) .

The slide above summarizes the quarterly results and key drivers of profit growth. It is a critical document for understanding the factors behind Kaneka's expansion at a glance. Beyond the significant growth in sales and profit at all levels, the most notable achievement is that all four business units (Material, Quality of Life, Health Care, and Nutrition) recorded both increased sales and increased profits.

Key drivers for this growth include the company-wide commitment to ensuring stable supply and implementing appropriate price revisions in response to external pressures such as rising raw material costs and currency fluctuations. Furthermore, significant profit growth was achieved through expanded overseas sales in the medical sector, M&A contributions , increased global sales of reduced CoQ10 , and a strategic shift toward high-value-added products in the food business.

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2. Segment Analysis: Diversified Profit Growth Across Four Solutions Units

We will now examine the performance of each segment that drove the overall results.

This slide, detailing sales and operating income by segment, is essential for accurately assessing the contribution of each business unit to the company's overall growth. The specific results for each area are as follows:

• Material Solutions Unit (Material SU) Recorded sales of ¥94.4 billion (+14.7% YoY) and operating income of ¥10.9 billion (+73.3% YoY) , serving as the primary engine for company-wide profit growth.
• Quality of Life Solutions Unit (Quality of Life SU) Recorded sales of ¥53.8 billion (+11.1% YoY) and operating income of ¥7.0 billion (+34.5% YoY) , driven by robust sales in housing equipment and electronics-related products.
• Health Care Solutions Unit (Health Care SU) Recorded sales of ¥22.0 billion (+20.5% YoY) and operating income of ¥3.5 billion (+11.3% YoY) , with global expansion in the medical device sector leading the sales growth.
• Nutrition Solutions Unit (Nutrition SU) Recorded sales of ¥52.4 billion (+6.3% YoY) and operating income of ¥3.4 billion (+25.5% YoY) , reflecting improved profitability in both the supplement and food/agri sectors.

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3. Deep Dive into Business Units

■ Material Solutions Unit

• Vinyls and Chlor-Alkali : Secured increased sales and profits through a commitment to stable supply and reflecting costs in product pricing. The company plans to maintain stable spreads from Q2 onward.
• Performance Polymers (MOD / MS) : Sales remained strong across all facilities, with growth in high-value-added MX (impact modifiers) . In MS (modified silicone polymers), substitution for other materials is progressing, and synergies with Cemedine Co., Ltd. are expanding.
• Green Planet : Adoption in new applications, such as artificial turf, is increasing, and the business is in an expansion phase through collaborations with brand holders.

■ Quality of Life Solutions Unit

• Foam & Residential Techs : Sales increased in the agricultural, fishery, and construction sectors, supported by cost-reduction efforts and price revisions.
• E & I Technology : While optical films for large LCD TVs performed well, polyimide films saw sluggish growth due to production adjustments in the smartphone market. The company plans to expand high-value-added grades, such as high-frequency PI and improved optical acrylic resins.
• PV & Energy Management : Sales of high-efficiency solar cells for domestic detached houses remained steady. Development of mass-production technology for next-generation tandem perovskite solar cells is also being actively pursued.
• Performance Fibers : Maintained steady sales in both hair products and flame-retardant fabrics.

■ Health Care Solutions Unit

• Medical : Sales of blood purification devices and catheters expanded both domestically and internationally. Growth was supported by overseas expansion in Asia and the U.S., as well as M&A contributions.
• Pharma : Despite the reactionary decline following concentrated shipments in Q4 of the previous year, sales of contract manufacturing for small-molecule and biopharmaceuticals are expected to increase from Q2 onward.

■ Nutrition Solutions Unit

• Supplemental Nutrition : Sales of reduced CoQ10 expanded significantly, particularly in the U.S. and Asian markets, and the probiotic business also grew steadily.
• Foods & Agris : Profitability improved through a shift toward high-value-added products and price revisions, alongside the expansion of B2C product sales.

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4. Quarterly Momentum and Financial Position

Q1 operating income (¥14.9 billion) not only represented an 83.1% increase from the ¥8.2 billion recorded in the same period last year but also surpassed the ¥10.7 billion achieved in Q4 of the previous year , which is typically a peak demand season. This indicates that the company’s overall performance momentum remains exceptionally strong.

According to the balance sheet as of the end of June 2026, total assets were ¥983.0 billion (+¥23.9 billion from the previous fiscal year-end) , and equity was ¥504.2 billion (+¥5.5 billion) , maintaining a sound financial base with an equity ratio of 51.3% . Book value per share (BPS) stood at ¥8,383.31 .

The Q1 exchange rate assumptions were ¥159.6 to the USD and ¥185.4 to the EUR, with domestic naphtha prices at ¥125,000/kl. The management system for maintaining and securing appropriate spreads remains effective even during periods of rising raw material costs.

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5. Spotlight: Accelerating Social Implementation of "Green Planet"

Kaneka is focusing on its 100% biodegradable polymer, "Kaneka Biodegradable Polymer Green Planet," as a pillar for long-term growth.

The slide above illustrates how Green Planet has moved beyond the R&D stage and is being implemented into concrete commercial products and social infrastructure . This is a significant topic symbolizing the company's sustainability and high-value-added strategy.

Key Adoption Examples:

1. Adoption in Shimano’s Lures (Salvage Solid 70S) : By combining the manufacturing technology of major fishing gear manufacturer Shimano with the material properties of Green Planet, the product decomposes into CO2 and water via microorganisms if lost in nature, contributing to solving environmental pollution caused by microplastics .
2. First Municipal Adoption of Biodegradable Artificial Turf : Biodegradable artificial turf, co-developed with Mizuno, was adopted for the covered plaza at the "Tomoba! Tawaramoto" disaster prevention park in Tawaramoto, Nara Prefecture. This is an innovative initiative to eliminate the problem of micro-debris from artificial turf flowing into the ocean.

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6. Full-Year Forecast and Outlook

Regarding the global economic outlook from Q2 onward, the company anticipates high market volatility and geopolitical risks, including the situation in the Middle East. Under these conditions, Kaneka intends to continue its commitment to stable supply, secure spreads, and concentrate resources on priority areas such as healthcare.

The full-year consolidated earnings forecast for the fiscal year ending March 2027, announced on May 14, 2026 ( net sales of ¥820.0 billion, operating income of ¥36.0 billion, ordinary income of ¥32.0 billion, net income attributable to owners of the parent of ¥31.5 billion, and an annual dividend of ¥210.00 per share ), remains unchanged at this time. The company plans to revise the forecast promptly once the outlook becomes more certain.