Sumitomo Chemical Co Ltd
(TSE:4005)
円
489.4
+7.2 (+1.49%)
Market Cap: 796.53 Bil
Enterprise Value: 1.92 Tn
PE Ratio: 13.18
PB Ratio: 0.81
GF Score: 64/100 
Q1 2027 Sumitomo Chemical Co Ltd Earnings Call Transcript
Aug 04, 2026 / 07:00AM GMT
Release Date Price:
円482.2
(-5.93%)
Key Points
Positve
- Core operating income surged to JPY62.3 billion in Q1 FY2026, a significant increase from JPY27.7 billion in the prior year, marking the second-best Q1 on record.
- Net income attributable to owners of the parent reached JPY40.8 billion, up JPY45.3 billion year-on-year, driven by strong core operating income growth.
- The DE ratio improved significantly to 0.80 times from 0.93 times at the end of FY2025, supported by strong business performance and Sumitomo Pharma's capital increase.
- Essential and green materials segment saw a substantial profit increase, with core operating income up JPY32.7 billion year-on-year, driven by improved margins at Petro Rabigh and inventory valuation gains.
- Agro and life solutions segment reported a strong profit increase, with core operating income up JPY7.4 billion year-on-year, due to steady crop protection shipments and improved feed additive margins.
- Semiconductor-related products in ICT and mobility solutions saw increased profits, driven by higher shipments due to growing demand for semiconductors.
- The company provided a first-half FY2026 forecast with core operating income expected to double year-on-year, excluding gains on business sales, and net income expected to reach JPY70 billion.
- Sumitomo Pharma's capital increase of JPY97.8 billion strengthened the balance sheet, contributing to the improved DE ratio.
- The company maintained its annual dividend forecast of JPY16 per share, providing stability to shareholders.
- Feed additive profits improved significantly due to rising market prices, with expectations of further price increases in Q2.
Negative
- ICT and mobility solutions core operating income declined by JPY5.3 billion year-on-year, due to lower selling prices for polarizing films and the absence of a prior-year gain from the sale of the large LCD polarizing film business.
- Display-related products faced challenges, including declining shipments due to a shortage of semiconductors and a sluggish mobile market.
- Advanced medical solutions segment reported a core operating loss of JPY1.9 billion, down JPY900 million year-on-year, due to declined profit margins at affiliated companies and shipment timing differences.
- Free cash flow deteriorated to a negative JPY44.3 billion, a JPY22.3 billion decline year-on-year, due to increased working capital and investment outflows.
- The company refrained from revising its full-year forecast due to ongoing turmoil in the Middle East, citing difficulty in predicting future conditions.
- Raw material prices, particularly NAFTA, continued to soar, with the company expecting the impact to persist, creating uncertainty for future margins.
- Inventory levels in the distribution channel for crop protection products remain high in Central and Latin America, particularly in Brazil, posing a risk to future shipments.
- The company expects a significant decrease in profit for Sumitomo Pharma in the first half due to the absence of gains from the sale of the Asian business and increased SG&A and R&D expenses in North America.
- Cash flows from operating activities decreased by JPY19 billion year-on-year, primarily due to a temporary increase in working capital from the restart of the Chiba plant.
- The company faces uncertainty in the feed additives market, as raw material prices continue to soar, making the outlook for the second half unclear.
Operator
It is now time, so we will begin our Q1 2026 financial results conference call.
Thank you very much for joining us.
Today, Yamauchi, Managing Executive Officer, will explain the financial results for FY 2026 first quarter. Followed by a Q&A session with Matsuo, General Manager of Accounting Department.
The session is scheduled to finish at 4:50 PM. Mr. Yamauchi, please start.
Yamauchi from Smitomo Chemicals.
Toshihiro Yamauchi
SUMITOMO CHEMICAL COMPANY, LIMITED - Executive Officer, Director of Accounting
Thank you very much for taking the time out of your busy schedule to join our conference call today.
We'd like to take this opportunity to express our sincere thanks.
To our investors and analysts for your continued understanding and support of our company's management. I will now explain the overview of our financial results for FY26 first quarter. Please turn to slide 4.
Before explaining the details of the financial results, let me briefly explain the profit and loss status for Q1.
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