Sakai Chemicals <4078> primarily engages in the development, manufacturing, and sales of inorganic chemical industrial products, organic Chemicals, and Pharmaceuticals, operating in two business segments: Chemicals and healthcare. The products handled by the group range from over-the-counter medications and cold remedies to dielectrics used in multilayer ceramic capacitors, ultra-fine zinc oxide and titanium dioxide for sunscreen, and organic sulfur compounds used in spectacle lenses, making their products widely used in various aspects of daily life. Recently, competitors leveraging low prices have entered the chemical industrial products market. Despite this, the company differentiates itself from competitors by leveraging the high quality developed since its founding.

For the second quarter of the fiscal year ending March 2025, consolidated cumulative performance showed revenue increasing by 3.5% year-on-year to 41,874 million yen, and operating profit soaring by 186.4% to 2,626 million yen, resulting in significant revenue growth and profit increase. The increase in revenue was driven by strong performance in both the Chemicals and healthcare segments. Particularly, sales of electronic materials, which the company positions as one of its growth businesses in the mid-term management plan, surged by 43.7% to 5,886 million yen. The recovery in market conditions contributed to the rebound in sales volume, coupled with steady price revisions benefitting the top line. On the profit side, solid electronic materials and the efficiency review business, which includes titanium dioxide and zinc and resin additives, contributed positively. Electronic materials benefitted from increased revenue, pricing adjustments, and improved operational efficiency. The efficiency review business improved profits through price revisions and operational improvements. Notably, although revenue from titanium dioxide, zinc products, and resin additives showed a decrease due to a profitability-focused strategy, they still contributed positively to consolidated profit, indicating that the strategic mid-term plan is progressing smoothly.

For the fiscal year ending March 2025, the earnings forecast anticipates a revenue increase of 6.0% from the previous year to 87,000 million yen, and an operating profit increase of 83.5% to 5,400 million yen, with no changes from the initial expectations. Although progress in the organic Chemicals, Cosmetic materials, and healthcare segments showed slight softness at the end of the first half, strong electronic materials and contract manufacturing are expected to drive earnings growth. Additionally, while the healthcare business experienced transient special factors in the first half, current problems have been resolved. Sales and profits are expected to grow towards the fiscal year-end. In terms of Dividends, an annual Dividends of 125.0 yen per share (expected Dividends yield of 4.81%) is planned. The company has changed its basic policy on Dividends from maintaining a payout ratio of 30% or more to aiming for a DOE of 3% or more. By adopting DOE, the company intends to continue stable shareholder returns in the future.

As a medium to long-term growth strategy, the company has announced "Transformation: BEYOND 2030." The mid-term management plan, formulated through backcasting from the desired future state, is positioned as a transformation stage toward future growth, focusing on shifting to high-value-added products, achieving ROE exceeding capital costs, improving PB, and accelerating non-financial efforts through materiality promotion. Specifically, regarding portfolio restructuring, the company plans to resolutely execute business arrangements based on growth and profitability to pursue both top-line expansion and profit accumulation. Through the execution of these fundamental strategies, the company aims to achieve an operating profit of 9,000 million yen and an ROE of 8% by the fiscal year ending March 2027.