Company overview of Shinagawa Refractories <5351>.
1. Company Overview
The company group is a leading player in the global refractories market. The company contributes to the development of the industry and the realization of a rich society by providing engineering services such as refractory manufacturing, sales, furnace design, and furnace construction. They provide a variety of refractories and equipment to Japan's industrial base industries such as steel, non-ferrous metals, cement, glass, incinerators, waste melting furnaces, gas and electricity. For individual customer industries, more than 80% of sales come from the steel industry, with the rest being for incinerators, cement, and other industries. It is on par with Kurosaki Harima <5352> in the refractories market.
Climate change is becoming more and more serious around the world. As a measure against global warming, the Paris Agreement, adopted at the 2015 United Nations Climate Change Framework Convention (COP21), set a goal of reducing the average global temperature rise to "well below 2 degrees Celsius from pre-industrial levels and to try to limit the temperature increase to 1.5 degrees Celsius." The Glasgow Climate Accord at COP 26 in 2021 confirmed the need to reduce the world's CO2 emissions to "a 45% reduction from 2010 levels by 2030" and "net zero" by around 2050 in order to keep the temperature increase at "+1.5 degrees Celsius." The summer of 2023 was the hottest on record, with the number of days that exceeded the "+1.5 degrees Celsius" target being the highest ever. In July, United Nations Secretary-General Guterres warned, "The age of global warming is over. The era of global boiling is upon us."
In the midst of all this, the company advocates sustainable management for the realization of a sustainable society. Many of the world's core industries have high-temperature processes in their manufacturing sites. Steel, chemical, and machinery manufacturing, which are core industries, are energy-intensive equipment industries with high greenhouse gas (GHG) emissions. The need for the group's products and services that support GHG emission reduction is expected to expand in the medium to long term.
The company is a long-established company celebrating its 150th anniversary in 2025, but it is driving management reforms toward further creation and strengthening of "earnings power." From the fiscal year ending in March 2024, a sector-based ROIC management system that emphasizes the sector system and capital efficiency has been introduced. A "corporate headquarters" has been established to support collaboration between sectors, and an integrated sales system for unique solutions spanning multiple sectors is being promoted by the Group Management Strategy Conference.
2. History
The company was formed by the merger of Shinagawa Shireruwa Co., Ltd. and JFE Refractories Co., Ltd. in October 2009. The predecessor Shinagawa Shireruwa was established in 1875 and was the first private company in Japan to manufacture refractory bricks. The steel industry has been subject to industry reorganization due to increased global competition, and of the five blast furnace manufacturers, Japan Steel Tube Co., Ltd. and Kawasaki Steel Co., Ltd. merged to form JFE Holdings <5411> in September 2002, and Nippon Steel Corporation <5401>, formerly Nippon Steel & Sumitomo Metal Corporation, and Sumitomo Metal Industries, Ltd. merged to form Nippon Steel <5401> in October 2012. The shareholder of the company, which was formed by the integration of the refractory manufacturers of Japan Steel Tube and Kawasaki Steel, is JFE Steel, a subsidiary of JFE Holdings, with a majority ownership ratio of 34.9% as of the end of March 2024. The third-largest shareholder is Kobe Steel <5406> with 3.9% ownership.
JFE Steel is not listed, but JFE Holdings, its full parent company, is. Although the company is positioned as an equity method affiliate of JFE Steel, there is no concurrent service by officers. While there is personnel exchange for business execution, transactions between the two companies are negotiated on an individual basis, like with general customers. The management is based on the company's own judgment, and independence is considered to be guaranteed.
It was listed on the first section of the Tokyo Stock Exchange in 1949. As a result of a review of market classification, it moved to the "prime market" in April 2022.
(Author: FISCO Guest Analyst Shuji Matsumoto)