Nippon Chemi-Con (6997): FY2025 Results Summary — AI Server Demand Lifts Sales; FY2026 Operating Profit Planned to More Than Double

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Nippon Chemi-Con Corporation (TSE Prime Market, Securities code: 6997), a manufacturer of aluminum electrolytic capacitors, announced its FY2025 (FY ended March 31, 2026) results in its Financial Results Explanatory Material dated May 2026. Net sales rose 11.5% year on year to 136,821 million yen, driven by AI server growth and a recovery of the industrial equipment and automotive electronics markets, while operating profit declined 9.9% to 3,369 million yen due to soaring material prices. Profit attributable to owners of parent was 2,367 million yen, an increase of 2,330 million yen from the prior year. For FY2026, the company plans net sales of 160,000 million yen (+16.9%) and operating profit of 8,000 million yen (+137.4%).

Consolidated Results (Full-Year Actual)

By market, the ICT market was firm, mainly on the mass production of large-sized aluminum electrolytic capacitors for AI servers and hybrid capacitors. In the automotive electronics market, demand improved thanks to automotive electronics and normalization of the status of customer parts inventory, but the market recovery was sluggish due to factors such as the end of EV subsidies and stagnant consumption attributable to the rising cost of living. In the industrial equipment market, although investment sentiment was down due to factors such as US tariff policies, the market trended towards recovery mainly thanks to data center-related investments. On profit, the company worked to improve its operating margin by strengthening sales of high-performance products, but profits decreased due to factors such as the soaring cost of materials and changes in product mix.

Item (Million yen, %)	FY2024 Results	FY2025 Results	Change	% Change
Net Sales	122,684	136,821	+14,137	+11.5%
Operating profit	3,740	3,369	-371	-9.9%
Ratio to net sales	3.0%	2.5%	-0.5pt	–
Profit attributable to owners of parent	37	2,367	+2,330	–
Ratio to net sales	0.0%	1.7%	+1.7pt	–
Capital investment	7,631	5,911	-1,720	-22.5%
Depreciation and amortization	6,640	6,842	+202	+3.0%
R&D expenses	4,228	3,892	-336	-7.9%
Avg. exchange rate: USD (yen)	152.58	150.77	1.2% yen appreciation

The year-on-year operating profit bridge (unit: billion yen) shows FY2024 operating profit of 3.7 lifted by net sales change (+6.1) and cost reductions through VA (Value Analysis) initiatives (+1.0), offset by selling price fluctuations including product mix (-2.9), materials/electricity cost (-1.3), manufacturing fixed costs (-1.3), SG&A expenses (-1.1), other (-0.5), and exchange rate fluctuations from yen appreciation (-0.3), resulting in FY2025 operating profit of 3.4.

Net Sales by Product, Market, and Region

Net sales from aluminum electrolytic capacitors increased 13.1% to 120,025 million yen, mainly on growth in data center demand (including AI servers). Within this, conductive polymer capacitors rose 14.1% to 23,174 million yen. DLCAP declined 4.2%, and mechanical parts and other parts fell 8.3%.

Product (Million yen)	FY2024	FY2025	Change	% Change
Aluminum electrolytic	106,114	120,025	+13,911	+13.1%
(of which) Conductive polymer	20,306	23,174	+2,868	+14.1%
DLCAP	3,751	3,593	-158	-4.2%
Ceramic capacitors/Varistors	2,453	2,561	+109	+4.4%
Mechanical parts and other parts	3,441	3,155	-286	-8.3%
Capacitor materials	5,703	5,643	-60	-1.1%
Other	1,220	1,842	+622	+51.0%
Total	122,684	136,821	+14,137	+11.5%

By market (unit: billion yen), ICT expanded from 31.5 in FY2024 to 48.1 in FY2025 (35% of total), while automotive electronics decreased from 43.9 to 40.1 (29%). Industrial equipment rose from 24.3 to 28.2 (21%), home appliances declined from 9.6 to 6.9 (5%), new energy was flat at 5.1 (4%), and other edged up from 8.3 to 8.5 (4%). By region (unit: billion yen), Greater China grew from 48.6 to 58.1 (42% of total), Japan was flat at 26.2 (19%), Europe rose from 13.1 to 14.4 (11%), the Americas slipped from 14.0 to 13.7 (10%), and other regions increased from 20.8 to 24.4 (18%).

Cash Flow and Capital Investment

Free cash flow increased year on year mainly due to an increase in net income before taxes and other adjustments and the receipt of settlement payments from the Taiwan Fair Trade Commission. The balance of cash and cash equivalents decreased year on year due to the lowering of interest-bearing debt and investment in growth sectors, etc.

Item (Million yen)	FY2024 Results	FY2025 Results	Change
Cash flows from operating activities	-493	7,622	8,115
Cash flow from investment activities	-9,754	-5,288	4,465
Free cash flow	-10,247	2,333	12,581
Cash flow from financing activities	-11,931	-6,232	5,698
Impact (amount) of exchange rate fluctuations	748	1,320	572
Cash and cash equivalents balance	23,864	21,286	-2,578

Capital investment in FY2025 totaled 5,911 million yen (FY2024: 7,631 million yen), executed under a policy focused on selection and concentration. Product business investments were 3,520 million yen, including expanded facilities to respond to increased demand for aluminum electrolytic capacitors for AI servers and increased production capacity for hybrid capacitors with a focus on the automotive electronics and AI markets. Materials business investments of 1,343 million yen went to developing high-capacitance aluminum foils as core materials for high-performance products, and staff-related investments of 1,047 million yen covered system upgrades to enable DX promotion and strengthening human resources.

FY2026 Forecast

For FY2026, the company forecasts increased net sales and profit from aggressive sales to growth markets, particularly AI servers. In the ICT market it forecasts a strong increase in demand centered on AI servers; in automotive electronics, a strong increase in sales on increased volume for automotive electronics products driven by electrification, normalization of the status of customer parts inventory, and increased market share; and in industrial equipment, strong demand driven mainly by data center-related investment. The company aims to increase profits by strengthening sales targeting growth markets, mainly large-sized aluminum electrolytic capacitors and hybrid capacitors for AI servers, and by promoting price adjustment as well as cost restructuring.

Item (Million yen, %)	FY2025 Full-year Results	FY2026 Full-Year Plan	Change	% Change
Net Sales	136,821	160,000	+23,179	+16.9%
Operating profit	3,369	8,000	+4,631	+137.4%
Operating margin	2.5%	5.0%	+2.5pt	–
Profit attributable to owners of parent	2,367	4,000	+1,633	+68.9%
ROE	4.0%	6.6%	+2.6pt	–
Capital investment	5,911	5,700	-211	-3.5%
Depreciation and amortization	6,842	6,600	-242	-3.5%
R&D expenses	3,892	4,000	+108	+2.7%
Exchange rate: USD (yen)	150.77	153.00	1.5% yen depreciation

By product, the FY2026 plan calls for aluminum electrolytic capacitor sales of 144,700 million yen (+20.6% YoY), of which conductive polymer capacitors are planned at 28,800 million yen (+24.3%). DLCAP is planned at 3,100 million yen (-13.7%), ceramic capacitors/varistors at 2,400 million yen (-6.3%), mechanical parts and other parts at 2,600 million yen (-17.6%), capacitor materials at 5,800 million yen (+2.8%), and other at 1,400 million yen (-24.0%). In the operating profit plan (unit: billion yen), FY2025 operating profit of 3.4 is expected to rise to 8.0, with net sales change (+7.2), selling price factors (+1.5), cost reductions through VA initiatives (+0.8), and exchange rate fluctuations (+0.6) outweighing materials/electricity cost (-2.7), SG&A expenses (-1.9), manufacturing fixed costs (-0.5), and other (-0.4).

For FY2026 initiatives, the company plans to increase production capacity for large-sized aluminum electrolytic capacitors for AI server PSU, continue development and investments to increase production of high-capacitance and high-output hybrid capacitors, and develop next-generation high-capacitance top foil to increase competitiveness. On costs, it aims to improve its cost structure by promoting a shift to overseas production, leverage the use of external aluminum foils in general purpose products, promote local procurement overseas, and improve productivity by increasing mass production and promoting smart factories. As macro-environment risks, the company cites stagnant procurement sentiment due to inflation factors such as tariff policy, the impact of soaring energy and materials costs triggered by geopolitical risks, and the impact of demand for PC components due to semiconductor shortages.

Shareholder Returns

Dividend and other shareholder return details cannot be confirmed from the materials. Among management indicators, the company presents ROE of 4.0% for FY2025 and a plan of 6.6% for FY2026 (+2.6pt).

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.