Daido Steel (5471): FY2025 Results Summary — Operating Profit Up on Firm Volumes, Dividend Raised to ¥49

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Daido Steel Co., Ltd. reported higher revenue and higher profit for FY2025 (April 2025 – March 2026). Revenue was ¥5,781 (¥100 million) and operating profit was ¥421, while profit attributable to owners of parent rose to ¥326 from ¥283 a year earlier. Adjusted operating profit, however, declined year on year to ¥399 from ¥440, mainly reflecting reduced demand for open-die forgings for drilling; against the January 29 forecast, profit came in higher on stronger volumes in products for automobiles and industrial equipment. The full-year dividend will be ¥49 per share, up ¥2 from the previous fiscal year.

Consolidated Results (Full-Year Actual)

Sales volume of specialty steel was 1,025 thousand tons, up 10 thousand tons year on year and 3 thousand tons above the January 29 forecast. Operating profit rose ¥27 year on year and was ¥61 above the January 29 forecast. Adjusted operating profit is adjusted for items that correspond to extraordinary gains/losses, foreign exchange gains/losses, inventory valuation gains/losses, provision for environmental expenses, fixed asset tax (leveling), and provision for paid leave; the total of these adjustment items was ¥-22 in FY2025 versus ¥46 in FY2024.

Item (thousand tons, ¥100 million)	FY2024	FY2025	y/y	Deviation from the forecast on Jan. 29
Sales Volume of Specialty Steel	1,015	1,025	10	3
Revenue	5,749	5,781	32	31
Operating Profit	394	421	27	61
Adjusted Operating Profit	440	399	-41	30
Profit Before Tax	427	448	21	73
Profit Attributable to Owners of Parent	283	326	43	71
Dividend (yen/share)	47	49	2	0

On the balance sheet, total assets increased to ¥8,564 as of March 2026 from ¥7,830 a year earlier, a difference of ¥734. Tangible fixed assets increased by ¥20.8 billion due to the progress in construction related to strategic investments, and assets increased by ¥27.8 billion due to the consolidation of Nippon Koshuha Steel Co., Ltd. ROE was 7.2% and the D/E ratio was 0.38. Operating cash flow was ¥660 versus ¥535 in FY2024, investment cash flow was ¥-482, and free cash flow was ¥178.

Segment Results

In Specialty Steel, sales volume was in line with the previous year and the year-on-year difference in adjusted operating profit was attributable to the fact that the ferrous scrap surcharge gap ceased to exist (surcharge gap of ¥26 in FY2024 versus ¥7 in FY2025), so margins were effectively maintained. In High-Performance Materials and Magnetic Materials, adjusted operating profit remained in line with the previous year as sales volumes for industrial equipment and semiconductor production equipment (SPE) recovered toward fiscal year-end, while demand for heavy rare earth-free magnets continued to increase due to the tightening of export restrictions on heavy rare earths (Dy, Tb) in China. In Parts for Automobiles and Industrial Equipment, profits declined year on year as order adjustments for drilling-related products continued amid a weak crude oil market, while demand for aircraft and diesel engine exhaust valves for ships remained at a high level.

Segment (¥100 million)	FY2024 Revenue	FY2024 Operating Profit	FY2024 Adjusted Operating Profit	FY2025 Revenue	FY2025 Operating Profit	FY2025 Adjusted Operating Profit
Specialty Steel	2,101	121	131	2,078	134	113
High-Performance Materials and Magnetic Materials	2,009	110	138	1,998	149	134
Parts for Automobiles and Industrial Equipment	1,130	113	119	1,179	82	94
Engineering	241	22	23	266	26	27
Trading and Service	268	28	29	260	30	31
Total	5,749	394	440	5,781	421	399

FY2026 Forecast

For FY2026 (April 2026 to March 2027), the company incorporates a surcharge gap amounting to negative ¥2.8 billion resulting from rising ferrous scrap and crude oil prices. Adjusted operating profit is expected to be maintained at around the ¥40 billion level, supported by higher sales of stainless steel for SPE and plant applications, as well as increased sales of open-die forgings. Planning premises include an exchange rate of JPY 155/USD, a ferrous scrap price of JPY 51 thousand per ton (FY2025: JPY 42 thousand per ton), estimated car production by Japanese makers of 25 million units, and specialty steel sales volume of 1,042 thousand tons. The cost impact of the surge in crude oil prices from Middle East geopolitical risk is estimated at ¥1.2 billion, based on premises of USD 90 per barrel in FY2026 1Q and USD 63 per barrel from FY2026 2Q.

Item (thousand tons, ¥100 million)	FY2025 (Actual)	FY2026 (Forecast)	y/y
Sales Volume of Specialty Steel	1,025	1,042	17
Revenue	5,781	6,300	519
Operating Profit	421	400	-21
Adjusted Operating Profit	399	401	2
Profit Before Tax	448	420	-28
Profit Attributable to Owners of Parent	326	275	-51
Dividends (yen/share)	49	52	3

By segment, the company expects automobile-related orders in Specialty Steel to remain at the same level as the previous year with industrial equipment-related orders recovering gradually; in High-Performance Materials and Magnetic Materials, sales volume of stainless steel for SPE and sales of products promoted for plant applications are projected to increase; and in Parts for Automobiles and Industrial Equipment, orders related to aerospace and heavy electric equipment are expected to increase while orders for diesel engine exhaust valves for ships remain at a high level.

Segment (¥100 million)	FY2026 Revenue	FY2026 Operating Profit	FY2026 Adjusted Operating Profit
Specialty Steel	2,300	80	83
High-Performance Materials and Magnetic Materials	2,300	190	186
Parts for Automobiles and Industrial Equipment	1,200	90	92
Engineering	230	10	10
Trading and Service	270	30	30
Total	6,300	400	401

Shareholder Returns

The shareholder return policy sets a consolidated dividend payout ratio of 30% or more, with a lower limit of DOE at 2.5%, and the company considers acquiring treasury stock based on the progress of optimizing cash allocation. The FY2025 full-year dividend is ¥49 per share (interim ¥22, year-end ¥27), up ¥2 from the FY2024 result of ¥47 per share, and the FY2026 full-year dividend forecast is ¥52 per share (interim ¥24, year-end ¥28), up ¥3. The payout ratio was 34.6% at the interim and 30.3% for the full year in FY2025, and 34.3% and 37.8% respectively for FY2026; excluding one-off effects the ratios were 34.0% and 35.6% for FY2025 and 35.4% and 38.4% for FY2026. The company completed a share repurchase of ¥6.6 billion in July 2025 (6,041,100 shares, 2.9% of the total number of shares outstanding excluding treasury stock), following ¥8.5 billion in November 2024 (7,398,900 shares, 3.5%).

Dividend per Share (yen/share)	FY2024	FY2025	FY2026 outlook
Interim dividend	21	22	24
Year-end dividend	26	27	28
Full-year dividend	47	49	52

Medium-Term Plan and Topics

The FY2026 plan calls for adjusted operating profit of 40.1 billion JPY (operating profit: 40 billion JPY), which the company describes as maintaining the level announced in October 2025 under the redesigned mid-term plan of 40 billion JPY or more, as sales for high-performance materials such as open-die forgings and stainless steel for SPE are expected to exceed initial expectations. The fast-growing market product revenue ratio was 15% in FY2025 and is planned at 17% in FY2026, against a FY2030 target of 25%. Cumulative strategic investments since FY2024 total 66 billion JPY, and construction for the Superalloy Manufacturing Process Transformation Project (investment of 36 billion JPY) is progressing as planned, with VIM capacity expansion and the installation of two additional VAR furnaces completed and in operation. Capital investment on a construction basis was ¥612 in FY2025 against depreciation expenses of ¥311. Management targets under Our Vision for 2030 are operating profit of 60 billion JPY or more, ROE of 9% or more, and PBR of 1.0 or more.

In February 2026, Nippon Koshuha Steel became a wholly owned subsidiary of Daido Steel through share acquisition. For FY2026, revenue of ¥26 billion and operating profit of ¥0.6 billion are planned for the company, and in the FY2025 financial results a one-time gain of ¥5.3 billion arising from new consolidation was recorded in the P/L as a negative goodwill gain classified as an extraordinary gain, which is excluded from adjusted operating profit. On cross-shareholdings, two issues totaling ¥16.5 billion were sold in FY2025, and the ratio of cross-shareholdings to net assets as of the end of March 2026 was 18.0%; the company aims to reduce the ratio to 15% of net assets by FY2026 and 10% by FY2030.

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.