Chugai Ro (1964): FY2025 Results Summary — Sales and Operating Profit Rise as Plant Engineering Expands

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Chugai Ro Co., Ltd. (TSE Prime, stock code 1964) reported consolidated net sales of 37,332 million yen for FY2025 (April 1, 2025–March 31, 2026), 103% of the prior year, and operating profit of 2,879 million yen, 105% of the prior year. Ordinary profit was 3,110 million yen and profit attributable to owners of the parent was 4,668 million yen, 156% of the prior year and 126% of the company’s forecast. Order intake was 37,100 million yen, 94% of the prior year and 98% of the forecast. The year-end dividend per share was JPY166, against JPY150 in FY2024.

Consolidated Results (Full-Year Actual)

The company states that in FY2025 results were largely in line with its forecast as the transition to a management policy focused on operating profit progressed smoothly. Net sales, operating profit and ordinary profit all exceeded the prior year, while order intake fell short of both the prior year and the forecast.

Item	FY2024	FY2025 (Forecast)	FY2025	Compared to Forecast	YoY	FY2026 (Forecast)
Order Intake	39,477	37,800	37,100	98%	94%	38,700
Net Sales	36,247	37,500	37,332	100%	103%	40,300
Operating Profit	2,735	3,000	2,879	96%	105%	3,620
Ordinary Profit	3,003	3,150	3,110	99%	104%	3,720
Profit Attributable to Owners of the Parent	2,998	3,700	4,668	126%	156%	2,516
Year-End Dividend per Share	JPY150	JPY150	JPY166	111%	111%	JPY180

Unit: Millions of Yen (JPY), except dividend per share.

On the breakdown of the operating profit change, gross profit increased by 523 million yen to 8,114 million yen and the gross profit margin improved by 0.8 point to 21.7%, reflecting the impact of increased revenue as well as a margin held at the previous year’s level through the pass-through of rising costs to sales prices, greater emphasis on more profitable projects and improved cost control. SG&A expenses rose by 380 million yen to 5,235 million yen and the SG&A ratio increased by 0.6 point to 14.0% on higher human resources expenses and other factors. As a result the operating profit margin improved by 0.1 point to 7.7% and operating profit increased by 143 million yen.

Total assets stood at 51,282 million yen, up 2,546 million yen, and total net assets at 31,481 million yen, up 2,872 million yen. The equity ratio improved by 2.7 points to 60.8% and dependence on borrowings declined by 2.6 points to 8.7%. Operating activities produced a net cash inflow of 6,259 million yen on a decrease in trade receivables and contract assets, investing activities a net inflow of 2,684 million yen on proceeds from the sale of investment securities despite purchases of property, plant and equipment, and financing activities a net outflow of 2,569 million yen. Cash and cash equivalents at the end of the fiscal year were 10,777 million yen.

Order backlog at the end of FY2025 was 37,699 million yen, against 37,824 million yen at the end of FY2024, which the company describes as a decrease of ¥0.1 billion. Orders during the year included continuous annealing line modification work from the domestic steel industry, a reheating furnace for the non-ferrous metal industry, an electric furnace dust recycling system for the steel industry, ladle preheating equipment for electric furnaces, heat treatment equipment related to next generation batteries, and ovens for housing equipment components. For FY2026 the company expects backlog of 36,099 million yen, describing this as continuing to secure a high level of orders totaling ¥36.0 billion, driven primarily by demand for heat treatment equipment for functional materials, solar cell-related facility and combustion systems for steel mills.

Segment Results

Plant Engineering Business was the main driver of the year, with net sales of 13,828 million yen (120% of the prior year) and operating profit of 1,677 million yen, an increase of 713 million yen. Heat Treatment Business net sales were 18,307 million yen (99%) with operating profit of 1,411 million yen, down 89 million yen. Development Business recorded net sales of 1,981 million yen (83%) and an operating loss of 247 million yen. Other Businesses posted net sales of 8,025 million yen (98%) and operating profit of 31 million yen, down 498 million yen; the company notes that “Other” recorded a smaller profit, affected by the performance of subsidiaries in China and Mexico.

Segment	Net Sales FY2024	Net Sales FY2025	YoY Change	Operating Profit FY2024	Operating Profit FY2025	YoY Change
Heat Treatment Business	18,590	18,307	99%	1,500	1,411	(89)
Plant Engineering Business	11,522	13,828	120%	963	1,677	＋713
Development Business	2,376	1,981	83%	(208)	(247)	(39)
Other Businesses	8,173	8,025	98%	529	31	(498)
Adjusted Amount	(4,415)	(4,809)	–	(49)	7	–
Total	36,247	37,332	103%	2,735	2,879	＋143

Unit: Millions of Yen (JPY).

FY2026 Forecast

For FY2026, the final year of the medium-term management plan, the company forecasts order intake of 38,700 million yen, net sales of 40,300 million yen, operating profit of 3,620 million yen, ordinary profit of 3,720 million yen and profit attributable to owners of the parent of 2,516 million yen. The company explains that the order intake forecast has been revised down from the medium-term plan target due to the uncertain outlook of the Middle East situation, while the operating profit forecast remains unchanged from the target amount.

Item	FY2024	FY2025	FY2026 (Forecast)	(Reference) FY2026 (Target)
Order Intake	39,477	37,100	38,700	42,000
Net Sales	36,247	37,332	40,300	41,500
Operating Profit	2,735	2,879	3,620	3,620
Ordinary Profit	3,003	3,110	3,720	3,720
Profit Attributable to Owners of the Parent	2,998	4,668	2,516	2,450
ROE	10.7%	15.7%	8.0%*	10.0%

Unit: Millions of Yen (JPY). *Excluding gains on sales of strategic shareholdings. The stated FY2026 targets are net sales of ¥41.5 billion and operating profit of ¥3.62 billion (operating profit margin 8.7%) with ROE of 10.0%.

Shareholder Returns

Beginning in FY2024 the company has set a target of maintaining a dividend payout ratio of 60% or more based on NOPAT (net operating profit after tax), and states it will continue to maintain a high level of dividends. It also remains committed to a total shareholder return ratio of 50% or more by conducting share buybacks as appropriate. The payout ratio used as the key indicator is calculated based on NOPAT excluding operating profit attributable to non-controlling interests.

Item	FY2021	FY2022	FY2023	FY2024	FY2025	FY2026 (Forecast)
Dividend per Share	@JPY70	@JPY70	@JPY80	@JPY150	@JPY166	@JPY180
Total Dividends Paid (Millions of Yen)	537	530	594	1101	1201	1302
Amount of Share Repurchases (Millions of Yen)	150	100	509	399	1140	–
Total Shareholder Return	50.5%	51.2%	50.2%	50.0%	50.1%	–

Medium-Term Management Plan and Corporate Value Initiatives

The medium-term management plan covers FY2022 to FY2026 under the Management Vision 2026 “Transforming Ourselves to Pioneer the Future Through Carbon Neutral Technologies,” built on three key strategies: creation of new markets centered on carbon neutrality; refinement of existing products to expand sales and enhance profitability; and creating a fulfilling and motivating workplace.

On the first strategy, the indicator is to create a ¥10 billion market by 2030, with an FY2026 sales target of ¥4.0 billion from new products. FY2025 net sales related to new market creation were ¥870 million, with projects including the NEDO Green Innovation Fund project, decarbonization of thermal processes in manufacturing, development of hydrogen-reduction heating technologies and an electric arc furnace dust recycling facility. The company delivered one of the largest hydrogen-burning metal heating demonstration furnaces in Japan and signed an MOU with Taiwan’s China Steel Corporation on decarbonized combustion technology. CO2 emissions reductions achieved by delivered equipment amounted to 2.77 million tons in FY2025, a reduction rate of 23% against the FY2013 base year, ahead of the 20% reduction target set for FY2026.

On the second strategy, the FY2026 indicators are cumulative net sales of ¥11.2 billion and cumulative operating profit of ¥2.06 billion; FY2025 cumulative net sales reached ¥11.0 billion with cumulative R&D expenses including capital investment of ¥730 million. On the third strategy, the FY2026 non-consolidated indicators are operating profit per employee of ¥5,668 thousand and total annual working hours per employee of 1,800 hours; FY2025 results were operating profit per employee of ¥6,255 thousand and total actual working hours per employee of 2,041 hours, with system investment of ¥400 million in the year (a cumulative ¥800 million out of the approximately ¥1,500 million planned).

On corporate value enhancement, the ROE target of 10.0% was achieved in FY2024 and ROE reached 15.7% in FY2025. The reduction of strategic shareholdings to below 20% was achieved in FY2025, one year ahead of schedule. PBR, which had stayed above 1.0x since September 2025, stood at 0.96x at the end of FY2025, which the company attributes to the impact of the Middle East situation. The target for the ratio of female managers on a consolidated group basis of 5% or higher was not yet achieved as of March 2026, with achievement targeted by March 2027.

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.