NOF CORPORATION Q2 FY2026 earnings call

• Shareholder Return Strategy

  • The company has maintained progressive dividends since 2009, and will continue to target stable and progressive dividends over the medium to long term, with stable dividend maintenance as its core policy.
  • A share repurchase program with a total upper limit of 5.0 billion yen will be executed between November 7, 2025 and December 31, 2025. The company will balance strategic investment and capital efficiency improvement while maintaining and enhancing shareholder returns.

• Business Segment Strategic Developments

  • Functional Chemicals (Anti-fog agent): The company's anti-fog coating agents are primarily used for automotive headlamps and rear combination lamps, with strengths in proprietary high performance, automotive-grade reliability and long-term global market experience. The company projects 6% annual average growth through 2030, and will pursue market share expansion through continuous global sales expansion and new product development, while also pushing into non-automotive applications such as sports goggles.
  • Pharmaceutical, Medical and Healthcare (Lutein-blended food functional materials): The company's lutein-blended products address key customer needs: improving quality degradation during frozen storage for frozen bread/dough, and delivering natural firm texture for noodles. The company will expand into protein modification for meat, egg and dairy products to address more customer needs.
  • Chemical Explosives (CPT data acquisition service): The subsidiary NOF Giken Kogyo launched this service in July 2025, which dispatches CPT equipment and operators to collect seabed geotechnical data. The service supports site surveys for floating offshore wind farm anchoring and subsea infrastructure deployment, contributing to Japan's energy self-sufficiency and carbon neutrality goals.

• New Business Creation and R&D

  • The company selected 6 new priority business areas across its three focus areas: Life/Healthcare, Environment/Energy, and Electronics/Information, aiming to develop new products and technologies that solve social challenges. The corporate R&D division discovers and validates promising materials/technologies, while business divisions evaluate commercialization, with cross-departmental collaboration to deliver new businesses.
  • The company pursues open innovation to accelerate new business creation, including industry-academia commissioned research themes (focused on electronics materials in FY2025), venture capital investment to co-develop technologies with startups, and a joint research lab with AIST to develop environmentally friendly chemicals and manufacturing processes.
  • Two promising early-stage technologies: 1) A cryopreservation solution for regenerative medicine cells that enables bulk direct freezing of cultured cells, currently in sample development targeting early commercial launch; 2) Upcycled Hokkaido white grape skin powder for functional foods, which supports skin health and repurposes waste grape skins from winemaking.

• Strategic Planning Context

  • FY2025 is the final year of the 2025 Mid-Term Management Plan and a key transition year for the upcoming 2028 Mid-Term Management Plan, which the company positions as Stage III: Business Area Expansion. The company will continue to advance the 2025 plan targets in H2, and is steadily developing plans to strengthen solution business (the core growth driver) and outline new business creation initiatives and investment plans for the 2028 plan.

1. 機能化学品事業 (Functional Chemicals Segment):

   • Half-year 2025: Decreased revenue and profit year-on-year, with a 3.7 billion yen operating profit decrease. The decrease breaks down to -2.6 billion yen from lower overall sales volume (partially offset by strong demand for special rust inhibitors), +0.1 billion yen from lower variable costs, and -1.2 billion yen from higher fixed costs.
   • Full-year 2025 forecast: 148.0 billion yen in revenue (down 2.9 billion yen year-on-year) and 27.0 billion yen in operating profit (down 2.8 billion yen year-on-year), contributing 57.3% of total projected full-year revenue.

2. 医薬・医療・健康事業 (Pharmaceutical, Medical and Healthcare Segment):

   • Half-year 2025: Increased revenue and profit year-on-year, with a 0.3 billion yen operating profit increase. The increase breaks down to +0.7 billion yen from higher sales volume, +0.2 billion yen from lower variable costs, and -0.6 billion yen from higher fixed costs.
   • Full-year 2025 forecast: 50.8 billion yen in revenue (up 2.8 billion yen year-on-year) and 16.0 billion yen in operating profit (up 0.3 billion yen year-on-year), contributing 19.7% of total projected full-year revenue.

3. 化薬事業 (Chemical Explosives Segment):

   • Half-year 2025: Increased revenue and profit year-on-year driven by strong defense-related products, with a 0.6 billion yen operating profit increase. The increase breaks down to +1.7 billion yen from higher sales volume, -0.3 billion yen from higher variable costs, and -0.9 billion yen from higher fixed costs.
   • Full-year 2025 forecast: 59.0 billion yen in revenue (up 20.2 billion yen year-on-year) and 6.4 billion yen in operating profit (up 3.3 billion yen year-on-year), contributing 22.8% of total projected full-year revenue.

• Full-year 2025 consolidated guidance (revised November 6) was revised upward for top-line and bottom-line metrics: revenue is lifted 6.4 billion yen to 258.4 billion yen, ordinary profit is lifted 0.4 billion yen to 48.3 billion yen, and net income is lifted 1.4 billion yen to 38.2 billion yen. Operating profit was maintained at the prior forecast of 46.0 billion yen, representing a 0.7 billion yen year-on-year increase from 2024 actual results.
• The annual dividend was revised upward by 4 yen to 52 yen per share (26 yen interim, 26 yen year-end), with a projected payout ratio of 31.3%.

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