Sumitomo Chemical Company, Limited

For Q1 FY2026, consolidated sales revenue was JPY 578.2 billion, up JPY 52.1 billion year over year. Core operating income was JPY 62.3 billion, up JPY 34.7 billion YoY; operating income was JPY 61 billion, up JPY 35.6 billion YoY; and net income attributable to owners of the parent was JPY 40.8 billion, up JPY 45.3 billion YoY. The average USD/JPY rate was JPY 159.57 and naphtha was JPY 118,500 per kiloliter. For the first half, the company now expects sales revenue of JPY 1.17 trillion, core operating income of JPY 125 billion, operating income of JPY 122 billion, and net income attributable to owners of the parent of JPY 70 billion. It also kept the annual dividend at JPY 16 per share (interim JPY 8, year-end JPY 8) and said the full-year forecast remains unchanged for now.

Yamauchi said the quarter showed broad improvement across segments, with the strongest contribution coming from Essential and Green Materials, Agro and Life Solutions, and semiconductor-related businesses. His tone was constructive but cautious: he repeatedly pointed to Middle East uncertainty and raw material inflation as reasons the company has not revised the full-year forecast yet. He also emphasized that Q1 was the second-best first quarter on record for core operating income and net income.

The financial commentary centered on the sharp earnings recovery and balance-sheet improvement. Core operating income rose to JPY 62.3 billion, with company-wide price effects of JPY 15 billion and volume/equity-method effects of JPY 23.7 billion; finance income and expenses improved to a loss of JPY 700 million, helped by JPY 1.6 billion of foreign-currency gains. The D/E ratio improved to 0.80x from 0.93x at FY25 year-end, supported by Sumitomo Pharma’s JPY 97.8 billion capital increase; total assets were JPY 3,613.5 billion, equity was JPY 1,412.4 billion, operating cash flow was positive JPY 5 billion, and free cash flow was negative JPY 44.3 billion.

Analysts focused on whether Agro and Life’s Q2 step-up was sustainable, the outlook for methionine and crop protection, and how El Niño could affect regional demand and inventories. Management said Agro and Life’s Q1 improvement was mainly from methionine price increases tied to tighter supply/demand in the Middle East, while crop protection should strengthen in Q2 as Brazil, Latin America, and India enter peak season; it said it has a high probability of meeting the first-half Agro forecast. In ICT & Mobility, management said display remains weak, semiconductor-related shipments should be steady to slightly stronger, and higher fixed costs from semiconductor investments are limiting profit leverage. On Essential and Green Materials, management explained that Q2 will reflect lower inventory valuation gains versus Q1 and that Petro Rabigh remains a key support, while Singapore utilization is expected to stay flat for now.