■Shinagawa Refractories ＜5351 ＞ Business Overview
(2) Insulation sector
Ceramic fiber, an insulating material, is an essential material for energy conservation because it is lightweight, has low thermal conductivity, and high insulation. We meet needs with various products such as various modules, molded products, insulation boards, sheets, and gaskets with excellent workability. Isolite Industries, which operates the insulation materials business, was acquired in 2004. The shareholding ratio was 54.9%, but it became a wholly owned subsidiary due to a TOB+ share sale request at the end of 2022/3. We recognized that a period of major change in the global business environment had arrived against the backdrop of responses to environmental issues, etc., and proceeded with the construction of a group management system that can quickly make bold decisions.
(3) Advanced equipment sector (formerly ceramics sector)
The company began its fine ceramics business in 1978. The company was spun off as Shinagawa Fine Ceramics in 2002 in anticipation of the growth of advanced industries. The same sector consists of 2 companies: Shinagawa Fine Ceramics and SSCA (Shinagawa Specialty Ceramics Americas LLC), which has transferred business in the United States. Fine ceramics are ceramic materials with highly controlled microstructure. It is a material with various functions and characteristics, such as alumina, zirconia, silicon carbide, sialon, etc., and provides a variety of engineering ceramics, from various rollers, dies, and pump parts to ceramic components for semiconductor/LCD manufacturing equipment. The “ceramics sector” was reorganized into the “advanced equipment sector” from the 2025/3 fiscal year in order to incorporate business related to the semiconductor manufacturing equipment industry into the business domain as a pillar of future growth, triggered by the fact that Com Innovation, whose main business is assembly of semiconductor manufacturing equipment, was acquired in 2024/3.
(4) Engineering sector
The engineering business designs, constructs, and maintains refractory materials in industrial kilns. We provide comprehensive engineering to support the world of ultra-high temperatures, such as the design and manufacture of various construction machines and equipment related to refractory materials. Industrial furnaces in recent years are required for environmentally friendly energy saving, labor saving, detoxification, safety, etc., and advanced technology is required for the design and construction of kilns. For the steel industry, we respond to a wide range of needs with the latest technology, such as ladles, slide gate molten steel flow control devices used in continuous casting, and rapid immersion nozzle exchange devices. In addition, it participated in blast furnace repair work using the large block ring method, and has received great acclaim for contributing to ultra-short term repairs. We have the best track record in environment-related equipment such as garbage incinerators and melting furnaces in Japan.
(5) Others
Other real estate businesses rent owned real estate and make effective use of land. Properties that have become idle assets due to the end of the lease agreement have been sold, and used for capital investment and M&A funds for the refractory products and related products business, which is the core business.
3. Overseas business
(1) Overseas sales ratio
(One company) The Japan Iron and Steel Federation predicts that global demand for steel will increase from about 1.8 billion tons in 2020 to about 2.7 billion tons in 2050 as the economies of emerging countries grow. Meanwhile, the potential growth potential of the Japanese economy is low, and domestic crude steel production is expected to gradually decline as demand for steel products shrinks.
The company has been actively developing bases overseas. In the 5th Mid-Term Management Plan (fiscal year ending 2022/3 to fiscal year ending 2024/3), strengthening and expanding overseas business has been one of the priority measures. Overseas sales increased 2.7 times from 16,117 million yen for the fiscal year ending March 31, 2021 to 42,968 million yen for the fiscal year ending 2024/3. The overseas sales ratio increased from 16.1% to 29.8%. In the overseas business, performance is strong, with sales volume increasing, and business volume is expanding through M&A. Since raw materials are mainly dependent on overseas, the depreciation of the yen was a negative factor on profits, but the impact was resolved due to the expansion of overseas business. In “Vision 2030,” we aim to be a “global comprehensive refractory manufacturer” that manufactures and sells locally, and targets an overseas sales ratio of 50%. In the 6th Mid-Term Management Plan, which began in the fiscal year ending 2025/3, the target is an overseas sales ratio of 45% for the fiscal year ending 2027/3, and the plan is to actively promote M&A, JA, etc., and accelerate global expansion.
(Written by FISCO Visiting Analyst Matsumoto Akihiro)