NGK Corporation

Business Overview

Reorganization from Four Business Segments to Three

In the fiscal year ended March 31, 2022, NGK Corporation (NGK) operated through four business segments: Energy Infrastructure Business, Ceramics Business, Electronics Business, and Process Technology Business. The Energy Infrastructure Business handled insulators and related equipment for electric power and NAS batteries; the Ceramics Business handled automotive exhaust gas purification components and sensors; the Electronics Business handled electronic components and beryllium copper products; and the Process Technology Business handled products for semiconductor manufacturing equipment and industrial ceramic products, equipment, and systems. (Annual Securities Report, 2022)

In the fiscal year ended March 31, 2023, NGK reorganized its reportable segments following an organizational change into three segments: Environment Business, Digital Society Business, and Energy & Industry Business. Automotive exhaust gas purification components and sensors were grouped under Environment Business; products for semiconductor manufacturing equipment, electronic components, beryllium copper products, and molds under Digital Society Business; and NAS batteries, insulators and related equipment for electric power, and industrial ceramic products under Energy & Industry Business. This change from four reportable segments to three was the most significant change in business classification during the five-year period. (Annual Securities Reports, 2022–2023)

Expansion of Environment Business

The three-segment structure was maintained thereafter, but in the fiscal year ended March 31, 2025, industrial equipment-related products previously included in Energy & Industry Business were transferred to Environment Business. As a result, Environment Business came to include not only automotive exhaust gas purification components and sensors, but also industrial ceramic products, equipment, and systems such as corrosion-resistant equipment for chemical industries, membrane separation systems, combustion equipment and refractory products, and radioactive waste treatment equipment. (Annual Securities Report, 2025)

Digital Society Business has continued to center on products for semiconductor manufacturing equipment, along with electronic components, beryllium copper products, and molds. There has been no major change in the overall structure of manufacturing and sales operations through domestic and overseas companies, and the same business classification has been maintained since the reorganization in the fiscal year ended March 31, 2023. (Annual Securities Reports, 2023–2026)

Decision to Exit the NAS Battery Business

The three-segment structure remained in place in the fiscal year ended March 31, 2026, with NAS batteries and insulators and related equipment for electric power as the principal products of Energy & Industry Business. In October 2025, however, the Board of Directors decided to discontinue manufacturing and sales activities for NAS batteries, which had been operated as the Energy Storage Business, and to stop accepting new orders. NAS batteries, commercialized in 2002, therefore reached a decision to end manufacturing and sales activities near the end of this five-year period. (Annual Securities Report, 2026)

Changes in the Business Portfolio over Five Years

Across the five-year period, changes in the business structure centered on reorganizing existing product groups rather than simply adding new businesses. NGK moved from four business segments in the fiscal year ended March 31, 2022 to three in the fiscal year ended March 31, 2023, and subsequently reviewed the scope of responsibilities within those three segments, including the transfer of industrial equipment-related products to Environment Business. (Annual Securities Reports, 2022–2025)

At the latest point in the period, Environment Business handled automotive exhaust gas purification components, sensors, and industrial ceramic products; Digital Society Business handled products for semiconductor manufacturing equipment and electronic components; and Energy & Industry Business handled NAS batteries and insulators and related equipment for electric power. At the same time, NGK had decided to discontinue manufacturing and sales activities for NAS batteries in Energy & Industry Business, indicating a review of the business portfolio toward the end of the five-year period. (Annual Securities Reports, 2022–2026)

Business Environment and Strategy

Management Policy and Business Environment

Under the NGK Group Vision: Road to 2050, NGK positioned the achievement of carbon neutrality and the transition toward a digital society as development opportunities looking ahead to 2050. It set out five transformations—ESG Management, Profitability Improvement, Research & Development, Commercialization, and Digital Transformation (DX)—and pursued a shift in its business structure toward a “Third Foundation” based on its unique ceramic technologies. NGK also used Return on Equity (ROE) as a key management indicator and NGK ROIC, based on Return on Invested Capital (ROIC), as a management indicator for business divisions, while emphasizing capital efficiency with a medium- to long-term focus on ROE of at least 10%. (Annual Securities Report, 2022)

To transform its business structure, NGK established New Value 1000, targeting JPY 100.0 billion in net sales from new products and new businesses in 2030. It planned total research and development investment of JPY 300.0 billion over the 10 years from 2021 to 2030, with approximately 80% allocated to carbon neutrality and digital society fields. In April 2022, NGK established Corporate NV Creation, centered on marketing, and built a structure for creating and commercializing new products in collaboration with the Corporate R&D and Manufacturing Engineering organizations. (Annual Securities Reports, 2022–2023)

Road to 2050 and New Value 1000 remained the central pillars of this policy thereafter. In fiscal 2022, NGK established a development and commercialization committee to oversee the process from research and development through commercialization. It also promoted concurrent development that incorporates manufacturing technology from an early stage, materials informatics combining experimental data with AI, and investments in venture capital and startup companies. (Annual Securities Reports, 2023–2025)

For Environment Business, NGK recognized the possibility that the market for internal combustion engine vehicles could contract over the medium to long term, while responding to tighter exhaust gas regulations, introducing new products, improving productivity, and optimizing its global production structure. It also sought to develop carbon-neutrality-related products, including Direct Air Capture (DAC), which directly captures CO2 from the atmosphere, and separation membranes, as new business fields. In Digital Society Business, NGK viewed higher semiconductor performance and demand related to AI and data centers as growth opportunities, and expanded production capacity and research and development in adjacent fields, centered on ceramics for semiconductor manufacturing equipment. (Annual Securities Reports, 2023–2026)

In the fiscal year ended March 31, 2026, NGK positioned Digital Society Business as a growth driver. In March 2026, it decided to invest more than JPY 70.0 billion in a new plant in Ishikawa Prefecture for ceramics used in semiconductor manufacturing equipment, increasing domestic production capacity by approximately 20%. In carbon-neutrality-related fields, NGK recognized that changes in government policies across countries had delayed renewable-energy penetration and the transition to decarbonization, while maintaining that the long-term direction had not changed. It therefore continued efforts to improve performance and reduce costs for DAC and sub-nano ceramic membranes. (Annual Securities Report, 2026)

NGK continued to emphasize ROE and NGK ROIC throughout the period. In the fiscal year ended March 31, 2026, based on expected earnings growth in Digital Society Business, it raised its ROE target for fiscal 2030 to 12%, compared with the previous focus on at least 10%. Across the five years, NGK maintained its basic policy of transforming the business structure while making its mechanisms for research and development and new-business creation more concrete. Toward the end of the period, this was accompanied by large-scale investment in Digital Society Business and a higher capital-efficiency target. (Annual Securities Reports, 2022–2026)

Sustainability Approach and Initiatives

Based on the NGK Group Philosophy, “Enriching Human Life by Adding New Value to Society,” NGK regards contributing to a sustainable society by providing new value through its unique ceramic technologies as its basic approach to sustainability. It aims to contribute to the achievement of carbon neutrality and a digital society and identifies material issues that are important to both the NGK Group and its stakeholders. (Annual Securities Reports, 2023–2026)

In addressing climate change, NGK seeks to promote carbon neutrality across the entire value chain and achieve business activities with net-zero CO2 emissions. Under the framework of the Task Force on Climate-Related Financial Disclosures (TCFD), it analyzes transition risks, physical risks, and business opportunities using multiple scenarios and time horizons, and reflects the results in business strategies and response measures. NGK has also continued its policy of developing carbon-neutrality-related products using data and digital technologies. (Annual Securities Reports, 2023–2026)

For human capital, NGK's basic policy is to create an environment in which people with diverse experiences and values can contribute, while employees take initiative in challenging themselves and developing together. The HR Committee addresses personnel measures based on the human capital management policy, human rights initiatives, and labor-related issues, and reports important matters and annual results to the Board of Directors. From April 2026, responsibility for matters concerning respect for human rights was transferred from the HR Committee to the Sustainability Committee. (Annual Securities Reports, 2023–2026)

Note: A dedicated section for “Sustainability Approach and Initiatives” was added to Annual Securities Reports following revisions to disclosure rules in January 2023.

Business Risks

Throughout the period, NGK identified risks to business operations from changes in political conditions, laws and regulations, tax systems, tariffs, and infrastructure associated with overseas operations, as well as impacts on business continuity from wars, infectious diseases, and natural disasters. In the fiscal year ended March 31, 2026, reflecting geopolitical tensions and policy developments concerning economic security, it also explicitly identified supply-chain stability—from procurement of raw materials and components through production and logistics—as an important operating assumption. (Annual Securities Reports, 2022–2026)

In Environment Business, NGK continued to recognize the risk that demand for its core automotive exhaust gas purification products could change as the market shifts toward non-internal-combustion vehicles such as electric vehicles (EVs) and fuel cell vehicles (FCVs). At the same time, it expected a certain level of demand from tighter exhaust gas regulations in various countries and continued developing and launching new and higher-function products and adjusting production to demand trends. In China, NGK also identified the rise of competitors and declining market share as risks. (Annual Securities Reports, 2022–2026)

In Digital Society Business, market fluctuations and technological changes in semiconductors and data centers can affect demand. NGK also continued to recognize the risk that funds and technologies invested in research and development might not lead to sufficient results in the form of new products or new businesses. In the fiscal year ended March 31, 2026, it specifically identified the possibility of failing to achieve New Value 1000 if research and development results did not sufficiently align with market and customer needs. (Annual Securities Reports, 2022–2026)

Compliance, human rights, safety, and quality also remained continuing risk areas. NGK recognized the risk of penalties, litigation, and reputational damage arising from violations of competition laws, import and export regulations, labor laws, anti-corruption rules, and social norms in Japan and overseas. In quality, it identified potential effects on earnings and reputation from major market claims, contractual breaches, and product safety issues. For quality compliance, the Group promoted management commitments, rules and training, audits and monitoring, and preventive measures against quality risks across the organization. (Annual Securities Reports, 2022–2026)

For information systems and information security, NGK identified risks including data theft, destruction or alteration, and business interruption caused by cyberattacks, unauthorized access, and system failures. In the latest fiscal year, reflecting broader use of digital technologies including DX and generative AI and greater dependence on information systems, NGK described an approach to risk management covering both the “offensive” use of digital technology and the “defensive” protection of information infrastructure. (Annual Securities Report, 2026)

Across the five years, long-standing major risks continued, including contraction of the internal combustion engine vehicle market, uncertainty in research and development, compliance and quality issues, and foreign exchange fluctuations. At the same time, disclosures became more specific regarding supply chains amid geopolitical and economic-security concerns, cybersecurity, and human capital. In the latest fiscal year, NGK also presented response measures for individual risks and the risks remaining after those measures. (Annual Securities Reports, 2022–2026)

Management's Analysis of Financial Position, Results, and Cash Flows

In the fiscal year ended March 31, 2022, shipments of automotive-related products increased with the global recovery in automobile markets, while demand for products used in semiconductor manufacturing equipment rose substantially amid favorable semiconductor market conditions. The weaker yen also contributed, and revenue increased 12.9% year on year to JPY 510.4 billion, while operating profit increased 64.3% to JPY 83.5 billion. (Annual Securities Report, 2022)

Conditions changed in the fiscal year ended March 31, 2023, as lower semiconductor and data-center investment reduced shipments of products for semiconductor manufacturing equipment and electronic components. Revenue increased to JPY 559.2 billion with the weaker yen, while operating profit declined to JPY 66.8 billion due to lower sales volumes, higher labor costs, and rising raw-material and fuel prices. In Environment Business, higher raw-material, fuel, and labor costs also weighed on profit, while the operating loss in Energy & Industry Business widened due to higher raw-material prices. (Annual Securities Report, 2023)

In the fiscal year ended March 31, 2024, revenue increased to JPY 578.9 billion due to higher volumes of automotive-related products and the weaker yen. Operating profit remained broadly unchanged at JPY 66.4 billion as volumes of products for semiconductor manufacturing equipment continued to decline and higher raw-material and fuel prices and increased research and development expenses affected earnings. In the ceramic package business, deteriorating performance caused by lower demand led to an impairment loss on business assets, and net income attributable to owners of the parent decreased to JPY 40.6 billion. (Annual Securities Report, 2024)

In the fiscal year ended March 31, 2025, shipments of products for semiconductor manufacturing equipment increased against a backdrop of higher semiconductor demand for AI applications and data-center investment, while insulator shipments also increased with transmission and distribution investment in Japan and overseas. Although volumes of automotive-related products decreased, higher semiconductor-related product sales and the weaker yen helped revenue recover to JPY 619.5 billion and operating profit to JPY 81.2 billion. In particular, Digital Society Business recorded a 24.2% year-on-year increase in revenue and a 652.5% increase in operating profit. (Annual Securities Report, 2025)

In the fiscal year ended March 31, 2026, sales of products for semiconductor manufacturing equipment continued to increase, supported by higher semiconductor demand for AI applications and inventory accumulation by certain customers, while automotive-related products remained steady. Revenue increased 8.2% year on year to JPY 670.1 billion and operating profit increased 16.9% to JPY 95.0 billion. Meanwhile, NGK recorded JPY 20.0 billion in business restructuring expenses as an extraordinary loss in connection with the discontinuation of NAS battery manufacturing and sales activities. Even so, net income attributable to owners of the parent increased 9.1% year on year to JPY 59.9 billion. (Annual Securities Report, 2026)

Over the five-year period, performance moved from the recovery in automotive and semiconductor demand in the fiscal year ended March 31, 2022 through the semiconductor-demand slowdown and cost increases from the fiscal year ended March 31, 2023 and the impairment of the ceramic package business in the fiscal year ended March 31, 2024. From the fiscal year ended March 31, 2025, Digital Society Business again became a driver of earnings, supported by AI- and data-center-related demand. That growth continued in the fiscal year ended March 31, 2026, while costs associated with ending the NAS battery business also emerged, making it a year in which investment in growth fields and the review of existing businesses progressed at the same time. (Annual Securities Reports, 2022–2026)

Material Agreements

From the fiscal year ended March 31, 2022 through the fiscal year ended March 31, 2024, NGK reported that there were no applicable “Material Agreements, etc. in Management.” (Annual Securities Reports, 2022–2024)

In the fiscal year ended March 31, 2025, NGK entered into an agreement with KNM Process Systems Sdn Bhd to acquire all shares of Deutsche KNM GmbH, which manufactures and sells heat exchangers, membrane systems, and related products. NGK explained that it intended to strengthen competitiveness by combining the engineering and membrane-system expertise of the Borsig GmbH group under Deutsche KNM GmbH with its own ceramic technologies. (Annual Securities Report, 2025)

In January 2026, however, NGK decided to terminate the share acquisition agreement for Deutsche KNM GmbH. During the same fiscal year, it also entered into an absorption-type company split agreement under which the sales division of its wholly owned subsidiary NGK ELECTRONICS DEVICES, INC. would be transferred to NGK effective April 1, 2026. The company identified securing personnel and improving operational efficiency as issues for the ceramic package business and explained that the reorganization was intended to support sustainable growth and strengthen the competitiveness of the electronic devices business. (Annual Securities Report, 2026)

Research and Development Activities

Research and development remained an important management priority throughout the five years. Group-wide research and development expenses were JPY 23.6 billion in the fiscal year ended March 31, 2022, JPY 26.2 billion in 2023, JPY 31.6 billion in 2024, JPY 29.6 billion in 2025, and JPY 31.8 billion in 2026. (Annual Securities Reports, 2022–2026)

The research and development structure also changed. In the fiscal year ended March 31, 2022, NGK had a two-part structure consisting of the head-office research and development organization and business divisions and subsidiaries. After establishing Corporate NV Creation in April 2022, it moved to a structure in which Corporate NV Creation, responsible for marketing, the Corporate R&D organization, responsible for differentiating technologies, and the Manufacturing Engineering organization, responsible for manufacturing, worked together to accelerate the process from research and development to commercialization. (Annual Securities Reports, 2022–2026)

In research themes, NGK continued improving the performance of products in existing businesses, including automotive exhaust gas purification products, sensors, and ceramics for semiconductor manufacturing equipment, while expanding initiatives related to carbon neutrality and digital society, including DAC, separation membranes, and next-generation composite wafers. In fiscal 2025, NGK opened NGK Collaboration Square DIVERS as an open-innovation hub combining knowledge from inside and outside the company. (Annual Securities Reports, 2022–2026)

Under Road to 2050, NGK planned JPY 300.0 billion in research and development investment over the 10 years from 2021 and stated that it had invested JPY 142.6 billion during the five years through the fiscal year ended March 31, 2026. It also moved to a plan to conduct approximately JPY 200.0 billion of research and development over the five years from 2026 to enhance the business potential of promising themes and accelerate transformation. New Value 1000, which targets JPY 100.0 billion in sales from new products and new businesses in 2030, remained in place. Over the five years, both the priority areas for research and development and the organizational structure and investment scale for connecting research to commercialization became more concrete. (Annual Securities Reports, 2022–2026)

Financial Overview

Consolidated Financial Position

Total assets increased from JPY 982.8 billion at March 31, 2022 to JPY 1,243.3 billion at March 31, 2026. Net assets increased from JPY 589.6 billion to JPY 817.4 billion over the same period, while the equity ratio rose from 59.3% to 65.0%. (Annual Securities Reports, 2022–2026)

Within current assets, cash and deposits increased from JPY 139.2 billion at March 31, 2022 to JPY 198.2 billion at March 31, 2026, while securities increased from JPY 46.4 billion to JPY 124.8 billion. Inventories also increased from JPY 188.3 billion to JPY 232.8 billion, although they declined in the fiscal year ended March 31, 2026 after peaking at JPY 241.9 billion at March 31, 2025. (Annual Securities Reports, 2022–2026)

For property, plant and equipment, NGK continued capital expenditures related to expanding production capacity, including for products used in semiconductor manufacturing equipment, and to research and development. At March 31, 2026, buildings and structures were JPY 140.3 billion and machinery, equipment and vehicles were JPY 155.5 billion. Construction in progress decreased from JPY 32.5 billion at March 31, 2025 to JPY 27.2 billion at March 31, 2026. (Annual Securities Reports, 2025–2026)

The increase in net assets reflected accumulated retained earnings as well as an increase in the foreign currency translation adjustment. At March 31, 2026, retained earnings were JPY 492.0 billion, the foreign currency translation adjustment was JPY 121.6 billion, and accumulated other comprehensive income increased to JPY 186.5 billion. In the same fiscal year, NGK also recorded a JPY 12.3 billion provision for business restructuring for costs and losses expected to arise in connection with discontinuing NAS battery manufacturing and sales activities. (Annual Securities Report, 2026)

Consolidated Results of Operations

Revenue increased from JPY 510.4 billion in the fiscal year ended March 31, 2022 to JPY 670.1 billion in the fiscal year ended March 31, 2026. Profit did not increase in a straight line: operating profit decreased from JPY 83.5 billion in 2022 to JPY 66.8 billion in 2023 and JPY 66.4 billion in 2024, before recovering to JPY 81.2 billion in 2025 and JPY 95.0 billion in 2026. (Annual Securities Reports, 2022–2026)

From the fiscal year ended March 31, 2023 to the fiscal year ended March 31, 2024, impairment losses also affected earnings in addition to the lack of growth in operating profit. NGK recorded impairment losses of JPY 10.0 billion in 2023 and JPY 7.0 billion in 2024 as extraordinary losses. In 2024, ordinary profit was JPY 63.0 billion, while net income attributable to owners of the parent was JPY 40.6 billion. (Annual Securities Reports, 2023–2024)

In the fiscal year ended March 31, 2025, revenue recovered to JPY 619.5 billion, operating profit to JPY 81.2 billion, ordinary profit to JPY 78.2 billion, and net income attributable to owners of the parent to JPY 54.9 billion. In the same fiscal year, NGK recorded an impairment loss of JPY 5.8 billion and a compensation loss of JPY 3.0 billion as extraordinary losses. (Annual Securities Report, 2025)

In the fiscal year ended March 31, 2026, revenue increased to JPY 670.1 billion, operating profit to JPY 95.0 billion, and ordinary profit to JPY 95.2 billion. Extraordinary income included JPY 13.2 billion in gain on sales of investment securities, while extraordinary losses included a JPY 4.8 billion impairment loss and JPY 20.0 billion in business restructuring expenses related to discontinuing NAS battery manufacturing and sales activities. Total extraordinary losses were JPY 25.9 billion, while net income attributable to owners of the parent was JPY 59.9 billion. (Annual Securities Report, 2026)

Over the five years, revenue expanded, while operating profit declined from the fiscal year ended March 31, 2023 through the fiscal year ended March 31, 2024 and impairment losses continued to be recorded. Operating profit then recovered from the fiscal year ended March 31, 2025 and reached its highest level in the period in the fiscal year ended March 31, 2026, although that year also included a significant extraordinary loss related to the end of the NAS battery business. (Annual Securities Reports, 2022–2026)

Consolidated Cash Flows

Cash flows from operating activities were JPY 94.8 billion in the fiscal year ended March 31, 2022, JPY 97.9 billion in 2023, JPY 99.2 billion in 2024, and JPY 96.7 billion in 2025, generally remaining within a range of approximately JPY 95.0–100.0 billion. They increased to JPY 138.0 billion in the fiscal year ended March 31, 2026. (Annual Securities Reports, 2022–2026)

Cash flows from operating activities in the fiscal year ended March 31, 2026 included profit before income taxes of JPY 83.8 billion and depreciation and amortization of JPY 57.5 billion. They also included a JPY 12.3 billion increase in the provision for business restructuring and a JPY 22.1 billion increase in cash from a decrease in inventories. (Annual Securities Report, 2026)

Cash flows from investing activities remained negative throughout the five years, with net cash used of JPY 77.1 billion in the fiscal year ended March 31, 2026. In that year, NGK spent JPY 53.2 billion on purchases of property, plant and equipment and JPY 2.3 billion on purchases of intangible assets. Continued investment in facilities, including research and development and production-capacity expansion, was reflected in investing cash flows. (Annual Securities Reports, 2022–2026)

Cash flows from financing activities also remained negative, with net cash used of JPY 48.3 billion in the fiscal year ended March 31, 2026. In that year, NGK received JPY 35.0 billion from long-term borrowings and JPY 5.0 billion from bond issuance, while repaying JPY 36.9 billion of long-term borrowings, spending JPY 15.0 billion on share repurchases, and paying JPY 19.8 billion in dividends. (Annual Securities Report, 2026)

Cash and cash equivalents at the end of the fiscal year increased from JPY 154.9 billion in the fiscal year ended March 31, 2022 to JPY 199.6 billion in the fiscal year ended March 31, 2026. While cash generation from operating activities continued, NGK made cash outlays for capital expenditures, debt repayments, dividends, and share repurchases, yet its ending cash balance increased over the period. (Annual Securities Reports, 2022–2026)

Notes to the Consolidated Financial Statements

Impairment of fixed assets continued to affect earnings during the period. NGK recorded impairment losses of JPY 10.0 billion in the fiscal year ended March 31, 2023, JPY 7.0 billion in 2024, JPY 5.8 billion in 2025, and JPY 4.8 billion in 2026. (Annual Securities Reports, 2023–2026)

Of the impairment losses in the fiscal year ended March 31, 2025, JPY 2.5 billion related to business assets for insulated heat-dissipation circuit boards and JPY 1.7 billion related to business assets for the package business. NGK reduced the carrying amounts of business assets with lower profitability, idle assets, and other assets to their recoverable amounts. (Annual Securities Report, 2025)

In the fiscal year ended March 31, 2026, NGK recorded JPY 20.0 billion in business restructuring expenses as an extraordinary loss in connection with the discontinuation of NAS battery manufacturing and sales activities. The main components were costs or losses related to disposal and valuation of inventories and costs for services that NGK was responsible for providing. NGK also recorded a JPY 12.3 billion provision for business restructuring in the consolidated balance sheet for costs and losses expected to arise in the future. (Annual Securities Report, 2026)

Accordingly, the five-year financial statements show not only trends in revenue and operating profit, but also impairment of fixed assets resulting from changes in the business environment and, at the end of the period, expenses and provisions associated with ending the NAS battery business. These were major financial items reflecting the review of the business portfolio. (Annual Securities Reports, 2023–2026)

Dividend Policy

NGK places importance on shareholder interests and regards sustainable enhancement of corporate value and profit returns as one of its most important management policies. From the fiscal year ended March 31, 2022 through the fiscal year ended March 31, 2026, its dividend policy continued to use a dividend on equity ratio (DOE) of 3% and a consolidated dividend payout ratio of approximately 30% as medium-term benchmarks, taking into account net asset management in response to changes in business risk and the relationship with ROE based on performance over approximately three years. NGK determines dividends while also considering the cash-flow outlook and intends to use retained earnings for capital expenditures to expand existing businesses and develop new businesses. (Annual Securities Reports, 2022–2026)

Annual dividend per share was ¥63 in the fiscal year ended March 31, 2022, ¥66 in 2023, ¥50 in 2024, ¥60 in 2025, and ¥80 in 2026. (Annual Securities Reports, 2022–2026)

(Annual Securities Reports, 2022–2026)

In the fiscal year ended March 31, 2022, NGK raised the year-end dividend from the initially planned ¥30 per share to ¥33 per share, resulting in an annual dividend of ¥63 per share together with the ¥30 interim dividend. In the fiscal year ended March 31, 2023, it increased the annual dividend to ¥66 per share, comprising ¥33 per share for both the interim and year-end dividends. The annual dividend then decreased to ¥50 per share in the fiscal year ended March 31, 2024, with ¥25 per share for both the interim and year-end dividends, before rising again to ¥60 per share in 2025 and ¥80 per share in 2026. (Annual Securities Reports, 2022–2026)

During the period, NGK maintained the basic dividend-policy benchmarks of a 3% DOE and a consolidated dividend payout ratio of approximately 30%. In its Annual Securities Report for the fiscal year ended March 31, 2026, however, it stated that from the following fiscal year it would raise these benchmarks to a 3.5% DOE and a dividend payout ratio of at least 35%, with the aim of improving capital efficiency and enhancing shareholder returns. It also planned an annual dividend of ¥106 per share for the following fiscal year, comprising ¥53 per share for both the interim and year-end dividends. (Annual Securities Report, 2026)

Across the five years, the actual annual dividend fluctuated with earnings and capital conditions. By the end of the period, however, NGK had raised not only the dividend level but also its DOE and dividend payout ratio benchmarks. The change in shareholder-return policy from a 3% DOE and a consolidated dividend payout ratio of approximately 30% to a 3.5% DOE and a dividend payout ratio of at least 35% was the most significant change in dividend policy during the five-year period. (Annual Securities Reports, 2022–2026)

Key Financial Indicators

The five-year trend in key consolidated financial indicators is shown below.

(Annual Securities Report, 2026)

Revenue expanded throughout the five years, but profit did not move in the same direction. Operating profit and profit declined from the fiscal year ended March 31, 2023 through the fiscal year ended March 31, 2024, and recovered from the fiscal year ended March 31, 2025. In the fiscal year ended March 31, 2026, operating profit reached its highest level in the five-year period, while profit and EPS had not returned to their fiscal 2022 levels, showing a difference between the expansion in revenue scale and the trend in bottom-line earnings. (Annual Securities Report, 2026)

Financially, both total assets and net assets increased, while the equity ratio also rose throughout the five years. ROE, however, declined from 12.9% in the fiscal year ended March 31, 2022 to 6.1% in the fiscal year ended March 31, 2024 and remained at 7.8% in both 2025 and 2026. While the financial base expanded, the level of earnings relative to equity remained below that of the first year of the period. (Annual Securities Report, 2026)

Operating cash flow remained positive throughout the five years and increased substantially in the fiscal year ended March 31, 2026. Investing cash flow and financing cash flow were negative in every year, while cash and cash equivalents at year-end increased throughout the period. NGK accumulated cash while making cash outlays for capital expenditures, debt repayments, dividends, and share repurchases. (Annual Securities Report, 2026)

Five-Year Review

Over NGK's five-year period, the company moved from four business segments in the fiscal year ended March 31, 2022 to three—Environment Business, Digital Society Business, and Energy & Industry Business—in the fiscal year ended March 31, 2023, and continued to review the scope of responsibilities within each segment. Toward the end of the period, it decided to discontinue NAS battery manufacturing and sales activities. The five years therefore included continued reorganization of existing businesses and review of the business portfolio. (Annual Securities Reports, 2022–2026)

From a management perspective, NGK pursued research and development and new-business creation under the NGK Group Vision: Road to 2050 and New Value 1000, with carbon neutrality and digital society as priority fields. While building a structure spanning research and development through commercialization, Digital Society Business became more prominent in the latter half of the period amid AI- and data-center-related demand. In the fiscal year ended March 31, 2026, NGK decided to build a new plant for ceramics used in semiconductor manufacturing equipment. (Annual Securities Reports, 2022–2026)

In performance, revenue expanded throughout the five years, while operating profit and profit declined from the fiscal year ended March 31, 2023 through the fiscal year ended March 31, 2024 and recovered from the fiscal year ended March 31, 2025. Financially, total assets, net assets, and the equity ratio increased, and NGK continued to generate positive operating cash flow. At the same time, it recorded impairment losses on fixed assets and business restructuring expenses related to the end of the NAS battery business. Investment in growth fields and reviews of existing businesses were therefore also reflected in the financial results. (Annual Securities Reports, 2022–2026)

For capital efficiency, NGK continued to emphasize ROE and raised its fiscal 2030 ROE target to 12% in the fiscal year ended March 31, 2026. Actual ROE, however, declined from 12.9% in the fiscal year ended March 31, 2022 and was 7.8% in both 2025 and 2026. By the end of the period, NGK had also raised its DOE and dividend payout ratio benchmarks. Across the five years, NGK simultaneously reviewed its business structure, invested in research and development and capital expenditures in growth fields, and strengthened its focus on capital efficiency and shareholder returns. (Annual Securities Reports, 2022–2026)

Source: NGK Corporation Annual Securities Reports, 2022–2026.