Company Overview

1. Company Overview

Toda Kogyo <4100> was founded in Okayama Prefecture in 1823 (Year 6 of the Bunsei Era) by the Toda family, as a diligent workshop manufacturing benbira (a compound of oxygen and iron used for various purposes such as timber paint and dyeing, undercoating for indigo dyeing, lacquerware, coloration of umbrella bones, and red-glazed ceramic) for buildings. In 2023, the company celebrated its 200th anniversary as a veteran chemical material manufacturer which has strove to deepen its fine particle synthesis technology nurtured with iron oxide. It has expanded its business by providing advanced materials like high-purity iron oxide for optical lens polishing agent, magnetite oxide used in audio and video tapes, toner materials for copiers and printers, magnetic materials for motors and sensors for automobiles and home appliances, dielectric materials for MLCC, and materials for LIBs.

As of the end of March 2024, the Toda Kogyo Group consisted of the company, 14 consolidated subsidiaries, 5 companies accounted for by the equity method, and other affiliated companies, with a total of 1,112 consolidated employees.

2. Business content

The Toda Kogyo Group is currently operating in two business segments: functional pigment business (various pigments, environmental materials) and electronic materials business (magnetic materials, dielectric materials, soft magnetic materials, materials for LIBs, etc.).

In terms of the composition of sales by business segment in the fiscal year ending March 2024, the functional pigment business accounted for 30.9% and the electronic materials business accounted for 69.1%, with segment profits before common expenses being 24.7% and 75.3%, respectively. These materials are used in five markets.

(1) Electronic Materials Business

The company mainly develops products as a business field for the automotive, communications, and home appliance markets. Magnetite materials (ferrite, rare earth), dielectric materials (barium titanate), materials for LIBs, and soft magnetic materials are positioned as key businesses. Overall, the visible sales fluctuate significantly due to the market conditions of chemicals such as metals and rare metals, as well as fluctuations in exchange rates. There are also fluctuations in inventory, selling prices, and operating rates affecting profit margins.

(a) Magnetite Materials

In terms of product sales for the fiscal year ending March 2024, magnetite materials were the largest sales for the electronics materials business, accounting for 11.8 billion yen (65% of the segment's composition). The center of this is the ferrite-rare earth magnetic compound (a molded material that combines magnetic powder and resin) for bonded magnets. Bonded magnets are made from magnetic compounds with high filling content of ferrite magnets or rare earth magnets mixed with binders such as high molecular-weight resins or rubbers. Recently, the ratio of rare earth magnet compound materials has increased to nearly half. They have the advantages of complex shaped processing, integral molding with metals, thinning, and elongation over sintered magnets in magnetic face. A wide range of products such as “ferrite-rare earth” and “isotropic-anisotropic” are available and used in various industries. Their applications are expanding into areas such as air conditioners, air purifiers, and automobiles. Including the manufacturing and sales of injection molded bonded magnets, Toda Kogyo acquired Jiangmen Xielite Magnetic Materials Science & Technology Co., Ltd. (hereafter, Jiangmen Xielite) in August 2021. This expands the business into molding as well. The segment boasts an 8% operating margin, becoming the core of the electronic materials business.

(Written by FISCO Guest Analyst Hiroshi Okamoto)