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Sumitomo Chemical Co
(4005)
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Rating:59Neutral
Price Target:
¥504.00
▼(-6.42% Downside)
Action:Reiterated
Date:08/05/26
The score is driven primarily by improving financial performance (return to profitability and positive TTM free cash flow) but held back by elevated leverage and uneven cash conversion. Technicals are the biggest near-term drag, with the stock in a clear downtrend and bearish momentum signals. Valuation is supportive (P/E ~14 and ~2.6% yield), and the latest earnings call was moderately positive on guidance and segment recovery, though tempered by negative near-term free cash flow and uncertainty.
Positive Factors
Diversified business model
Sumitomo Chemical's wide product mix across commodity petrochemicals, higher‑value functional materials, electronics chemicals, agrochemicals and pharmaceuticals spreads demand and margin risk. This multi‑segment exposure supports revenue stability and cross‑cycle resilience over the next several months.
Negative Factors
Elevated leverage (historical)
Despite recent improvements, the company has operated with a relatively high debt load which can constrain capital allocation and limit downside protection if earnings soften. Elevated leverage increases sensitivity to interest costs and cyclical downturns over the coming months.
Read all positive and negative factors
Positive Factors
Negative Factors
Diversified business model
Sumitomo Chemical's wide product mix across commodity petrochemicals, higher‑value functional materials, electronics chemicals, agrochemicals and pharmaceuticals spreads demand and margin risk. This multi‑segment exposure supports revenue stability and cross‑cycle resilience over the next several months.
Read all positive factors
Sumitomo Chemical Co (4005) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥853.61B
Dividend Yield2.57%
Average Volume (3M)8.80M
Price to Earnings (P/E)8.3
Beta (1Y)1.06
Revenue Growth-5.54%
EPS Growth995.46%
CountryJP
Employees27,491
SectorBasic Materials
Sector Strength58
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)64.60
Shares Outstanding1,662,978,900
10 Day Avg. Volume7,938,570
30 Day Avg. Volume8,803,416
Financial Highlights & Ratios
PEG Ratio0.23
Price to Book (P/B)0.81
Price to Sales (P/S)0.35
P/FCF Ratio7.24
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥850.00Price Target Upside57.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)49.76
Revenue Forecast (FY)¥2.46T
Sumitomo Chemical Co Business Overview & Revenue Model
Company Description
Sumitomo Chemical Company, Limited is a global enterprise active across diverse sectors, including petrochemicals and plastics, advanced energy and functional materials, specialized IT-related chemicals, health and agricultural sciences, pharmaceu...
How the Company Makes Money
Sumitomo Chemical makes money primarily by manufacturing and selling chemical products and related materials to industrial and end-market customers worldwide. Its revenue model is largely volume- and price-driven, with earnings influenced by produ...
Sumitomo Chemical Co Earnings Call Summary
Earnings Call Date:Aug 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Nov 04, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive operating performance driven by strong price realization, FX tailwinds and a significant rebound in Essential & Green Materials and Agro & Life Solutions, with core operating income and net income rising substantially. However, the upbeat results are tempered by a worsening free cash flow position, cost pressures from raw materials and fixed investment (notably in semiconductor capacity), segment‑specific weakness in display/ICT and ongoing geopolitical and weather uncertainties that leave full‑year visibility limited. On balance the positive profit and guidance developments outweigh the headwinds, but risks to cash flow and outlook remain.Positive Updates
Strong Quarterly Profitability Surge
Core operating income reached JPY 62.3 billion in Q1, up JPY 34.7 billion year‑on‑year (approximately +125%), and operating income was JPY 61.0 billion (up JPY 35.6 billion). Net income attributable to owners was JPY 40.8 billion, up JPY 45.3 billion year‑on‑year — the second best Q1 on record after FY'22.
Negative Updates
Free Cash Flow Deterioration
Cash flows from operating activities were positive but weak at JPY 5.0 billion (down JPY 19.0 billion YoY). Investing cash flow outflow was JPY 49.2 billion, leaving free cash flow negative JPY 44.3 billion (a deterioration of JPY 22.3 billion year‑on‑year).
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Quarterly Profitability Surge
Core operating income reached JPY 62.3 billion in Q1, up JPY 34.7 billion year‑on‑year (approximately +125%), and operating income was JPY 61.0 billion (up JPY 35.6 billion). Net income attributable to owners was JPY 40.8 billion, up JPY 45.3 billion year‑on‑year — the second best Q1 on record after FY'22.
Read all positive updates
Company Guidance
Management issued H1 FY2026 guidance calling for sales of JPY1.17 trillion (up JPY74.6bn YoY), core operating income of JPY125.0bn (up JPY16.3bn YoY; core operating income excluding gains on business sales expected to double YoY), operating income of JPY122.0bn (up JPY18.3bn YoY) and quarterly net income attributable to owners of JPY70.0bn (up JPY30.3bn YoY), and said it expects to achieve the May-announced full‑year net income target by the end of H1; assumptions include FX of JPY155/USD for Q2 (JPY157/USD for H1) and naphtha at JPY90,000/kL for Q2 (JPY104,000/kL for H1), interim dividend JPY8 and year‑end JPY8 (annual JPY16) unchanged, while segment guidance projects significant profit improvement in Essential & Green Materials (Petro Rabigh margin recovery and inventory‑valuation gains), strong Agro & Life Solutions (crop‑protection shipments and better feed‑additive margins), mixed ICT & Mobility (weaker display, stronger semiconductor processing materials) and weaker Sumitomo Pharma profits (higher SG&A/R&D and no prior‑year sale gains); management left the full‑year forecast unchanged due to Middle East uncertainty and will reassess at H1 results (balance sheet note: D/E improved to 0.80x after Sumitomo Pharma’s JPY97.8bn capital increase).Sumitomo Chemical Co Financial Statement Overview
Summary
Income Statement
67
Positive
Balance Sheet
54
Neutral
Cash Flow
60
Neutral
| Breakdown | TTM | Mar 2026 | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.38T | 2.33T | 2.61T | 2.45T | 2.90T | 2.77T |
| Gross Profit | 698.78B | 668.27B | 675.79B | 445.78B | 762.12B | 820.50B |
| EBITDA | 320.25B | 300.91B | 228.50B | -275.08B | 192.28B | 430.86B |
| Net Income | 106.25B | 60.95B | 38.59B | -311.84B | 6.99B | 162.13B |
Balance Sheet | ||||||
| Total Assets | 3.61T | 3.41T | 3.44T | 3.93T | 4.17T | 4.31T |
| Cash, Cash Equivalents and Short-Term Investments | 223.20B | 208.59B | 209.84B | 217.45B | 305.84B | 365.43B |
| Total Debt | 1.13T | 1.15T | 1.37T | 1.66T | 1.55T | 1.44T |
| Total Liabilities | 2.20T | 2.17T | 2.37T | 2.77T | 2.68T | 2.61T |
| Stockholders Equity | 1.10T | 1.01T | 900.79B | 965.75B | 1.17T | 1.22T |
Cash Flow | ||||||
| Free Cash Flow | 96.11B | 113.19B | 102.56B | -204.19B | -31.96B | 64.25B |
| Operating Cash Flow | 215.73B | 234.76B | 233.03B | -51.32B | 111.62B | 171.72B |
| Investing Cash Flow | 18.77B | -74.82B | 79.90B | -112.24B | -218.48B | -119.42B |
| Financing Cash Flow | -191.13B | -199.07B | -295.45B | 49.25B | 20.57B | -77.39B |
Sumitomo Chemical Co Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | ¥12.41T | 25.21 | 10.90% | 1.58% | 0.62% | -2.72% | |
64 Neutral | ¥2.28T | 12.26 | 8.13% | 2.28% | 4.03% | 61.70% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
61 Neutral | ¥3.06T | 56.06 | 5.27% | 0.47% | 1.40% | 57.40% | |
59 Neutral | ¥853.61B | 8.26 | 6.28% | 2.51% | -5.54% | 995.46% | |
57 Neutral | ¥1.67T | -41.67 | 0.66% | 2.60% | -7.96% | 106.67% | |
57 Neutral | ¥872.05B | 15.85 | 5.11% | 3.52% | -0.63% | 15.92% |
* Basic Materials Sector Average
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Sumitomo Chemical Co Corporate Events
Sumitomo Pharma Rejects Short-Seller Allegations, Stands by Audited Accounts
Aug 4, 2026
Sumitomo Chemical’s pharmaceutical subsidiary, Sumitomo Pharma Co., Ltd., has responded to a critical report issued by Gotham City Research LLC that alleges misstatements and inappropriate accounting treatments in the group’s financial...
Sumitomo Chemical Delivers Strong Q1 2026 Rebound and Unveils First-Half Forecast
Aug 4, 2026
Sumitomo Chemical reported a sharp turnaround in profitability for the first quarter of fiscal 2026, with sales revenue rising to ¥578.2 billion and core operating income jumping to ¥62.3 billion, up 125.2% year on year. Operating income...
Sumitomo Chemical Finalizes Capital Reserves Adjustment After Koei Chemical Share Exchange
Aug 3, 2026
Sumitomo Chemical has finalized the amount of capital reserves reduction linked to its recently completed share exchange with Koei Chemical Company, Limited, effective August 1, 2026. In this transaction, Sumitomo Chemical became the wholly owning...
Sumitomo Chemical Activates Polyolefin JV Integration With Prime Polymer
Jul 1, 2026
Sumitomo Chemical said its previously announced integration of its Japanese polypropylene and linear low-density polyethylene operations into Prime Polymer has progressed, with the business integration, joint venture and first-phase absorption-typ...
Sumitomo Chemical Unit Taoka Chemical Lifts Earnings on Strong Resin Raw Material Sales
May 15, 2026
Sumitomo Chemical said its consolidated subsidiary Taoka Chemical Co., Ltd. posted higher non-consolidated results for the fiscal year ended March 31, 2026, compared with the prior year. The company emphasized that the impact of Taoka ChemicalR...
Sumitomo Chemical Profits Rebound Despite Lower Sales, Dividend Raised
May 14, 2026
Sumitomo Chemical reported a 10.7% decline in fiscal 2025 sales revenue to ¥2.33 trillion, but core operating income jumped 48.3% to ¥208.4 billion, while operating income fell 21.4% to ¥151.7 billion. Net income attributable to own...
Sumitomo Chemical Reverses Rabigh Share Write-down With No Impact on Group Earnings
May 14, 2026
Sumitomo Chemical Co., Ltd. reported that an extraordinary loss previously booked on a write-down of its investment in Class A ordinary shares of Rabigh Refining and Petrochemical Company in the third quarter of FY2025 has been reversed in its non...
Sumitomo Chemical Books ¥12.9 Billion FX Gain in Q4 FY2025
May 14, 2026
Sumitomo Chemical Co., Ltd. reported a finance income boost in the fourth quarter of fiscal 2025, driven by a foreign exchange gain of ¥12.87 billion from January 1 to March 31, 2026. The gain mainly stems from the revaluation of assets and l...
Sumitomo Chemical to Reclassify Capital Reserves Ahead of Koei Chemical Takeover
May 13, 2026
Sumitomo Chemical has approved a move to reduce the capital reserves that will arise from its planned share exchange to make subsidiary Koei Chemical a wholly owned unit, transferring the entire increase to other capital surplus instead. The board...
Sumitomo Pharma Profit Jumps on U.S. Asset Transfer and Asian Stake Sale
May 13, 2026
Sumitomo Chemical reported that its consolidated subsidiary Sumitomo Pharma Co., Ltd. posted sharp year-on-year gains in non-consolidated results for the fiscal year ended March 31, 2026, driven by an 82.9% rise in net sales to ¥249.5 billion...
Sumitomo Chemical to Take Koei Chemical Private via Simplified Share Exchange
May 13, 2026
Sumitomo Chemical and Koei Chemical have agreed to a share exchange that will make Koei Chemical a wholly owned subsidiary of Sumitomo Chemical, with Sumitomo as the parent company in a simplified share exchange and Koei seeking shareholder approv...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.