In its full-year forecast for the fiscal year ending December 2026, announced on November 11, Resonac Holdings sharply raised its core operating profit outlook while cutting its net profit outlook by 33%. The company lifted its core operating profit forecast from ¥196.0 billion to ¥250.0 billion, but lowered its forecast for profit attributable to owners of the parent (hereafter, attributable net profit) from ¥112.5 billion to ¥75.0 billion. This divergence appears to reflect losses related to the graphite electrode business and losses from the separation of Resonac's Crasus Chemical unit, rather than a decline in the company's underlying earning power. Of the ¥37.8 billion cut in net profit including non-controlling interests, ¥12.8 billion comes from discontinued operations, including Crasus Chemical, and the remaining ¥25.0 billion from lower profit in continuing operations. However, details of the losses related to the graphite electrode business have not been disclosed, leaving uncertainty about the impact on future earnings and cash flow.
Core operating profit revised up ¥54 billion, net profit revised down ¥37.5 billion
The full-year forecast published on November 11 moved in sharply different directions depending on the profit measure. Forecast revenue rose ¥70.0 billion, from ¥1,165.0 billion to ¥1,235.0 billion, and core operating profit was raised ¥54.0 billion, from ¥196.0 billion to ¥250.0 billion. Meanwhile, operating profit under IFRS (International Financial Reporting Standards) fell ¥45.0 billion, from ¥160.0 billion to ¥115.0 billion, and attributable net profit was cut ¥37.5 billion, from ¥112.5 billion to ¥75.0 billion, a downward revision of 33.3%. The dividend forecast was left unchanged at ¥65. All comparisons are with the company's forecasts as of August 6.
Resonac explained that it raised revenue and core operating profit because demand for semiconductor and electronic materials, mainly for advanced semiconductors, has remained strong. IFRS operating profit and net profit, on the other hand, were lowered to reflect losses associated with giving concrete shape to strategic options for the graphite electrode business. Kabutan has also reported the 33% downward revision to the net profit forecast, and the strength of semiconductor materials and the profitability challenges in graphite electrodes have featured in earlier earnings coverage. The key question in these results is which loss items pushed down net profit even as semiconductor materials profit continues to grow.
Of the ¥54.0 billion upward revision to core operating profit, ¥53.0 billion, or roughly 98%, comes from the Semiconductor and Electronic Materials segment. The segment's full-year core operating profit forecast reaches ¥248.0 billion. The company cites strong demand, mainly for advanced semiconductors, as the reason for the increase, so the upward revision is almost entirely attributable to the semiconductor and electronic materials business. That said, Resonac's results alone do not show that Japan's semiconductor materials industry as a whole is performing equally well.
Non-recurring items and discontinued operations drive the gap between core operating profit and net profit
To understand this forecast revision, it helps to be clear about the difference between "core operating profit," the measure Resonac uses, and operating profit under IFRS. According to the company's presentation materials, core operating profit is IFRS operating profit excluding gains and losses from non-recurring factors, and is positioned as an indicator equivalent to operating profit under Japanese accounting standards. Specifically, it excludes other income, other expenses, and impairment losses included in cost of sales or selling, general and administrative expenses as "non-recurring items." As a result, even if core operating profit increases, IFRS operating profit falls if non-recurring losses grow larger.
Net profit is also affected by the profit or loss of discontinued operations. Under IFRS, when the sale of a major, separate business is decided, the business is classified as a discontinued operation, and its revenue and operating profit are excluded from the continuing operations income statement. The profit or loss of discontinued operations is grouped into a separate line, "profit from discontinued operations," and flows into the final net profit figure.
Crasus Chemical, which Resonac has separated, is also classified as a discontinued operation. The separation was not an ordinary sale but a "partial spin-off," in which the business is detached through an in-kind dividend to shareholders, and it left Resonac's control with its execution on October 1, 2026. For accounting purposes, it is treated as a discontinued operation retroactively to the beginning of the period, and the interest of less than 20% that Resonac holds after the separation is designated as measured at fair value through other comprehensive income.
With this accounting treatment in mind, the reason for the downward revision to operating profit becomes clear. Although the core operating profit forecast rose ¥54.0 billion, the forecast for non-recurring items worsened by ¥99.0 billion, from a loss of ¥36.0 billion to a loss of ¥135.0 billion. As a result, the IFRS operating profit forecast was reduced by a net ¥45.0 billion.
Resonac attributes the worsening of non-recurring items to losses associated with giving concrete shape to strategic options for the graphite electrode business. Its presentation materials put this loss at ¥99.0 billion, matching the full deterioration in non-recurring items. However, the company has not disclosed the specific breakdown or nature of the loss.
Splitting the ¥37.8 billion cut in net profit between continuing and discontinued operations
The full-year forecast for net profit including non-controlling interests was lowered ¥37.8 billion, from ¥114.0 billion to ¥76.2 billion. The cut in attributable net profit is ¥37.5 billion, and the ¥0.3 billion difference stems from changes in profit attributable to non-controlling interests. Dividing the ¥37.8 billion reduction between continuing and discontinued operations makes the structure of this downward revision clearer.
First, the IFRS operating profit forecast fell ¥45.0 billion. Net financial income and expenses worsened from a loss of ¥10.5 billion to a loss of ¥13.0 billion, while equity-method investment gains improved from ¥8.5 billion to ¥9.0 billion. As a result, profit before tax fell ¥47.0 billion, from ¥158.0 billion to ¥111.0 billion, and profit from continuing operations was cut ¥25.0 billion, from ¥110.0 billion to ¥85.0 billion. In addition, profit from discontinued operations worsens by ¥12.8 billion, from ¥4.0 billion to a loss of ¥8.8 billion, bringing the combined reduction to ¥37.8 billion.
Of the ¥12.8 billion deterioration in discontinued operations, ¥11.6 billion is a loss associated with the partial spin-off of Crasus Chemical. According to the financial results summary, remeasuring the disposal group to be distributed to shareholders at fair value less costs to sell resulted in an impairment loss of ¥11.586 billion, recorded in the January–September 2026 period. The specific breakdown of the remaining ¥1.2 billion has not been disclosed. Profit from discontinued operations for January–September was a loss of ¥8.8 billion, the same amount as the full-year forecast. The presentation materials also show no profit or loss from discontinued operations being taken in after October 1, so the ¥12.8 billion deterioration appears already to be reflected in actual results.
Meanwhile, core operating profit, which shows underlying earning power, has grown substantially. Core operating profit for January–September 2026 was ¥164.1 billion, up sharply from ¥69.5 billion a year earlier. In the Semiconductor and Electronic Materials segment alone, it expanded from ¥74.0 billion a year earlier to ¥158.6 billion. On the financial side, the net debt-to-equity ratio, which shows net interest-bearing debt relative to equity, fell from 0.83x at the end of 2025 to 0.54x at the end of September 2026. Note that this indicator includes Resonac's own adjustment of treating 50% of subordinated loans as equity.
The difference between core operating profit and net profit also shows up in earnings per share (EPS). Adjusted EPS, as presented by the company, was raised from ¥800 to ¥1,131, while basic EPS was lowered from ¥606 to ¥404. Adjusted EPS is a company-specific measure that divides attributable net profit excluding non-recurring items by the average number of shares during the period, and it adds back non-recurring losses in full without considering tax effects. The two measures moved in opposite directions this time because the ¥99.0 billion deterioration in non-recurring items is excluded from the adjusted EPS calculation.
These figures suggest that the downward revision to the net profit forecast is driven mainly by losses classified as non-recurring items and losses from the spin-off, rather than by weaker underlying earning power. However, core operating profit and adjusted EPS are based on the company's own definitions, and this does not mean the excluded losses will have no effect on future earnings or cash flow.
Details of the graphite electrode losses remain unclear; the full-year results around February 2027 are the focus
Resonac's attributable net profit forecast was raised from ¥77.0 billion as of February 2026 to ¥112.5 billion in August, and has now been lowered to ¥75.0 billion. The initial forecast of ¥77.0 billion on February 13 is a figure Kabutan reported based on XBRL data, and the August forecast represents an upward revision of 46.1% from it. The current ¥75.0 billion is ¥2.0 billion, or 2.6%, below the initial forecast. However, the initial forecast assumed that Crasus Chemical would be consolidated for the full year, whereas the November forecast reflects profit or loss from discontinued operations, including the spin-off loss. Because the accounting assumptions differ, a simple comparison calls for caution.
The biggest source of uncertainty in this downward revision is that details of the ¥99.0 billion loss related to the graphite electrode business have not been disclosed. Resonac describes it as "giving concrete shape to strategic options," but does not state whether this contemplates a business sale, withdrawal, impairment, or a tie-up with another company. It is also unclear whether the loss is limited to an accounting valuation loss or involves actual cash outlays. Neither the financial results summary, the notice regarding the revision of the earnings forecast, nor the presentation materials provides a detailed breakdown or timing of recognition, so the possibility of additional losses cannot be ruled out.
There are signs of improvement in the graphite electrode business's recent performance. Core operating profit of the Chemicals segment, which includes graphite electrodes, swung from a ¥7.4 billion loss in January–September of the previous year to a ¥1.5 billion profit in January–September 2026. Revenue in the graphite business also rose about 18%, from ¥59.7 billion to ¥70.3 billion, which the company attributes to a recovery in graphite electrode sales volume and the effects of structural reforms. Because a large loss is expected even as the graphite electrode business's losses narrow and the segment as a whole returns to profit, it may reflect the company's assessment of the business's future earnings and the recoverability of its assets.
In a timely disclosure on December 1, 2025, Resonac presented a structural reform plan for the graphite electrode business. The plan calls for cutting fixed costs by about ¥11.7 billion a year compared with fiscal 2024 and reducing headcount by about 40%, or about 700 people, from the end of fiscal 2024. The effects of the reform are expected to appear from the second half of 2025 through fiscal 2026, and as of December 2025 the company had only decided to carry out the headcount reduction. How the current loss relates to these structural reforms cannot be determined at this point.
Still, the view that the downward revision to net profit stems mainly from non-recurring losses is consistent with the figures currently disclosed. Full-year core operating profit was revised up ¥54.0 billion, and the January–September results also expanded from ¥69.5 billion a year earlier to ¥164.1 billion. Of the ¥37.8 billion cut in net profit, ¥12.8 billion can be explained by losses from discontinued operations that have already been recorded. Whether the losses related to the graphite electrode business will end with this one-time charge, however, needs to be confirmed separately.
For October–December 2026, the core operating profit implied by the company's forecast is ¥85.9 billion, above the ¥79.2 billion recorded in July–September. IFRS operating profit, however, comes to a ¥33.4 billion loss when the January–September result of ¥148.4 billion is subtracted from the full-year forecast of ¥115.0 billion, and attributable net profit works out to a ¥19.6 billion loss after subtracting ¥94.6 billion from ¥75.0 billion. For non-recurring items, the gap between the full-year forecast of a ¥135.0 billion loss and the January–September actual loss of ¥15.8 billion is a ¥119.2 billion loss. The company has not explained when the losses will specifically be recorded, but the differences between the full-year forecast and actual results show that it assumes large losses will be booked in October–December.
Two points will be the focus going forward: whether growth in underlying profit continues as the company forecasts, and what kind of losses the graphite electrode business losses turn out to be. If October–December core operating profit falls well short of ¥85.9 billion, the assessment of underlying earning power will need to be revisited. And if non-recurring losses in the full-year results, expected around February 2027, exceed the forecast ¥135.0 billion, losses will have grown beyond the original assumptions. Moreover, if it turns out that more than half of the losses tied to strategic options for the graphite electrode business involve cash outlays, the impact on the company's finances will have to be weighed, not treated as a mere one-time accounting entry.
The picture is clear from this forecast: strength in semiconductor and electronic materials is expanding underlying profit, while losses from business restructuring pull down net profit. But without knowing how the graphite electrode business will be handled or what the losses consist of, the impact cannot be called temporary with certainty. In the next full-year results, the actual non-recurring items and whether cash outlays are involved will be key factors for judgment, alongside whether core operating profit is achieved.