AGC Inc (5201): Strong 1Q progress; expects higher costs from Middle East conflict to be offset

Research evidence excerpt

AGC Inc (5201): Strong 1Q progress; expects higher costs from Middle East conflict to be offset

Chemicals: 1Q costs/others: Increased by ¥6.8bn YoY, but improvement in manufacturing

costs was a key factor. There was also a reversal based on the lower of cost or market

method. In addition, changes in the scope of consolidation contributed one-time profits

in the low single-digit billion yen range.

Chemicals: Price assumptions: AGC currently expects ethylene and PVC market prices to

remain at the March level. Its caustic soda outlook is unchanged from the outlook in Feb.

Chemicals: New Thai plant: The plant had some operational adjustments in 1Q, but this

was related to equipment startup rather than raw material procurement issues, and the

impact was minor. AGC expects operation at near full capacity from 2Q.

Life science: Colorado facility: AGC is holding talks with the aim of executing an early

sale in 2026. It still has depreciation and other remaining costs, but due to the

elimination of personnel costs as the largest cost item, it has achieved substantial cost

reductions.

Life science: Copenhagen facility: Sales increased QoQ. Productivity also improved, due

partly to an increase in contract orders. The profit-growth contribution reached the

billion yen level. Europe did not grow much overall due to lower sales for small molecule

pharmaceuticals and agrochemicals.

Electronics: 1Q costs/others: Decreased by ¥5.7bn YoY, reflecting manufacturing cost

deterioration and large impact of yen depreciation in displays.

Semiconductor-related material trends: AGC expects EUV mask blank and slurry sales to

grow YoY in FY12/26. However, EUV mask blank sales were flat YoY in 1Q. Copper-clad

laminate (CCL) demand is firm, and AGC expects continued strong demand in the high-