Create Triples Q1 Operating Profit to ¥402m as a Resin Supply Squeeze Drives 19% Sales Surge

Create Co., Ltd. (TSE: 3024), an Osaka-based wholesaler of pipes, valves, fittings and plumbing and water-infrastructure materials, published consolidated first-quarter results under Japanese GAAP on August 6. For the three months from April 1 to June 30, 2026 — the opening quarter of the year to March 2027 — net sales rose 19.0% to ¥10,496 million, gross profit climbed 27.9% to ¥2,000 million, and operating profit more than tripled, up 202.1% to ¥402 million. Ordinary profit rose 216.8% to ¥394 million and net profit attributable to owners of the parent jumped 330.6% to ¥294 million, taking quarterly earnings per share to ¥75.66 from ¥17.64. Comprehensive income was ¥300 million against ¥50 million a year earlier.

A supply squeeze, not a construction boom

The company is unusually direct about where the money came from, and it was not a building upturn. Escalating tension in the Middle East restricted naphtha supply and sent prices sharply higher; major manufacturers of resin products responded with shipment restrictions and, in some cases, by suspending order-taking altogether, while successive price increases moved down the chain. Contractors and distributors reacted by placing speculative and forward orders ahead of those increases, and Create — whose stock breadth and nationwide delivery network are its stated differentiators — captured a disproportionate share of that scramble. Management describes procurement and cost conditions as unprecedentedly severe and tense, and says it made the completion of its “supply responsibility” as a trading house the top priority, working closely with suppliers to secure product, passing through prices where appropriate, and drawing on inventory and logistics at its nationwide bases so that customers’ job sites would not stop.

The underlying construction market offered little help. The payback from the rush of building starts ahead of the revised Building Standards Act had largely run its course, but severe labour shortages and elevated freight costs persisted. Management is explicit that the June quarter is not a run rate: it warns that raw-material and energy prices may stay high while supply restrictions linger, and that the speculative and forward demand booked in the quarter carries a risk of payback declines later in the year. One further item flattered the bottom line — an extraordinary gain of ¥60 million in compensation received for vacating premises, which lifted pre-tax profit to ¥454 million before a ¥159 million tax charge.

Pipe and plumbing materials do essentially all the work

Create reports three segments, and one of them is the company. Pipe & Plumbing Materials generated external sales of ¥10,408 million, up 19.1% — 99.2% of the consolidated total — and segment profit of ¥372 million, up 279.0% from ¥98 million. The construction-related segment more than tripled off a negligible base, to ¥23 million, but still posted an operating loss of ¥4 million, narrowed from a ¥7 million loss. Logistics-related went the other way: external sales fell 17.0% to ¥64 million and segment profit fell 18.6% to ¥34 million. On total sales of ¥162 million including intersegment work, logistics remains by some distance the group’s highest-margin activity, but at that scale it cannot move the consolidated line.

Resin products jump 31% as naphtha tightens

Within the core segment, the four product groups tell the supply-disruption story cleanly. Resin (chemical) products — PVC pipe, fittings and manholes plus polyethylene pipe, the group most exposed to naphtha — grew fastest, up 31.4% to ¥3,545 million, because Create’s inventory variety and delivery capability were, in the company’s telling, highly valued precisely while the wider market was in disarray. Hot-water and water-supply products rose 12.5% to ¥2,287 million: polybutene pipe beat the prior year despite shipment limits, stainless products ran strongly on factory, logistics-centre, school and hotel projects, and copper tube surged as buyers pulled forward orders ahead of price revisions. Drainage and wastewater products rose 12.4% to ¥1,996 million, with the flagship drainage header roughly flat against a weak backdrop for new apartment-block starts and fire-resistant two-layer pipe — whose inner pipe is PVC — carrying the group on continued strong enquiry. Other products rose 15.6% to ¥2,579 million, lifted by housing equipment, where replacement demand ahead of the April 2027 tightening of air-conditioner energy-efficiency standards grew sharply, and by tender wins in general pipe materials.

Working capital balloons and the equity ratio falls to 26.7%

Buying hard into a squeezed market has a balance-sheet cost. Total assets rose ¥3,272 million to ¥21,583 million in three months. Current assets accounted for ¥3,197 million of that, reaching ¥17,258 million: electronically recorded monetary claims alone rose ¥2,090 million, notes and accounts receivable ¥405 million, and merchandise and finished goods ¥529 million, while cash and deposits added just ¥54 million. Non-current assets edged up ¥74 million to ¥4,324 million. Liabilities rose ¥3,073 million to ¥15,814 million, with current liabilities up ¥3,125 million to ¥14,325 million — driven by ¥2,160 million of short-term borrowings taken on from a zero balance at the March year-end. Non-current liabilities fell ¥52 million to ¥1,489 million as long-term debt was repaid down ¥50 million. Net assets rose ¥198 million to ¥5,768 million on ¥193 million of retained-earnings growth, but because the asset base expanded far faster, the equity ratio fell to 26.7% from 30.4%. No quarterly cash flow statement was prepared; depreciation was ¥29.8 million and goodwill amortisation ¥2.4 million.

Guidance restored at ¥40.0 billion — and the medium-term plan is withdrawn

Create had declined to give full-year guidance with its May 15 annual results, saying the oil-price shock made a reasonable estimate impossible. It has now published one: for the year to March 2027 it expects net sales of ¥40,000 million, up 7.2%, operating profit of ¥900 million, up 9.3%, ordinary profit of ¥830 million, up 5.6%, and net profit of ¥550 million, up 50.8%, for full-year earnings per share of ¥140.67. The first quarter therefore delivers 26% of the sales target but 45% of the operating-profit target — consistent with management’s own warning that the quarter’s margin is not repeatable. The same disclosure carries a harder message: on the basis of that forecast, the company judged the numerical targets of its current medium-term plan “Vision 110” — ¥44.0 billion of sales and ¥1.0 billion of operating profit — unachievable, and has withdrawn the plan in its final year. Create marked its 110th anniversary in January 2026 and had built the plan around that milestone.

Dividend lifted to ¥43.00 and weighted toward the interim

The dividend forecast was revised alongside guidance. For the year to March 2027 Create now plans an interim dividend of ¥23.00 and a year-end dividend of ¥20.00, a total of ¥43.00 against ¥40.00 paid for the year to March 2026 (¥14.00 interim, ¥26.00 year-end). That is a 7.5% increase and roughly 30.6% of forecast earnings per share, with the weighting shifted decisively toward the interim payment. The company reported no changes to its scope of consolidation or accounting policies, no going-concern issues and no material subsequent events; the quarterly statements were not subject to auditor review. Shares outstanding were unchanged at 3,969,000 including 71,880 treasury shares, with an average of 3,897,120 shares during the quarter.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company’s published earnings short report and may be subject to subsequent revision.