Japan Markets ViewNoritake (5331): Transforming into a Materials Firm Amid Pressure for Change and AI Demand

 

[Akira Motoyoshi, QUICK Market Eyes] Noritake, globally known for its ceramics and tableware, is accelerating its transformation into a materials company focused on electronic and semiconductor materials. The company once gained worldwide fame for its “Noritake Tableware.” However, driven by changing lifestyles, it shifted its core business toward industrial equipment and ceramic raw materials. In recent years, Noritake has concentrated its management resources on advanced electronics fields, such as materials for multilayer ceramic capacitors. With a history spanning over 120 years since its founding, the company is overcoming the constraints of its founding business. It is leveraging pressure for change from the market and activist shareholders as a tailwind. Attention is focused on the company’s structural reform aimed at next-generation growth.

Noritake’s founding tableware business began in 1904, when it developed Japan’s first white porcelain dinnerware set. Its outstanding beauty and traditional craftsmanship fascinated people worldwide, establishing the solid reputation of the “Noritake” brand. However, the market environment cooled rapidly in recent years. This was amid a shift toward more diverse lifestyles and declining demand for wedding gifts. The founding business became a persistent loss-maker that dragged down overall financial performance. In response, Noritake decided to execute a business pivot. The company transferred and applied its proprietary ceramic technologies, developed over many years, to industrial uses. Since then, the company has cultivated industrial equipment, including diamond tools, as well as ceramic materials for electronic components into new pillars of growth.

*Excerpted from Noritake’s financial results material for the fiscal year ending March 31, 2026.

Growing demand for MLCC materials in the electronics market further accelerated this turning point. The company’s electronic pastes and electronic component materials have demonstrated high competitiveness. This performance is backed by tailwinds such as progress in advanced driver-assistance systems (ADAS) and the rapid expansion of the AI server market. Noritake is actively executing capital expenditures on the scale of tens of billions of yen at its Minato Plant and Miyoshi Site to expand its production capacity. In April, the company integrated its tableware business – a long-standing challenge – into its Ceramics & Materials business segment. Through this, Noritake embodied structural reform by restructuring without sanctuary even its former flagship business, driving organizational streamlining and operational efficiency at once.

*Excerpted from Noritake’s financial results material for the fiscal year ending March 31, 2026.

Strategic Capital, an activist fund established by a key former executive of the Murakami Fund, criticized the company’s overly risk-averse stance. It pointed out that Noritake accumulates equity without utilizing debt, leaving its ROE below its cost of capital (7% to 9%). Strategic Capital demanded stronger shareholder returns, including a target dividend on equity (DOE) of 8% and a dividend payout ratio (DPR) of 100%. It also requested a revised portfolio plan that includes the downsizing or exit from the unprofitable tableware business, as well as the prompt full divestment of cross-shareholdings. These demands put pressure on management, leading to a sharp drop in the approval rate for the re-election of President Akira Higashiyama at the 2025 annual general meeting. In response to this pressure for change, the company set a target of achieving an ROE of 9% or higher in its 13th Three-Year Business Plan. To achieve this, it began fully addressing the enhancement of shareholder returns and the improvement of capital efficiency. Measures include introducing a progressive dividend policy, targeting a payout ratio of 35% or higher, and setting a total return ratio target of 50% or higher through flexible share buybacks.

*Excerpted from Noritake’s financial results material for the fiscal year ending March 31, 2026.

The results of this business structural transformation are reflected in the company’s recent financial results. In its consolidated financial results for the April–June quarter of 2026 (Q1), announced on August 7, Noritake reported significant increases in both revenue and profit. Net sales rose 19% year-on-year to JPY39.7 bn, while operating profit grew 85% to JPY4.0 bn. In the core Ceramics & Materials segment, sales of MLCC materials grew against the backdrop of rising demand for data centers and AI servers. The segment reported net sales of JPY17.3 bn, up 34% year-on-year, and an operating profit of JPY2.8 bn, up 66%. The Industrial Products and Engineering segments also showed growth. Reflecting its strong recent performance, the company raised its full-year forecast for the fiscal year ending March 31, 2027. It now expects net sales to increase by 10% year-on-year to JPY157.5 bn and operating profit to rise 17% to JPY13.0 bn. This is an upward revision from its initial forecast of JPY150.0 bn in net sales (up 5% year-on-year) and JPY11.5 bn in operating profit (up 4%). Nevertheless, considering that the progress rate of Q1 operating profit against the full-year target stands at 31% (compared with 20% in the same period of the previous year), there is a possibility of another upward revision from the Q2 onward.

The stock price has risen 26% year-to-date. However, its valuation remains attractive at a P/E ratio of 11.6x and a P/B ratio of 1.1x. These figures show a strong sense of undervaluation compared with the market average (P/E ratio of 17.1x and P/B ratio of 1.9x), as well as those of Morimura Group peers TOTO (5332), NGK (5333), and Niterra (5334). The dual drivers of enhanced shareholder returns – triggered by the tug-of-war with the activist shareholder – and the strategic shift toward semiconductor materials are expected to encourage a valuation re-rating. This development is anticipated to lead to a dramatic improvement in shareholder value for this prestigious, historic enterprise.

(Reported on August 24, 2026)

 

 

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