Global industrial gases major Nippon Sanso Holdings (NSHD) plans to ramp up capital spending in its current financial year, with two major acquisitions in Australia and Spain being earmarked to support future growth.
Speaking during the company’s fourth quarter earnings call, executives confirmed that capital spending rose to around 11.2% of sales in FYE2025 and is set to climb further.
“Our capital spend as a percent of sales continues to improve and to get larger as a percentage,” said NSHD CFO Alan Draper. “Next year… we’ll continue to increase that.”
The group reported a capital spending backlog of around ¥140bn ($947m), slightly down from previous quarters, but management said completed projects would begin contributing to profitability this year. While new orders had softened slightly in Q4, NSHD is still seeing solid demand. “We have good opportunities in front of us,” Draper said.
Two pending acquisitions – one in Australia and another in Spain’s healthcare sector – are factored into the company’s budget and expected to begin contributing to earnings in the second half of the financial year.
The Australian deal is still awaiting antitrust approval but is expected to close in the latter half of the year, while the Spanish transaction could begin contributing within nine months.
“[The Australia acquisition] is likely to take a little more time until we get the approval, but in the latter half of this year it is likely to start contributing to our profit and loss, according to our plan,” said CEO Toshihiko Hamada. “It’s not that we are faced with major impediments. It’s simply procedural matters.”
Despite global uncertainties, NSHD said it would continue to invest in capital projects where demand remains firm. “There are many uncertainties, but it doesn’t mean we will not invest,” said Hamada. “We are now trying to assess such opportunities in the right manner. We are taking an even more prudent view.”
Looking ahead, NSHD expects capital investment levels to remain high. “I don’t think any industries can grow in a positive direction without solid capital investment,” management said. “So 140 [billion yen] becoming 150 or 160 or even 200 billion – that is how we look at the situation.”
Further details are expected at NSHD’s scheduled 23 May meeting.
