| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥373.3B | ¥362.5B | +3.0% |
| Operating Income / Operating Profit | ¥28.8B | ¥27.4B | +5.3% |
| Ordinary Income | ¥31.1B | ¥30.0B | +3.6% |
| Net Income / Net Profit | ¥48.5B | ¥29.9B | +62.2% |
| ROE | 15.4% | 10.4% | - |
For the fiscal year ended March 2026, Revenue was ¥373.3B (YoY +¥10.9B +3.0%), Operating Income was ¥28.8B (YoY +¥1.4B +5.3%), Ordinary Income was ¥31.1B (YoY +¥1.1B +3.6%), and Net Income attributable to owners of the parent was ¥48.5B (YoY +¥18.7B +62.2%). At the operating level, gross margin improved to 21.7% (YoY +0.8pt), and operating margin rose slightly to 7.7% (YoY +0.2pt). The large increase in bottom-line profit was primarily driven by a gain on sale of investment securities of ¥33.1B, a significant non-recurring uplift. By segment, the Plant Business achieved Revenue of ¥138.3B (+20.0%) and Operating Income of ¥16.8B (+74.1%) realizing high-margin growth; the Heat Treatment Business posted Revenue of ¥183.1B (-1.5%) and Operating Income of ¥14.1B (-5.9%), showing slight declines; the Development Business reported Revenue of ¥19.8B (-16.6%) and an operating loss of ¥2.5B, remaining in the red. Operating Cash Flow was ¥64.3B (YoY +273.9%), greatly improved due to progress in receivables collection and an increase in contract liabilities. Investing Cash Flow turned positive to +¥25.9B driven by proceeds from sale of investment securities, and Free Cash Flow was very ample at ¥90.2B.
Revenue: Revenue was ¥373.3B (YoY +3.0%), a modest increase. By segment, the Plant Business grew to ¥138.3B (YoY +20.0%), achieving double-digit growth driven by wins of large steel and nonferrous metal-related projects and a higher mix of high value-added projects. The Heat Treatment Business recorded ¥183.1B (YoY -1.5%), a slight decline; demand from automotive and battery manufacturing remained firm, but project mix effects left results roughly flat year-on-year. The Development Business contracted to ¥19.8B (YoY -16.6%) as orders were limited in the launch phase of decarbonization and precision coating areas. Other businesses were ¥80.2B (YoY -1.8%), roughly flat. Gross profit was ¥81.1B (YoY +¥5.2B +6.9%), with gross margin improving to 21.7% (YoY +0.8pt), lifted by improved profitability in the Plant Business.
Profitability: SG&A was ¥52.4B (YoY +¥3.8B +7.8%), increasing and pushing the SG&A ratio to 14.0% (YoY +0.6pt). Cost increases outpaced revenue growth (+3.0%), mainly due to higher personnel and administrative costs. Operating Income was ¥28.8B (YoY +¥1.4B +5.3%), as gross margin improvement absorbed higher SG&A, leading to a modest improvement in operating margin to 7.7% (YoY +0.2pt). Non-operating income was ¥3.2B, mainly dividend income of ¥2.4B and foreign exchange gains of ¥0.2B; non-operating expenses were ¥0.8B, mainly interest expense ¥0.7B. Ordinary Income was ¥31.1B (YoY +¥1.1B +3.6%), tracking operating performance. Extraordinary income of ¥33.1B (gain on sale of investment securities) was recorded, causing Profit Before Tax to surge to ¥64.3B (YoY +¥22.0B +52.2%). After deducting income taxes of ¥17.7B (effective tax rate 27.6%), Net Income attributable to owners of the parent was ¥48.5B (YoY +¥18.7B +62.2%). In conclusion, the company achieved revenue and operating profit growth, but the large increase in net income is dependent on non-recurring extraordinary gains.
The Heat Treatment Business posted Revenue of ¥183.1B (YoY -1.5%) and Operating Income of ¥14.1B (YoY -5.9%), with an operating margin of 7.7%. Demand from automotive and battery manufacturing persisted, but rising costs and project mix reduced profitability slightly. The Plant Business achieved Revenue of ¥138.3B (YoY +20.0%) and Operating Income of ¥16.8B (YoY +74.1%), with margin improving to 12.1%, reflecting a shift to higher-margin projects. Large steel and nonferrous metal projects drove earnings, and a higher share of high value-added projects contributed to margin expansion. The Development Business reported Revenue of ¥19.8B (YoY -16.6%) and an operating loss of ¥2.5B (prior year loss ¥2.1B), widening the deficit. Fixed-cost burdens in the launch phases of decarbonization, precision coating, and waste-treatment fields, together with lower orders, pressured earnings. Other businesses produced Revenue of ¥80.2B (YoY -1.8%) and Operating Income of ¥0.3B (YoY -94.1%), a steep decline in profitability. There is a large dispersion of margins across segments: Plant (12.1%) is lifting company margins, while continued losses in Development dilute overall profitability.
Profitability: Operating margin was 7.7% (prior year 7.5% +0.2pt), modestly improved, aided by a gross margin increase to 21.7% (prior year +0.8pt). ROE rose to 15.4% (prior year 10.7% +4.7pt), but this was mainly driven by the one-off boost to net income from extraordinary gains; operating-level improvements were limited. Operating margin has shown gradual improvement over the past three years, with higher Plant margins providing structural uplift.
Cash Quality: Operating Cash Flow / Net Income was 1.38x, indicating good cash backing of profits, and OCF/EBITDA was 1.88x, reflecting high cash conversion. The accrual ratio was -3.4%, negative, indicating accounting profit is well-supported by cash.
Investment Efficiency: Total Asset Turnover was 0.73x (prior year 0.74x), nearly unchanged; a high receivables ratio of 50.4% constrains turnover improvement. Capex / Depreciation was 1.73x, showing an active investment stance for future growth.
Financial Soundness: Equity Ratio was 61.4% (prior year 58.6% +2.8pt), improved. Interest-bearing debt / EBITDA was 1.30x, and interest coverage was 38.9x, indicating ample financial capacity. Current ratio was 250%, and quick ratio was also 250%, showing very strong liquidity. With cash of ¥108.2B versus interest-bearing debt of ¥44.5B, the company holds net cash of approximately ¥63.8B.
Operating Cash Flow was ¥64.3B (prior year -¥37.0B, a major improvement). Pre-tax profit before tax and similar items was ¥64.3B, while subtotal OCF was ¥74.9B, with additions from non-cash expenses (depreciation ¥5.4B, etc.). Changes in working capital were driven primarily by a decrease in trade receivables of +¥39.3B, reflecting progress in receivables collection. An increase in contract liabilities of +¥7.0B contributed as advance receipts before delivery. Conversely, a decrease in accounts payable of -¥6.3B pressured working capital. After tax payments of -¥12.3B, Operating Cash Flow was ¥64.3B. Investing Cash Flow was +¥25.9B, mainly due to proceeds from sale of investment securities of +¥37.3B. Capital expenditures were -¥9.4B and intangible asset investments -¥1.2B, within normal ranges. Free Cash Flow (Operating CF + Investing CF) was ¥90.2B, very ample, but excluding the one-off sale of investment securities, Core FCF (Operating CF - Capex) is estimated at about ¥54.9B, still high. Financing Cash Flow was -¥26.4B, reflecting long-term debt repayments of -¥9.0B, net short-term debt reduction of -¥3.7B, dividend payments of -¥11.0B, and share buybacks of -¥4.0B. Cash increased from ¥43.5B at the beginning of the period to ¥107.8B at the end (+¥64.3B), materially strengthening liquidity on hand.
Of this period’s Net Income of ¥48.5B, ¥33.1B was gain on sale of investment securities, meaning approximately 68% of Net Income is attributable to an extraordinary gain, reflecting a transitory earnings composition. Non-operating income was limited at ¥3.2B (0.9% of Revenue), mainly dividend income ¥2.4B and foreign exchange gains ¥0.2B. There is a roughly +56% gap between Ordinary Income (¥31.1B) and Net Income (¥48.5B), primarily due to the extraordinary gain. On an accrual basis, Operating Cash Flow of ¥64.3B exceeds Net Income of ¥48.5B (OCF/NI = 1.38x), indicating solid cash backing. From the OCF subtotal of ¥74.9B, after working capital movements Operating CF of ¥64.3B was generated, with receivables collection and increases in contract liabilities serving as key cash sources. OCF/EBITDA of 1.88x is high, showing strong cash conversion quality. However, the thickness of FCF at ¥90.2B includes investment securities sale proceeds of +¥37.3B, so repeatability should be treated with caution. Core FCF (OCF - Capex) is estimated at about ¥54.9B, confirming sustainable cash generation capacity.
Full-year plan: Revenue ¥403.0B (YoY +7.9%), Operating Income ¥36.2B (YoY +25.7%), Ordinary Income ¥37.2B (YoY +19.6%), and Net Income attributable to owners of the parent ¥25.16B (YoY -48.1%) are forecast. The company plans double-digit operating profit growth, presuming continuation of high-margin Plant projects and tighter cost control. The decline in Net Income reflects normalization after this period’s ¥33.1B gain on sale of investment securities. Progress against the full-year Operating Income plan of ¥36.2B is 79.6% after H1 results of ¥28.8B, a high ratio; H2 plans just ¥7.4B of Operating Income, implying a pullback from H1 strength. Full-year dividend guidance is ¥180 (this period ¥166, +¥14), with a forecast payout ratio of approximately 49.8% (based on FY EPS forecast ¥361.31).
Year-end dividend was ¥166, with a payout ratio of 36.8% (based on EPS ¥643.7 and annual dividend ¥166), at an appropriate level. Total dividends amounted to ¥11.0B, and FCF coverage of dividends is 8.20x relative to FCF of ¥90.2B, indicating ample dividend funding. Share buybacks of ¥4.0B were conducted, bringing total shareholder returns (dividends + buybacks) to approximately ¥15.0B, implying a Total Return Ratio of about 32% (based on Net Income ¥46.7B). Backed by net cash of roughly ¥63.8B and strong Operating CF of ¥64.3B, shareholder returns are highly sustainable. Full-year dividend guidance is ¥180 (this period ¥166, +¥14), and the company indicates a dividend-increase policy premised on operating profit growth. Historical dividends show consecutive increases: prior year ¥150, this period ¥166, and forecast ¥180, indicating stable dividend growth.
Risk of prolonged receivables collection: DSO is 253 days, extremely long, and trade receivables of 25,859百万円 account for 50.4% of total assets, a high level. Contract liabilities of ¥2.62B (26.2億円) are positive for working capital as advance receipts, but the high receivables dependency increases credit risk and reduces working capital turnover efficiency. Although receivables decreased by +¥39.3B this period, structural strengthening of collection management is required.
Margin and progress risk in the Plant Business: The Plant Business achieved Operating Income of ¥16.8B with a margin of 12.1%, but fixed-price large projects carry risks of cost overruns and schedule delays that could squeeze margins. This period’s large profit increase (+74.1%) relied on improved project mix, and the quality of future orders will determine sustainability.
Continued losses and margin dilution risk in the Development Business: The Development Business recorded an operating loss of ¥2.5B, widening from a loss of ¥2.1B in the prior year, with Revenue contracting to ¥19.8B (-16.6%). New areas such as decarbonization and precision coating remain in the launch phase with heavy fixed-cost burdens; if order growth lags, the downward pressure on company margins will persist. Short-term turnaround to profitability is uncertain and mid-term business development is a key challenge.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.7% | 5.5% (3.5%–7.2%) | +2.2pt |
| Net Profit Margin | 13.0% | 3.5% (2.5%–4.4%) | +9.5pt |
Operating margin exceeds the industry median by +2.2pt; net profit margin is substantially higher due to extraordinary gains, but the latter is transitory.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.0% | 9.8% (-2.1%–15.1%) | -6.9pt |
Revenue growth is -6.9pt below the industry median, indicating a comparatively slower growth pace.
※ Source: Company compilation
High profitability in the Plant Business has improved the company’s earnings structure: The Plant Business achieved a margin of 12.1% (YoY +3.4pt) and Operating Income of ¥16.8B (+74.1%), becoming a core business that contributes more than half of company profits. Acquisition of large steel and nonferrous metal projects and a higher share of high value-added projects are drivers, indicating a structural trend of improving profitability. Future order backlog and project quality will be key to margin sustainability.
One-off increase in net income will normalize next fiscal year: This period’s large Net Income of ¥48.5B (+62.2%) depended on a ¥33.1B gain on sale of investment securities; next year’s plan forecasts Net Income of ¥25.16B (-48.1%). Core earnings should be evaluated focusing on operating and ordinary income levels, where operating profit is planned to increase (+25.7%). The company plans to raise the dividend to ¥180, reflecting sustained shareholder return backed by operating profit growth.
Strong financial position and high cash generation provide flexibility for capital allocation: With net cash of approximately ¥63.8B, Operating CF of ¥64.3B, and FCF of ¥90.2B (including one-offs), the company has a solid financial and cash flow base. Capex/Depreciation = 1.73x indicates continued growth investment while maintaining shareholder returns (dividends + buybacks) with a Total Return Ratio of about 32%. The company has the financial capacity to balance growth investment funded by internal resources and stable dividends.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions should be made at your own responsibility; consult professionals as necessary.