| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue | ¥662.4B | ¥659.9B | +0.4% |
| Operating Income | ¥45.4B | ¥30.4B | +49.3% |
| Ordinary Income | ¥49.4B | ¥35.1B | +40.6% |
| Net Income | ¥33.0B | ¥24.6B | +34.0% |
| ROE | 3.4% | 2.6% | - |
For the quarter ended February 2026 (Q1), Revenue was ¥662.4B (YoY +¥2.6B +0.4%), Operating Income was ¥45.4B (YoY +¥15.0B +49.3%), Ordinary Income was ¥49.4B (YoY +¥14.3B +40.6%), and Net Income attributable to owners of parent was ¥33.0B (YoY +¥8.4B +34.0%). Revenue showed only a slight increase, but Operating Margin improved significantly to 6.9% (from 4.6% in the prior-year period, +2.3pt), resulting in higher revenue and profits. The core Energy & Solutions Business formed the center of corporate profit with Operating Income of ¥34.2B (¥26.9B prior year), and the Engineering & Maintenance Business remained solid with Operating Income of ¥13.3B (¥11.7B prior year). Meanwhile, Housing, Car Life Support, and Animal Healthcare continued to record small losses, though loss magnitudes are narrowing. Gross margin was 26.4% (from 25.0% prior year, +1.4pt) and SG&A ratio improved to 19.6% (from 20.4% prior year, -0.8pt), indicating broad-based profitability improvement.
【Revenue】Revenue of ¥662.4B (YoY +0.4%) was slightly up. By segment, Engineering & Maintenance achieved double-digit growth at ¥111.8B (+17.8%), and the Property Business expanded to ¥18.4B (+4.1%). Conversely, the core Energy & Solutions Business decreased slightly to ¥360.0B (-1.3%), with city gas sales at ¥123.7B (¥133.7B prior year) and LP gas at ¥91.7B (¥96.5B prior year) both declining. Housing Business was ¥94.6B (-3.5%), and Animal Healthcare was ¥57.4B (-0.7%), both slightly down. Overall topline was stable, supported by winter demand in the first half.
【Profitability】Operating Income rose sharply to ¥45.4B (YoY +49.3%). Cost of sales ratio improved to 73.6% (from 75.0% prior year, -1.4pt), and Gross Profit increased by ¥9.8B to ¥174.9B (¥165.1B prior year). SG&A decreased to ¥129.5B from ¥134.7B prior year (reduction of ¥5.2B), and SG&A ratio improved to 19.6% (-0.8pt). Company-wide cost optimization and an increase in high-margin projects contributed to margin improvement. Non-operating income was ¥5.3B (¥5.8B prior year), including interest income ¥0.3B, dividend income ¥0.3B, equity-method investment income ¥0.3B, and derivative valuation gains ¥3.1B. Non-operating expenses were ¥1.3B (¥1.1B prior year), including interest expense ¥1.1B. Extraordinary items were net -¥1.0B (extraordinary gains ¥0.5B - extraordinary losses ¥1.5B), minor. Profit before tax was ¥48.4B, from which income taxes of ¥15.4B (effective tax rate 31.9%) and non-controlling interests of ¥1.1B were deducted, yielding Net Income of ¥33.0B (YoY +34.0%). The quarter showed slight revenue growth and substantial profit growth.
The Energy & Solutions Business recorded Revenue of ¥360.0B (-1.3%) but Operating Income of ¥34.2B (+26.9%), with margin improving to 9.5% (prior year 7.4%). Engineering & Maintenance Business posted Revenue of ¥111.8B (+17.8%) and Operating Income of ¥13.3B (+13.3%), maintaining a high margin of 11.9%. Housing Business had Revenue of ¥94.6B (-3.5%) and an operating loss of ¥0.5B (prior year -¥3.0B), shrinking the loss by 73.3%. Car Life Support Business had Revenue of ¥40.8B (+1.4%) and an operating loss of ¥1.9B (prior year -¥3.4B), reducing losses by 44.6%. Animal Healthcare Business recorded Revenue of ¥57.4B (-0.7%) and an operating loss of ¥2.0B (prior year -¥0.8B), with loss widening and being the only segment where the negative gap worsened. Property Business showed Revenue of ¥18.4B (+4.1%) and Operating Income of ¥2.1B (from ¥0.1B prior year, +2,150%), with margin improving dramatically to 11.1%. Others segment Revenue was ¥6.8B (-26.1%) with operating breakeven. Segment-wise, the high profitability of the two core businesses (Energy, E&M) is notable, while the three consumer-related businesses (Housing, Car Life, Animal Health) retain structural profitability challenges.
【Profitability】Operating Margin 6.9% (from 4.6% prior year, +2.3pt), Gross Margin 26.4% (from 25.0% prior year, +1.4pt), ROE 3.4% (annualized). Improvement in Operating Margin was driven by both lower cost ratios and reduced SG&A. EBITDA was ¥61.4B, with an EBITDA margin of 9.3%. 【Cash Quality】Operating Cash Flow (OCF) was -¥50.8B, substantially below Net Income of ¥33.0B, with OCF/Net Income at -1.59x. Accounts receivable increase -¥53.1B and inventory increase -¥16.2B were main contributors, significantly delaying conversion of profit to cash. OCF/EBITDA was -0.83x (negative). Working capital days (CCC) were 193 days, with Days Sales Outstanding (DSO) 211 days and Days Inventory Outstanding (DIO) 164 days, indicating elongation. 【Investment Efficiency】Capital expenditures were ¥59.9B, 3.7x depreciation of ¥16.0B. Investing Cash Flow was -¥72.1B, and Free Cash Flow was -¥122.9B (substantial negative). Total asset turnover was 0.30x (annualized 1.2x), low. 【Financial Soundness】Equity Ratio 43.6% (from 42.0% prior year, +1.6pt), Current Ratio 146.1%, Quick Ratio 121.8% indicating healthy short-term liquidity. Interest-bearing debt was ¥581.7B (short-term borrowings ¥111.3B, long-term borrowings ¥470.5B), and Net Interest-Bearing Debt was ¥321.9B. Debt/Capital was 37.7%, and Debt/EBITDA was 9.5x, indicating high leverage. Interest coverage was modest at 39.5x on an Operating Income basis and 53.4x on an EBITDA basis, suggesting limited interest burden.
OCF was -¥50.8B (worsened from -¥44.0B prior year). Starting from Profit before tax of ¥48.4B, after adjusting non-cash items (depreciation ¥16.0B, etc.), subtotal before working capital changes was -¥30.0B. Large outflows from working capital were the main cause: accounts receivable increase -¥53.1B and inventory increase -¥16.2B, partially offset by accounts payable increase +¥11.5B. Corporate tax payments of -¥20.3B were also deducted, resulting in a large negative OCF. Investing CF was -¥72.1B, including capital expenditures -¥59.9B, intangible asset acquisitions -¥3.7B, and collection of long-term loans ¥1.98B. Free Cash Flow (OCF + Investing CF) was -¥122.9B. Financing CF was +¥63.9B, including net increase in short-term borrowings +¥69.4B, long-term borrowings raised +¥27.0B, long-term borrowings repayments -¥21.4B, and dividends paid -¥10.3B. Short-term borrowing increases financed cash needs, and cash declined to ¥259.8B (from ¥318.8B prior year, -¥59.0B). Expansion of working capital and delayed cash conversion are prominent, posing a challenge to balancing business growth and financial health.
Operating Income of ¥45.4B is the core of profit; non-operating income ¥5.3B (0.8% of sales) — including dividend income ¥0.3B and derivative valuation gains ¥3.1B — contributed relatively modestly. Extraordinary items were net -¥1.0B (extraordinary gains ¥0.5B - extraordinary losses ¥1.5B), a minor drag. The difference between Ordinary Income ¥49.4B and Net Income ¥33.0B is mainly due to income taxes ¥15.4B (effective tax rate 31.9%), and temporary factors had limited impact. Accrual ratio ((Net Income ¥33.0B - OCF -¥50.8B) ÷ Total Assets ¥2,211.2B) = 3.7%, indicating a favorable level of accruals relative to profit, but OCF is substantially below Net Income, so cash realization of profit is lagging. Comprehensive Income of ¥38.1B exceeded Net Income ¥33.0B, mainly due to valuation gains on securities +¥8.4B. Earnings quality is driven primarily by recurring factors with minor one-off items, but the weak cash backing due to working capital expansion is a concern.
Full Year plan: Revenue ¥2,600.0B (YoY +3.4%), Operating Income ¥75.0B (+1.6%), Ordinary Income ¥84.0B (-15.4%), Net Income ¥52.0B. Q1 progress rates are Revenue 25.5%, Operating Income 60.5%, Ordinary Income 58.8%, Net Income 63.5%. Progress for Operating Income and Net Income substantially exceeds the standard 25%, possibly reflecting concentrated winter demand and timing differences in Property Business revenue. Considering early profit recognition, there is a risk of normalization or a rebound decline in the second half, but continued high-margin projects in the Engineering & Maintenance Business are expected to provide a floor. No revisions to full-year forecasts were made this quarter.
Dividend payments this quarter were ¥10.3B. Full-year dividend plan is ¥16 per share, implying a payout ratio of approximately 19.8% against planned full-year EPS of ¥80.98, a conservative level. Last year’s dividend was also ¥16, so the dividend is unchanged. Free Cash Flow is -¥122.9B, so this quarter’s dividend was not covered by internally generated cash and was supplemented by increased short-term borrowings. If working capital normalizes and OCF turns positive in the second half, dividend sustainability can be maintained, but current capital expenditure burden is large and room to expand Total Return Ratio is limited. Dividend maintenance is considered possible, but share buybacks or dividend increases are unlikely in the near term.
【Industry Position】(For reference, based on our analysis) As a regionally focused integrated energy, construction, and real-estate conglomerate, Operating Margin of 6.9% is around the median among regional energy companies, and the improvement trend is positive. However, ROE of 3.4% (annualized) is below the industry median, and low total asset turnover of 0.30x depresses capital efficiency. Debt/EBITDA of 9.5x is high within the industry, indicating reliance on financial leverage. OCF/Net Income of -1.59x is well below peers’ median (+1.0 to +1.5x), highlighting issues in cash realization. Capital expenditure is 3.7x depreciation, indicating an aggressive investment stance but causing short-term cash outflows. While stabilization of energy prices and more high-margin projects have improved profitability, working capital management and deleveraging will be key to future industry standing.
Key points from the results: First, there is a marked improvement in margins. Operating Margin expanded from 4.6% to 6.9% (+2.3pt), with improvements in both gross margin and SG&A ratio. Improved profitability in the core Energy & Solutions Business and company-wide cost optimization indicate structural improvement in cost structure. Second, weak OCF generation and addressing working capital expansion are urgent issues. OCF was -¥50.8B versus Net Income of ¥33.0B, with increases in receivables and inventory absorbing cash. Continued lengthening of turnover days (DSO 211 days, DIO 164 days) could make short-term borrowing dependence chronic and constrain financial flexibility. Normalizing working capital is key to medium-term financial soundness. Third, while full-year progress rates are strong, attention should be paid to seasonality and transitory factors. Progress rates for Operating Income and Net Income exceed 60%, more than 35pt above the norm, likely due to winter demand concentration and timing differences in Property Business revenue, so monitor the risk of second-half pullbacks.
This report is an earnings analysis automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.