| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4215.6B | ¥4220.3B | -0.1% |
| Operating Income / Operating Profit | ¥279.1B | ¥166.5B | +67.6% |
| Ordinary Income | ¥228.8B | ¥105.9B | +116.0% |
| Net Income / Net Profit | ¥160.9B | ¥31.5B | +410.9% |
| ROE | 6.4% | 1.4% | - |
For the fiscal year ended March 2026, Revenue / Net Sales were ¥4215.6B (YoY -¥4.7B, -0.1%), essentially flat, while Operating Income was ¥279.1B (YoY +¥112.5B, +67.6%), Ordinary Income was ¥228.8B (YoY +¥122.9B, +116.0%), and Net Income attributable to owners of the parent was ¥111.7B (YoY +¥91.7B, +457.8%), marking a substantial profit increase. Although the cost of sales ratio edged up slightly from 74.3% to 74.4%, gross margin improved from 23.0% to 25.7% (+2.7pt), and SG&A ratio remained steady at 19.0%, resulting in Operating Margin expanding from 3.9% to 6.6% (+2.7pt). Special items recorded a net loss of ▲¥35.0B (Special income ¥21.9B, Special losses ¥56.9B), but the large improvement in operating profitability drove the sharp recovery in net profit. Non-operating items included interest expense of ¥29.2B and equity-method losses of ¥8.4B, which reduced Ordinary Income by ¥50.3B from Operating Income.
Revenue: Revenue was ¥4215.6B (YoY -0.1%), essentially flat. By segment, Film achieved ¥1761.2B (external sales basis, YoY +5.0%) and increased revenue, and Real Estate was steady at ¥56.6B (+6.6%). Life Science was ¥346.8B (+0.6%) with marginal growth, Functional Fibers & Trading was ¥916.1B (-8.6%) with declining sales, and Environment & Functional Materials was ¥1101.3B (-0.6%) with a slight decline. Overall, growth in the core Film segment offset deceleration in other segments, keeping the top line stable.
Profitability: Gross profit improved substantially to ¥1081.5B (Gross Margin 25.7%, +2.7pt YoY). SG&A was contained at ¥802.5B (SG&A ratio 19.0%), resulting in Operating Income of ¥279.1B (Operating Margin 6.6%, +2.7pt YoY), up 67.6%. Non-operating income totaled ¥27.0B (including forex gains ¥5.3B and dividend income ¥4.0B), while non-operating expenses were ¥77.3B (including interest expense ¥29.2B and equity-method losses ¥8.4B), producing a net burden of ▲¥50.3B. Special items recorded a net loss of ▲¥35.0B (special income ¥21.9B including gain on sales of fixed assets ¥13.0B and gain on sales of investment securities ¥5.0B; special losses ¥56.9B including business restructuring costs ¥5.7B and impairment losses ¥3.8B). After income taxes of ¥51.3B and non-controlling interests of ¥30.7B, Net Income attributable to owners of the parent was ¥111.7B (Net Margin 2.6%, +2.2pt YoY), delivering a result of roughly flat revenue with significantly higher profits.
Profitability: Operating Margin 6.6% (prior year 3.9%, +2.7pt), Net Margin 2.6% (prior year 0.5%, +2.2pt), reflecting significant improvement. Expansion of Gross Margin to 25.7% (prior year 23.0%, +2.7pt) was the primary driver, aided by product mix improvement and price normalization. ROE 6.4% (prior year 1.4%, +5.0pt) remains moderate but is on an improving trend due to the large net income increase.
Cash Quality: Operating Cash Flow (OCF) ¥450.3B, 2.8x Net Income ¥160.9B; OCF/EBITDA is 0.86x, slightly below the benchmark (0.9x), but accrual ratio is favorable at ▲5.4%. Depreciation & Amortization ¥246.3B and OCF subtotal ¥479.0B indicate strong pre-working-capital cash generation ability.
Investment Efficiency: Total Asset Turnover 0.67x (prior year 0.68x), slightly down, indicating room to improve working capital efficiency. Days Sales Outstanding (DSO) 76 days, Days Inventory Outstanding (DIO) 149 days, and Cash Conversion Cycle (CCC) 172 days have lengthened, necessitating inventory reduction and stricter credit management.
Financial Soundness: Equity Ratio 40.1% (prior year 37.5%, +2.6pt) improved. Current Ratio 171.7% and Quick Ratio 129.3% show good short-term liquidity. Total interest-bearing debt ¥1630B, Debt/EBITDA 3.10x, Interest Coverage 9.6x — leverage is somewhat elevated but resilience is adequate.
Operating Cash Flow was ¥450.3B (YoY +49.5%), about 2.8x Net Income ¥160.9B. From OCF subtotal ¥479.0B, working capital changes were ▲¥28.7B (inventory increase ▲¥71.3B, receivables decrease +¥62.0B, payables decrease ▲¥60.1B), followed by income taxes paid ▲¥17.2B, interest & dividend received +¥11.1B, and interest paid ▲¥28.8B. Inventory build-up and payables compression partially constrained cash generation, but overall levels remained healthy. Investing Cash Flow was ▲¥270.8B, including purchases of tangible and intangible fixed assets ▲¥291.5B (substantially reduced from ▲¥452.3B prior year), collection of long-term loans +¥1.3B, and proceeds from sale of investment securities +¥25.1B. Financing Cash Flow was ▲¥165.1B, with long-term borrowings raised +¥44.6B and bond issuance +¥100.0B offset by long-term borrowings repayments ▲¥99.8B, bond redemptions ▲¥100.0B, dividends paid ▲¥35.3B, and net decrease in commercial paper ▲¥30.0B. Free Cash Flow was ¥179.6B (OCF + Investing CF), a significant improvement YoY and sufficient to cover dividends (approx. ¥35.3B). Cash and deposits rose to ¥311.1B (prior year ¥285.8B, +¥27.0B), indicating stable liquidity.
Recurring earnings are centered on Operating Income of ¥279.1B, with non-operating income of ¥27.0B (0.6% of Revenue) being minor. Main components of non-operating income were forex gains ¥5.3B, dividend income ¥4.0B, and subsidy income ¥5.8B, indicating low dependency on non-core income. Conversely, non-operating expenses ¥77.3B (including interest expense ¥29.2B and equity-method losses ¥8.4B) and special losses ¥56.9B (including business restructuring costs ¥5.7B, impairment losses ¥3.8B, and loss on disposal of fixed assets ¥13.2B) were temporary burdens. The net special-item loss of ▲¥35.0B represents about 31% of Net Income ¥111.7B, so one-off items had a material impact. Accrual quality is good: OCF ¥450.3B is 2.8x Net Income ¥160.9B and accrual ratio is ▲5.4%. The gap between Ordinary Income ¥228.8B and Net Income attributable to owners of the parent ¥111.7B (about 51%) is mainly due to special losses, interest burden, income taxes ¥51.3B, and non-controlling interests ¥30.7B, while recurring profitability remains solid. Comprehensive Income ¥253.6B exceeded Net Income ¥160.9B significantly, supported by currency translation adjustments +¥41.8B and actuarial gains related to retirement benefits +¥61.9B, with other comprehensive income totaling +¥108.5B.
Year-end dividend ¥40 (interim dividend ¥0) for an annual dividend of ¥40, with total dividends of approximately ¥35.3B. The payout ratio against Net Income attributable to owners of the parent ¥111.7B is about 31.6%, a sustainable level. Free Cash Flow ¥179.6B is about 5.1x the total dividends, indicating very high FCF coverage and low risk of dividend reduction. No share buybacks were conducted (Financing CF ▲¥0.0B); shareholder returns consist solely of dividends. The annual dividend was maintained at ¥40 from the prior year, reflecting a policy that emphasizes stable dividends. The payout ratio of 1.8% (XBRL metric) appears calculated on a different basis than EPS; therefore, the 31.6% figure based on Net Income attributable to owners of the parent should be regarded as the practical payout ratio.
Segment revenue concentration: The Life Science Business accounts for ¥346.8B (8.2% of total) but Operating Income was only ¥0.7B (Margin 0.2%), a drastic deterioration of ▲96.8% YoY. While the Film Business’s profit contribution is increasing, delayed recovery in Life Science profitability would pose downside risk to consolidated earnings.
Working capital efficiency deterioration: Long DIO of 149 days and CCC of 172 days, with inventory increase ▲¥71.3B and payables decrease ▲¥60.1B, pressured OCF. During demand volatility, inventory write-downs or price adjustments could materialize, increasing cash-generation volatility.
Rising interest burden risk: Total interest-bearing debt ¥1630B and interest expense ¥29.2B yield an interest burden ratio (interest expense / Operating Income) of 10.5%. Although Debt/EBITDA 3.10x and Interest Coverage 9.6x indicate resilience, rising interest rates could increase financial expenses and squeeze Ordinary Income. Short-term debt of ¥547B and bonds maturing within one year of ¥100B make the short-term debt ratio 33.5%, highlighting the importance of refinance management.
Revenue & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.6% | 7.8% (4.6%–12.3%) | -1.1pt |
| Net Margin | 3.8% | 5.2% (2.3%–8.2%) | -1.4pt |
Profitability is slightly below the industry median, placing the company in the mid-to-lower range among manufacturers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -0.1% | 3.7% (-0.4%–9.3%) | -3.8pt |
Revenue growth is below the industry median, indicating challenges in top-line expansion.
※ Source: Company compilation
Significant profit improvement amid flat revenue (Operating Income +67.6%) was driven by Gross Margin expansion of +2.7pt and cost optimization. Operating Margin recovered to 6.6%, reflecting effects of product mix improvement and price normalization. Free Cash Flow ¥179.6B is about 5.1x dividends, showing solid cash generation. Going forward, continuing to increase value-added in the core Film Business and restoring profitability in the Life Science Business (current margin 0.2%) will be key to sustainable growth.
Large scope to improve working capital efficiency. With CCC 172 days and DIO 149 days elongated, inventory increase ▲¥71.3B and payables compression ▲¥60.1B constrained OCF growth. If inventory optimization and stronger credit control can reduce CCC to below 120 days, OCF/EBITDA could exceed 0.9x and ROE could be lifted. The large decrease in construction-in-progress (▲¥329B) and increases in transfers to machinery/buildings suggest the start-up of growth investments; monitor the resulting rise in depreciation and progress in monetization.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference data compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult professional advisors as needed.