| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue | ¥1437.6B | ¥1506.6B | -4.6% |
| Operating Income | ¥91.8B | ¥103.1B | -11.0% |
| Ordinary Income | ¥110.7B | ¥117.8B | -6.1% |
| Net Income | ¥95.0B | ¥46.9B | +102.5% |
| ROE | 7.1% | 3.9% | - |
For the fiscal year ended March 2026, Revenue was ¥1,437.6B (YoY -69.0B, -4.6%), Operating Income was ¥91.8B (YoY -11.3B, -11.0%), Ordinary Income was ¥110.7B (YoY -7.1B, -6.1%), and Net Income attributable to owners of parent was ¥95.0B (YoY +48.1B, +102.5%). Revenue declined due to weakness in the Textile Business, but gross margin improved to 21.5% (+0.5pt). At the operating level, SG&A ratio rose to 15.1% (+0.9pt), resulting in a modest decline in operating margin to 6.4% (-0.4pt). However, non-operating income of ¥25.1B, including dividend income received of ¥19.1B, and extraordinary gains of ¥74.4B such as gain on sale of investment securities of ¥64.5B lifted profit after tax to more than double the prior year.
Revenue of ¥1,437.6B was down 4.6% YoY. By segment: Chemical Products Business ¥627.9B (-4.9%) declined slightly due to softer raw material markets and demand adjustments; Textile Business ¥433.3B (-10.8%) fell significantly on weak domestic and overseas demand and yen appreciation; Environmental Mechatronics Business ¥239.8B (+8.1%) increased driven by growth in bio-related and automation equipment projects; Food & Services Business ¥111.9B (+6.5%) rose on expanded freeze-dried demand and improved hotel occupancy; Real Estate Business ¥44.0B (+5.8%) increased with new lease commencements. Revenue mix: Chemical Products 43.7%, Textile 30.1%, Environmental Mechatronics 16.7%, Food & Services 7.8%, Real Estate 3.1%. Gross margin improved to 21.5% (+0.5pt) aided by mix improvement in Chemical Products and higher-margin projects in Environmental Mechatronics.
Operating Income of ¥91.8B was down 11.0% YoY. SG&A was ¥216.9B (SG&A ratio 15.1%, +0.9pt) and rose slightly (+1.6%) despite lower revenue, reversing operating leverage. By segment operating income: Chemical Products ¥41.5B (-17.4%, margin 6.6%) was hit by elevated raw material costs and delayed price recovery; Textile recorded an operating loss of -¥9.0B (prior year +¥0.8B) owing to demand declines and fixed cost burden; Environmental Mechatronics ¥38.7B (+15.7%, margin 16.1%) gained from accumulation of high-margin projects; Food & Services ¥8.8B (+22.2%, margin 7.9%) benefited from higher occupancy; Real Estate ¥23.0B (+2.5%, margin 52.2%) maintained stable high-margin earnings. Non-operating income totaled ¥25.1B, mainly dividend income received ¥19.1B and interest income ¥1.9B, offset by non-operating expenses of ¥6.2B (including interest expense ¥1.9B), yielding net non-operating income of +¥18.9B and Ordinary Income of ¥110.7B (-6.1%). Extraordinary gains of ¥74.4B (gain on sale of investment securities ¥64.5B, gain on sale of fixed assets ¥8.2B) expanded pre-tax income to ¥181.8B. After deducting corporate taxes ¥52.7B (effective tax rate 29.0%) and non-controlling interests ¥0.3B, Net Income attributable to owners of parent was ¥95.0B (+102.5%). In summary: revenue and operating profit declined, but extraordinary gains resulted in higher final profit.
Chemical Products Business (Revenue ¥627.9B, Operating Income ¥41.5B, margin 6.6%) is the core segment with 43.7% revenue share, handling high-performance resins and industrial materials. It recorded -4.9% revenue and -17.4% profit YoY as high raw material costs and delayed price pass-through compressed profits. Textile Business (Revenue ¥433.3B, Operating Loss -¥9.0B, margin -2.1%) turned from prior year profit of +¥0.8B to a loss, impacted by weak domestic uniform demand, export profitability deterioration due to yen appreciation, and restructuring costs of ¥8.8B. Environmental Mechatronics Business (Revenue ¥239.8B, Operating Income ¥38.7B, margin 16.1%) grew +8.1% in revenue and +15.7% in profit, driven by high value-added life-science and robot-vision projects, maintaining the highest margin among five segments. Food & Services Business (Revenue ¥111.9B, Operating Income ¥8.8B, margin 7.9%) increased +6.5% in revenue and +22.2% in profit due to freeze-dried products and improved hotel occupancy. Real Estate Business (Revenue ¥44.0B, Operating Income ¥23.0B, margin 52.2%) rose +5.8% in revenue and +2.5% in profit, supporting the earnings base as a high-margin (>50%) stable business.
Profitability: Operating margin 6.4% (prior year 6.8%, -0.4pt), Net margin 6.6% (prior year 3.1%, +3.5pt), ROE 7.1% (calculation basis: Net Income attributable to owners of parent ¥95.0B ÷ average shareholders’ equity ¥1,274B). Operating-level margin slightly declined due to higher SG&A ratio, but Net margin improved substantially due to extraordinary gains. Gross margin 21.5% (+0.5pt YoY) shows signs of mix improvement. Cash quality: Operating Cash Flow (OCF) ¥145.9B is 1.54x Net Income ¥95.0B; Operating CF/EBITDA (Operating Income ¥91.8B + Depreciation ¥50.2B) is 1.03x, indicating solid cash backing. Inventory reduction of ¥22.5B contributed to working capital improvement, while accounts receivable increase -¥12.6B and accounts payable decrease -¥20.6B were headwinds. Free Cash Flow (FCF) ¥159.5B (OCF + Investing CF ¥13.7B) sufficiently covered dividend and share buybacks totaling ¥123B. Investment efficiency: Total asset turnover 0.71x (prior year 0.79x) declined due to an increase in investment securities (¥695B, 34.4% of total assets), leaving room for capital efficiency improvement. DSO (Receivables ÷ daily sales) was 72 days, slightly longer YoY. Financial health: Equity Ratio 66.2% (prior year 62.9%, +3.3pt), Debt/EBITDA 0.49x, Current Ratio 227%, Quick Ratio 194% — extremely healthy. Interest Coverage 48.6x (Operating Income ÷ Interest Expense), and Cash ¥155B / Short-term borrowings ¥61B = 2.55x, indicating strong refinancing resilience.
OCF was ¥145.9B (prior year ¥110.5B, +32.0%). Starting from pre-tax income ¥181.8B, non-cash adjustments including Depreciation ¥50.2B, gain on sale of investment securities -¥64.5B, gain on sale of fixed assets -¥8.2B produced an operating cash subtotal of ¥156.4B. On working capital, inventory decrease ¥22.5B contributed positively, while accounts receivable increase -¥12.6B and accounts payable decrease -¥20.6B were offsets, with inventory compression effects dominating. After corporate tax payments -¥31.1B, OCF generated ¥145.9B. Investing CF was +¥13.7B as proceeds from sale of securities ¥73.9B exceeded capital expenditures -¥60.8B, resulting in a temporary cash inflow. Consequently, FCF was ample at ¥159.5B. Financing CF included dividend payments -¥43.9B and share buybacks -¥71.2B totaling shareholder returns -¥115.1B, short-term borrowings repayments -¥31.8B and long-term borrowings repayments -¥3.4B, resulting in Financing CF of -¥158.1B. Cash increased from ¥151.6B at the beginning of the period to ¥155.0B at the end (+¥3.4B), leaving strong liquidity. OCF’s cash backing is solid; the Investing CF surplus is driven by one-off investment securities sales, but OCF itself shows high stability.
Against Ordinary Income ¥110.7B, Extraordinary gains of ¥74.4B (gain on sale of investment securities ¥64.5B, gain on sale of fixed assets ¥8.2B, subsidy income ¥1.2B, etc.) were recorded, meaning 40.9% of pre-tax income ¥181.8B was attributable to one-off items. After subtracting extraordinary losses ¥3.3B (restructuring costs ¥8.8B, impairment losses ¥0.4B, etc.), net one-off contribution was +¥71.1B, materially large; therefore, sustainability of final profit is limited. Of non-operating income ¥25.1B, dividend income received ¥19.1B is recurring income from held investment securities and indicates the quality of the investment portfolio. Comprehensive income ¥240.0B substantially exceeded Net Income attributable to owners of parent ¥95.0B, with other comprehensive income (OCI) ¥110.3B including valuation difference on securities ¥92.4B, foreign currency translation adjustments ¥11.2B, and retirement benefit adjustments ¥6.6B. Expansion of valuation difference reflects unrealized gains on investment securities, and the increase in deferred tax liabilities ¥143.1B (prior year ¥95.1B, +¥48.0B) is the tax effect. On accruals, OCF ¥145.9B is 1.54x Net Income ¥95.0B, showing good cash conversion; earnings quality is healthy at the operating level, but final profit reliance on extraordinary gains should be considered transient.
For the year ending March 2027, projections are Revenue ¥1,540B (+7.1%), Operating Income ¥112B (+22.0%), Ordinary Income ¥125B (+12.9%), Net Income ¥130B (+36.8%). The improvement to an operating margin of 7.3% (+0.9pt) assumes turnaround in the Textile Business (completion of restructuring) and continued revenue and profit growth in Environmental Mechatronics. Year-end dividend is planned at ¥166 (up from interim ¥141, annual ¥307). For the next fiscal year, following a stock split (1 share → 5 shares scheduled for October 2026), DPS is expected to be ¥33 (equivalent to ¥165 before split), implying an annual equivalent of ¥331. Progress rates (current results / full-year guidance) are Operating Income 82.0% (¥91.8B/¥112B), Ordinary Income 88.6%, Net Income 73.1%; achieving operating-level targets requires Textile to return to profit in H2 and margin recovery in Chemical Products. Forecast EPS ¥162.59 is much lower than this year’s ¥781.89, reflecting the assumption of lost extraordinary gains and is a reasonable premise. Key to guidance realization is the speed of Textile restructuring, project accumulation in Environmental Mechatronics, and continued SG&A efficiency.
Annual dividend of ¥307 (interim ¥141, year-end ¥166; year-end increased by ¥25 from initial forecast of ¥141). Total dividends are approximately ¥5.2B and payout ratio is 34.9% (based on Net Income attributable to owners of parent ¥95.0B; consistent with company disclosure). Additionally, share buybacks of ¥71.2B were executed, bringing total shareholder returns to about ¥123B and total return ratio to approximately 130%. FCF ¥159.5B comfortably covers total returns (FCF coverage 1.30x). With cash ¥155B and net interest-bearing debt minimal (interest-bearing debt ¥97B - cash ¥155B = -¥58B, net cash), capacity for returns is ample. Next fiscal year, the stock split (1→5) will make apparent DPS ¥33, but on a pre-split basis this equates to an annual ¥331, effectively continuing an increase in dividend. Company likely to maintain payout ratio in the 30–40% range; given stable OCF and unrealized gains on investment securities, sustainability of dividends and buybacks is high.
Continued Textile loss risk: The Textile Business recorded an operating loss of -¥9.0B this period and incurred restructuring costs of ¥8.8B, while demand recovery remains uncertain. Domestic uniform market contraction and intensified overseas competition mean that failure to achieve planned return to profitability next year would make the ¥112B operating income target difficult to reach. Textile accounts for 30.1% of revenue, and improving its margin from -2.1% is key to overall company profitability.
Short-term debt concentration and refinancing strain: Short-term borrowings ¥60.9B and short-term interest-bearing debt ¥96.4B result in a short-term debt ratio of 87% with high maturity concentration. While cash/short-term debt is 2.55x providing cushion, risks remain of deteriorating refinancing conditions amid financial market volatility or changes in bank policy. Interest coverage of 48.6x indicates high capacity to service interest, but high short-term borrowing dependence constrains financial flexibility.
Investment securities price volatility risk: Investment securities ¥695B (34.4% of total assets) are mainly strategic holdings and managed assets; market price fluctuations can materially affect comprehensive income and equity. This period OCI valuation difference +¥92.4B boosted comprehensive income, but in a market downturn the reverse would occur, accompanied by volatility in deferred tax liabilities. ROE 7.1% on equity ¥1,337B is relatively low; improving dividend yield of the investment portfolio and clarifying divestment policy are challenges to enhance capital efficiency.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.4% | 4.6% (1.7%–8.2%) | +1.8pt |
| Net Margin | 6.6% | 3.3% (0.9%–5.8%) | +3.3pt |
Profitability exceeds industry median, with both Operating and Net margins at higher levels. Net margin is notable due to extraordinary gains, but operating margin is also +1.8pt above the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -4.6% | 4.3% (2.2%–13.0%) | -8.9pt |
Growth materially lags the industry median, driven by Textile weakness. With the industry generally growing, achieving next year’s planned recovery (+7.1%) is a challenge.
※ Source: Company compilation
Improving operating-level profitability is critical to achieving next year’s plan: This year, final profit was substantially bolstered by extraordinary gains of ¥74.4B, while operating margin slightly declined to 6.4% (-0.4pt). Achieving next year’s 7.3% operating margin requires Textile to exit the red (-¥9.0B → profitable), margin recovery in Chemical Products, and SG&A ratio containment (15.1% → low-14% range). The +0.5pt gross margin trend appears sustainable, and growth in Environmental Mechatronics (margin 16.1%) will provide support.
Strong financial base and ample cash flow underpin sustainability of shareholder returns: Equity Ratio 66.2%, Debt/EBITDA 0.49x, and FCF ¥159.5B sufficiently cover total returns ¥123B (dividends + buybacks). With planned maintenance of payout ratio in the 30–40% range and a stock split, shareholder return stance is expected to continue. Unrealized gains on investment securities ¥695B (valuation difference +¥92.4B) increase equity and provide scope for policy-holding disposals as return sources. Stabilization of OCF (¥145.9B, +32% YoY) suggests high sustainability of returns even after extraordinary gains recede.
This report is an AI-generated financial analysis document created from XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.