| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥913.9B | ¥990.5B | -7.7% |
| Operating Income / Operating Profit | ¥6.1B | ¥-85.6B | +54.7% |
| Ordinary Income | ¥-2.8B | ¥-102.7B | +97.3% |
| Net Income / Net Profit | ¥-64.8B | ¥-145.2B | +55.4% |
| ROE | -18.6% | -34.9% | - |
For the fiscal year ended March 2026, Revenue was ¥913.9B (YoY -¥76.6B, -7.7%), Operating Income was ¥6.1B (YoY +¥91.7B, +54.7%), Ordinary Income was ¥-2.8B (YoY +¥99.9B, +97.3%), and Net Income was ¥-64.8B (YoY +¥80.4B, +55.4%). Although revenue declined, the company returned to operating profitability, substantially narrowing deficits at the ordinary and final stages. Operating margin improved to 0.7% from -8.6% a year earlier, a +930bp improvement, and gross margin recovered to 7.9% (previous year -2.1%). Reduced losses in the Cokes Business and achieved profitability in Fuel & Resource Recycling and Comprehensive Engineering drove consolidated operating profitability. At the ordinary level, interest expense of ¥8.7B weighed heavily, and non-operating expenses of ¥15.1B exceeded non-operating income of ¥6.3B, resulting in an ordinary loss. Extraordinary losses of ¥70.6B (impairment ¥44.4B, loss on disposal of fixed assets ¥10.9B, disaster losses ¥5.8B) were the primary cause of the net loss, indicating large one-off factors. Operating Cash Flow (OCF) improved strongly to ¥85.1B (YoY +367.8%), and Free Cash Flow (FCF) was nearly balanced at ¥-1.7B. Total assets were ¥1,265.4B and total equity ¥348.0B, giving an Equity Ratio of 27.5%. ROE was -18.6% due to the net loss; however, business indicators clearly show signs of bottoming out.
【Revenue】 Revenue was ¥913.9B (-7.7% YoY). By segment, the Cokes Business recorded ¥561.3B (-4.4%), representing 61.4% of consolidated revenue; Fuel & Resource Recycling reported ¥233.5B (-14.3%) and Comprehensive Engineering ¥105.4B (-10.0%), both with double-digit declines, driving consolidated revenue reduction. Other businesses were ¥43.8B (+1.4%). The main reasons for the revenue decline were lower sales volumes of steam coal and petroleum coke in Fuel & Resource Recycling and the loss of large projects in Comprehensive Engineering. Gross profit was ¥72.2B (previous year ¥-21.2B), with a gross margin of 7.9% improving from -2.1% a year earlier (+1,000bp). This improvement was mainly due to cost reductions and profitability improvement in the Cokes Business and stabilization of energy costs.
【Profitability】 Operating Income was ¥6.1B (previous year ¥-85.6B), turning to profit, with an operating margin of 0.7% (previous year -8.6%), a +930bp improvement. Selling, General & Administrative expenses were ¥66.1B (SG&A ratio 7.2%), up from ¥64.5B a year earlier (+2.5%), but downward rigidity relative to the -7.7% revenue decline was limited. By segment, the Cokes Business posted an operating loss of ¥-23.3B, a large reduction from an equivalent of ¥-123.6B last year (+81.2% improvement); Fuel & Resource Recycling reported Operating Income of ¥26.3B (margin 11.3%); Comprehensive Engineering reported ¥14.8B (margin 14.0%), both securing profitability and driving consolidated operating profitability. Other businesses contributed ¥5.8B (margin 13.2%). Ordinary Income was ¥-2.8B (previous year ¥-102.7B), greatly narrowing the loss. Non-operating income was ¥6.3B versus non-operating expenses of ¥15.1B (including interest expense ¥8.7B), with interest burden the main cause of ordinary losses. Pre-tax income was ¥-71.2B, and extraordinary losses of ¥70.6B (impairment ¥44.4B, loss on disposal of fixed assets ¥10.9B, disaster losses ¥5.8B) were significant, indicating dominance of one-off factors. After corporate taxes and others of ¥5.6B (including reversal of deferred tax assets), Net Income was ¥-64.8B (previous year ¥-145.2B). Despite revenue declines, the company achieved a reduction in the net loss through operating profitability and absorption of one-off losses—a pattern of profit improvement on lower sales.
The Cokes Business reported Revenue of ¥561.3B (-4.4%) and Operating Loss of ¥-23.3B (an improvement of +81.2% from an equivalent of ¥-123.6B last year) as spreads between feedstock coal prices and product prices improved and operating efficiency increased, substantially reducing the deficit. Despite a negative margin of -4.1%, structural improvement is progressing year-on-year. Fuel & Resource Recycling recorded Revenue of ¥233.5B (-14.3%) and Operating Income of ¥26.3B (margin 11.3%, YoY -5.2%), maintaining high profitability despite revenue decline and functioning as the largest profit-contributing segment. The revenue decline was driven by reduced sales volumes of steam coal and petroleum coke, but value-added services such as call centers supported earnings. Comprehensive Engineering posted Revenue of ¥105.4B (-10.0%) and Operating Income of ¥14.8B (margin 14.0%, YoY -28.7%); despite loss of large projects, high margins were maintained. Other businesses had Revenue of ¥43.8B (+1.4%) and Operating Income of ¥5.8B (margin 13.2%, YoY -2.4%), contributing steadily. On a consolidated basis, the three non-Cokes segments generated Operating Income of ¥46.9B, absorbing the Cokes loss of ¥-23.3B and achieving consolidated operating profitability. The diversification effect of the business portfolio is materializing, indicating progress in reducing dependency on the Cokes Business.
【Profitability】Operating margin of 0.7% (previous year -8.6%) achieved a +930bp improvement and a return to operating profit. Gross margin 7.9% (previous year -2.1%) improved +1,000bp, reflecting normalization of cost structure. ROE -18.6% is substantially negative due to the net loss but narrowed from -34.8% a year earlier. ROA (on Ordinary Income basis) -0.2% improved from -7.9% last year. EBITDA was ¥66.2B (Operating Income ¥6.1B + Depreciation ¥60.1B), up +181.3% YoY. 【Cash Quality】OCF/Operating Income is 13.97x, indicating high cash conversion at the operating level. OCF/EBITDA is 1.29x, favorable. Conversely, OCF/Net Income is -1.11x (sign reversal), suggesting net loss driven by one-off items. FCF of ¥-1.7B results from OCF ¥85.1B less Investing CF ¥-86.8B, with CapEx ¥79.6B largely self-funded. 【Investment Efficiency】CapEx/Depreciation is 1.33x, indicating continued capital expenditure for asset renewal, with efficiency-improving investments ongoing. Days Inventory Outstanding (DIO) of 123 days is +18 days YoY, increasing inventory burden and indicating room for working capital efficiency improvement. Days Sales Outstanding (DSO) of 36 days is stable. Days Payable Outstanding (DPO) 42 days is +8 days YoY, indicating greater use of trade credit. 【Financial Soundness】Equity Ratio 27.5% (previous year 31.8%) declined due to net asset erosion from the net loss. D/E ratio is 2.64x and Debt/Capital 65.9%, indicating high leverage. Interest coverage (EBIT / interest expense) 0.70x is at a watch level, showing weak capacity to cover interest in the ordinary operations. Current ratio 83.2% and quick ratio 64.0% leave short-term liquidity challenges. Short-term borrowings are ¥378.9B versus cash ¥63.9B, yielding cash/short-term borrowings 0.17x, indicating refinancing risk.
OCF was ¥85.1B (previous year ¥-31.8B), a substantial improvement of +367.8%. Starting from an OCF subtotal of ¥98.0B, changes in working capital contributed: inventory increase -¥14.9B, decrease in accounts receivable +¥30.2B, increase in accounts payable +¥19.8B. Receivables collection and utilization of payables drove CF improvement, while inventory increased, leaving cash tied up with DIO of 123 days. Corporate tax payments -¥3.8B and interest payments -¥8.7B persistently reduce CF, and interest payments exceeding EBIT ¥6.1B are a structural cause of ordinary losses. Investing CF was ¥-86.8B, primarily acquisition of tangible fixed assets -¥79.7B; acquisition of investment securities -¥0.1B and sales +¥1.2B were small. FCF was ¥-1.7B, nearly balanced, indicating CapEx was funded from internal cash. Financing CF was ¥14.5B, with increases in short-term borrowings +¥77.8B and long-term borrowings repayment -¥70.8B resulting in net long-term funding -¥63.8B, and dividend payments -¥8.7B leading to a net increase. Cash and cash equivalents increased by ¥12.8B to an ending balance of ¥63.9B. However, relative to short-term borrowings of ¥378.9B, liquidity remains fragile; refinancing and reduction of interest burden are key issues.
Ordinary Income was ¥-2.8B while pre-tax income was ¥-71.2B, with extraordinary losses of ¥70.6B dominating net results as one-off factors. Extraordinary losses consisted of impairment losses ¥44.4B, loss on disposal of fixed assets ¥10.9B, and disaster losses ¥5.8B, reflecting asset profitability reassessment and disaster impact. Comprehensive income was ¥-68.0B, slightly worse than Net Income ¥-64.8B by ¥-3.2B; fair value changes on available-for-sale securities +¥3.4B and actuarial gains/losses related adjustments +¥5.4B provided buffers, while deferred hedge gains/losses -¥0.0B were neutral. Non-operating income of ¥6.3B (dividends received ¥0.4B, subsidy income ¥1.6B, etc.) versus non-operating expenses ¥15.1B (interest expense ¥8.7B, other ¥3.1B) means interest burden exceeds Operating Income of ¥6.1B, creating a structural cause of ordinary losses. The gap between OCF ¥85.1B and Net Income ¥-64.8B is ¥149.9B, explained by non-cash expenses such as depreciation ¥60.1B and impairment losses ¥44.4B and working capital improvements. From an accrual perspective, the large positive difference between OCF and Net Income indicates cash generation exceeding accounting profit, suggesting high quality of cash earnings. However, net results are dominated by one-off losses and lack persistence; the risk of repeat one-off losses in future appears limited.
Full Year guidance plans Revenue ¥1,016.0B (YoY +11.2%), Operating Income ¥36.0B (YoY +491.8%), Ordinary Income ¥20.0B (turning positive from previous year ¥-2.8B), and Net Income ¥5.0B (turning positive from previous year ¥-64.8B). In terms of progress (while Q2-based assessment is not possible, compared to full-year guidance), current Revenue ¥913.9B is 89.9% of the forecast, whereas Operating Income ¥6.1B is only 17.0% of the ¥36.0B forecast. Assumptions for achieving the full-year forecast include profit normalization in the Cokes Business, inventory reduction, and reduction of interest burden, with significant earnings improvement expected in H2. The forecasted operating margin of 3.5% implies a +280bp improvement from the current 0.7%, relying on Cokes Business returning to profit and expansion of non-Cokes segments. The full-year Net Income target of ¥5.0B assumes avoidance of recurring extraordinary losses; absence of new one-off losses is a condition. Revenue growth of +11.2% assumes order recovery in Fuel & Resource Recycling and Comprehensive Engineering and stabilization of Cokes sales volumes, under a scenario where energy costs and the feedstock coal/product price spread are neutral to slightly improved.
Dividends this fiscal year: year-end ¥0, interim ¥0, no dividend. The previous year also had no dividends; dividend suspension amid continued net losses is reasonable for financial preservation. Payout Ratio is 0% and cannot be calculated due to negative distributable profits. No share buybacks were confirmed; Total Return Ratio is also 0%. Given the plan to return to Net Income ¥5.0B next year, priority is expected to be debt reduction and interest burden alleviation and recovery of Interest Coverage (target >2x), with resumption of dividends considered only after confirming stable profitability and improved financial condition. With FCF ¥-1.7B near balance, dividend capacity is limited. Postponing shareholder returns while rebuilding capital and deleveraging is a rational approach.
Structural low-margin risk in the Cokes Business: The Cokes Business accounts for 61.4% of revenue and posted an operating loss of ¥-23.3B. It is vulnerable to spreads between feedstock coal prices and product prices. Although improved YoY (+81.2%), it remains loss-making; renewed raw material cost surges or delayed price pass-through could pressure consolidated earnings. Demand cycles in the steel industry can reduce utilization rates and increase fixed cost burdens, eroding margins.
High leverage and short-term debt concentration creating liquidity risk: With D/E 2.64x and Debt/Capital 65.9% and short-term borrowings of ¥378.9B representing 56.3% of interest-bearing debt, cash of ¥63.9B yields cash/short-term borrowings 0.17x, showing a pronounced maturity mismatch. Worsening refinancing conditions or credit line reductions could severely impact liquidity. Interest coverage of 0.70x indicates weak capacity to cover interest, raising the risk that ordinary losses could become persistent in a rising interest rate environment.
Excess inventory and deterioration in working capital efficiency: DIO 123 days (+18 days YoY) and inventories of ¥105.0B, including raw materials ¥167.4B and work-in-progress ¥11.4B (total inventories ¥283.8B), are pressuring working capital. Risks include inventory valuation losses and higher storage costs depressing gross margin; prolonged cash flow tie-up would reduce investment capacity. Reduced sales volumes in Fuel & Resource Recycling are the main cause of inventory buildup; continued demand weakness could lead to obsolescence losses.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.7% | 7.8% (4.6%–12.3%) | -7.1pt |
| Net Margin | -7.1% | 5.2% (2.3%–8.2%) | -12.3pt |
Profitability is well below the industry median, with both operating margin and net margin in the lower tier. One-off losses are significant, but low-margin structure at the operating level is also evident.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -7.7% | 3.7% (-0.4%–9.3%) | -11.4pt |
Revenue growth lags the industry median by 11.4pt, showing underperformance during a revenue contraction. Double-digit declines in Fuel & Resource Recycling and Comprehensive Engineering are the main causes, indicating relative weakness within the industry.
※Source: Company compilation
Business bottoming is clear as operating profitability and OCF normalize: Turning to operating profit of ¥6.1B, substantial improvement in OCF to ¥85.1B, and an 81.2% reduction in the Cokes Business loss indicate progress in rebuilding the business base. Two non-Cokes segments (Fuel & Resource Recycling and Comprehensive Engineering) generated ¥41.1B of operating income, demonstrating portfolio diversification effects. Although operating margin of 0.7% remains low, the +930bp improvement from -8.6% last year signals structural improvement; achieving the next target of operating margin 3.5% in the coming year is the key focus.
Interest burden and short-term debt concentration are drag factors at the ordinary and net stages: Interest expense of ¥8.7B exceeds Operating Income ¥6.1B, with Interest Coverage 0.70x indicating weak interest absorption. Short-term borrowings of ¥378.9B make up 56% of interest-bearing debt, and compared to cash ¥63.9B liquidity risk is evident. Debt/EBITDA 10.2x and D/E 2.64x show high leverage, raising capital costs and hindering value creation at the ordinary level. Deleveraging, lengthening debt maturities, and improving interest terms are keys to improving capital efficiency; targets include Interest Coverage >2x and Debt/EBITDA <6x.
Inventory reduction and Cokes Business profitability are prerequisites for achieving next-year plans: DIO 123 days (+18 days YoY) increases inventory burden and leaves ample room to improve working capital efficiency. Reducing inventory directly supports maintaining gross margin and expanding cash-generation capacity; improvement to DIO below 90 days is desirable. The Cokes Business still accounts for 61% of revenue and has an operating loss of ¥-23.3B, but continued trend of +81.2% YoY improvement could make profitability attainable. Managing spreads between feedstock coal and cokes prices, improving plant utilization, and advancing price pass-through are conditions for turning the business profitable and are decisive for achieving the next-year Operating Income plan of ¥36.0B.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult experts as necessary before making investment decisions.