| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥8731.9B | ¥10054.7B | -13.2% |
| Operating Income | ¥-707.1B | ¥-718.3B | +1.6% |
| Profit Before Tax | ¥-740.6B | ¥-780.4B | +5.1% |
| Net Income | ¥-879.2B | ¥303.1B | -390.1% |
| ROE | -23.9% | 6.9% | - |
For the fiscal year ended March 2026, Revenue was ¥8,731.9B (YoY -¥1,322.8B -13.2%), Operating loss was ¥707.1B (YoY +¥11.2B +1.6% narrowing of loss), Ordinary Income was ¥383.5B (YoY +¥316.3B +470.9%), and Net loss attributable to owners of the parent was ¥880.0B (YoY -¥1,161.1B -390.1%). Declining revenue and a large final-stage loss were driven primarily by a contraction in the Composite Molded Materials business (¥1,883.9B → ¥700.5B) and a major impairment (¥889.4B), which heavily depressed profitability. At the operating stage, special retirement payments of ¥40.1B and impairment losses of ¥889.4B were recorded, expanding the operating loss to ¥707.1B; however, gains on disposals from discontinued operations enabled a positive result at the ordinary income level. EBITDA (Operating loss + Depreciation) was -¥104.0B (margin -1.2%), indicating weak cash generation, but inventory reduction and receivables collection improved Operating Cash Flow to ¥986.5B (YoY +41.3%), resulting in a large positive cash flow. Free Cash Flow was ¥597.0B, so liquidity is sound, but the quality of earnings remains in the process of improvement.
[Revenue] Revenue was ¥8,731.9B (YoY -13.2%), with the largest decline driven by a substantial contraction in the Composite Molded Materials business (-¥1,183.4B). Segment composition ratios were Fibers & Products 40.1% (¥3,500.7B, YoY -0.5%), Materials 38.8% (¥3,385.8B, YoY -26.3%), Healthcare 15.9% (¥1,385.6B, YoY +1.2%), Other 5.3% (¥459.9B, YoY -19.7%). Fibers & Products remained steady, Healthcare showed slight growth, and Materials decelerated sharply due to weakening carbon fiber/composite markets and portfolio rebalancing. By region: Japan ¥3,954.7B (YoY -3.3%), China ¥1,707.7B (YoY -2.3%), US ¥920.7B (YoY -49.6%) — notably US sales halved due to downsizing of aramid/composites-related businesses. High-performance materials were ¥2,685.3B (YoY -0.9%) slightly down, while Composite Molded Materials fell substantially to ¥700.5B (YoY -62.8%), reflecting simultaneous portfolio restructuring and demand slowdown. Gross margin was 18.5% (from 19.5% last year, -1.0pt), indicating margin compression and room for price pass-through and mix improvement.
[Profitability] Cost of sales was ¥7,112.3B (cost ratio 81.5%) yielding gross profit ¥1,619.6B (gross margin 18.5%, -1.0pt). SG&A was ¥2,313.2B (SG&A ratio 26.5%, -1.5pt improvement), resulting in an Operating loss of ¥707.1B (Operating margin -8.1%). Despite SG&A ratio improvement, gross margin deterioration outweighed benefits, maintaining an operating deficit. Impairment losses of ¥889.4B (mainly Materials ¥622.9B, Healthcare ¥252.9B) and special retirement payments ¥40.1B pressured results. Segment operating profits were Materials ¥1.2B (margin 0.0%, from ¥60.3B prior, -98.0%), Fibers & Products ¥170.9B (margin 4.9%, -4.2%), Healthcare ¥134.3B (margin 9.7%, +136.0%). Materials saw earnings collapse due to weaker composites markets and polycarbonate (PC) margin compression; Healthcare benefited from improved medical devices and home healthcare. Non-operating items included financial income ¥41.6B, financial expenses ¥94.7B, and equity-method income ¥19.6B, producing Ordinary Income ¥383.5B (from ¥67.2B prior, +470.9%) and a turnaround to profit at the ordinary level. Despite a pre-tax loss of ¥740.6B, income taxes were ¥138.6B (effective tax rate -18.7%), resulting in Net loss attributable to owners of the parent of ¥880.0B. One-off large impairments and special losses were material, yielding a structure of revenue decline and profit decline at the operating stage, revenue decline but profit increase at the ordinary stage, and revenue decline with a large final loss at the bottom line.
Fibers & Products maintained resilience with Revenue ¥3,500.7B (YoY -0.5%) and Operating Profit ¥170.9B (YoY -4.2%), margin 4.9%, supported by stable demand for polyester fibers and textile products. Materials saw a sharp slowdown with Revenue ¥3,385.8B (YoY -26.3%) and Operating Profit ¥1.2B (YoY -98.0%), margin 0.0% (effectively zero). The contraction of Composite Molded Materials (-¥1,183.4B) and impairment losses ¥622.9B were primary drivers, with intensified price competition for carbon fiber and PC and demand slowdown pressuring earnings. Healthcare improved significantly with Revenue ¥1,385.6B (YoY +1.2%) and Operating Profit ¥134.3B (YoY +136.0%), margin 9.7%, driven by stronger pharmaceutical and medical device sales and home healthcare efficiency. Other recorded Revenue ¥459.9B (YoY -19.7%), Operating Profit ¥45.6B (YoY -35.6%), margin 9.9%, affected by contraction in battery materials and membrane businesses. The consolidated Operating loss of ¥707.1B reflects segment operating profit ¥257.8B less impairments and one-off costs ¥964.9B. Recovery of Materials is key to normalizing group profitability.
[Profitability] Operating margin -8.1% (from -7.1% last year, -1.0pt deterioration), ROE -22.1% (from +6.7% last year, -28.8pt deterioration), EBITDA -¥104.0B (margin -1.2%), indicating weak cash generation. Gross margin 18.5% (-1.0pt), SG&A ratio 26.5% (-1.5pt improvement) — cost reductions are progressing but gross margin recovery is urgent. EPS -¥456.33 (from ¥147.15 prior, large swing to loss) with major impairments and restructuring costs heavily depressing results. [Cash Quality] Operating CF ¥986.5B versus Net loss ¥880.0B, OCF/Net Income -1.12x. Non-cash charges (Depreciation ¥603.2B, Impairment ¥889.4B) and inventory reduction (Inventories -¥182.1B) boosted cash flow. Free Cash Flow ¥597.0B (Operating CF ¥986.5B - Investing CF ¥389.6B) covers dividend payments ¥96.4B. [Investment Efficiency] Total asset turnover 0.95x (declined YoY), ROA -9.6% (on an ordinary profit basis ROA 4.2%), indicating low asset efficiency. Capex ¥535.1B / Depreciation ¥603.2B = 0.89x, suggesting maintenance-level investment. [Financial Soundness] Equity Ratio 39.6% (from 40.6% last year, -1.0pt), D/E ratio 0.85x, Current Ratio 175%, Net D/E 0.80x — financial resilience is maintained. Inventories ¥2,088.2B (-8.3%), Trade receivables ¥1,673.7B (+0.4%) show working capital compression trends, but DSO 70 days, DIO 107 days, CCC 124 days indicate significant room for improvement.
Operating CF was ¥986.5B (from ¥698.4B prior, +41.3%). The divergence from the Net loss of ¥880.0B is due to non-cash charges (Depreciation ¥603.2B, Impairment ¥889.4B) and working capital improvements (Inventories contributed -¥182.1B in cash, Trade receivables improved by +¥82.7B collection progress, Trade payables decreased -¥74.5B), resulting in an OCF subtotal of ¥1,037.5B less tax and similar payments of ¥78.9B to secure ¥986.5B. Investing CF was -¥389.6B, reflecting Capex ¥535.1B and intangible investments ¥64.3B offset partially by investment disposals ¥142.0B and subsidiary disposals ¥11.3B. Free Cash Flow of ¥597.0B was robust and used for dividend payments ¥96.4B, share buybacks ¥0.1B, and debt repayments ¥659.2B. Financing CF was -¥732.5B, with changes including short-term borrowings increase ¥85.7B, long-term borrowings repayment -¥659.2B, lease payments -¥62.2B, and dividend payments -¥96.4B. Cash and cash equivalents were ¥1,044.7B (from ¥1,075.4B prior, -¥30.6B, including foreign exchange impact +¥87.1B), leaving a healthy cash position. While inventory compression progressed, there is risk of DIO re-expansion next fiscal year.
Earnings quality this period was heavily influenced by one-off factors and diverged from recurring earning power. At the operating level, impairment losses ¥889.4B (Materials ¥622.9B, Healthcare ¥252.9B) and special retirement payments ¥40.1B were recorded, pushing segment operating profit ¥257.8B down to an operating loss of ¥707.1B. Ordinary Income ¥383.5B — despite including loss on disposal of affiliated company shares ¥30.3B — was supported by financial income ¥41.6B and equity-method income ¥19.6B, producing a positive ordinary result. The gap between Net loss ¥880.0B and Ordinary Income reflects a pre-tax loss of ¥740.6B with an effective tax rate of -18.7% (income taxes ¥138.6B), suggesting deferred tax asset adjustments and valuation allowance impacts. Non-operating income/expense were neutral as a share of sales (financial income 0.5%, financial expenses 1.1%). Other comprehensive income was +¥307.9B (FX translation +¥272.4B, cash flow hedge -¥24.4B, defined benefit remeasurements +¥24.7B, financial asset valuation +¥33.6B), partially offsetting the Net loss to yield comprehensive income of -¥571.3B. Accrual ratio -20.3% ([Net loss - Operating CF]/Total assets) reflects non-cash charges and inventory compression; cash-wise the situation is relatively sound, but given gross margin low at 18.5% and continued operating losses, verification of recurring ordinary earning power after one-off items subside is critical.
The company plan for the fiscal year ending March 2027 calls for Revenue ¥8,500.0B (YoY -2.7%), Operating Income ¥700.0B (YoY +¥1,407.1B, turning to profit), Net income attributable to owners of the parent ¥450.0B (YoY +¥1,330.0B), EPS ¥233.26, DPS ¥25.00. Achieving Operating Income of ¥700B requires an EBIT margin improvement to approximately 8.2% (700/8,500), predicated on Materials returning to profitability, fixed cost absorption, and gross margin recovery (price correction and higher product mix). The company expects roughly ¥1,400B of operating-stage improvement from the disappearance of one-off impairments, but gross margin recovery from 18.5% to around 23% would be necessary, relying on demand recovery and utilization improvement in Composite Molded Materials and continued SG&A restraint. Dividend is conservatively set at annual ¥25 (per-share), with an expected payout ratio of about 10.7% (25 / 233.26), aiming to preserve dividend sustainability after earnings recover. Key progress checkpoints include Materials achieving quarterly operating profitability, normalization of inventory turnover (DIO shortened to below 100 days), and SG&A ratio compression below 25%.
Annual dividend is ¥50 (interim ¥25 + year-end ¥25) totaling ¥96.4B. Because the company reported a loss this period, the payout ratio is arithmetically negative and thus not a meaningful indicator, but given Operating CF ¥986.5B and Free CF ¥597.0B, dividend payments ¥96.4B yield an FCF dividend coverage of 6.2x, indicating sufficient payout capacity. With an Equity Ratio of 39.6% and Cash and Cash Equivalents ¥1,044.7B, financial strength is within acceptable bounds, and continuation of dividends is judged feasible. Share buybacks were limited to ¥0.1B, and the Total Return Ratio is not shown due to negative earnings. For FY2027 the dividend forecast is ¥25 (annualized), and with projected Net Income attributable to owners of the parent ¥450B the payout ratio is conservatively about 10.7%. Continued cash generation after impairments and establishment of a profit base are keys to medium- to long-term dividend sustainability.
Materials market deterioration and fragile profitability: The Materials segment reported Operating Profit ¥1.2B (margin 0.0%) effectively at break-even, with contraction in Composite Molded Materials and intensified price competition for carbon fiber and PC continuing. Of Materials revenue ¥3,385.8B, Composite Molded Materials is ¥700.5B (from ¥1,883.9B prior, -62.8%), a large decline; if market recovery is delayed, achieving next-year operating profitability (company plan Operating Income ¥700B) will be difficult. Post-impairment asset base is ¥3,747.6B, lowering re-impairment risk, but recovery depends on utilization and price spread improvements.
Deterioration in working capital efficiency and cash pressure: With DSO 70 days, DIO 107 days, CCC 124 days, working capital efficiency remains low by industry standards. Although Inventories ¥2,088.2B contracted -8.3% YoY, it has not decreased in line with revenue decline (-13.2%), leaving DIO broadly unchanged. If next year inventory builds in anticipation of revenue recovery, risks include inventory write-downs or discounts and cash absorption from working capital expansion (worsening CCC).
Uncertainty of recurring ordinary earning power and dependence on one-offs: Ordinary Income ¥383.5B improved YoY +470.9% but was influenced by gains/losses such as loss on disposal of affiliated company shares ¥30.3B and volatility in financial gains/losses. The large gap between an operating loss of ¥707.1B and ordinary profit shows weak recurring earning power (segment operating profit ¥257.8B). If gross margin remains depressed at 18.5%, operating losses could persist even after one-off items subside; progress in price pass-through and product mix improvement will be key.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | -22.1% | 5.9% (2.6%–12.0%) | -28.0pt |
| Operating Margin | -8.1% | 4.6% (1.7%–8.2%) | -12.7pt |
| Net Margin | -10.1% | 3.3% (0.9%–5.8%) | -13.4pt |
Profitability metrics are substantially below industry medians, with impairments and one-off costs evident.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -13.2% | 4.3% (2.2%–13.0%) | -17.5pt |
Revenue growth is 17.5pt below the industry median, with contraction in Composite Molded Materials significantly weighing on growth.
※Source: Company compilation
Robust Operating CF and progress on inventory reduction: Despite a Net loss of ¥880.0B, Operating CF was ¥986.5B and Free CF ¥597.0B, indicating solid cash generation. Inventory reduction of -¥182.1B and non-cash charges (Impairment ¥889.4B, Depreciation ¥603.2B) supported cash flow, enabling dividend payments (¥96.4B, FCF coverage 6.2x) and net reduction in interest-bearing debt. Asset shrinkage and restructuring show signs of bottoming, but attention should focus on DIO re-expansion risk and CCC normalization next year.
Materials earnings recovery is the group turning point: The Materials segment had Operating Profit ¥1.2B (margin 0.0%), effectively zero. Although the impairment of ¥622.9B increased prudence in asset carrying amounts, next-year operating profitability (company plan Operating Income ¥700B) assumes Materials recovery. Demand recovery for Composite Molded Materials, improved price spreads for carbon fiber and PC, and utilization gains are essential; quarterly Materials operating profit trends will be a key monitoring metric. Healthcare’s high margin (9.7%) and stable Fibers & Products earnings (4.9%) continue to provide a support base.
Verification of ordinary earning power post one-offs is the focus: One-off costs (Impairment ¥889.4B, special retirement payments ¥40.1B) materially pressured results and the gross margin decline to 18.5% (-1.0pt) suggests structural challenges. While the absence of one-offs should yield substantial operating improvement next year, recovery in gross margin (via price correction and higher product mix) and continued SG&A restraint are required for sustained profitability. Achieving the company’s target EBIT margin of 8.2% implies gross margin recovery to roughly 23%, making market conditions and price pass-through key monitoring points.
This report is an AI-generated earnings analysis created by 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 based on public financial statements. Investment decisions should be made at your own risk and, if necessary, after consulting a professional advisor.