| Indicator | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥1717.7B | ¥1596.5B | +7.6% |
| Operating Income | ¥208.3B | ¥178.7B | +16.6% |
| Ordinary Income | ¥220.1B | ¥192.8B | +14.2% |
| Net Income | ¥156.7B | ¥139.6B | +12.2% |
| ROE | 9.7% | 9.7% | - |
For the fiscal year ended March 2026, Seiren Co., Ltd. recorded Revenue of ¥1717.7B (YoY +¥121.1B, +7.6%), Operating Income of ¥208.3B (YoY +¥29.6B, +16.6%), Ordinary Income of ¥220.1B (YoY +¥27.2B, +14.2%), and Net Income of ¥156.7B (YoY +¥17.0B, +12.2%), achieving growth both on the top line and bottom line. Operating margin improved to 12.1% (prior year 11.2%), up +0.9pt, mainly due to a reduction in SG&A ratio to 15.3% (prior year 16.4%), a decline of -1.1pt. Gross margin slightly decreased to 27.4% (prior year 27.6%, -0.2pt), but SG&A efficiency amplified operating leverage. By segment, the core Automotive Materials segment (67.1% of revenue) expanded +5.0% in revenue and +16.1% in profit, securing a margin of 14.1%. Electronics grew +22.9% in revenue and +67.3% in profit, maintaining high profitability with a 22.3% margin. Environmental & Living Materials expanded sharply with +29.2% revenue growth. Non-operating items contributed net +¥11.8B (interest income ¥8.7B, dividend income ¥4.4B less interest expense ¥1.0B). Extraordinary items were modest at net +¥3.4B, including gain on sale of investment securities ¥4.6B, indicating profit growth centered on recurring activities. Operating Cash Flow was ¥177.7B, 1.13x Net Income and robust, but working capital deterioration (accounts receivable +¥32.4B, accounts payable -¥31.6B) worsened net working capital by -¥59.8B, leaving OCF/EBITDA at 0.66x. Capital expenditures rose to ¥103.5B (+82.8% YoY), resulting in Free Cash Flow of -¥16.8B. However, strong liquidity of cash ¥388.9B and an Equity Ratio of 72.3% provided financial capacity to return ¥44.6B in dividends and ¥59.8B in share buybacks as total shareholder returns.
[Revenue] Revenue expanded steadily to ¥1717.7B (+7.6%). By segment, Automotive Materials reached ¥1152.6B (+5.0%), accounting for 67.1% of total revenue, supported by volume growth in automotive interior materials and improved product mix. Electronics recorded ¥138.7B (+22.9%), driven by increased demand for conductive materials and industrial materials. Environmental & Living Materials surged to ¥134.3B (+29.2%), aided by recovery in building and interior materials demand. High Fashion was flat at ¥214.2B (-0.1%), Medical slightly decreased to ¥66.9B (-1.6%), but overall revenue increased including other segments. By region, Japan expanded significantly to ¥734.6B (+14.0%), China decreased to ¥345.7B (-3.4%), while Other Asia ¥239.4B (+14.0%) and North America ¥331.0B (+0.5%) provided support.
[Profitability] Cost of sales increased by ¥113.0B to ¥1246.2B, and gross margin edged down to 27.4% (prior year 27.6%, -0.2pt), reflecting that rising raw material and logistics costs were not fully absorbed by price pass-through and productivity gains. SG&A increased modestly to ¥263.1B (+¥1.4B, +0.6%), well below revenue growth, improving the SG&A ratio to 15.3% (prior year 16.4%, -1.1pt). Fixed cost absorption and management cost efficiency contributed to Operating Income of ¥208.3B (+16.6%) and operating margin of 12.1% (+0.9pt). Non-operating income totaled ¥16.1B (including interest income ¥8.7B, dividend income ¥4.4B, foreign exchange gains ¥0.4B) against non-operating expenses ¥4.4B (including interest expense ¥1.0B), resulting in net +¥11.8B and Ordinary Income of ¥220.1B (+14.2%). Extraordinary items comprised extraordinary gains ¥5.1B (gain on sale of investment securities ¥4.6B, gain on sale of fixed assets ¥0.5B) and extraordinary losses ¥1.7B (impairment losses ¥0.5B, valuation loss on investment securities ¥0.2B), netting +¥3.4B and thus minor. Pre-tax income was ¥223.4B, from which income taxes ¥66.7B (effective tax rate 29.9%) were deducted; after minority interest attributable to non-controlling interests ¥0.7B, Net Income attributable to owners of the parent was ¥156.7B (+12.2%). In conclusion, modest gross margin decline was offset by SG&A efficiency to deliver revenue and profit growth.
Automotive Materials recorded Revenue ¥1152.6B (+5.0%), Operating Income ¥162.0B (+16.1%), and margin 14.1%, with margin improving +0.2pt from 13.9% due to volume expansion and product mix improvements. This core segment accounts for 77.8% of consolidated Operating Income. High Fashion posted Revenue ¥214.2B (-0.1%), Operating Income ¥14.1B (-0.6%), margin 6.6%, reflecting stagnation in the apparel market. Electronics achieved Revenue ¥138.7B (+22.9%), Operating Income ¥30.9B (+67.3%), margin 22.3%, maintaining high profitability driven by demand expansion for conductive materials and industrial cloth and a higher proportion of high value-added products. Environmental & Living Materials saw Revenue ¥134.3B (+29.2%), Operating Income ¥10.3B (+5.0%), margin 7.7%; revenue surged but profit growth was limited, suggesting ramp-up costs and price competition. Medical recorded Revenue ¥66.9B (-1.6%), Operating Income ¥7.4B (+7.1%), margin 11.1%, securing profit growth despite revenue decline through margin improvement (prior year 10.2%). Others recorded Revenue ¥25.3B (+90.9%), Operating Income ¥5.6B (+7.9%), margin 22.1%, with substantial expansion in new businesses such as sales of packaging film raw materials. Consolidated Operating Income was ¥208.3B, while segment income totalled ¥230.3B; the adjustment of -¥22.0B reflects corporate allocation of administrative expenses.
[Profitability] Operating margin improved to 12.1% (prior year 11.2%, +0.9pt), and Net Income margin improved to 9.1% (prior year 8.7%, +0.4pt). Gross margin slightly declined to 27.4% (prior year 27.6%, -0.2pt), but SG&A efficiency (15.3% vs prior year 16.4%, -1.1pt) amplified operating leverage. ROE was 9.7% (prior year 10.4%) down, reflecting equity growth (¥1617.9B vs prior year ¥1438.8B, +12.4%) outpacing Net Income growth (+12.2%). ROA (on Ordinary Income basis) improved to 10.4% (prior year 10.0%). [Cash Quality] Operating CF / Net Income was a solid 1.13x, but OCF/EBITDA was limited to 0.66x (Operating CF ¥177.7B / EBITDA ¥270.9B) due to working capital deterioration (-¥59.8B) which depressed cash conversion efficiency. DSO was 99 days, DIO 105 days, and CCC 143 days, indicating elongation and room to improve working capital efficiency. [Investment Efficiency] Total asset turnover declined to 0.767x (prior year 0.801x), with increases in tangible fixed assets +¥143.3B (+25.5%) and investment securities +¥80.9B (+78.1%) weighing on asset efficiency. CapEx of ¥103.5B was 1.65x depreciation ¥62.8B, indicating aggressive investment to expand mid-term supply capacity. [Financial Soundness] Equity Ratio was high at 72.3% (prior year 71.7%). Interest-bearing debt totaled ¥92.1B (long-term borrowings ¥78.7B + short-term borrowings ¥13.4B), Debt/EBITDA was 0.34x, and interest coverage was 282x (EBITDA ¥270.9B / interest paid ¥0.96B), indicating an extremely conservative position. Current ratio was 349% (prior year 314%), quick ratio 298% (prior year 264%), and cash & deposits ¥388.9B far exceed short-term liabilities.
Operating CF was ¥177.7B (prior year ¥205.4B, -13.5%). Pre-tax income ¥223.4B plus non-cash items including depreciation ¥62.8B produced an operating CF subtotal of ¥238.9B, but working capital deterioration led to cash outflow of -¥59.8B. Breakdown: increase in accounts receivable -¥32.4B, decrease in accounts payable -¥31.6B, increase in inventories -¥4.2B, reflecting working capital demand from revenue expansion and changes in payment terms. After payment of income taxes -¥73.5B, Operating CF was ¥177.7B. Investing CF was -¥194.5B (prior year -¥118.1B), with main outflows being CapEx -¥103.5B (prior year -¥56.6B, +82.8%), acquisition of investment securities -¥66.0B, and acquisition of intangible assets -¥0.9B. Proceeds from sale of investment securities +¥38.8B partly offset outflows. Free Cash Flow was negative at -¥16.8B (prior year +¥87.3B). Financing CF was -¥56.8B (prior year -¥78.0B), with borrowings from long-term loans +¥41.0B offset by long-term loan repayments -¥52.2B, net decrease in short-term borrowings -¥34.7B, dividends -¥44.6B, and share buybacks -¥59.8B. Cash decreased by -¥61.2B, but year-end cash balance remained ample at ¥388.9B (prior year ¥430.3B).
Overall quality of earnings is sound. Operating Income of ¥208.3B was generated from recurring business activities. Of non-operating income ¥16.1B, interest income ¥8.7B and dividend income ¥4.4B are stable returns from financial asset management; foreign exchange gains ¥0.4B were minor. Extraordinary gains ¥5.1B were mainly due to gain on sale of investment securities ¥4.6B and are temporary but accounted for only 2.3% of total, a small proportion. Extraordinary losses ¥1.7B were limited (impairment losses ¥0.5B, valuation loss on investment securities ¥0.2B, loss on retirement of fixed assets ¥1.0B), showing no signs of structural earnings deterioration. Operating CF of ¥177.7B is 1.13x Net Income ¥156.7B and thus appears robust, but OCF/EBITDA 0.66x indicates working capital deterioration (-¥59.8B) delaying accrual cash realization. Comprehensive income ¥220.8B exceeded Net Income by +¥64.1B, contributed by foreign currency translation adjustments +¥33.4B, valuation differences on available-for-sale securities +¥26.6B, and actuarial gains/losses adjustments +¥4.2B. These are valuation gains from market movements and involve future realizability, not short-term recognition distortions. Overall, earnings growth centered on Ordinary Income is positive, though improvement in working capital management is key to cash generation.
The company plans Revenue ¥1903.0B (YoY +10.8%), Operating Income ¥209.0B (YoY +0.3%), Ordinary Income ¥211.0B (YoY -4.1%), and Net Income ¥150.0B (YoY -4.3%). While top-line assumes double-digit growth, Operating Income is planned to be flat and Ordinary Income and Net Income assumed to decline, incorporating margin compression despite revenue expansion. Planned operating margin declines to 11.0% (this period 12.1%, -1.1pt), likely due to raw material and logistics cost increases, amortization of ramp-up investments, and product mix changes. Year-to-date progress is 90.3% for Revenue (ratio of current results to full-year forecast) and 99.7% for Operating Income, suggesting the full-year forecast is conservatively set. The larger decline in Ordinary Income (-4.1%) vs. flat Operating Income (+0.3%) suggests expectations of reduced non-operating income or increased non-operating expenses. Net Income decline (-4.3%) may reflect tax rate and minority interest fluctuations, overall a cautious outlook. Current CapEx ¥103.5B (1.65x depreciation ¥62.8B) targets future capacity and efficiency; while amortization increases will pressure margins, upside remains if utilization and product mix improvements materialize.
Dividend per share is ¥76 (interim ¥38, year-end ¥38), with payout ratio 28.1% and total dividends ¥44.6B. Payout ratio matches prior year 28.1%, reflecting dividend increases in line with profit growth. Additionally, share buybacks of ¥59.8B were executed, making total shareholder returns ¥104.5B. Total return ratio (dividends + buybacks) is approximately 66.7% (¥104.5B / Net Income ¥156.7B), a high level. However, Free Cash Flow this period was negative at -¥16.8B, so return funding was covered by Operating CF and cash on hand. With year-end cash ¥388.9B and current ratio 349%, there is no near-term concern over continuity of dividends. Operating CF / Net Income 1.13x is solid, but working capital deterioration has suppressed cash generation; if working capital normalizes and investment outflows smooth, FCF coverage for dividends and buybacks should improve. Dividend policy appears to target a payout ratio around 28% while flexibly executing buybacks depending on surplus funds and investment needs.
Segment concentration risk: Automotive Materials accounts for 67.1% of revenue and 77.8% of Operating Income, representing a concentrated structure. This segment focuses on automotive interior materials, so fluctuations in automotive demand, model cycles, and customer mix directly affect performance. The high margin of Automotive Materials at 14.1% poses a risk: raw material price spikes or shifts in order composition could materially impair consolidated results. There is no guarantee that the prior year profit growth (+16.1%) will persist; in a demand slowdown fixed cost burden could weigh heavily.
Working capital efficiency deterioration risk: DSO 99 days, DIO 105 days, and CCC 143 days have lengthened, and OCF/EBITDA is 0.66x, indicating weakened cash conversion. This period working capital cash outflow was -¥59.8B (accounts receivable -¥32.4B, accounts payable -¥31.6B, inventory -¥4.2B). While partly attributable to revenue expansion, chronic receivables or inventory buildup could lead to persistent negative FCF, constraining dividends and investment. Short-term coverage exists with cash ¥388.9B, but urgent improvement in working capital management is required.
Raw material & cost inflation risk: Gross margin declined to 27.4% (prior year 27.6%, -0.2pt), reflecting upward pressure on raw material and logistics costs. The company’s plan assumes operating margin decline to 11.0% (this period 12.1%, -1.1pt); if cost increases cannot be passed through in prices, margin compression could accelerate. SG&A efficiency offset margins this period (-1.1pt), but future increases in amortization from CapEx (current CapEx ¥103.5B is 1.65x depreciation) could add fixed costs and pressure margins. Foreign exchange fluctuations (57.2% of revenue is overseas) also pose a risk of yen appreciation reducing yen-denominated earnings.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.1% | 4.6% (1.7%–8.2%) | +7.5pt |
| Net Margin | 9.1% | 3.3% (0.9%–5.8%) | +5.8pt |
The company’s profitability substantially exceeds the retail industry median, indicating advantages in high value-added products and production efficiency.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.6% | 4.3% (2.2%–13.0%) | +3.3pt |
Revenue growth outperformed the industry median by +3.3pt, driven by expansion in the core segment and contributions from high-growth segments such as Electronics.
※ Source: Company compilation
Operating margin improved to 12.1% (+0.9pt) through SG&A efficiency and expansion of high-margin segments, maintaining a high-profit structure +7.5pt above the industry median (4.6%). Margins in Automotive Materials (14.1%) and Electronics (22.3%) indicate future growth potential. However, the slight gross margin decline (-0.2pt) and company guidance for lower operating margin (11.0%) warrant caution given raw material and amortization cost increases. If working capital normalizes and price pass-through advances, there is room to maintain or improve margins.
Financial soundness is very high with Equity Ratio 72.3%, Debt/EBITDA 0.34x, and cash ¥388.9B, providing flexibility for investment and returns. However, FCF was negative at -¥16.8B this period, driven by CapEx ¥103.5B (1.65x depreciation) and working capital deterioration (-¥59.8B), expanding cash outflows. Total return ratio 66.7% was funded from cash on hand, so sustainability depends on improvements in working capital (shortening DSO, DIO, CCC). If CapEx is leveled and Operating CF normalizes (improvement in OCF/EBITDA), FCF turnaround and expanded return capacity are expected.
Segment concentration risk (Automotive Materials 67.1%) raises performance volatility, but high growth in Electronics (+22.9% revenue, +67.3% profit) and Environmental & Living Materials (+29.2% revenue) provides diversification benefits. The company’s conservative guidance (revenue growth with stable to lower profits) appears to incorporate cost increases and amortization burdens; actual results could exceed guidance. Progress in compressing working capital, implementing price revisions, and expanding high-margin segments would support medium-term margin improvement and enhanced cash generation.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; please consult professional advisors as needed before making investment decisions.