| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥18617.1B | ¥18492.6B | +0.7% |
| Operating Income | ¥345.8B | ¥676.9B | -48.9% |
| Ordinary Income | ¥405.3B | ¥685.7B | -40.9% |
| Net Income | ¥1391.9B | ¥353.5B | +293.8% |
| ROE | 12.2% | 3.1% | - |
For the fiscal year ending March 2026, Oji Holdings reported Revenue of ¥18,617.1B (YoY +¥124.5B +0.7%), a slight increase, while Operating Income fell to ¥345.8B (YoY -¥331.1B -48.9%), approximately halving, and Ordinary Income declined to ¥405.3B (YoY -¥280.4B -40.9%). Conversely, Net Income rose sharply to ¥1,391.9B (YoY +¥1,038.4B +293.8%). At the operating level, gross profit margin deteriorated to 17.4% (from 18.9%, -1.5pt) and Operating Margin declined to 1.9% (from 3.7%, -1.8pt). However, substantial recognition of Special Gains totaling ¥928.4B (Investment Securities Sale Gains ¥348.4B, Fixed Asset Sale Gains ¥400.6B, etc.) drove the increase in Net Income. Approximately 90% of the Net Income is attributable to one-off items, revealing structural weakness characterized by declining core profitability and profit growth led by nonrecurring gains.
[Revenue] Revenue of ¥18,617.1B (+0.7%) was only marginally higher. Living Industry Materials (生活産業資材) led growth with ¥9,432.6B (+2.8%), but Printing & Information Media (印刷情報メディア) declined substantially to ¥2,720.5B (-7.2%), and the Resource & Environment Business (資源環境ビジネス) edged down to ¥3,897.5B (-0.7%), weighing on overall results. Functional Materials (機能材) was essentially flat at ¥2,359.9B (-0.2%), and Others were ¥3,370.5B (-0.2%). Segment composition was Living Industry Materials 50.7%, Resource & Environment Business 20.9%, Others 18.1%, Printing & Information Media 14.6%, Functional Materials 12.7%, with the core Living Industry Materials accounting for over half of consolidated Revenue. Some overseas sales benefited from yen depreciation, reflected in Foreign Exchange Gains of ¥125.7B recorded in non-operating income, but consolidated Revenue growth remained subdued at +0.7%, constrained by structural demand contraction and delayed price pass-through.
[Profitability] Gross margin worsened to 17.4% (from 18.9%, -1.5pt), and Gross Profit declined to ¥3,234.6B (¥-114.9B -3.4%). SG&A rose to ¥2,888.7B (+¥71.7B +2.5%), outpacing Revenue growth (+0.7%), resulting in Operating Income of ¥345.8B (-48.9%) and an Operating Margin of 1.9%. In non-operating items, Non-operating Income was ¥317.9B (Dividend Income ¥43.0B, Foreign Exchange Gains ¥125.7B, Equity-method Investment Income ¥50.9B, etc.) which exceeded Non-operating Expenses of ¥258.4B (Interest Expense ¥115.9B, etc.), producing Ordinary Income of ¥405.3B (-40.9%). Special Gains of ¥928.4B (Investment Securities Sale Gains ¥348.4B, Fixed Asset Sale Gains ¥400.6B) less Special Losses of ¥417.3B (Impairment Losses ¥102.0B, Business Restructuring Costs ¥244.6B) lifted Profit before Income Taxes to ¥916.4B (+8.6%). Income Taxes ¥347.0B (effective tax rate 37.9%) and Non-controlling Interests ¥13.5B reduced Parent Net Income to ¥555.8B (+20.4%). The increase was primarily due to a net rise in Special Items (approx. +¥511B), indicating a marked deterioration in core earnings power. In conclusion, the company delivered Revenue up but Operating Income down, while Net Income rose driven by one-off gains.
Living Industry Materials achieved Operating Income of ¥196.9B (+7.5%), with a margin of 2.1%, the only major segment to record higher profits. Functional Materials recorded Operating Income of ¥107.6B (-12.6%), margin 4.6%, remaining the highest margin segment despite lower profit. Resource & Environment Business reported Operating Income of ¥67.3B (-78.5%), margin 1.7%, a substantial decline and the main driver of consolidated margin deterioration. Printing & Information Media posted Operating Income of ¥75.1B (-43.5%), margin 2.8%, with significant declines driven by structural demand contraction. Others posted an Operating Loss of ¥116.8B (widening from ¥-87.8B last year), reflecting impacts including changes to corporate cost allocation. Consolidated Operating Income composition was Living Industry Materials 56.9%, Functional Materials 31.1%, Printing & Information Media 21.7%, Resource & Environment Business 19.5%; recovery of Resource & Environment Business margins will be key to improving consolidated operating margins.
[Profitability] Operating Margin 1.9% worsened from 3.7% (-1.8pt), Gross Margin 17.4% (prior 18.9%, -1.5pt), and SG&A Ratio 15.5% (prior 15.2%, +0.3pt), indicating pressure on both fronts. ROE 12.2% (prior 4.3%, +7.9pt) rose substantially due to the surge in Net Income, but core ROE excluding non-operating and special items is estimated at approximately 1.6%, well below the cost of capital. ROA 1.5% (based on Ordinary Income) declined from 2.7%. [Cash Quality] Operating Cash Flow/Net Income ratio was 204.1% and Operating Cash Flow/EBITDA ratio 89.4%, indicating healthy cash generation, though the latter slightly below the 90% benchmark suggests scope to improve working capital efficiency. [Investment Efficiency] Total Asset Turnover was 0.693x (prior 0.702x), slightly down, indicating broadly stable asset efficiency. EPS ¥61.10 (prior ¥47.34, +29.1%), BPS ¥1,257.44 (prior ¥1,177.99, +6.7%), improving per-share metrics largely driven by special items. [Financial Soundness] Equity Ratio 42.3% (prior 41.8%, +0.5pt) slightly up, D/E Leverage 1.36x (prior 1.42x) slightly improved, but Debt/EBITDA 6.08x and Interest Coverage 2.98x indicate a heavy debt burden relative to earnings. Current Ratio 107.1% and Quick Ratio 89.2% provide minimal short-term safety, but with cash ¥65.9B against short-term interest-bearing debt (Short-term Borrowings ¥281.5B, CP ¥67.0B, Bonds maturing within 1 year ¥30.0B) totaling ¥378.5B, liquidity cushion is limited.
Operating Cash Flow was ¥113.38B (prior ¥94.42B, +20.1%), and Operating CF/Net Income ratio was 204.1%, reflecting sound cash generation, though Operating CF/EBITDA at 89.4% is slightly below benchmark, indicating room to improve working capital efficiency. Operating CF subtotal (pre-working capital changes) was ¥139.88B, aided by Inventory reductions (+¥12.94B) and Accounts Receivable reductions (+¥11.98B), while reductions in Accounts Payable (-¥21.78B) and Income Taxes Paid (-¥31.26B) were outflows. Investing CF was -¥12.48B (prior -¥154.91B), a substantial improvement, with proceeds from Fixed Asset Sales ¥49.35B and Investment Securities Sales/Redemptions ¥61.82B outweighing Capital Expenditures -¥92.45B and Investment Securities Acquisitions -¥10.80B. As a result, Free Cash Flow was ¥100.90B, ample. Financing CF was -¥93.62B (Dividends Paid -¥27.71B, Share Repurchases -¥47.69B, Long-term Borrowings Repayment -¥123.71B, Long-term Borrowings Proceeds +¥83.43B, etc.), used to fund total returns and net reduction in interest-bearing debt. Cash and Cash Equivalents increased by ¥9.60B to an ending balance of ¥74.25B, including Foreign Exchange Impact +¥2.32B.
(Note: numerical values in body reflect the same magnitudes as reported; units retained as ¥ and B for 億.)
Of the Parent Net Income of ¥555.8B, over 90% is attributable to Special Items (Special Gains ¥928.4B − Special Losses ¥417.3B = net ¥511.1B), indicating very weak recurring earnings power. The net Special Items amount is roughly 1.5x Operating Income of ¥345.8B, and the ratio of one-off items to Net Income is approximately 92%, signaling low earnings quality. Within Non-operating Income ¥317.9B, Foreign Exchange Gains ¥125.7B and Equity-method Investment Income ¥50.9B are strongly influenced by market conditions and asset sales, and should be discounted when assessing recurring performance. The accrual ratio (Net Income − Operating CF)/Total Assets is approximately -2.1%, in a healthy range, but Operating CF/EBITDA at 89.4% suggests room for improvement. The divergence between Ordinary Income ¥405.3B and Net Income ¥555.8B (+37%) is mainly due to special items, and Net Income may decline substantially next fiscal year as these one-off gains reverse. The company projects Parent Net Income of ¥35.0B (EPS ¥38.47) for the next fiscal year, a -37% decline versus this year, reflecting this anticipated reversal.
Company guidance for FY ending March 2027 forecasts Revenue ¥19,400.0B (+4.2%), Operating Income ¥600.0B (+73.5%), implying an Operating Margin of around 3.1% (improvement of +1.2pt from this year’s 1.9%). Ordinary Income is forecast at ¥450.0B (+11.0%), roughly in line with this year, and Parent Net Income is projected at ¥35.0B (EPS ¥38.47), a -37% decline. The assumed decline is primarily the reversal of this year’s Special Gains of ¥928.4B; the company assumes substantial recovery in core Operating Income. Key assumptions for plan achievement include improvement in gross margins via price revisions taking hold, normalization of raw material and energy costs, recovery of profitability in the Resource & Environment Business, stabilization of exchange rates, and SG&A efficiency measures. Full-year dividend guidance is ¥18.00 (annualized), unchanged from this year’s annual ¥36.00 (interim ¥18.00 + year-end ¥18.00) but, given the projected EPS decline, the Payout Ratio is expected to fall to approximately 46.8% from this year’s 50.7%.
Annual dividend is ¥36.00 per share (Interim ¥18.00 + Year-end ¥18.00), representing a Payout Ratio of about 58.9% against EPS ¥61.10. On a weighted average shares outstanding basis of 909,728 thousand shares, the total dividend amount is approximately ¥32.75B, though actual Dividends Paid were ¥27.71B (per Cash Flow Statement), reflecting a reduction in dividend-eligible shares due to share repurchases during the period. Share repurchases totaled ¥47.69B, making Total Returns (Dividends + Share Repurchases) approximately ¥75.40B, and the Total Return Ratio (Total Returns / Parent Net Income) is about 135.6%. Free Cash Flow of ¥100.90B comfortably covered Total Returns ¥75.40B, with excess applied to net reduction of interest-bearing debt. For next year, dividend guidance is ¥18.00 (presumably annual), and based on the Net Income plan of ¥35.0B, the implied Payout Ratio would be ~46.8%. This year’s high level of Total Returns was supported by one-off Special Gains and FCF generation; future return levels will depend on the balance of Operating CF and investment plans.
Continued steep profit decline in Resource & Environment Business: Resource & Environment Business reported Operating Income ¥67.3B (-78.5%) and is the primary driver of consolidated Operating Margin deterioration. Raw material market volatility for wood, recovered paper, etc., adverse pricing dynamics, and declines in utilization underpin this weakness. Delays in profitability recovery in this segment could keep consolidated margins in the 1% range, making improvement in ROE and ROIC difficult.
Short-term liquidity pressure and interest burden: With cash of ¥65.9B versus short-term interest-bearing debt of ¥378.5B, Current Ratio 107.1%, Debt/EBITDA 6.08x, and Interest Coverage 2.98x, leverage is heavy relative to earnings and short-term liquidity cushion is limited. In a rising interest rate environment, interest payments (¥115.9B this year) could increase, pressuring Operating CF and creating financial constraints.
Decline in Net Income and reduced return capacity due to reversal of one-off gains: Approximately 90% of this year’s Net Income ¥555.8B derives from Special Items. The company’s plan for next year assumes Parent Net Income ¥35.0B (-37%). If Operating CF is not maintained at this year’s level or large investments are required, pressure to reduce Dividends and Share Repurchases would increase, making the sustainability of shareholder returns uncertain.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.9% | 7.8% (4.6%–12.3%) | -5.9pt |
| Net Margin | 7.5% | 5.2% (2.3%–8.2%) | +2.3pt |
Operating Margin underperforms the industry median by -5.9pt, but Net Margin outperforms by +2.3pt due to Special Items.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.7% | 3.7% (-0.4%–9.3%) | -3.0pt |
Revenue growth trails the industry median by -3.0pt, indicating below-average growth.
※ Source: Company compilation
Operating Margin 1.9% is the lowest in three years, with simultaneous deterioration in gross margin and rising SG&A exposing fragility in the earnings structure. The company forecasts a recovery to 3.1% next year, but improvement in Resource & Environment Business margins and sustained price pass-through are prerequisites.
Special Gains ¥928.4B (Fixed Asset Sales ¥400.6B, Investment Securities Sales ¥348.4B, etc.) significantly boosted Net Income, but next year the company plans Net Income ¥35.0B (-37%), highlighting low sustainability of one-off-driven profits. Free Cash Flow ¥100.9B is solid and covered Total Returns ¥75.4B, but future return levels will depend on Operating CF and investment plans.
With Debt/EBITDA 6.08x, Interest Coverage 2.98x, and Current Ratio 107.1%, leverage is high relative to earnings and liquidity cushion is thin. Concurrent interest rate increases and EBITDA declines would pose material financial constraints; recovery in Operating Margin and planned reductions in interest-bearing debt are key to maintaining financial soundness.
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 particular security. Industry benchmarks are reference information compiled by our firm based on publicly available financial statements. Investment decisions are your responsibility; please consult professional advisors as appropriate.