| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2877.4B | ¥3057.2B | -5.9% |
| Operating Income / Operating Profit | ¥75.4B | ¥197.3B | -61.8% |
| Ordinary Income | ¥112.7B | ¥187.6B | -39.9% |
| Net Income / Net Profit | ¥141.0B | ¥116.0B | +21.6% |
| ROE | 5.6% | 4.4% | - |
FY2026 (year ended March 2026) results: Revenue ¥2,877.4B (YoY -¥179.8B -5.9%), Operating Income ¥75.4B (YoY -¥121.9B -61.8%), Ordinary Income ¥112.7B (YoY -¥74.9B -39.9%), Net Income attributable to owners of the parent ¥141.0B (YoY +¥25.0B +21.6%). The Operating stage saw a large decline due to deterioration in volume and price mix in the Paper & Pulp Business, but a gain on sales of investment securities of ¥41.7B was recorded, turning final profit upward. Operating margin worsened 3.9ppt from 6.5% to 2.6%, highlighting a noticeable decline in the profitability of the core business.
【Revenue / Net Sales】Revenue was ¥2,877.4B (YoY -5.9%), a decline. By segment, the Paper & Pulp Business accounted for ¥2,643.3B (-6.6%) or 91.9% of sales composition, but sales fell due to weakening demand for paper and paperboard products and a pause in price corrections. The Packaging & Paper Processing Business grew to ¥174.5B (+4.7%), maintaining an uptrend as product mix revisions and price pass-through progressed. Other businesses totaled ¥340.3B (+2.8%), with timber and logistics-related operations remaining firm. Cost of sales ratio deteriorated 2.9ppt to 80.4% (prior year 77.5%) as high fuel/raw material and logistics costs persisted and selling prices were pushed down, compressing gross profit alongside sales deceleration. Gross margin of 19.6% (prior year 22.5%) is low for a manufacturer, exposing delays in cost-structure reforms.
【Profitability】Gross profit declined significantly to ¥564.6B (prior year ¥687.98B, -17.9%). SG&A was ¥489.2B (prior year ¥490.70B, -0.3%), roughly flat, but SG&A ratio rose 1.0ppt to 17.0% (prior year 16.0%) due to the stickiness of fixed costs against lower sales. Operating Income was ¥75.4B (-61.8%), with an operating margin of 2.6% (prior year 6.5%), a marked deterioration. Non-operating items included dividend income ¥17.6B, interest income ¥4.3B, foreign exchange gains ¥6.3B, and equity-method investment income ¥22.3B, producing non-operating income of ¥63.5B; after offsetting non-operating expenses of ¥26.1B (including interest expense ¥8.7B), Ordinary Income was ¥112.7B (-39.9%). Extraordinary items largely offset—gain on sales of investment securities ¥41.7B versus loss on retirement/sale of fixed assets ¥17.6B—resulting in profit before tax ¥115.2B and Net Income attributable to owners of the parent ¥141.0B (after income taxes ¥40.7B), a turnaround to higher final profit due to one-time gains. In conclusion, revenue and operating profit declined, but special gains lifted the bottom line.
The Paper & Pulp Business posted Revenue ¥2,643.3B (YoY -6.6%) and Operating Income ¥59.6B (YoY -67.3%), a large decline in profit. Operating margin deteriorated 4.1ppt to 2.3% (prior year 6.4%) as demand-supply deterioration for paper and paperboard products and high fuel/raw material costs had a direct hit. The Packaging & Paper Processing Business recorded Revenue ¥174.5B (+4.7%) and Operating Income ¥5.6B (+144.7%), performing well with operating margin improving 1.8ppt to 3.2% (prior year 1.4%). Product-mix revisals and a shift to higher-value-added products were effective. Other businesses posted Revenue ¥340.3B (+2.8%) and Operating Income ¥6.5B (-24.4%), with operating margin slightly weakening to 1.9% (prior year 2.6%). High concentration in the Paper & Pulp Business (about 83% of operating profit) determines consolidated results, making improvement in that segment’s profitability the top priority.
【Profitability】Operating margin 2.6% (prior year 6.5%), Ordinary Income margin 3.9% (prior year 6.1%), Net Income margin attributable to owners of the parent 4.9% (prior year 3.8%), indicating that significant deterioration at the operating level was supplemented by non-operating and extraordinary items. Gross margin 19.6% (prior year 22.5%) is low for manufacturing and requires urgent cost-structure review. ROE 5.6% (prior year 8.7%; simple calculation: Net Income ¥141.0B ÷ year-end equity ¥2,519.0B = 5.6%) shows declining capital efficiency. ROA (on Ordinary Income basis) 2.7% (prior year 4.5%) also worsened, with inventory increases and accumulation of investment securities dragging down asset efficiency. 【Cash Quality】Operating Cash Flow (OCF) ¥101.9B (prior year ¥409.3B, -75.1%) declined sharply, with OCF/Net Income at 0.72x, below 1. OCF subtotal (before working capital changes) was ¥138.7B; inventory increase -¥54.1B, decrease in accounts payable -¥20.0B, and pension asset movements -¥76.4B absorbed cash. EBITDA (Operating Income + depreciation) was ¥213.7B, and OCF/EBITDA was 0.48x, indicating deteriorated working capital efficiency is impairing cash conversion. 【Investment Efficiency】Capital expenditures were ¥166.9B, 1.21x depreciation ¥138.3B, continuing growth/renewal investment. Free Cash Flow was ¥69.1B (OCF + investing CF), covering dividends ¥40.5B by 1.71x, but total shareholder returns of roughly ¥150B including ¥109.9B of share buybacks exceeded FCF and relied on proceeds from sales of investment securities. 【Financial Soundness】Equity Ratio 60.1% (prior year 63.3%), Current Ratio 213.5% (prior year 218.9%), remaining at high levels. Debt-to-Equity 0.66x and Debt/Capital (interest-bearing debt / (interest-bearing debt + equity)) 18.1% indicate a conservative capital structure. Debt/EBITDA 2.61x (interest-bearing debt ¥557.8B ÷ EBITDA ¥213.7B) is within investment-grade range but worsened YoY due to lower EBITDA. Interest coverage (Operating Income / interest expense) is 8.7x (¥75.4B ÷ ¥8.7B), showing strong interest-payment resilience.
OCF was ¥101.9B (prior year ¥409.3B, -75.1%), a large decrease. OCF subtotal (before working capital changes) was ¥138.7B, including depreciation ¥138.3B and equity-method investment profit adjustment -¥22.3B. Working capital changes absorbed cash: inventory increase -¥54.1B (DIO 120 days), decrease in trade receivables +¥18.4B (DSO 82 days), decrease in accounts payable -¥20.0B, and pension asset changes -¥76.4B. After deducting corporate tax payments -¥60.1B, OCF remained low, necessitating urgent working capital management improvements. Investing CF was -¥32.8B; capital expenditures -¥166.9B were offset by proceeds from sales of investment securities ¥73.9B (investment securities purchases -¥29.8B) and proceeds from sale of subsidiaries and affiliates’ shares ¥123.3B. Free Cash Flow was ¥69.1B (OCF + investing CF), securing cash generation but showing strong dependence on working capital management and asset sales. Financing CF was -¥62.5B: long-term borrowings procured ¥182.1B, net decrease in short-term borrowings -¥72.0B, and bond issuance ¥150.0B to extend maturities, while dividends -¥40.5B and share buybacks -¥109.9B resulted in total returns of about ¥150B. Cash and cash equivalents at year-end were ¥264.2B (opening ¥251.5B, +¥12.7B), a marginal increase, indicating the need to strengthen cash generation in coming periods.
Against Ordinary Income ¥112.7B, Operating Income was ¥75.4B; the ¥37.3B difference derives from non-operating income ¥63.5B minus non-operating expenses ¥26.1B, supported by dividend income ¥17.6B, equity-method investment income ¥22.3B, and foreign exchange gains ¥6.3B. Extraordinary items mainly comprised gain on sales of investment securities ¥41.7B resulting in special gains ¥44.5B, while loss on retirement/sale of fixed assets ¥17.6B and others produced special losses ¥42.0B, nearly offsetting; Net Income ¥141.0B was boosted by one-time gains. Comprehensive income was ¥175.3B, ¥34.3B above Net Income ¥141.0B, contributed by Other Comprehensive Income ¥100.8B (foreign currency translation adjustments ¥34.0B, valuation difference on available-for-sale securities ¥49.3B, retirement benefit adjustments ¥43.2B, etc.). On an accrual basis, OCF ¥101.9B is lower than Net Income ¥141.0B, indicating reversals where working capital build-up (inventory +¥54.1B, accounts payable -¥20.0B) and pension asset increase -¥76.4B blocked cash conversion. Gains on sales of investment securities ¥41.7B and loss on sale of subsidiaries and affiliates’ shares ¥16.9B are one-off factors; core business earning power should be assessed by Operating Income ¥75.4B (operating margin 2.6%). The quality of recurring earnings is low, and improvements in working capital efficiency and core business margins are prerequisites for sustainable growth.
Full year forecast for FY2026: Revenue ¥3,050B (YoY +6.0%), Operating Income ¥30B (YoY -60.2%), Ordinary Income ¥40B (YoY -64.5%), Net Income attributable to owners of the parent ¥50B (YoY -56.9%). Progress vs. first-half results: Revenue 94.3%, Operating Income 251.3%, Ordinary Income 281.8%, Net Income 282.0%, reflecting a conservative guidance that assumes a large profit decline in the second half. Operating margin is planned at about 1.0% (¥30B / ¥3,050B), down further from 2.6% in the first half, incorporating further downward pressure on paper and paperboard prices, higher fuel/raw material costs, and demand weakening. The planned sharp second-half decline relative to the first half cannot be explained solely by seasonality and reflects a cautious assumption of worsening business conditions. Forecast EPS ¥31.49 and forecast dividend ¥13.00 imply a projected payout ratio of about 41.3%, indicating a priority to maintain dividends despite profit volatility. Achieving the second-half plan hinges on improvements in full-year profitability and inventory/cost management.
Annual dividend is ¥26.00 (interim ¥13.00, year-end ¥13.00) with a payout ratio of 23.8% (based on Net Income ¥141.0B; simple calculation uses total dividends ¥41.74B ÷ ¥141.0B = 29.6%, adopting XBRL reported values) and is at a healthy level. Total dividends ¥40.5B are covered 1.71x by Free Cash Flow ¥69.1B, but total shareholder returns of about ¥150B including share buybacks ¥109.9B (amount recorded in financing CF; actual acquisition amount ¥108.1B) substantially exceed FCF. Share buybacks can be seen as agile capital policy, but this fiscal year shows strong dependence on proceeds from sales of investment securities ¥73.9B and sale of subsidiaries/affiliates’ shares ¥123.3B. Forecast dividend for next year ¥13.00 (annualizing to ¥26.00 if maintained) and forecast EPS ¥31.49 imply payout ratio will rise to about 41.3%, suggesting a policy to prioritize dividend maintenance even amid profit declines. Sustainability of total returns depends on FCF generation, working capital improvements, and balanced disposals of non-core assets; securing cash-based return capacity is a medium- to long-term challenge.
Concentration in core business and rapid profitability deterioration risk: The Paper & Pulp Business accounts for 91.9% of sales and the majority of operating profit, but its operating margin plunged to 2.3% (prior year 6.4%). Continued worsening of supply-demand for paper and paperboard products and high raw material costs would have a material impact on consolidated results. The second-half guidance assumes a further deterioration to an operating margin of about 1%, highlighting the risk from portfolio concentration.
Working capital efficiency deterioration and cash realization risk: Inventory increased ¥81.9B YoY to ¥339.5B, with DIO at 120 days and slower inventory turnover. Inventory increase -¥54.1B and accounts payable decrease -¥20.0B pressured OCF, and OCF/Net Income at 0.72x is below 1. If inventory valuation losses or obsolescence risks materialize, both cash flow and profits could be adversely affected.
Sustainability risk of total returns: Total shareholder returns of about ¥150B (dividends ¥40.5B and share buybacks ¥109.9B) far exceed Free Cash Flow ¥69.1B and depend on proceeds from sales of investment securities ¥73.9B and sale of subsidiaries/affiliates’ shares ¥123.3B. Maintaining the same level of returns in subsequent periods would require strengthening OCF and restraining capex or pursuing additional asset sales, making it difficult to balance with growth investments.
収益性・リターン
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.6% | 7.8% (4.6%–12.3%) | -5.1pt |
| Net Margin | 4.9% | 5.2% (2.3%–8.2%) | -0.3pt |
Operating margin is 5.1ppt below the industry median, indicating inferior profitability as a manufacturer. Net margin is around the median but depends on special gains.
成長性・資本効率
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -5.9% | 3.7% (-0.4%–9.3%) | -9.6pt |
Revenue growth rate is 9.6ppt below the industry median, highlighting pronounced demand deterioration in the core Paper & Pulp Business. While the manufacturing sector average shows positive growth, this company posted a decline, making market share retention and demand stimulation urgent priorities.
※Source: Company compilation
Priority is to bottom out core business profitability and improve working capital: Operating margin plunged to 2.6% (prior year 6.5%), and the second-half guidance is a conservative plan assuming about 1%. The Paper & Pulp Business operating margin of 2.3% requires improvement for a manufacturer; reforms to the cost structure, price pass-through, and effective demand-stimulation measures will determine margin recovery in subsequent periods. With DIO at 120 days and deteriorated working capital efficiency, inventory optimization and stronger accounts payable management are key to improving OCF.
Accelerate growth of the Packaging & Paper Processing Business and diversify the portfolio: Packaging & Paper Processing recorded Revenue +4.7% and Operating Income +144.7%, with operating margin improving to 3.2%. To reduce concentration in the Paper & Pulp Business (about 83% of operating profit) and achieve sustainable growth, scale expansion of this segment and a shift to higher-value-added products are essential. M&A and capacity expansion through capex will be pillars of the mid-term growth strategy.
Ensure sustainability of total returns and transition to cash-based management: Total returns of about ¥150B far exceed Free Cash Flow ¥69.1B and depend on proceeds from sales of investment securities. To maintain both dividend levels and share buybacks, strengthening OCF (working capital efficiency improvement, recovery of core profit), strategic disposal of non-core assets, and selective concentration of capital expenditures are necessary. Clarifying return policy and capital allocation strategy going forward is a prerequisite for maintaining investor trust.
This report is an AI-generated financial analysis document based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; please consult professionals as necessary.