| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥2795.9B | ¥2513.7B | +11.2% |
| Operating Income | ¥635.5B | ¥568.3B | +11.8% |
| Ordinary Income | ¥659.0B | ¥580.2B | +13.6% |
| Net Income | ¥505.0B | ¥429.5B | +17.6% |
| ROE | 19.5% | 18.2% | - |
For the fiscal year ended March 2026, Revenue was ¥2795.9B (YoY +¥282.2B +11.2%), Operating Income was ¥635.5B (YoY +¥67.2B +11.8%), Ordinary Income was ¥659.0B (YoY +¥78.8B +13.6%), and Net Income was ¥505.0B (YoY +¥75.5B +17.6%), marking two consecutive periods of revenue and profit growth. Operating margin remained stable at 22.7% (prior year 22.6%), sustaining a high-margin business profile. High-margin segments—Functional Materials Business with an operating margin of 31.2% and Agricultural Chemicals Business with 27.1%—drove results, and regional sales expansion in China, Korea, and Americas/Europe contributed. ROE of 19.5% (prior year 18.7%) exceeded the company’s historical levels, reflecting efficient use of total assets.
[Revenue] By region, Japan ¥1,118.4B (vs PY +5.6%), China ¥579.5B (vs PY +21.7%), Korea ¥274.0B (vs PY +12.2%), Other Asia ¥364.2B (vs PY +8.7%), Americas/Europe ¥459.8B (vs PY +15.3%), with revenue growth across all regions. By segment, composition ratios were Wholesale Business 46.1% (prior year 36.0%), Functional Materials Business 40.5% (prior year 29.3%), Agricultural Chemicals Business 34.4% (prior year 28.1%); Wholesale is largest by revenue but low-margin at 3.0%. Functional Materials revenue was ¥1,133.8B (YoY +13.3%), driven mainly by recovery in demand for semiconductor and display materials; Agricultural Chemicals was ¥962.4B (YoY +11.6%), supported by stable pesticide demand. Healthcare declined to ¥52.2B (YoY -12.8%), Chemicals increased slightly to ¥393.1B (YoY +3.9%).
[Profitability] Gross margin improved to 46.8% (prior year 46.4%) due to raw material cost control and product mix improvement (+0.4pt). SG&A ratio rose to 24.1% (prior year 23.8%) (+0.3pt), reflecting upfront costs associated with sales growth. Non-operating income totaled ¥47.9B (dividend income ¥15.8B, foreign exchange gains ¥6.1B) less non-operating expenses ¥24.5B (interest expense ¥4.0B) resulting in Ordinary Income of ¥659.0B (YoY +13.6%). Extraordinary gains were ¥53.3B (gain on sale of investment securities ¥12.5B) and extraordinary losses ¥38.8B (impairment losses ¥38.8B), which largely offset, leaving profit before tax at ¥659.0B. After corporate taxes of ¥154.0B (effective tax rate 23.4%) and minority interest of ¥7.9B, Net Income was ¥505.0B. In conclusion, revenue growth across regions and expansion of high-margin businesses drove the increase in revenue and profit.
Functional Materials Business delivered Operating Income of ¥353.3B (YoY +20.5%) with an operating margin of 31.2% (prior year 29.3%), a substantial improvement driven by recovery and price improvement in semiconductor and display materials. Agricultural Chemicals Business posted Operating Income of ¥260.4B (YoY +0.5%) with a margin of 27.1% (prior year 27.0%), slightly up, supported by steady demand for herbicides and insecticides. Wholesale Business recorded Operating Income of ¥38.1B (YoY -6.7%) with margin deteriorating to 3.0% (prior year 4.1%), reflecting low-margin structure despite increased throughput. Chemicals Business had Operating Income of ¥11.1B (YoY +200.0%) with margin improving to 2.8% (prior year 1.0%), suggesting recovery in profitability after impairment adjustments. Healthcare Business posted Operating Income of ¥13.5B (YoY -30.5%) with margin down to 25.9% (prior year 32.5%), as sales decline pressured profitability. Combined, Functional Materials and Agricultural Chemicals accounted for 94.3% of total operating income, highlighting a pronounced two-pole revenue structure.
[Profitability] Operating margin of 22.7% (prior year 22.6%) remained at a high level. ROE of 19.5% (prior year 18.7%) achieved high returns despite a conservative Equity Ratio of 73.0%. Gross margin 46.8% improved by +0.4pt YoY, while SG&A ratio rose +0.3pt, but operating leverage remained effective. [Cash Quality] Operating Cash Flow (OCF) was ¥641.6B, 1.27x Net Income ¥505.0B, indicating healthy cash conversion. However, OCF/EBITDA (Operating Income + Depreciation) was 0.81x (¥641.6B ÷ ¥789.6B), below the benchmark 0.9x, suggesting working capital stagnation. Days Sales Outstanding (DSO) 127 days (prior year 129 days), Days Inventory Outstanding (DIO) 140 days (prior year 156 days), Days Payable Outstanding (DPO) 55 days (prior year 54 days), resulting in a Cash Conversion Cycle (CCC) of 212 days (prior year 231 days) — an improving trend but still long. [Investment Efficiency] Capex was ¥180.2B, 1.17x depreciation ¥154.1B, within maintenance/growth investment range. Total Asset Turnover was 0.79x (Revenue ¥2,795.9B ÷ Total Assets ¥3,550.8B), a slight improvement from 0.76x prior year. [Financial Soundness] Equity Ratio 73.0% (prior year 71.4%), Current Ratio 283.5% (prior year 265.5%), Debt/EBITDA 0.25x ((short-term borrowings + long-term borrowings + bonds ¥104.7B) ÷ EBITDA ¥789.6B), indicating a very conservative balance sheet. 98.1% of interest-bearing debt is short-term (CP ¥79.9B, short-term borrowings ¥196.8B, bonds maturing within 1 year ¥3.8B), but cash and deposits ¥357.3B cover short-term debt ¥280.5B by 1.27x, limiting liquidity risk.
OCF was ¥641.6B (YoY +8.4%); starting from profit before tax ¥659.0B plus depreciation ¥154.1B, working capital changes included accounts receivable -¥74.2B (increase), inventories +¥39.2B (decrease), and accounts payable +¥20.1B (increase), resulting in a net working capital outflow of -¥134.2B. After corporate tax payments of ¥169.8B, OCF remained ¥641.6B. Investing Cash Flow was -¥211.8B, comprising capex -¥180.2B, intangible assets -¥16.7B, purchase of investment securities -¥2.8B, acquisition of subsidiary shares -¥29.2B, and recovery of short-term loans +¥18.2B. Free Cash Flow was ¥429.9B (OCF ¥641.6B - Investing CF ¥211.8B), robust. Financing Cash Flow was -¥361.6B, with shareholder returns totaling ¥341.4B (dividends ¥236.4B [interim dividend ¥70, year-end dividend ¥132] and share buybacks ¥105.0B). Bond issuance +¥100.0B, long-term borrowings repayment -¥7.2B, short-term borrowings net change -¥1.7B, CP net increase -¥10.0B. As a result, cash and deposits rose from ¥274.5B at the beginning of the period to ¥357.3B at period-end, an increase of ¥82.8B. OCF/Net Income 1.27x is healthy, but OCF/EBITDA 0.81x is constrained by receivables and inventory retention. Improving working capital efficiency would further enhance cash generation.
The ratio of Ordinary Income ¥659.0B to Net Income ¥505.0B is 76.6%, indicating minimal impact from extraordinary items (net +¥14.5B). Non-operating income ¥47.9B (dividend income ¥15.8B, foreign exchange gains ¥6.1B, equity-method investment income ¥15.1B) is subject to economic cycles and FX volatility but contributes a moderate 7.3% to Ordinary Income. Extraordinary gains ¥53.3B (gain on sale of investment securities ¥12.5B) are one-off, and extraordinary losses ¥38.8B (impairment losses ¥38.8B) are not large enough to distort recurring earnings power. Comprehensive Income was ¥568.0B (Net Income ¥505.0B + OCI ¥63.0B), comprising foreign currency translation adjustments +¥14.8B, valuation difference on securities +¥44.1B, and retirement benefit adjustments +¥3.7B. The expansion in valuation difference on securities aligns with the increase in investment securities to ¥324.8B (prior year ¥243.5B), providing an unrealized gains cushion supporting net assets. OCF of ¥641.6B versus subtotal before depreciation ¥775.8B indicates that working capital changes and tax payments caused a ¥134.2B cash outflow, but core cash generation remains solid. In conclusion, the majority of Ordinary Income is derived from Operating Income, signaling good quality of earnings. Extraordinary items had limited impact, and divergence between Comprehensive Income and Net Income is within a healthy range due to asset valuation movements.
Full Year guidance: Revenue ¥2,897.0B (YoY +3.6%), Operating Income ¥668.0B (YoY +5.1%), Ordinary Income ¥688.0B (YoY +4.4%), Net Income ¥515.0B. Progress rates are Revenue 96.5%, Operating Income 95.1%, Ordinary Income 95.8%, Net Income 98.1%, indicating results are essentially near landing. Growth rates are expected to decelerate from this period’s increases (Operating Income +11.8% YoY), but forecasts are cautiously based on firm demand and price improvements in Functional Materials and Agricultural Chemicals. Dividend guidance is annual ¥70, implying a reduction in year-end dividend compared with this period’s actual ¥202 (interim ¥70 + year-end ¥132). EPS forecast ¥387.11 (up +5.1% from current period EPS ¥368.26). Forecast Operating Margin 23.1% (¥668.0B ÷ ¥2,897.0B) implies a +0.4pt improvement from current 22.7%, projecting modest margin improvement. Revenue growth +3.6% reflects a cautious stance incorporating potential global demand slowdown risks.
Dividends: interim ¥70, year-end ¥132, annual ¥202, with a Payout Ratio of 55.5% (¥202 ÷ EPS ¥368.26), sustainable within the target range. Compared with prior year dividend ¥70 (interim only disclosed), annual increase of ¥132 is noted but lack of full prior-year year-end dividend data precludes definitive conclusion on consecutive increases. Including share buybacks ¥105.0B, Total Return Ratio is approximately 69% ((dividends ¥238.2B + share buybacks ¥105.0B) ÷ Net Income ¥505.0B), and FCF ¥429.9B comfortably covers this. Total shareholder return of ¥343.2B is about 79.8% of FCF, leaving ¥86.7B available for additional returns or growth investment. Treasury shares at period-end were 690M shares (0.5% of outstanding), contributing to capital efficiency. BPS ¥1,903.42 increased +11.2% from ¥1,711.83 prior year, and high ROE 19.5% is lifting shareholder value. While dividend policy is not explicitly stated, the company appears inclined to maintain payout ratios in the 50% range.
Working capital efficiency stagnation: With DSO 127 days, DIO 140 days, and CCC 212 days, working capital retention constrains OCF/EBITDA at 0.81x. Accounts receivable ¥974.6B (as a % of sales 34.9%) and inventories ¥569.9B (as a % of sales 20.4%) are large; continued delays in collections or inventory accumulation would weaken cash conversion capability.
Concentration of short-term liabilities: 98.1% of interest-bearing debt ¥280.5B is composed of short-term borrowings, CP, and bonds maturing within one year. While cash and deposits ¥357.3B provide coverage, sudden changes in interest rates or refinancing constraints could raise funding costs and increase finance expenses.
Cyclicality of semiconductor and display materials: Functional Materials accounts for 55.6% of operating income and is sensitive to semiconductor and display market cycles. A sharp drop in demand or price declines could rapidly erode high-margin business profitability and pressure overall company profits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 22.7% | 7.8% (4.6%–12.3%) | +15.0pt |
| Net Margin | 18.1% | 5.2% (2.3%–8.2%) | +12.9pt |
The company’s operating margin of 22.7% exceeds the manufacturing median 7.8% by +15.0pt, achieving top-tier industry profitability. Focus on high value-added products in Functional Materials and Agricultural Chemicals contributes to this.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 11.2% | 3.7% (-0.4%–9.3%) | +7.5pt |
Revenue growth of 11.2% outperformed the manufacturing median 3.7% by +7.5pt, reflecting success in global expansion and focus on high-growth segments. The company maintains a top-quartile growth pace within the industry.
※Source: Company compilation
Profitability and ROE are top-tier in manufacturing and appear sustainable. Operating Margin 22.7% and ROE 19.5% are driven by high-margin Functional Materials (margin 31.2%) and Agricultural Chemicals (margin 27.1%); continued recovery in semiconductor and display materials demand could further enhance earnings power. Achieving this ROE with an Equity Ratio of 73.0% is notable.
Working capital efficiency presents upside for cash conversion improvement. Although CCC improved by 19 days YoY to 212 days, it remains long and suppresses OCF/EBITDA at 0.81x. Accelerating turnover of receivables ¥974.6B and inventories ¥569.9B could lift OCF/Net Income from 1.27x to above 1.5x, offering significant financial improvement. Inventory optimization and collection cycle reduction are key next financial initiatives.
Shareholder returns are sustainable with ample FCF cushion. With FCF ¥429.9B and total returns ¥343.2B (dividends + buybacks) equivalent to 79.8% of FCF, ¥86.7B remains available for additional returns or growth investment. Payout Ratio 55.5% is within the sustainable range, and continued dividends and buybacks are plausible. Concentration of short-term debt is covered by cash and deposits, maintaining sufficient liquidity.
This report was automatically generated by AI analyzing XBRL financial disclosure 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 disclosures. Investment decisions are your responsibility; consult a professional advisor as necessary.