| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1616.9B | ¥1620.2B | -0.2% |
| Operating Income / Operating Profit | ¥-185.9B | ¥94.3B | -26.3% |
| Profit Before Tax | ¥-183.1B | ¥102.2B | -26.6% |
| Net Income | ¥-105.5B | ¥79.0B | -19.8% |
| ROE | -6.3% | 3.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1616.9B (YoY -¥3.3B, -0.2%) and essentially flat, Operating Income fell into a loss of ¥-185.9B (YoY -¥280.2B, -26.3%), Ordinary Income was ¥98.5B (YoY +¥34.4B, +53.7%), and Net loss attributable to owners of the parent was ¥-106.9B (YoY -¥186.9B, -19.8%). A large impairment loss of ¥365B drove the operating loss, but equity-method investment income turned positive (¥11.9B), supporting an increase in Ordinary Income; tax effects narrowed the net loss to a level below the operating loss. Gross profit margin improved to 28.2% (prior year 26.2%) up +2.0pt, SG&A ratio was contained at 20.0% (prior year 20.1%), but Other expenses including impairment of ¥372.7B caused the operating loss. Operating Cash Flow was solid at ¥280.1B (YoY -5.1%), Free Cash Flow was ¥142.9B and covered dividend payments of ¥63.4B, but share buybacks of ¥390.7B caused total shareholder returns to far exceed Free Cash Flow, leading to an increase in interest-bearing debt of ¥+356.2B YoY. Equity Ratio declined to 48.8% (prior year 60.6%) but the capital base remains intact. The impairment is a one-off factor, and management plans a V-shaped recovery next fiscal year to Revenue ¥1,720B and Operating Income ¥110B.
[Revenue] Revenue was ¥1616.9B, down ¥3.3B YoY (-0.2%), essentially flat. By segment, Functional Products Business delivered ¥612.8B (+6.8%), Construction-related Business ¥160.1B (+7.9%)—both increased—while Resin Products Business decreased to ¥367.2B (-9.4%), Chemical Products Business ¥294.9B (-3.9%), and Other Related Businesses ¥181.8B (-2.2%), resulting in an overall flat outcome. Gross profit was ¥455.5B (gross margin 28.2%), up ¥30.5B YoY; gross margin improved +2.0pt from 26.2% the prior year, likely reflecting price adjustments, improved product mix, and reduced raw material costs. Selling, general and administrative expenses were ¥322.6B (SG&A ratio 20.0%), reduced by ¥3.2B from ¥325.8B the prior year; SG&A ratio was restrained by -0.1pt from 20.1% due to effective fixed-cost control.
[Profit / Loss] Operating Income turned to a loss of ¥-185.9B (prior year ¥94.3B), with an operating margin of -11.5% (prior year +5.8%), a deterioration of -17.3pt. The main deterioration driver was a sharp increase in Other expenses to ¥372.7B (prior year ¥16.0B), which includes an impairment loss of ¥365B. The impairment was mainly related to tangible fixed assets and aligns with a YoY decrease in tangible fixed assets of ¥-263B. Conversely, the sum of segment Operating Income was positive at ¥145.2B, and the primary reason for the consolidated operating loss was company-level adjustments amounting to a loss of ¥-331.2B (prior year -¥5.7B). Equity-method investment income turned positive at ¥11.9B (prior year -¥0.2B), and Other income of ¥42.0B (prior year ¥11.4B) included gains on disposals of fixed assets of ¥30.6B, supporting Ordinary Income. Ordinary Income was ¥98.5B (+53.7%), Profit Before Tax was ¥-183.1B (prior year ¥+102.2B), and income taxes were a net benefit of ¥-77.6B (tax reversal), yielding an effective tax rate of -42.4% (negative). Net loss attributable to owners of the parent was ¥-106.9B (prior year ¥+78.0B). In summary: flat Revenue, improved gross margin and controlled SG&A, but a large one-off impairment swung results from recurring profit to impairment-driven loss; Ordinary Income remained positive while Net Income recorded a loss in this exceptional impairment-impacted year.
Functional Products Business: Revenue ¥612.8B (+6.8%), Operating Income ¥21.3B (+207.2%), margin 3.5%. Achieved revenue and profit growth, likely driven by increased demand for carbon fiber and PPS resins. Chemical Products Business: Revenue ¥294.9B (-3.9%), Operating Income ¥13.5B (+128.0%), margin 4.6%. Revenue declined but profits rose significantly due to cost reductions and price correction. Resin Products Business: Revenue ¥367.2B (-9.4%), Operating Income ¥69.1B (-2.6%), margin 18.8%—the highest profitability across the company—maintaining stable core earnings. Construction-related Business: Revenue ¥160.1B (+7.9%), Operating Income ¥15.3B (+10.1%), margin 9.6%—solid revenue and profit growth. Other Related Businesses: Revenue ¥181.8B (-2.2%), Operating Income ¥25.9B (-11.0%), margin 14.3%—slight declines. The segment aggregate Operating Income was ¥145.2B, but company-level adjustments produced a large adjustment loss of ¥-331.2B (prior year -¥5.7B), leading to consolidated Operating Income of ¥-185.9B. The main cause of the adjustment loss was the impairment loss of ¥365B; excluding this one-off, segment-level earnings show improvement.
[Profitability] Operating margin -11.5% (prior year +5.8%) deteriorated significantly due to the one-off impairment; gross margin 28.2% (prior year 26.2%) improved +2.0pt, indicating improved underlying profitability. ROE declined to -5.7% (prior year +3.6%), driven mainly by deterioration in net margin to -6.6% (prior year +4.8%). EBIT was ¥27.4B (prior year ¥+8.3B), remaining positive; EBIT margin improved to 1.7% (prior year 0.5%), suggesting underlying earnings power is recovering when including financial results and equity-method income. [Cash Quality] Operating Cash Flow was ¥280.1B, substantially exceeding the Net loss of ¥-106.9B; Operating CF / Net Income is -2.62x, reflecting the significant non-cash nature of the impairment. Free Cash Flow was ¥142.9B (Operating CF ¥280.1B - Investing CF ¥137.2B), in the black, and dividend payments of ¥63.4B are sufficiently covered. However, total shareholder returns including share buybacks of ¥390.7B far exceeded Free Cash Flow and were financed by increased borrowings. [Investment Efficiency] Total asset turnover was 0.478x (prior year 0.469x), roughly flat. Inventory days (DIO) were 136 days (prior year 142 days), Days Sales Outstanding (DSO) 74 days (prior year 70 days), and Cash Conversion Cycle (CCC) 144 days (prior year 133 days), indicating deterioration and room for improvement in working capital efficiency. Capital expenditure was ¥232.6B versus depreciation of ¥123.4B (1.88x). Tangible fixed assets decreased ¥-263B YoY due to impairments and disposals. [Financial Soundness] Equity Ratio declined to 48.8% (prior year 60.6%) but the capital base remains. Interest-bearing debt rose to ¥1,196.6B (YoY +¥356.2B), increasing D/E to about 0.72x (prior year 0.38x). Interest-bearing debt to total assets ratio rose to 35.4% (prior year 23.1%), increasing financial leverage. Current ratio was approximately 142% (prior year 189%), and quick ratio about 87% (prior year 115%), so short-term liquidity deteriorated but remains at acceptable levels.
Operating Cash Flow was ¥280.1B (prior year ¥295.3B, -5.1%), remaining robust. Subtotal before working capital changes was ¥313.1B (prior year ¥290.7B), supported by non-cash items including the impairment of ¥365B. In working capital, inventory reductions of +¥42.1B (prior year +¥44.2B) contributed positively, while increases in trade receivables of -¥4.5B (prior year +¥76.7B) and increases in trade payables of +¥2.1B (prior year -¥9.3B) slightly detracted, with slower receivables collection having a modest negative effect. Corporate tax payments were -¥45.7B (prior year -¥2.3B), suggesting some taxes were payable despite the loss due to partial taxation and settlement of deferred taxes. Investing Cash Flow was -¥137.2B (prior year -¥394.4B), with a significant reduction in outflows; proceeds from sales of tangible and intangible assets rose to ¥41.9B (prior year ¥8.6B), and acquisition spending was restrained at -¥232.6B (prior year -¥438.4B). Proceeds from sales of investment securities of ¥48.6B also contributed to funding. Free Cash Flow improved substantially to ¥142.9B (prior year -¥99.1B). Financing Cash Flow was -¥79.6B (prior year +¥84.4B), net outflow, with dividend payments of -¥63.4B (prior year -¥46.6B) and share repurchases of -¥390.7B (prior year -¥150.0B) greatly increased. These were partially offset by net borrowings of +¥164.5B (short-term +¥165.0B, long-term -¥6.3B) and bond issuance proceeds of ¥199.1B (same as prior year). Cash and cash equivalents increased from ¥21.5B at the beginning of the period to ¥29.7B at period-end, a net increase of +¥82.3B; foreign exchange effects added +¥19.0B (prior year -¥1.6B). Overall, Operating Cash Flow was solid and divergence from accounting results was large due to the non-cash impairment; investment spending was curtailed and Free Cash Flow was positive, but large share buybacks and dividends caused total returns to exceed Free Cash Flow and were financed by increased borrowing.
The primary cause of the operating loss this period was the one-off impairment loss of ¥365B included in Other expenses of ¥372.7B; segment aggregate Operating Income of ¥145.2B remained positive, indicating underlying earnings are intact. Equity-method investment income of ¥11.9B (0.7% of Revenue) and financial income of ¥10.4B (0.6% of Revenue) provided supplementary support to Ordinary Income, so reliance on non-core income is limited. The divergence between Ordinary Income of ¥98.5B and Profit Before Tax of ¥-183.1B is mainly attributable to the impairment in Other expenses; excluding one-off items, underlying profitability remains positive. On the accrual side, Operating Cash Flow of ¥280.1B far exceeded the Net loss of ¥-106.9B, yielding an Operating CF / Net Income of -2.62x, highlighting the impact of the non-cash impairment. Working capital benefitted from inventory drawdown of +¥42.1B, while receivables rose by ¥-4.5B indicating some collection delays; with DIO 136 days, DSO 74 days and CCC 144 days, working capital efficiency is below industry benchmarks. Gains on disposal of fixed assets of ¥30.6B (included in Other income of ¥42.0B) are a one-off source of cash and not a sustainable earnings driver. Overall, excluding the impairment, segment-level operating profits remain positive and earnings quality is maintained, and cash generation is solid; however, there is significant scope to improve working capital efficiency and to build a revenue structure not reliant on one-off asset sales.
Full-year guidance assumes Revenue ¥1,720B (YoY +6.3%), Operating Income ¥110B (turning back to profit from prior year ¥-185.9B), Net Income attributable to owners of the parent ¥75B (turning to profit from ¥-106.9B), EPS196.24円, and dividend ¥108. The plan assumes a V-shaped recovery in operating margin from -11.5% to +6.4%, predicated on a one-off impairment cycle passing, revenue recovery, continued gross margin improvement and SG&A restraint. The +6.3% Revenue growth assumption likely incorporates continued increases in Functional Products and Construction-related sales and recovery in Resin and Chemical businesses; segment-level details were not disclosed, and normalization of inventory and receivables is assumed. Operating Income ¥110B is below the prior-year segment aggregate of ¥145.2B but is considered achievable through normalization of company-level adjustments (end of impairment cycle). The dividend forecast of ¥108 is said to be based on a DOE ~5% guideline; assuming Net Income ¥75B and Equity ¥1,671.8B, the payout ratio is about 58% (prior-year payout ratio cannot be calculated due to loss) and the total dividend amount is estimated at approximately ¥43B, which is expected to be covered by Free Cash Flow. However, restraining total shareholder returns including buybacks to within Free Cash Flow will be key to sustainability. Given this period’s significant shortfall versus plan, achieving next year’s targets will require preventing recurrence of impairments, normalizing working capital, and executing on price/cost optimization.
This period’s dividends comprised an interim dividend of 109.5円 and a year-end dividend of 104.5円, totaling 214円 (about 5x the prior-year total dividend of 43.35円); total dividend payments were ¥63.4B (prior year ¥46.6B). The payout ratio cannot be calculated due to the net loss, but retained earnings of ¥1,453.9B and equity of ¥1,671.8B indicate dividends are payable and are covered by Free Cash Flow of ¥142.9B. Share repurchases were ¥390.7B (prior year ¥150.0B), substantially larger, and combined with dividends total shareholder returns were ¥454.1B, far exceeding Free Cash Flow of ¥142.9B; funding was supplemented by net borrowings of ¥164.5B and bond issuance of ¥199.1B. Total return ratio cannot be computed due to the loss, but total returns exceeding Free Cash Flow by over 3x raises sustainability concerns. Next fiscal year the dividend plan is ¥108 (DOE ~5% guideline) with an estimated total dividend of about ¥43B; with projected Net Income ¥75B, the payout ratio would be about 58%, a reasonable level and expected to be covered by Free Cash Flow. However, total returns including buybacks should be restrained to within Free Cash Flow next year; continuation of large buybacks risks higher leverage and deterioration in capital efficiency. The DOE ~5% guideline signals stable shareholder returns relative to equity and, given earnings recovery and equity levels, appears sustainable if total returns are confined to Free Cash Flow.
Working capital efficiency deterioration risk: Inventory days DIO 136 days, DSO 74 days, CCC 144 days are materially worse than industry benchmarks, indicating structural inventory build-up and delayed receivables collection. Inventory of ¥433.9B equals approximately 3.2 months of Revenue, creating vulnerability to demand softness or product mix shifts. Delays in normalizing working capital could worsen cash flow and necessitate additional financing, further increasing financial leverage.
Increased interest-bearing debt and interest-rate risk: Interest-bearing debt rose sharply to ¥1,196.6B (YoY +¥356.2B), increasing D/E to about 0.72x (prior year 0.38x) and interest-bearing debt to total assets to 35.4% (prior year 23.1%). Short-term debt and bonds within current liabilities are ¥373.3B (prior year ¥177.7B), increasing refinancing risk and sensitivity to rising interest rates. In a rising-rate environment, interest expense could increase and pressure operating margin recovery.
Risk of recurring impairment losses: This period recorded an impairment of ¥365B and tangible fixed assets decreased ¥-263B YoY. The impairment signals a conservative re-estimation of future cash-generating ability of assets; continued market deterioration or weak demand could trigger further impairments. The next fiscal year’s plan assumes the impairment cycle is complete; if segment profitability falls short of expectations, the risk of additional large impairments and further net losses remains.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | -5.7% | 6.3% (3.2%–9.9%) | -12.0pt |
| Operating Margin | -11.5% | 7.8% (4.6%–12.3%) | -19.2pt |
| Net Margin | -6.5% | 5.2% (2.3%–8.2%) | -11.7pt |
ROE, Operating Margin and Net Margin are all well below medians and the company ranks in the lower tier within manufacturing. The primary cause is the one-off impairment of ¥365B; given segment-level core earnings remain positive, recovery in profitability after the impairment cycle is the focus.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.2% | 3.7% (-0.4%–9.3%) | -3.9pt |
Revenue growth lagged the median and was essentially flat, indicating weaker growth relative to peers. The plan for +6.3% growth next year will test execution capability.
※ Source: Company compilation based on public financial statements
The large impairment is a one-off factor and segment core earnings remain positive; management plans a V-shaped recovery to Operating Income ¥110B (approx. 6.4% operating margin) next year. If the impairment cycle is completed and gross margin improvements and SG&A discipline continue, profitability recovery toward industry medians is expected. However, achieving the plan requires normalization of high inventory and receivables and execution of price/cost optimization; monitoring progress will be important.
Operating Cash Flow was ¥280.1B and Free Cash Flow was ¥142.9B, so dividends are coverable by Free Cash Flow. However, total returns including share buybacks of ¥390.7B far exceeded Free Cash Flow and interest-bearing debt increased by ¥+356.2B YoY. D/E rose to about 0.72x (prior year 0.38x) and short-term borrowings increased, raising interest-rate sensitivity and refinancing risk. Next year, constraining total shareholder returns within Free Cash Flow will be essential to maintain capital efficiency and financial soundness; the sustainability of the DOE ~5% dividend policy and the rationalization of total returns are key issues.
Working capital: DIO 136 days, DSO 74 days, CCC 144 days show working capital efficiency materially below industry benchmarks and significant room for structural improvement. Inventory ¥433.9B and receivables ¥325.8B are high; delays in resolving these could worsen cash flow and require additional borrowings, increasing leverage. Improving production planning, demand forecasting, SKU optimization, and tightening credit/collection terms to normalize working capital are prerequisites for margin recovery and ROIC improvement. Quarterly monitoring is important.
This report is an earnings analysis document automatically generated by AI analyzing 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 from public financial statements. Investment decisions are your own responsibility; consult a professional advisor as necessary.