| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1549.0B | ¥1452.0B | +6.7% |
| Operating Income / Operating Profit | ¥190.8B | ¥104.8B | +82.0% |
| Ordinary Income | ¥217.4B | ¥113.9B | +90.8% |
| Net Income / Net Profit (attributable to owners of the parent) | ¥144.5B | ¥65.4B | +120.9% |
| ROE | 11.2% | 5.7% | - |
For the full year ended March 2026, Revenue was ¥1,549.0B (YoY +¥97.0B +6.7%), Operating Income was ¥190.8B (YoY +¥86.0B +82.0%), Ordinary Income was ¥217.4B (YoY +¥103.5B +90.8%), and Net Income attributable to owners of the parent was ¥144.5B (YoY +¥79.1B +120.9%), delivering substantial top- and bottom-line growth. Operating margin improved from 7.2% to 12.3% (+5.1pt) and gross margin rose from 27.2% to 32.1% (+4.9pt). Expansion of high-margin product mix in the Organic Chemicals Business and profitability correction in the Inorganic Chemicals Business drove profitability. At the ordinary income level, foreign exchange gains of ¥21.4B and equity-method income of ¥13.9B were positive contributors, while a low effective tax rate of 17.7% supported the net income level. ROE improved materially from 7.6% to 12.9%, primarily driven by higher net profit margin (5.8%→10.7%, +4.9pt); total asset turnover remained stable at 0.64x and financial leverage decreased from 1.97x to 1.86x, indicating the improvement relied on quality of profitability.
[Revenue] Revenue was ¥1,549.0B (+6.7%), led by the Organic Chemicals Business at ¥826.2B (+21.9%). The Inorganic Chemicals Business declined to ¥682.5B (-6.8%), but consolidated revenue after inter-segment adjustments increased by ¥97.0B YoY. By region, Europe grew to ¥339.8B (+32.3%) and the Americas to ¥289.4B (+21.4%), driven by FX and local sales expansion. Asia decreased to ¥311.8B (-11.6%), while Japan remained firm at ¥596.5B (+2.2%). Overseas ratio expanded to 61.5% of total.
[Profitability] Cost of sales was ¥1,052.3B, yielding a gross margin of 32.1% (prior year 27.2%, +4.9pt). SG&A was ¥305.9B (+5.3%), below the revenue growth rate of +6.7%, causing SG&A ratio to fall 0.3pt to 19.7% and delivering operating leverage. Operating Income was ¥190.8B (+82.0%), with operating margin of 12.3% (prior year 7.2%, +5.1pt). Non-operating items included interest income ¥1.8B, foreign exchange gains ¥21.4B and equity-method income ¥13.9B boosting Ordinary Income, while interest expense of ¥8.3B was limited; Ordinary Income reached ¥217.4B (+90.8%). In extraordinary items, there was special gain on sale of investment securities ¥0.2B versus special losses ¥15.3B including impairment losses ¥3.8B, resulting in profit before tax of ¥202.3B (YoY +87.2%). Income taxes were ¥35.8B (effective tax rate 17.7%), below prior-year 21.7%, contributing to higher Net Income. Consequently, Net Income attributable to owners of the parent was ¥144.5B (+120.9%), with net margin 10.7% (prior 5.8%, +4.9pt).
The Organic Chemicals Business recorded Revenue ¥826.2B (+21.9%), Operating Income ¥183.3B (+47.4%), and an operating margin of 22.2%, remaining highly profitable and accounting for 76.6% of segment operating profit. Expansion of high-value products in agrochemicals, pharmaceuticals and animal health products and price maintenance were primary drivers, lifting the segment margin from 18.3% (+3.9pt). The Inorganic Chemicals Business saw Revenue ¥682.5B (-6.8%) but Operating Income rose sharply to ¥49.7B (+211.3%), with operating margin improving to 7.3% from 2.2% (+5.1pt). Profitability correction measures for titanium oxide and functional materials succeeded, advancing cost optimization and appropriate pricing. Other Businesses contributed Revenue ¥40.3B and Operating Income ¥6.3B steadily. Total segment profit was ¥239.3B, less corporate and other adjustments of -¥48.6B, yielding consolidated Operating Income ¥190.8B.
[Profitability] Operating margin of 12.3% improved from 7.2% (+5.1pt), driven mainly by gross margin expansion to 32.1% (prior 27.2%, +4.9pt) and complemented by a decline in SG&A ratio to 19.7% (prior 20.0%, -0.3pt). ROE 11.2% improved from 7.6% (+3.6pt), primarily due to higher net margin (5.8%→10.7%). Total asset turnover was stable at 0.64x and financial leverage decreased from 1.97x to 1.86x. [Cash Quality] Operating Cash Flow (OCF) was ¥172.6B / Net Income ¥144.5B = 1.19x, indicating solid cash backing of profits. OCF to sales ratio was 11.1%, showing stable cash generation. Inventory decrease +¥42.2B boosted cash flow, while accounts receivable increase -¥48.1B and accounts payable decrease -¥57.9B offset that, leaving room to improve working capital efficiency. [Investment Efficiency] Total asset turnover 0.64x was flat YoY. Tangible fixed asset turnover was 2.89x, down from 3.12x, and Construction in Progress ¥109.2B (20.4% of tangible fixed assets) remains high, indicating assets awaiting commissioning. Capital expenditure was ¥125.9B (8.1% of sales), continuing an active investment stance. [Financial Soundness] Equity Ratio 53.7% (prior 50.8%, +2.9pt), current ratio 311.0%, quick ratio 231.1% show robust liquidity. Interest-bearing debt was ¥531.2B (D/E ratio 0.86x, Debt/Capital 29.1%), at a conservative level; interest coverage was 22.9x, demonstrating strong interest-bearing capacity.
Operating Cash Flow was ¥172.6B (YoY -5.9%); OCF / Net Income was 1.19x, showing good earnings backing though down YoY. Pre-tax profit before income taxes ¥202.3B plus non-cash charges such as depreciation ¥48.1B produced subtotal OCF before working capital changes of ¥196.6B. Working capital changes included inventory decrease +¥42.2B boosting cash, while accounts receivable increase -¥48.1B and accounts payable decrease -¥57.9B subtracted, overall pressuring cash from operations. After corporate tax payments -¥20.1B and interest payments -¥8.4B, OCF totaled ¥172.6B. Investing Cash Flow was -¥100.1B, primarily acquisition of tangible and intangible fixed assets -¥117.7B, partially offset by loan recoveries ¥17.7B, resulting in Free Cash Flow of ¥72.5B. Financing Cash Flow was -¥38.2B; proceeds from long-term borrowings +¥112.5B were offset by long-term borrowings repayments -¥86.5B, dividend payments -¥44.1B, and treasury stock purchases -¥10.1B, leading to cash and cash equivalents at period end of ¥294.2B (YoY +¥44.8B).
Operating Income ¥190.8B is the core recurring earnings; non-operating income ¥41.3B (2.7% of sales) is supplementary but material: foreign exchange gains ¥21.4B accounted for 11.2% of Operating Income, making currency movements non-negligible. Interest income ¥1.8B, dividend income ¥2.5B and equity-method investment income ¥13.9B also supported ordinary income. Non-operating expenses were ¥14.7B, mainly interest expense ¥8.3B, low at 7.7% of Operating Income, indicating light interest burden. Special gains were ¥0.2B (gain on sale of investment securities) and special losses ¥15.3B (impairment losses ¥3.8B, loss on disposal of fixed assets ¥7.8B, etc.), but the impact was limited with net profit ratio 10.6%. The difference between Ordinary Income ¥217.4B and Net Income ¥144.5B stems mainly from tax burden ¥35.8B (effective tax rate 17.7%) and extraordinary items. Comprehensive income was ¥189.4B, about 31% higher than Net Income ¥144.5B, contributed by valuation difference on available-for-sale securities ¥5.5B, foreign currency translation adjustments ¥8.2B, actuarial gains/losses related to retirement benefits ¥0.7B and OCI attributable to equity-method affiliates ¥8.5B. OCF ¥172.6B / Net Income ¥144.5B = 1.19x shows good cash backing; inventory decrease +¥42.2B aided cash, and accounts receivable increase -¥48.1B is a normal range movement accompanying revenue growth.
The company plan forecasts Revenue ¥1,500.0B, Operating Income ¥142.0B, Ordinary Income ¥133.0B, Net Income attributable to owners of the parent ¥91.0B, and dividend ¥50. Actual results exceeded plan materially: Revenue ¥1,549.0B (vs plan +3.3%), Operating Income ¥190.8B (vs plan +34.4%), Ordinary Income ¥217.4B (vs plan +63.5%), Net Income ¥144.5B (vs plan +58.8%). Operating Income over-performance (progress ratio 134.4%) was driven by the establishment of high margins in the Organic Chemicals Business (operating margin 22.2%), accelerated profitability correction in the Inorganic Chemicals Business, and FX upside of ¥21.4B. Next fiscal year’s plan is conservatively set (Revenue -3.2% YoY, Operating Income -25.6% YoY, Ordinary Income -38.8% YoY), reflecting caution on sustainability of this year’s FX contribution and high margins in Organic Chemicals.
Dividends were year-end ¥90 and interim ¥30, totaling ¥120 for the year, with a payout ratio of 38.6%, leaving room for flexibility. Total dividends paid ¥44.1B against Net Income attributable to owners of the parent ¥144.5B imply a payout ratio of 29.1% (company materials basis), which is conservative. Free Cash Flow ¥72.5B covers dividend payments ¥44.1B by 1.6x, indicating sustainability. Treasury stock purchases were limited at ¥10.1B, and Total Return Ratio is approximately 37%. Next fiscal year dividend forecast ¥50 (cut) reflects conservative earnings planning; payout ratio against forecast Net Income ¥91.0B falls to about 21%, but with cash and cash equivalents ¥294.2B and Equity Ratio 53.7%, concerns over sustainability are limited. Dividend yield cannot be calculated here due to lack of share price information, but current payout ratio 38.6% suggests room for future increases.
Working capital efficiency risk: Days Sales Outstanding (DSO) 101 days, Days Inventory Outstanding (DIO) 278 days, Cash Conversion Cycle (CCC) 340 days indicate a prolonged cash recovery cycle. High levels of accounts receivable ¥430.4B (27.8% of sales) and inventory ¥415.0B (26.8% of sales) mean that failure to compress inventory and strengthen receivables collection could lock up working capital, pressuring cash generation and constraining growth investment and dividend capacity.
Construction in Progress commissioning delay risk: Construction in Progress ¥109.2B represents 20.4% of tangible fixed assets. While the investment pipeline is sizable, delays in commissioning or startup yield issues could increase depreciation burden and delay asset utilization, reducing total asset turnover and pressuring ROIC and ROE. CapEx ¥125.9B (8.1% of sales, 2.6x depreciation) indicates an aggressive investment mode, making timing management critical.
FX and business concentration risk: Foreign exchange gains ¥21.4B comprised roughly 11.2% of Operating Income, meaning currency movements materially affect earnings. The Organic Chemicals Business accounts for 53.3% of revenue and 76.6% of operating profit, so concentration exposes consolidated results to market, regulatory and competitive shifts in that business. Profit resilience under adverse FX scenarios and diversification of the business portfolio are challenges.
Profitability & Returns
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.3% | 7.8% (4.6%–12.3%) | +4.6pt |
| Net Margin | 9.3% | 5.2% (2.3%–8.2%) | +4.1pt |
Both operating margin and net margin exceed the industry median, placing profitability in the upper peer range.
Growth & Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.7% | 3.7% (-0.4%–9.3%) | +3.0pt |
Revenue growth exceeds the median, indicating superior growth within the industry.
※ Source: Company compilation
Establishment of high profitability in the Organic Chemicals Business and profitability correction in the Inorganic Chemicals Business drove significant improvement in Operating Margin to 12.3% (prior 7.2%, +5.1pt) and Net Margin to 10.7% (prior 5.8%, +4.9pt), leading ROE to rise to 11.2% (prior 7.6%, +3.6pt). The qualitative improvement in profitability suggests structural enhancement, but the contribution of foreign exchange gains ¥21.4B (11.2% of Operating Income) is variable; resilience under FX headwinds will be a monitoring point.
Working capital efficiency (DSO101 days, DIO278 days, CCC340 days) is below industry average, and improving receivables collection and inventory compression is key to enhancing shareholder value. OCF ¥172.6B produced Free Cash Flow ¥72.5B and covers dividends 1.6x, indicating high sustainability, but progress in commissioning Construction in Progress ¥109.2B (20.4% of tangible fixed assets) will directly affect total asset turnover and capital efficiency; investment startup results will be a mid-term inflection point.
Next fiscal year plan is conservatively set (Revenue -3.2%, Operating Income -25.6%), reflecting caution on this year’s FX contribution and sustainability of high margins in Organic Chemicals. Nonetheless, payout ratio 38.6% retains room for further increases; strong financial position (Equity Ratio 53.7%, D/E 0.86x) supports balancing growth investment and shareholder returns. If working capital efficiency improves and new equipment begins operation smoothly, there is upside for further ROE and ROIC improvement.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions are your responsibility; please consult a professional advisor as appropriate.