| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1520.9B | ¥1552.0B | -2.0% |
| Operating Income / Operating Profit | ¥149.7B | ¥160.6B | -6.8% |
| Ordinary Income | ¥229.9B | ¥195.3B | +17.7% |
| Net Income / Net Profit | ¥126.7B | ¥102.0B | +24.2% |
| ROE | 6.1% | 5.4% | - |
For the fiscal year ended March 2026, Revenue was ¥1520.9B (YoY -¥31.1B -2.0%), Operating Income was ¥149.7B (YoY -¥10.9B -6.8%), Ordinary Income was ¥229.9B (YoY +¥34.6B +17.7%), and Net Income attributable to owners of the parent was ¥126.7B (YoY +¥24.6B +24.2%). Revenue declined due to volume and price adjustments in chemicals and a lull in large engineering projects, but equity-method investment income of ¥60.5B (prior year ¥27.0B), foreign exchange gains of ¥12.2B, and gains on sales of investment securities of ¥50.7B among other non-operating and special items boosted ordinary and net profit. Operating margin declined by about 0.6pt to 9.8% (prior year 10.4%), while net margin improved by about 1.7pt to 8.3% (prior year 6.6%), reflecting a structure where non-operating income complemented lower operating profit.
[Revenue] Revenue was ¥1520.9B (YoY -2.0%). By segment, Chemical Materials was ¥534.1B (+4.2%), supported by volume increases in specialty isocyanates and secondary battery materials. Agri Business was ¥527.6B (-1.8%), slightly down as domestic and international agrochemical demand was affected by adverse weather and regulatory trends but supported by improved unit prices. Trading & Logistics was ¥510.3B (-0.9%), roughly flat, impacted by adjustments in distribution volumes. Engineering was ¥154.9B (-27.9%), a large decline due to a lull in major plant projects and progress delays. Eco Solutions was ¥108.6B (+6.4%), growing as waste treatment and recycling businesses expanded. Gross margin improved by about 0.6pt to 29.6% (prior year 29.0%), reflecting a better product mix.
[Profitability] Operating Income was ¥149.7B (YoY -6.8%). SG&A was ¥300.6B, or 19.8% of sales (prior year 18.6%), rising about 1.2pt and pressuring earnings due to fixed cost stickiness. By segment, Chemical Materials Operating Income was ¥57.2B (-5.8%, margin 10.7%), Agri Business ¥54.9B (+7.2%, margin 10.4%), Trading & Logistics ¥22.7B (-6.1%, margin 4.4%), Engineering ¥11.4B (-51.8%, margin 7.4%), Eco Solutions ¥5.3B (+433.3%, margin 4.9%). Deterioration in Engineering profitability was the primary cause of group operating profit decline. Ordinary Income rose significantly to ¥229.9B (+17.7%), aided by equity-method investment income of ¥60.5B (prior year ¥27.0B), dividend income received of ¥15.8B, and foreign exchange gains of ¥12.2B, bringing non-operating income to ¥95.8B (6.3% of sales). Extraordinary income totaled ¥54.6B, centered on gains on sales of investment securities of ¥50.7B, while extraordinary losses were ¥37.2B, including impairment losses of ¥1.2B, resulting in net uplift of ¥17.4B. Pre-tax income was ¥247.3B, income taxes ¥64.0B, yielding Net Income ¥126.7B (+24.2%); after deducting non-controlling interests of ¥0.6B, net income attributable to owners of the parent was effectively ¥126.1B. In conclusion, while the company showed revenue and operating profit declines, ordinary and net profit increased, but results were highly dependent on non-operating and extraordinary factors.
Chemical Materials: Revenue ¥534.1B (+4.2%), Operating Income ¥57.2B (-5.8%), margin 10.7%. Volume increases in industrial chemicals and chemical products contributed, but energy cost rises depressed margins. Agri Business: Revenue ¥527.6B (-1.8%), Operating Income ¥54.9B (+7.2%), margin 10.4%. Price improvements for fungicides and insecticides and product mix optimization supported profit growth. Trading & Logistics: Revenue ¥510.3B (-0.9%), Operating Income ¥22.7B (-6.1%), margin 4.4%. Declines in distribution volumes and higher logistics costs reduced profit. Engineering: Revenue ¥154.9B (-27.9%), Operating Income ¥11.4B (-51.8%), margin 7.4%. Significant declines due to a lull in large projects and progress delays; replenishing order backlog is a priority. Eco Solutions: Revenue ¥108.6B (+6.4%), Operating Income ¥5.3B (+433.3%), margin 4.9%. New contracts in waste treatment and recycling and improved utilization drove substantial profit increases.
[Profitability] Operating margin 9.8% (prior year 10.4%) declined about 0.6pt, impacted by Engineering margin deterioration and a relative increase in SG&A. Net margin improved to 8.3% (prior year 6.6%), about 1.7pt better, largely due to equity-method investment income and extraordinary gains. ROE was 6.1%, roughly level with prior year; the net margin uplift offset slower asset turnover. [Cash Quality] Operating Cash Flow (OCF) was ¥215.9B, 1.7x Net Income ¥126.7B, indicating a good conversion rate, supported by reductions in trade receivables and inventory compression. OCF/EBITDA was 0.93x, and accrual ratio was -7.0%, indicating sound cash backing for profits. [Investment Efficiency] Total asset turnover declined to 0.495x (prior year 0.539x), with investment securities of ¥790.3B (+24.8%) and inventories of ¥529.6B weighing on capital efficiency. Inventory days were 181 days (prior year 177 days), receivables days shortened to 96 days (prior year 108 days), improving the cash conversion cycle (CCC) to 199 days (prior year 210 days), about 11 days better. [Financial Soundness] Equity Ratio was 67.1% (prior year 64.8%), Current Ratio 257%, Quick Ratio 148%, indicating ample short-term liquidity. Interest-bearing debt was ¥522.7B (Debt/EBITDA 2.26x, Interest Coverage 22.4x), maintaining an investment-grade profile.
OCF was ¥215.9B (prior year ¥226.4B, -4.6%). Operating cash flow before working capital changes subtotaled ¥224.1B, with decreases in trade receivables of ¥71.4B and inventories of ¥10.3B contributing positively, while a decrease in trade payables of ¥77.8B was a negative, resulting in a net working capital improvement of ¥3.9B. After corporate tax payments of ¥36.7B, receipts of interest and dividends of ¥35.1B, and interest payments of ¥6.5B, OCF secured 1.7x Net Income. Investing Cash Flow was -¥108.0B, of which capital expenditure was ¥110.8B (1.36x depreciation of ¥81.5B), indicating continued growth investment. There was net inflow from sales of investment securities of ¥60.1B and purchases of ¥1.3B, net +¥58.8B, making effective investment outlay about -¥166.8B. Free Cash Flow was ¥107.9B (prior year ¥50.8B), a large increase driven by a cycle in capital expenditure and stable OCF. Financing Cash Flow was -¥112.7B: long-term borrowings ¥140.0B versus repayments ¥119.7B, dividends ¥81.9B, and share repurchases ¥50.1B resulted in net outflow of about ¥112.7B. Cash and cash equivalents increased from ¥216.3B at the beginning of the period to ¥219.1B at the end, +¥2.7B, including foreign exchange translation adjustment of ¥7.5B.
Against Ordinary Income of ¥229.9B, non-operating income of ¥95.8B (6.3% of sales) consisted of equity-method investment income ¥60.5B, dividend income received ¥15.8B, and foreign exchange gains ¥12.2B, indicating high dependence on non-operating income. Equity-method investment income rose by ¥33.5B year-on-year, reflecting strong performance of affiliates, but its sustainability is uncertain due to cyclicality in commodity prices and FX. Extraordinary income of ¥54.6B (gains on sales of investment securities ¥50.7B, gains on sales of fixed assets ¥3.8B) was one-off and accounted for about 43% of Net Income. Net extraordinary income of +¥17.4B (after extraordinary losses ¥37.2B including impairment loss ¥1.2B) boosted Net Income by about 13.7%. OCF of ¥215.9B was 1.7x Net Income with an accrual ratio of -7.0%, indicating sufficient cash backing, but earnings below the ordinary income level are vulnerable to non-operating and extraordinary items. Comprehensive income was ¥312.6B, well above Net Income ¥126.7B; Other Comprehensive Income was ¥185.9B (foreign currency translation adjustments ¥13.7B, valuation differences on securities ¥56.2B, retirement benefit adjustments ¥24.8B, equity-method affiliates’ OCI share ¥34.5B), causing movements in equity.
Full-year forecast: Revenue ¥1522.0B (actual ¥1520.9B, achievement 99.9%), Operating Income ¥142.0B (actual ¥149.7B, achievement 105.5%), Ordinary Income ¥190.0B (actual ¥229.9B, achievement 121.0%), Net Income attributable to owners of the parent ¥158.0B (actual ¥126.7B, achievement 80.2%). Revenue landed roughly in line with plan, while Operating Income outperformed by ¥7.7B and Ordinary Income by ¥39.9B. The upside at the ordinary income level was mainly due to equity-method investment income and foreign exchange gains exceeding assumptions, so non-operating income made a large contribution. Conversely, Net Income underperformed forecast by -¥31.3B, likely because extraordinary gains were lower than planned. Actual EPS of ¥336.54 versus forecast EPS ¥294.77 was an upside of ¥41.77. Dividend forecast of ¥80 was raised to actual ¥160 (equivalent to ¥140 annually after stock split). Going forward, considering the risk of reversal of non-operating and extraordinary factors, strengthening core business profitability and recovering Engineering orders will be focal points.
Dividends were interim ¥70 and year-end ¥90, total ¥160 (pre-stock-split basis; equivalent to ¥140 annually post-split). Payout Ratio was 51.4% (based on EPS ¥336.54), within a sustainable range. Total dividend amount was approximately ¥8.69B (based on weighted average shares outstanding 54,292 thousand shares), coverage versus Free Cash Flow ¥107.9B was 1.24x, indicating ample coverage. Share repurchases of ¥5.01B were executed, making total returns approximately ¥13.70B (dividends ¥8.69B + share repurchases ¥5.01B), and Total Return Ratio about 108% (total returns ¥13.70B ÷ Net Income ¥126.7B), a high level but largely financed by Free Cash Flow and supported by abundant cash and deposits of ¥24.63B. Evaluated by payout ratio alone, 51.4% is mid-range; the combination with share buybacks pushed up total returns as a capital efficiency measure. With low financial leverage (Debt/Capital 20.2%) and Debt/EBITDA 2.26x, sustainability of near- to mid-term dividends and returns is high.
Engineering business project lull and margin deterioration: Revenue ¥154.9B (-27.9%), Operating Income ¥11.4B (-51.8%)—significant declines—necessitating replenishment of backlog and strict margin management. Construction in progress (work in progress on construction accounts) ¥163.4B (20.9% of tangible fixed assets) is high, and start-up delays or impairment risk could pressure profits.
Dependence on non-operating and extraordinary income: Ordinary and Net Income were boosted by equity-method investment income ¥60.5B, foreign exchange gains ¥12.2B, and gains on sales of investment securities ¥50.7B, but these include cyclical and one-off factors and carry high risk of reversal in subsequent periods. Non-operating income of ¥95.8B reached 6.3% of sales, highlighting the need to strengthen core earnings power.
Working capital stagnation and deterioration of capital efficiency: Inventory days 181 days (prior year 177 days), receivables days 96 days (prior year 108 days), CCC improved to 199 days, but inventory thickness of ¥529.6B restrains asset turnover to 0.495x, hindering cash generation efficiency. During economic swings, risks of inventory valuation losses and higher allowance for doubtful accounts increase.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.8% | 7.8% (4.6%–12.3%) | +2.1pt |
| Net Margin | 8.3% | 5.2% (2.3%–8.2%) | +3.1pt |
Both operating and net margins exceed the median, maintaining relatively high profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -2.0% | 3.7% (-0.4%–9.3%) | -5.7pt |
Revenue growth rate is below the median and declined; the lull in Engineering projects and volume/price adjustments in chemicals are primary drivers, placing the company in the lower rank within the sector.
※Source: Company compilation
Profitability improved at the ordinary and net levels due to non-operating and extraordinary items, but deterioration in operating profitability and slower asset turnover emerged as structural issues. Equity-method investment income ¥60.5B, foreign exchange gains ¥12.2B, and gains on sales of investment securities ¥50.7B boosted ordinary and net income, whereas operating margin fell to 9.8% (prior year 10.4%), and SG&A ratio rose to 19.8% (prior year 18.6%), requiring renewed cost control. Total asset turnover declined to 0.495x (prior year 0.539x), with investment securities ¥790.3B (+24.8%) and inventories ¥529.6B weighing on capital efficiency.
Recovery of orders for the Engineering business and commercialization of construction in progress will be growth drivers in subsequent periods. Engineering revenue ¥154.9B (-27.9%), Operating Income ¥11.4B (-51.8%)—significant declines—make backlog replenishment and margin improvement urgent. If projects recorded in construction in progress ¥163.4B (20.9% of tangible fixed assets) become operational, they could drive revenue recovery and margin improvement, but monitoring start-up delays and impairment risks is crucial. There remains substantial room to improve working capital efficiency (CCC 199 days), and additional cash generation is expected from shortening inventory turnover and collection terms.
Financial posture is conservative with high downside resilience and ample capacity for shareholder returns. Equity Ratio 67.1%, Current Ratio 257%, Debt/EBITDA 2.26x are healthy; Payout Ratio 51.4% and Total Return Ratio about 108% (dividends ¥8.69B + share repurchases ¥5.01B) are largely covered by Free Cash Flow ¥107.9B, with cash on hand ¥24.63B providing a buffer. Continuation of dividends in the short- to mid-term and scope for additional capital policy measures are substantial, but designing a smoothing dividend policy assuming reversals of non-operating and extraordinary income is desirable.
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 based on public financial statements. Investment decisions should be made at your own responsibility, and, if necessary, after consulting professional advisors.