| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥654.0B | ¥623.5B | +4.9% |
| Operating Income | ¥54.8B | ¥42.7B | +28.2% |
| Ordinary Income | ¥66.3B | ¥45.1B | +47.1% |
| Net Income | ¥22.9B | ¥32.9B | -30.5% |
| ROE | 3.1% | 4.9% | - |
For the fiscal year ended March 2026, Revenue was ¥654.0B (YoY +¥30.5B +4.9%), Operating Income was ¥54.8B (YoY +¥12.1B +28.2%), Ordinary Income was ¥66.3B (YoY +¥21.2B +47.1%), and Net Income attributable to owners of the parent was ¥37.9B (YoY +¥5.4B +16.5%). The core Precision Chemicals Business accounted for 80.3% of Revenue and 89.5% of Operating Income, and the operating margin improved by 1.5pt to 8.4% (prior year 6.9%). At the ordinary income level, foreign exchange gains of ¥12.9B (prior year ¥0.3B) made a substantial contribution, lifting the ordinary income margin to 10.1%. However, recognition of special losses of ¥11.6B, including disaster losses of ¥10.3B, caused Net Income growth to lag behind Operating and Ordinary Income.
Revenue reached ¥654.0B (+4.9%). By segment, the Precision Chemicals Business recorded ¥525.4B (+6.2%), representing 80.3% of total Revenue, with semiconductor materials demand expanding centered on major customers: ¥143.9B to Samsung Electronics and ¥123.4B to Kioxia. The Basic Chemicals Business was ¥80.1B (+0.2%), essentially flat; the Plant Business was ¥44.3B (-2.3%); and the Iron-related Business was ¥19.1B (-16.8%), declining. By region, Japan was ¥328.5B, Asia ¥302.8B, and Europe & Americas ¥22.7B, with Korea accounting for ¥164.3B or 25.1% of Revenue. Gross profit was ¥158.3B (gross margin 24.2%, +1.8pt from 22.4%), aided by product mix improvement.
Operating Income was ¥54.8B (+28.2%), a large increase, with an operating margin of 8.4% (prior year 6.9%, +1.5pt). Selling, general and administrative expenses were ¥103.5B (SG&A ratio 15.8%), up ¥6.3B YoY, but gross margin improvement absorbed the SG&A increase, producing operating leverage. By segment, Precision Chemicals recorded Operating Income of ¥49.0B (margin 9.3%, +22.6%), contributing 89.5% of the total. Ordinary Income was ¥66.3B (+47.1%), supported by a large expansion of non-operating income to ¥19.7B (prior year ¥8.8B). The breakdown includes foreign exchange gains of ¥12.9B (prior year ¥0.3B) and dividend income of ¥3.7B, with currency tailwinds boosting ordinary income. In extraordinary items, a gain on sale of investment securities of ¥3.3B was recognized, while special losses of ¥11.6B including disaster losses of ¥10.3B were recorded. Profit before income taxes was ¥58.0B; after income taxes of ¥19.7B, Net Income attributable to owners of the parent was ¥37.9B (+16.5%). As a result, while Revenue and profit increased, special losses constrained Net Income growth relative to ordinary-stage profit.
The Precision Chemicals Business recorded Revenue of ¥525.4B (+6.2%) and Operating Income of ¥49.0B (+22.6%, margin 9.3%), driving overall profitability and accounting for 89.5% of group Operating Income. Increased semiconductor materials demand and improved product mix contributed to margin expansion. The Basic Chemicals Business recorded Revenue of ¥80.1B (+0.2%) and Operating Income of ¥1.1B (+118.9%, margin 1.4%), turning from a prior-year loss to profit, though low profitability persists. The Plant Business had Revenue of ¥44.3B (-2.3%) and Operating Income of ¥3.4B (-0.6%, margin 7.6%), roughly flat. The Trading Business recorded Revenue of ¥19.2B (+7.7%) and Operating Income of ¥1.1B (-13.0%, margin 5.9%), with revenue up but profit down. The Iron-related Business had Revenue of ¥19.1B (-16.8%) and Operating Income of ¥1.6B (-54.8%, margin 8.4%), suffering from market conditions. Overall, revenue concentration in Precision Chemicals has strengthened, increasing dependence on higher-margin businesses.
Profitability: Operating margin 8.4% improved by 1.5pt from 6.9%, and gross margin rose to 24.2% (prior year 22.4%, +1.8pt). ROE was 3.1% (prior year 5.0%), down due to increases in equity despite Net Income growth. ROA on an ordinary income basis was 5.2% (prior year 3.6%, +1.6pt), and on a net income basis was 2.9%. EBIT was ¥54.8B, with an EBIT margin of 8.4%.
Cash Quality: Operating Cash Flow (OCF) was ¥72.8B, 1.92x Net Income of ¥37.9B, indicating good cash realization of profits, but OCF/EBITDA (Operating Income + Depreciation) remained at 0.49x. Increases in trade receivables of ¥33.8B and inventories of ¥38.1B absorbed working capital, significantly reducing the operating cash subtotal from ¥85.3B. Investment Efficiency: Capital expenditures were ¥85.5B (92% relative to depreciation ¥93.0B), largely maintenance and renewal; investment securities were ¥121.8B (9.3% of total assets), up ¥40.0B YoY. Financial Soundness: Equity Ratio was 56.5% (prior year 53.4%, +3.1pt), D/E ratio 0.77x, and Net D/E ratio 0.62x, indicating low and stable financial leverage. Debt/EBITDA was 2.02x, and interest coverage was 11.2x (Operating Income + interest income / interest expense), indicating high debt service capacity. Current ratio was 232% and quick ratio 209%, showing ample short-term liquidity, with cash and deposits of ¥202.2B providing 1.57x coverage of short-term liabilities of ¥128.8B.
OCF was ¥72.8B (YoY -44.4%), a large decline despite growth in Operating Income. Operating cash subtotal was ¥85.3B, but trade receivables increased ¥33.8B and inventories increased ¥38.1B, a combined ¥71.9B absorption of working capital that was not fully offset by accounts payable increases of ¥16.1B. Investing Cash Flow was -¥92.2B, led by capital expenditures of ¥85.5B and acquisition of investment securities of ¥0.3B. Capex was nearly on par with depreciation of ¥93.0B, reflecting a maintenance-focused capital policy. Financing Cash Flow was +¥6.8B, with long-term borrowings of ¥108.8B exceeding long-term borrowings repayments of ¥93.9B, dividend payments of ¥10.4B, and share buybacks of ¥1.1B. Free Cash Flow was -¥19.4B (OCF ¥72.8B - Investing CF ¥92.2B); operating cash was eroded by working capital increases, leaving insufficient cash to fully cover investing outflows. Cash and deposits were ¥202.2B (slightly down from ¥202.9B prior year), maintaining liquidity while financing capex through borrowings. DSO (days sales outstanding) was about 98 days, DIO (days inventory outstanding) about 156 days, and CCC (cash conversion cycle) about 197 days, indicating lengthening; improving working capital efficiency is a priority.
Ordinary Income of ¥66.3B exceeded Operating Income of ¥54.8B by ¥11.5B at the non-operating level. This consisted of non-operating income of ¥19.7B, mainly foreign exchange gains ¥12.9B and dividend income ¥3.7B, net of non-operating expenses including interest expense of ¥4.9B totaling ¥8.2B. Foreign exchange gains accounted for roughly 24% of Operating Income, significantly contributing to earnings but including non-recurring elements tied to currency movements. In extraordinary items, gain on sale of investment securities of ¥3.3B was recognized, while special losses of ¥11.6B including disaster losses of ¥10.3B resulted in a net -¥8.3B drag on Ordinary Income. Comprehensive income was ¥77.8B (¥75.7B attributable to owners of the parent), well above Net Income of ¥37.9B. The drivers were valuation difference on available-for-sale securities of ¥28.2B, actuarial adjustments related to retirement benefits of ¥8.4B, and foreign currency translation adjustments of ¥2.9B, with market value increases in investment securities boosting comprehensive income. OCF of ¥72.8B substantially exceeded Net Income, indicating good cash realization, but working capital absorption from receivables and inventory kept OCF/EBITDA low at 0.49x. Overall, core operating profit grew solidly and foreign exchange gains boosted ordinary-stage results, while special losses and working capital increases reduced Net Income and cash.
Full Year guidance is Revenue ¥950.0B (YoY +45.3%), Operating Income ¥100.0B (YoY +82.5%), Ordinary Income ¥100.0B (YoY +50.8%), Net Income attributable to owners of the parent ¥68.0B, and EPS ¥118.56. The operating margin is projected to improve further to 10.5% (+2.1pt), reflecting continued demand recovery and product mix improvement in the core Precision Chemicals Business. The plan assumes large YoY increases in Revenue and profit, but achievement hinges on FX assumptions, raw material costs, and improvement in working capital efficiency. Progress-to-plan (actual/guidance) stands at Revenue 68.8%, Operating Income 54.8%, Ordinary Income 66.3% at the half-year stage, suggesting some shortfall in H1 relative to plan but a strategy assuming recovery in H2.
The annual dividend for FY2026 was ¥20 (interim ¥9, year-end ¥11), up ¥3 from ¥17 the prior year. Year-end dividend was revised up ¥3 from ¥8 to ¥11, signaling strengthened shareholder returns reflecting improved performance. Payout Ratio was 30.1% (based on actual EPS ¥65.96 and dividend ¥20), a sustainable level. Share buybacks amounted to ¥1.1B, making total shareholder returns ¥11.5B (dividends ¥10.4B + buybacks ¥1.1B). Next fiscal year dividend forecast is ¥18, implying a payout ratio of 15.2% against forecast EPS ¥118.56, a more conservative stance given the large earnings increase assumed in EPS. The dividend policy appears to be continued increases in line with profit growth while maintaining a payout ratio around 30%. Free Cash Flow was -¥19.4B, but OCF of ¥72.8B sufficiently covers dividend payments; the negative FCF is driven by temporary increase in investing activity, so dividend sustainability is not considered a concern.
Customer concentration risk: Sales to Samsung Electronics ¥143.9B (22.0% of total) and Kioxia ¥123.4B (18.9%) together account for 40.9% of Revenue. Changes in both customers’ capex and production plans directly affect performance, and downside risk in semiconductor market adjustments could significantly reduce orders. Dependence on the Precision Chemicals Business is extremely high, with 89.5% of Operating Income derived from this segment and limited business diversification.
FX sensitivity risk: Foreign exchange gains of ¥12.9B equal 23.5% of Operating Income, making ordinary-stage earnings highly sensitive to currency movements. In a yen appreciation scenario, non-operating income would decline materially and could reduce ordinary income margins. Disclosure on hedging policy and sensitivity is limited, leaving resilience to FX volatility unclear.
Deterioration in working capital efficiency: DSO 98 days, DIO 156 days, CCC 197 days indicate prolonged working capital, and OCF/EBITDA remains at 0.49x. Continued increases in trade receivables ¥33.8B and inventories ¥38.1B would weaken OCF generation and constrain financial flexibility. If collection and inventory management do not improve, additional working capital financing may be required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.4% | 7.8% (4.6%–12.3%) | +0.6pt |
| Net Margin | 3.5% | 5.2% (2.3%–8.2%) | -1.7pt |
Operating margin exceeds the manufacturing median, indicating sound profitability, but net margin is below median due to special losses such as disaster-related charges.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.9% | 3.7% (-0.4%–9.3%) | +1.2pt |
Revenue growth outpaces the median, driven by recovery in semiconductor materials demand.
※ Source: Company compilation
Concentration in the Precision Chemicals Business (89.5% of Operating Income) and dependence on major customers (Samsung & Kioxia together 40.9% of Revenue) imply that while a cyclical recovery in semiconductors can deliver high profit growth, market downturns can cause significant earnings volatility. The operating margin of 8.4% (prior year 6.9%, +1.5pt) reflects product mix and utilization improvements, but SG&A growth has outpaced Revenue growth, so the sustainability of operating leverage should be monitored next fiscal year.
Foreign exchange gains of ¥12.9B (23.5% of Operating Income) materially boosted ordinary-stage profit, but currency appreciation could reverse these gains and hurt ordinary margins. Special losses of ¥11.6B (including disaster losses of ¥10.3B) are one-off, but preparedness for operational interruption risk is important. Comprehensive income of ¥77.8B (2.05x Net Income ¥37.9B) was heavily influenced by valuation gains on investment securities of ¥28.2B, indicating that equity market fluctuations materially affect net assets.
Worsening working capital efficiency (DSO98 days, DIO156 days, CCC197 days) keeps OCF/EBITDA low at 0.49x and results in negative FCF of ¥-19.4B. Achieving the next fiscal year’s aggressive guidance (Operating Income +82.5%) depends on improvement in receivables collection and inventory reduction; recovery in cash generation is a prerequisite for investment capacity and dividend continuity. Financials remain sound (D/E 0.77x, Debt/EBITDA 2.02x, current ratio 232%), and maintaining cash of ¥202.2B provides liquidity resilience.
This report was 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 are your responsibility; consult professional advisors as necessary.