| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3842.5B | ¥4002.5B | -4.0% |
| Operating Income | ¥262.2B | ¥144.1B | +82.0% |
| Ordinary Income | ¥192.9B | ¥76.2B | +153.1% |
| Net Income | ¥35.5B | ¥-111.1B | +131.9% |
| ROE | 1.0% | -3.6% | - |
For the fiscal year ended March 2026, Revenue was ¥3,842B (YoY -¥160B, -4.0%), a decrease, while Operating Income improved to ¥262B (YoY +¥118B, +82.0%), Ordinary Income to ¥193B (YoY +¥117B, +153.1%), and Net Income turned sharply positive to ¥156B (from -¥123B prior year). Gross margin improved to 24.5% (up +3.4pt from 21.1% prior year), and Operating Margin rose to 6.8% (up +3.2pt from 3.6%). By segment, Electronic & Advanced Products recorded Operating Income of ¥139B (margin 13.3%), accounting for the majority of company profits, and Polymer Solutions expanded profit to ¥36B (up +210%). Conversely, Elastomer & Infrastructure remained low-margin with Operating Income of ¥0.7B (margin 0.1%), and Life Innovation saw a decline in profit to ¥62B (down -34.9%). In non-recurring items, gains included Investment Securities Disposal Gains of ¥126B, Property Disposal Gains of ¥82B, and Negative Goodwill of ¥65B, while Impairment Losses of ¥161B and Business Liquidation Losses of ¥21B were recorded; these one-off items materially affected Net Income.
[Revenue] Revenue was ¥3,842B (-4.0%), impacted by market adjustments. By segment, Electronic & Advanced Products led growth with ¥1,044B (+13.3%), supported by recovery in semiconductor and electronic materials demand. Polymer Solutions declined to ¥1,242B (-8.3%), Elastomer & Infrastructure to ¥979B (-12.4%), and Life Innovation to ¥405B (-6.3%), with petrochemical-related segments driving the revenue decline. By region, domestic sales were ¥2,143B (sales mix 55.8%), slightly down, and overseas sales were ¥1,699B (mix 44.2%), with Asia accounting for ¥1,060B (27.6%).
[Profitability] Cost of sales ratio improved to 75.5% (down -3.4pt from 78.9%), yielding Gross Profit of ¥943B (Gross Margin 24.5%). SG&A was ¥680B (SG&A ratio 17.7%, up +0.2pt from 17.5%), roughly flat, resulting in Operating Income of ¥262B (Operating Margin 6.8%), a significant increase from ¥144B prior year. Non-operating items included Equity Method Income of ¥17B and Dividend Income of ¥13B, while Interest Expense was ¥21B and Other Non-operating Expenses ¥42B (including foreign exchange losses of ¥6B), which pressured Ordinary Income to ¥193B. Extraordinary items comprised Special Gains of ¥281B (Investment Securities Disposal Gains ¥126B, Property Disposal Gains ¥82B, Negative Goodwill ¥65B related to the consolidation of Toyo Styrene) and Special Losses of ¥260B (including Impairment Losses ¥161B and Business Liquidation Losses ¥21B), leading to Profit Before Tax of ¥214B. After deducting Income Taxes of ¥101B (effective tax rate 47.3%) and accounting for non-controlling interests, Net Income Attributable to Owners of the Parent was ¥157B (turning positive from -¥123B prior year), representing a shift from prior-year loss to current-year profit despite lower revenue.
Electronic & Advanced Products: Revenue ¥1,044B (+13.3%), Operating Income ¥139B (+51.5%, margin 13.3%), becoming the primary earnings driver accounting for approximately 53% of company profit. Recovery in semiconductor and electronic materials demand and a product mix shift to higher-value products contributed, improving segment margin by +3.4pt from 9.9% prior year.
Polymer Solutions: Revenue ¥1,242B (-8.3%), but Operating Income expanded to ¥36B (+209.7%, margin 2.9%) as market conditions improved and price corrections took effect.
Elastomer & Infrastructure: Revenue ¥979B (-12.4%), Operating Income ¥0.7B (margin 0.1%), continuing low profitability amid adverse market and cost conditions.
Life Innovation: Revenue ¥405B (-6.3%), Operating Income ¥62B (-34.9%, margin 15.4%), with margin pressure from product mix and increased R&D expenditure.
Other Businesses: Revenue ¥215B (-0.5%), Operating Income ¥24B (+1.3%, margin 11.3%), showing stable performance.
[Profitability] ROE was 1.0% (improved from -4.1% prior year) but remains low, primarily due to a low Net Income Margin of 0.9%. Operating Margin improved to 6.8% (up +3.2pt from 3.6%) driven by gross margin improvement and higher profitability in Electronic & Advanced Products, but special items and a high tax burden (effective tax rate 47.3%) depressed Net Income Margin.
[Cash Quality] Operating Cash Flow / Net Income ratio was 230%, indicating strong cash backing of profits, but OCF/EBITDA was 0.65x, low and suggestive of working capital build-up. The accrual ratio was -3.0%, at a healthy level, but there is room to further improve cash conversion.
[Investment Efficiency] Total Asset Turnover was 0.56x (down from 0.61x), reflecting lower sales and asset accumulation. Capital expenditure was ¥672B, 2.3x depreciation of ¥292B, and Construction in Progress was ¥790B (23% of tangible fixed assets), indicating large ongoing investments.
[Financial Soundness] Equity Ratio improved to 49.8% (up +2.8pt from 47.0%), and Debt/Equity ratio remained stable at 49.0%. Current Ratio was 140.5% and Quick Ratio 94.8%; liquidity is secured in the short term despite relatively high inventory. Interest Coverage (EBITDA / Interest Expense) was 26.3x, and (Operating Income / Interest Expense) was 12.5x, indicating ample capacity to service interest.
Operating Cash Flow was ¥362B (YoY +94.2%), a large increase, calculated from Operating Cash Flow subtotal of ¥389B and working capital changes of -¥27B (inventory decrease +¥141B, trade receivables decrease +¥25B, trade payables decrease -¥109B). After paying corporate taxes of ¥27B, final Operating Cash Flow reached approximately 2.3x Net Income of ¥157B, demonstrating strong cash realization of profits. Investing Cash Flow was -¥450B (prior year -¥596B), driven mainly by Capital Expenditure of -¥672B (2.3x depreciation of ¥292B), reflecting a phase of growth investment. Other investing items included proceeds from sale of investment securities ¥136B, payments for acquisition of subsidiary shares -¥32B, and proceeds from disposal of fixed assets ¥113B. Financing Cash Flow was +¥76B (prior year +¥401B); long-term borrowings of ¥436B financed a net reduction in short-term borrowings of -¥360B and bond redemptions of -¥150B, and dividends paid totaled -¥86B. Free Cash Flow (Operating CF + Investing CF) was -¥89B, negative due to large-scale capex considered a temporary outflow tied to growth investment. Cash and Cash Equivalents at period-end were ¥353B (down ¥17B from ¥370B at the beginning of the period).
Ordinary Income of ¥193B was primarily composed of Operating Income ¥262B, plus Non-operating Income ¥46B (including Dividend Income ¥13B, Equity Method Income ¥17B, and foreign exchange gains ¥5B) less Non-operating Expenses ¥115B (including Interest Expense ¥21B and other non-operating expenses ¥42B). Special Gains totaled ¥281B (Investment Securities Disposal Gains ¥126B, Property Disposal Gains ¥82B, Negative Goodwill ¥65B) and Special Losses totaled ¥260B (Impairment Losses ¥161B, Business Liquidation Losses ¥21B), which materially affected Net Income, demonstrating a high proportion of one-time items. Profit Before Tax was ¥214B, from which Income Taxes of ¥101B (effective tax rate 47.3%) were deducted to arrive at Net Income Attributable to Owners of the Parent of ¥157B (turning positive from -¥123B prior year). Comprehensive Income was ¥191B, comprising Net Income ¥157B plus Other Comprehensive Income ¥79B (foreign currency translation adjustments ¥12B, valuation differences on available-for-sale securities ¥14B, adjustments related to retirement benefits ¥35B, deferred hedge gains/losses ¥5B, and OCI attributable to equity-method affiliates ¥12B), resulting in a difference of approximately ¥34B between comprehensive income and net income. Operating Cash Flow of ¥362B, 2.3x Net Income, indicates strong cash generation, but OCF/EBITDA ratio of 0.65x highlights scope for improving working capital efficiency.
For FY2027 (year ending March 2027), management projects Revenue ¥4,500B (YoY +17.1%), Operating Income ¥300B (YoY +14.4%), Ordinary Income ¥200B (YoY +3.7%), Net Income Attributable to Owners of the Parent ¥160B (YoY +1.9%), and EPS ¥185.67. This implies an incremental Operating Income of ¥38B versus current results, assuming sustained recovery in demand for Electronic & Advanced Products, spread improvements for Polymer Solutions, and earnings recovery in Elastomer & Infrastructure. The gradual realization of returns from large-scale capital expenditure (Construction in Progress ¥790B, CIP ratio 23%) could enable achievement, but improving working capital efficiency and cash conversion (raising OCF/EBITDA) will be key to sustaining growth.
Total annual dividend was ¥100 (interim ¥50, year-end ¥50), representing a Payout Ratio of 54.9%, a sustainable level. Prior year dividend was also ¥100 (interim ¥50, year-end ¥50), unchanged. Share buybacks were minimal at ¥0.1B, so Total Return Ratio is effectively at the same level as the Payout Ratio. Free Cash Flow was negative -¥89B, so dividend coverage by FCF was -1.0x; dividends were funded from Operating Cash Flow but internal cash generation was insufficient. If capex remains a priority next fiscal year, total returns are likely to remain dividend-focused with limited scope for share repurchases.
Low-margin segment profitability risk: Elastomer & Infrastructure Solutions generated Operating Income of ¥0.7B (margin 0.1%), contributing very little relative to revenue of ¥979B. Volatility in market conditions or raw material prices could further compress profitability; delays in structural reform or business reorganization could hamper overall company margins.
Working capital efficiency deterioration risk: Inventory ¥847B (22.0% of Revenue) and Trade Receivables ¥883B (23.0% of Revenue) indicate a large working capital base and low OCF/EBITDA of 0.65x. Continued inventory build-up or prolonged receivables collection could reduce cash generation and make it difficult to balance large investment programs.
Financial leverage and liquidity risk: Interest-bearing debt totaled ¥1,876B (Long-term borrowings ¥1,248B, up 56% YoY; Short-term borrowings ¥518B; Bonds ¥110B), with Debt/EBITDA of 3.19x, a relatively high level. Quick Ratio of 94.8% leaves limited short-term liquidity buffer; rising interest rates or tightening financing conditions could strain funding.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.8% | 7.8% (4.6%–12.3%) | -0.9pt |
| Net Income Margin | 0.9% | 5.2% (2.3%–8.2%) | -4.3pt |
Operating Margin is 0.9pt below the industry median, and Net Income Margin is 4.3pt below median. The impact of special items and high tax burden depress Net Income Margin, positioning the company in the lower ranks within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -4.0% | 3.7% (-0.4%–9.3%) | -7.7pt |
Revenue growth lags the industry median by 7.7pt, reflecting a revenue contraction phase primarily due to petrochemical segment market adjustments, although margin improvement was achieved through higher profitability in Electronic & Advanced Products.
※Source: Company compilation
A qualitative shift in the business portfolio is underway. Electronic & Advanced Products delivered Operating Income of ¥139B (margin 13.3%), accounting for roughly half of company profit, and a shift toward higher-value products has driven profitability improvement. Conversely, Elastomer & Infrastructure remains extremely low-margin at 0.1%, highlighting a polarization of profitability within the portfolio. Progress in restructuring low-margin segments will be key to improving overall company margins.
Large-scale capital expenditure is front-loaded, with Construction in Progress ¥790B (23% of tangible fixed assets) and Capital Expenditure ¥672B (2.3x depreciation), indicating significant growth investment. Achieving the next fiscal year’s Revenue target of +17.1% depends on the operational contribution of these investments and sustained recovery in Electronic & Advanced Products demand. Meanwhile, an OCF/EBITDA ratio of 0.65x underscores the need to improve working capital efficiency (inventory and receivables compression) to enhance cash generation.
Volatility in special items warrants caution due to high variability in Net Income. This fiscal year included Investment Securities Disposal Gains ¥126B, Property Disposal Gains ¥82B, and Negative Goodwill ¥65B, while Impairment Losses ¥161B and Business Liquidation Losses ¥21B were recorded. The divergence between Ordinary Income ¥193B and Net Income ¥157B is largely attributable to one-off items; going forward, normalized Net Income should be assessed roughly as Operating Income × (1 - Effective Tax Rate).
This report is an earnings analysis document automatically generated by AI from 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 publicly disclosed financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.