| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥499.1B | ¥487.3B | +2.4% |
| Operating Income / Operating Profit | ¥41.0B | ¥34.9B | +17.2% |
| Ordinary Income | ¥45.8B | ¥37.6B | +21.9% |
| Net Income / Net Profit | ¥14.7B | ¥18.4B | -20.2% |
| ROE | 3.6% | 4.9% | - |
For the year ended March 2026, Revenue was ¥499.1B (YoY +¥11.8B +2.4%), Operating Income was ¥41.0B (YoY +¥6.0B +17.2%), Ordinary Income was ¥45.8B (YoY +¥8.2B +21.9%), and Net Income was ¥14.7B (YoY -¥3.7B -20.2%). While a trend of higher sales and profits was maintained, extraordinary losses of ¥6.1B including impairment losses of ¥5.7B pressured Net Income. Operating margin improved to 8.2% (YoY +1.0pt), and gross margin rose to 33.1% (YoY +1.1pt), indicating notable profitability improvement. By segment, the core Film & Sheet products led with Operating Income of ¥29.4B (+14.7%), and Electronic & Functional Products also saw substantial margin improvement with a profit rate of 8.8% (+58.0%). Conversely, Building Materials remained low-margin at 1.3%, and Engineering, despite higher revenue, saw profits decline -46.2%, showing mixed results. Operating Cash Flow (OCF) was ¥55.7B (YoY +35.6%), with Free Cash Flow at ¥42.5B. Financial soundness is strong with an Equity Ratio of 65.2% and a net cash position, but working capital efficiency (CCC 147 days) and low capital expenditure (CapEx/Depreciation 0.51x) leave room for improvement.
Revenue: Revenue of ¥499.1B was a modest increase of +2.4% YoY. By segment, Film & Sheet products were largest at ¥223.9B (composition 44.9%, YoY +6.9%), supported by firm demand and price revisions. Electronic & Functional Products were ¥168.4B (33.7%, YoY -3.3%) with lower sales but ongoing shift to higher-margin products. Building Materials was ¥71.1B (14.2%, YoY +1.5%) roughly flat, while Engineering was ¥40.4B (8.1%, YoY +12.3%) showing double-digit growth due to higher orders. Non-operating factors included foreign exchange gains of ¥2.3B and interest income of ¥2.3B, supplementing revenue drivers.
Profitability: Cost of goods sold was ¥333.8B, yielding a gross margin of 33.1% (YoY +1.1pt) due to raw material cost control and improved product mix. SG&A was ¥124.4B (24.9% of sales, YoY +0.2pt) largely contained, demonstrating cost discipline. Operating Income of ¥41.0B (Operating margin 8.2%, YoY +1.0pt) represented a 17.2% increase. From non-operating income of ¥7.5B less non-operating expenses of ¥2.6B, Ordinary Income reached ¥45.8B (YoY +21.9%). Extraordinary losses of ¥6.1B (impairment losses ¥5.7B, loss on disposal of fixed assets ¥0.4B) weighed on Net Income. After taxes of ¥10.1B and non-controlling interests of ¥3.6B, Net Income was ¥14.7B (YoY -20.2%). Excluding one-time items, the operating and ordinary profit increases are clear; in conclusion, the company posted higher sales and operating profits but recorded lower net profit due to extraordinary losses.
Film & Sheet products generated Operating Income of ¥29.4B (margin 13.2%), accounting for roughly 72% of consolidated operating profit and serving as the largest earnings source. Profit rose YoY +14.7% supported by demand expansion and price revisions. Electronic & Functional Products achieved Operating Income of ¥14.8B (margin 8.8%), a substantial YoY improvement of +58.0%. Although sales fell 3.3%, a shift to high-value-added products and efficiency gains significantly raised margins, improving earnings quality. Building Materials posted Operating Income of ¥0.9B (margin 1.3%), remaining low-margin; while revenue and profit increased, absolute amounts are small and margin improvement is an issue. Engineering grew revenue +12.3% but Operating Income was ¥2.3B (YoY -46.2%), a large decline; margin of 5.8% is the lowest among segments, highlighting structural issues where order growth is not converting into profit.
Profitability: Operating margin of 8.2% improved YoY +1.0pt. Gross margin 33.1% (YoY +1.1pt) and SG&A ratio 24.9% reflect a healthy earnings structure. ROE of 3.6% is low due to high Equity Ratio (65.2%) and profi tability constraints. ROA (on Ordinary Income basis) improved to 7.3% from 6.0% prior year.
Cash Quality: Operating Cash Flow / Net Income is 3.79x, indicating strong cash generation. Free Cash Flow (FCF) of ¥42.5B absorbed dividend payments of ¥7.5B and capital expenditures, leaving a large net positive. Depreciation was ¥18.6B versus CapEx ¥9.5B, with CapEx/Depreciation 0.51x, below maintenance/replacement level.
Investment Efficiency: Total asset turnover 0.80x, Days Sales Outstanding (DSO) 94 days, Inventory Days 110 days, and CCC 147 days indicate room to improve working capital efficiency.
Financial Soundness: Equity Ratio 65.2% (up +8.8pt from 56.4% prior year), net cash position (Cash ¥155.5B, Interest-bearing debt ¥68.5B) provides very high financial safety. Interest Coverage 33.3x and D/E ratio 0.17x are low. Current Ratio 321.6% and Quick Ratio 282.6% show robust liquidity.
Operating Cash Flow was ¥55.7B (YoY +35.6%). From operating cash subtotal of ¥65.9B, reductions in trade receivables of +¥13.3B contributed positively, while decreases in trade payables -¥8.7B and a slight inventory increase -¥0.6B detracted. Corporate tax payments -¥11.4B, interest & dividend received ¥2.4B, and interest paid -¥1.2B resulted in OCF of ¥55.7B. Investing Cash Flow was -¥13.1B, mainly capital expenditures of -¥9.5B. With depreciation ¥18.6B versus CapEx roughly half that level, growth-oriented investment was restrained. Financing Cash Flow was -¥37.0B, including net repayments of short-term borrowings -¥15.3B, repayments of long-term borrowings -¥23.3B, and dividend payments -¥7.5B, substantially reducing interest-bearing debt. Free Cash Flow was ¥42.5B (OCF ¥55.7B + Investing CF -¥13.1B), leaving a strong position and increasing surplus funds even after dividends. CCC 147 days (DSO 94 days, DIO 110 days, DPO 57 days) indicates considerable room for improvement; improving working capital would further enhance cash generation.
Core earnings are Operating Income ¥41.0B, indicating a solid recurring earnings base. Non-operating income ¥7.5B (1.5% of sales) is mainly foreign exchange gains ¥2.3B and interest income ¥2.3B, with no excessive reliance. Extraordinary losses ¥6.1B (impairment losses ¥5.7B, loss on disposal of fixed assets ¥0.4B) depressed Net Income, and one-off items account for approximately 41% of Net Income. The gap between Ordinary Income ¥45.8B and Net Income ¥14.7B is about 68%, primarily due to extraordinary losses ¥6.1B, tax burden ¥10.1B, and non-controlling interests ¥3.6B. OCF ¥55.7B is 3.79x Net Income ¥14.7B, showing very good cash backing. Comprehensive Income ¥38.6B results from Net Income ¥26.1B (including non-controlling interests) plus foreign currency translation adjustments ¥7.2B and retirement benefit adjustments ¥1.6B, with FX factors boosting comprehensive income. On an accrual basis (OCF vs Net Income), the company is substantially positive, indicating strong cash-based profitability. While the impairment loss signals a caution for asset returns, the operating profit increases in core segments and robust OCF support a high quality of recurring earnings.
Full-year forecast: Revenue ¥520.0B (YoY +4.2%), Operating Income ¥45.0B (YoY +9.9%), Ordinary Income ¥47.0B (YoY +2.5%), EPS 332.55円, Dividend ¥67 (Payout Ratio 20.1%). Management forecasts an increase in Operating Income of ¥4.0B from current Operating Income ¥41.0B, implying a slight rise in operating margin to about 8.7%. Revenue growth of +4.2% outpaces current year +2.4%, assuming continued revenue increases in the main Film & Sheet and Electronic & Functional Products segments. On the profit side, continuation of the current trend in margin improvement and correction of profitability in Building Materials and Engineering are key. If capital expenditure increases and working capital efficiency improves, results could beat the forecast. Conversely, recurrence of impairment or other one-time losses would be a downside risk.
Dividends for the period: interim dividend ¥41 and year-end dividend ¥51, totaling ¥92. Payout Ratio 33.7% is at a sustainable level. Free Cash Flow ¥42.5B vs dividend payments ¥7.5B yields FCF coverage of 5.7x, indicating ample room. Total dividend amount ¥7.5B represents about 51% of Net Income ¥14.7B, but the effective dividend source should be assessed on recurring earnings (Operating/Ordinary Income); relative to Operating Income ¥41.0B, the dividend is 18%, which is sustainable. With net cash position (Cash ¥155.5B - Interest-bearing debt ¥68.5B = ¥87B) and strong OCF, dividend continuity is very high. Full-year forecast dividend ¥67 is a cut from ¥92 this fiscal year, but at an implied payout ratio of 20.1% on forecast EPS 332.55円, it is conservative, preserving internal investment capacity while aiming for stable dividends. No share buyback was announced; shareholder returns are evaluated solely on dividends.
Structural issues in low-margin segments: Building Materials margin 1.3% and Engineering profit decline -46.2% pose structural risks to consolidated earnings. Building Materials generated ¥71.1B in sales with Operating Income ¥0.9B, indicating substantial room for margin improvement. Engineering shows inefficiencies where revenue growth is not translating to profit. If profitability in these segments does not improve, upside for consolidated operating margin will be limited.
Low working capital efficiency: CCC 147 days (DSO 94 days, DIO 110 days) is above industry averages, tying up approximately ¥13.5B in working capital (Receivables ¥128.4B + Inventory ¥100.1B - Payables ¥51.8B). Inventory days of 110 days have room to improve given product characteristics, and delayed receivables collection contributes to low capital efficiency, which in turn depresses ROE at 3.6%. Without improvements in working capital, cash generation and ROE improvement will be constrained.
Underinvestment in capital expenditures and risk to competitiveness: CapEx ¥9.5B is roughly half Depreciation ¥18.6B, with CapEx/Depreciation at 0.51x, well below maintenance/replacement levels. Insufficient CapEx raises concerns about preserving mid-to-long-term production capacity and technological competitiveness. Failure to invest appropriately could impair production efficiency and quality that support high margins in Film & Sheet and Electronic & Functional products, weakening the future earnings base.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.2% | 7.8% (4.6%–12.3%) | +0.5pt |
| Net Profit Margin | 2.9% | 5.2% (2.3%–8.2%) | -2.2pt |
Operating margin is +0.5pt above the industry median indicating good profitability, but Net Profit Margin is -2.2pt below median due to extraordinary losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.4% | 3.7% (-0.4%–9.3%) | -1.3pt |
Revenue growth is -1.3pt below industry median, showing somewhat modest top-line momentum.
※ Source: Company compilation
Sustainability of profitability improvement trend: Operating margin 8.2% (YoY +1.0pt) and gross margin 33.1% (YoY +1.1pt) indicate improving earnings structure. High margins in the core Film & Sheet segment (13.2%) and significant improvement in Electronic & Functional Products (Profit +58.0%) are lifting consolidated earnings, and continuation of this trend is key to achieving next fiscal year's Operating Income target of ¥45.0B. However, low margins in Building Materials and Engineering will continue to cap upside, so reallocation of resources among segments will be critical to future earnings expansion.
Financial soundness and investment capacity: Net cash ¥87B, Equity Ratio 65.2%, and OCF ¥55.7B show very healthy finances. However, CapEx ¥9.5B (CapEx/Depreciation 0.51x) is insufficient for mid-to-long-term competitiveness, suggesting a need for increased growth investment. If working capital efficiency (CCC 147 days) improves, the company could leverage retained earnings and cash generation for additional CapEx or expanded shareholder returns.
Transitory nature of extraordinary losses and normalization of Net Income: Net Income ¥14.7B was substantially depressed by impairment losses ¥5.7B included in extraordinary losses ¥6.1B, but Ordinary Income ¥45.8B grew YoY +21.9%. Assuming no recurrence of one-off losses next year, Net Income normalization (Full-year forecast ¥31B) is expected. Evaluated at the ordinary level, earnings quality is strong, and dividend continuity is supported by a payout ratio of 33.7% and solid FCF.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Investment decisions are your own responsibility; please consult a professional advisor as necessary.