NIPPON SANSO HOLDINGS CORPORATION FY2026 FY Earnings Report

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Executive Summary

For the fiscal year ended March 2026, the company achieved revenue of ¥13,596 B (¥13,596.1億) (YoY +¥516 B, +3.9%), Operating Income of ¥1,979 B (¥1,978.8億) (YoY +¥320 B, +19.3%), Ordinary Income of ¥1,688 B, and Net Income attributable to owners of the parent of ¥1,239 B (YoY +¥252 B, +25.4%), recording both top-line and bottom-line growth. Revenue was driven by Europe (+6.8%) and Asia & Oceania (+18.1%), while Operating Income rose substantially due to gross margin improvement (42.8%, +1.1pt from 41.7%) and containment of selling and administrative expenses (Other operating expenses sharply decreased from ¥366億 to ¥106億). Comprehensive income expanded to ¥2,668 B (YoY +197%), aided by foreign currency translation gains of +¥1,281億, significantly increasing equity. Operating Cash Flow was ¥2,726 B (2.1x Net Income), demonstrating strong cash generation, and Free Cash Flow was ¥698 B.

業績変動要因

【売上高】Revenue increased to ¥13,596 B (YoY +3.9%). By segment, Europe recorded ¥3,510 B (+6.8%), Asia & Oceania ¥2,085 B (+18.1%) achieving double-digit growth, and Thermos ¥333 B (+2.1%) a slight increase. Japan declined slightly to ¥4,063 B (-0.9%), and the U.S. was essentially flat at ¥3,606 B (+0.1%). Regional composition was Japan 29.9%, U.S. 26.5%, Europe 25.8%, Asia & Oceania 15.3%, Thermos 2.4%, raising the share of high-growth regions. External factors: stabilization of energy and raw material prices and progress in price pass-through supported top-line expansion, while U.S. demand softening and domestic market stagnation constrained growth rates.

【損益】Cost of sales increased to ¥7,772 B (prior year ¥7,626 B) but grew less than revenue, resulting in Gross Profit of ¥5,824 B (Gross Margin 42.8%) improved from ¥5,454 B (41.7%). SG&A was ¥3,853 B (SG&A ratio 28.3%) up from ¥3,593 B (27.5%), +7.2% reflecting higher personnel and growth investment costs. Other operating income was ¥69億 versus Other operating expenses ¥106億 (sharp decline from ¥367億 prior year). Equity-method investment gains were ¥46億, leading to Operating Income of ¥1,979 B (Operating margin 14.6%) up from ¥1,659 B (12.7%) a +19.3% increase. Financial income was ¥28億 against Financial expenses ¥239億 (mainly interest expense ¥229億), yielding Profit Before Tax of ¥1,768 B, with income taxes of ¥489億 (effective tax rate 27.7%) resulting in Profit for the Period of ¥1,279 B. Net Income attributable to owners of the parent was ¥1,239 B (prior ¥988 B, +25.4%), including Non-controlling interests of ¥40億. One-off items included impairment losses ¥4億, brand restructuring costs ¥8億, special retirement payments ¥18億, and provisions for business disposal losses ¥15億; however, recurring income comprised the majority of profit, indicating high earnings quality. In conclusion, the company achieved revenue and profit growth with notable margin improvements.

セグメント別分析

The Europe segment was the largest profit contributor with Operating Income of ¥704億 (margin 20.1%), Sales ¥3,510 B (YoY +6.8%), Operating Income up +12.8% from ¥625億 prior year. Japan segment sales were ¥4,063 B (-0.9%) with Operating Income ¥542億 (margin 13.3%) up +15.1% from ¥471億 driven by cost efficiency. U.S. segment sales were ¥3,606 B (+0.1%) essentially flat, with Operating Income ¥529億 (margin 14.7%) down -11.5% from ¥598億 due to worsening demand and higher costs. Asia & Oceania recorded high growth with Sales ¥2,085 B (+18.1%) and Operating Income ¥197億 (margin 9.5%) up +31.2% from ¥151億, benefiting from expansion in emerging markets. Thermos segment Sales were ¥333億 (+2.1%), Operating Income ¥65億 (margin 19.6%) functioning as a stable, high-margin business, up +3.6% YoY. Overall, Europe and Asia & Oceania’s high growth and profit increases drove consolidated performance, offsetting U.S. profit decline and Japan’s sales dip.

主要財務指標

【収益性】ROE improved to 11.3% (prior year 10.4%, +0.9pt), with DuPont decomposition indicating Net Profit Margin improvement to 9.1% (prior 7.6%, +1.5pt) as the primary driver. Operating margin rose significantly to 14.6% (prior 12.7%, +1.9pt) aided by Gross Margin improvement to 42.8% (prior 41.7%, +1.1pt) and reduced other operating expenses. Conversely, SG&A ratio increased to 28.3% (prior 27.5%, +0.8pt) reflecting persistent personnel, IT, and growth investments. Total asset turnover declined to 0.49x (prior 0.54x) as asset base expanded (notably tangible fixed assets +¥1,143億, goodwill +¥1,097億), reducing efficiency. 【キャッシュ品質】Operating Cash Flow / Net Income was 2.13x, indicating high cash quality and strong conversion of earnings to cash. Accrual ratio was -5.1% (negative), signaling high earnings quality. However, OCF/EBITDA was 0.84x below the benchmark (0.9x), driven by an increase in Accounts Receivable (from ¥2,631億 to ¥2,930億, +¥299億) and DSO worsening to 79 days (from 74 days, +5 days). 【投資効率】Capex / Depreciation was 0.86x indicating restrained capex, but the company completed a large M&A (subsidiary acquisition ¥985億) during the period, accelerating external growth. Invested Capital Return (ROIC) is estimated at approx. 7.2%, exceeding the cost of capital. 【財務健全性】Equity Ratio improved to 44.0% (prior 40.5%, +3.5pt), Current Ratio was 1.24x, and D/E ratio 1.20x, indicating healthy levels. Interest Coverage (EBIT / Interest Expense) was 8.6x, showing adequate interest-paying capacity. Debt / EBITDA (estimated) was 2.7x, within investment-grade range. Goodwill / Net Assets ratio is high at 54.3%, requiring monitoring for future impairment risk.

キャッシュフロー分析

Operating Cash Flow increased to ¥2,726 B (prior ¥2,351 B, +15.9%). Starting from Profit Before Tax ¥1,768 B plus depreciation ¥1,269 B subtotaling ¥3,330 B, the structure subtracts corporate tax paid ¥406億, interest paid ¥232億, and lease payments ¥162億. In working capital, Accounts Receivable increased by ¥87億 (indicating collection delays), Inventories decreased by ¥5億, and Accounts Payable increased by ¥3億 — modest movements — while other working capital improved by ¥214億, yielding a net positive contribution. Investing Cash Flow widened to -¥2,028 B (prior -¥1,429 B), including capital expenditure ¥1,092 B and subsidiary acquisition ¥985 B. Proceeds from sale of tangible fixed assets ¥43億 and proceeds from sale of investments ¥132億 partially offset this. Financing Cash Flow was -¥592億 (prior -¥733億), with short-term borrowings repaid ¥138億 and long-term borrowings repaid ¥753億, offset by new long-term borrowings ¥469億 and bond issuance ¥297億; dividends paid ¥242億 and lease liability repayments ¥162億 were executed. Free Cash Flow was ¥698億 (Operating CF + Investing CF), covering dividends ¥242億 by 2.9x. Cash and cash equivalents increased by ¥206億 from ¥1,445億 to ¥1,653億, with foreign exchange translation effects contributing +¥101億. OCF/EBITDA at 0.84x remains below benchmark (0.9x), indicating room to improve working capital efficiency, while Operating CF / Net Income at 2.13x confirms strong cash conversion and sustained capital allocation capacity.

収益の質

Of Profit for the Period ¥1,279 B, Net Income attributable to owners of the parent ¥1,239 B is the core, with Non-controlling interests ¥40億. One-off items totaled around ¥45億 (brand restructuring ¥8億, special retirement payments ¥18億, provisions for business disposal losses ¥15億, impairment losses ¥4億), which is just over 2% of Operating Income ¥1,979億, so recurring earnings dominate. Other operating income ¥69億 versus Other operating expenses ¥106億 shows a substantial reduction from prior Other operating expenses ¥367億, indicating fewer one-off losses from business exits or downsizing. Financial income ¥28億 is minor at 0.2% of revenue, comprising dividends received ¥16億 and interest received ¥18億, indicating low reliance on non-operating income. Operating CF ¥2,726億 is 2.13x Net Income and accrual ratio -5.1% (negative), supporting high earnings quality. However, OCF/EBITDA at 0.84x below benchmark and increasing accounts receivable (DSO 79 days, up 5 days) are dragging working capital efficiency, so strengthening credit control and collection processes is a priority. Comprehensive Income ¥2,668 B far exceeds Profit for the Period ¥1,279 B, with Other Comprehensive Income ¥1,389億 (mainly foreign currency translation differences from overseas operations +¥1,281億) boosting equity — though this is an unrealized valuation gain from FX and not cash. The divergence between Ordinary Income and Net Income is explainable by income taxes ¥489億 (effective tax rate 27.7%) and financial expenses ¥239億, with no abnormal tax items observed.

業績予想・ガイダンス

Full-year guidance projects Revenue ¥13,800 B, Operating Income ¥2,150 B (YoY +8.7%), Net Income ¥1,345 B (YoY +5.2%), EPS ¥302.64, and year-end dividend ¥33. Progress against full-year forecast based on current results is Revenue 98.5%, Operating Income 92.0%, Net Income 92.2%, indicating Operating Income is tracking slightly below the full-year pace. Company assumptions include maintained pricing policy, continued growth of high-margin businesses in Europe and Asia, and recovery in U.S. segment profitability. The plan assumes Operating Income growth (+8.7%) well exceeding revenue growth (+1.5%), implying continued margin improvement and expense control; realization depends on restraining SG&A growth and shifting toward higher value-added products and services.

株主還元

Annual dividend is ¥62 (Q2-end ¥29, year-end ¥33), with a Payout Ratio of 21.7% (Annual dividends ¥242億 / Net Income attributable to owners of the parent ¥1,239億), indicating ample room. Share buybacks were ¥9 million, negligible, implying a dividend-centric shareholder return policy. Total Return Ratio is approximately 22%, roughly in line with the payout ratio. With Free Cash Flow ¥698億 versus dividends ¥242億, FCF coverage is 2.9x, suggesting strong resilience to dividend cuts even in downturns. DOE (Dividends / Equity) is 2.0%, low and reflecting a stage of equity build-up. Next period dividend guidance is year-end ¥33 (payout ratio vs EPS forecast ¥302.64 of 10.9%), conservative; room for dividend increases depends on cash generation and leverage management. Given stable Operating CF and low payout ratio, gradual dividend growth over the medium term is likely.

リスク要因

1. High goodwill risk: Goodwill balance ¥6,850億 equals 54.3% of Net Assets ¥12,607億, up from ¥5,753億 (+¥1,097億, +19.1%) year-over-year. This increase reflects the large M&A (subsidiary acquisition ¥985億) and FX translation effects. There is a risk of impairment losses if operating conditions deteriorate. Continuous monitoring of impairment test assumptions (discount rates, growth rates, earnings plans) is necessary, and the U.S. segment’s profit decline (-11.5%) suggests some deterioration in business profitability.

2. Worsening working capital efficiency: Accounts Receivable increased to ¥2,930億 (from ¥2,631億, +11.4%), and DSO extended to 79 days (from 74 days, +5 days). OCF/EBITDA is 0.84x, below the benchmark (0.9x), and the rise in receivables reduced Operating CF by ¥87億. Loosening credit control or delays in collections could lengthen the cash conversion cycle, pressuring liquidity and profitability.

3. Increase in short-term interest-bearing debt and maturity risk: Bonds and borrowings (current) surged to ¥1,511億 (from ¥926億, +63.1%), likely reflecting short-terming of long-term borrowings due to maturities. With cash ¥1,653億 and robust Operating CF ¥2,726億, short-term liquidity risk is limited, but in a rising-rate environment refinancing costs would increase, and executing additional large M&A at Debt/EBITDA 2.7x would reduce available leverage headroom. Diversified maturity profile management and interest rate hedging strategies are important.

業種ベンチマーク（参考・当社調べ）

収益性・リターン

Profitability metrics substantially exceed industry medians, driven by high-margin European operations and margin improvement initiatives.

成長性・資本効率

Revenue growth is in line with industry median, with domestic market stagnation offset by growth in Europe and Asia.

※Source: Company compilation

決算上の注目ポイント

1. Structural improvements confirmed with Gross Margin 42.8% (YoY +1.1pt) and Operating Margin 14.6% (YoY +1.9pt). Price pass-through and cost efficiencies are lifting margins. SG&A ratio rose to 28.3% (YoY +0.8pt), but Operating Income growth +19.3% exceeded revenue growth +3.9%, demonstrating operating leverage. Next period guidance expects Operating Income growth +8.7%, indicating continued profit growth and a potential medium-term margin expansion trend.

2. Strong cash generation with Operating CF ¥2,726億 (2.1x Net Income) and Free CF ¥698億 enables both dividends ¥242億 (FCF coverage 2.9x) and M&A / capex. Low payout ratio 21.7% and improved Equity Ratio 44.0% enhance financial stability. However, DSO deterioration to 79 days (from 74 days) and OCF/EBITDA 0.84x highlight room to improve working capital; accelerating receivables collection will be key to improving cash quality next period.

3. By segment, Europe (Operating margin 20.1%) and Thermos (19.6%) operate as high-margin businesses, and Asia & Oceania drove growth (+18.1% sales, +31.2% operating income). Challenges remain with U.S. operating profit decline (-11.5%) and Japan sales decline (-0.9%), revealing regional profitability disparities. Goodwill / Net Assets at 54.3% and post-M&A integration risks require medium-term monitoring, but ROIC estimate 7.2% exceeding cost of capital suggests M&A strategy is currently value-accretive.

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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 securities. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as appropriate.

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