| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1381.5B | ¥1322.8B | +4.4% |
| Operating Income / Operating Profit | ¥148.1B | ¥150.0B | -1.2% |
| Ordinary Income | ¥196.7B | ¥199.4B | -1.3% |
| Net Income / Net Profit | ¥210.7B | ¥85.2B | +147.2% |
| ROE | 9.5% | 3.8% | - |
The fiscal results for the year ended March 2026 show Revenue ¥1,381.5B (YoY +¥58.7B +4.4%), Operating Income ¥148.1B (YoY -¥1.9B -1.2%), Ordinary Income ¥196.7B (YoY -¥2.7B -1.3%), and Net Income attributable to owners of the parent ¥210.7B (YoY +¥125.5B +147.2%). At the operating level, higher sales were offset by increased selling, general and administrative expenses (SG&A), resulting in a slight decrease in operating profit; however, Net Income rose substantially due to the recording of Special Gains ¥47.9B, mainly investment securities sale gains ¥42.4B. The Equipment (装置) Business delivered large revenue and profit growth (Revenue +15.0%, Profit +208.9%), driving consolidated performance, while the core Chemicals Business saw modest revenue growth with profit decline and the Processing Business also experienced modest revenue growth with profit decline. In sum, operating-stage results were revenue up / profit down, but special items converted this into revenue up / profit up at the bottom line.
[Revenue] Revenue was ¥1,381.5B (YoY +4.4%). By segment, Chemicals Business ¥601.5B (+2.0%) maintained stable growth; Equipment Business ¥283.9B (+15.0%) achieved large revenue growth driven by expanding demand; Processing Business ¥486.4B (+1.8%) remained steady; Others ¥31.1B (+9.4%). Growth in the Equipment Business led consolidated revenue, while Chemicals and Processing delivered low but resilient growth. Gross profit was ¥461.1B (gross margin 33.4%), up ¥22.0B YoY, but gross margin only slightly increased from 33.2% last year, reflecting the impact of raw material and energy costs.
[Profitability] Operating Income was ¥148.1B (-1.2%), with operating margin 10.7% (YoY -0.6pt). SG&A was ¥313.0B, up ¥23.9B YoY (+8.3%), significantly outpacing revenue growth (+4.4%). SG&A depreciation was ¥20.0B, up from ¥12.6B prior year (+58.7%), and company-wide costs expanded due to higher R&D and headquarters administrative expenses. Segment operating incomes were: Chemicals Business ¥93.6B (-9.4%, margin 15.6%), Equipment Business ¥21.2B (+208.9%, margin 7.5%), Processing Business ¥46.8B (-6.8%, margin 9.6%). The Equipment Business’s large improvement offset weaker profits in Chemicals and Processing. Ordinary Income was ¥196.7B (-1.3%), supported by non-operating income ¥56.9B (interest income ¥10.4B, dividend income ¥8.1B, equity-method investment income ¥14.5B, foreign exchange gains ¥2.7B, etc.), and net of non-operating expenses ¥8.3B contributing an uplift of ¥48.5B over Operating Income. Net special gains of ¥47.9B (mainly investment securities sale gains ¥42.4B) less special losses ¥15.1B (impairment losses ¥8.1B, loss on disposal of fixed assets ¥3.9B, etc.) yielded a net +¥32.8B, raising Profit Before Tax to ¥229.5B. After income taxes ¥86.6B (effective tax rate 37.7%) and non-controlling interests ¥13.5B, Net Income attributable to owners of the parent was ¥210.7B (+147.2%). One-off items (net special items +¥32.8B) accounted for roughly 15.6% of Net Income, so recurring earning power aligns with the slight decline in Operating Income. Conclusion: revenue up / operating profit down, but revenue up / net profit up due to significant one-off gains.
Chemicals Business: Revenue ¥601.5B (+2.0%), Operating Income ¥93.6B (-9.4%), margin 15.6%. High profitability maintained, but profit declined due to raw material price increases and higher SG&A. Equipment Business: Revenue ¥283.9B (+15.0%), Operating Income ¥21.2B (+208.9%), margin 7.5%. Recovery from prior low-margin projects and increased project volume led to significant revenue and profit growth. Processing Business: Revenue ¥486.4B (+1.8%), Operating Income ¥46.8B (-6.8%), margin 9.6%. An impairment loss ¥8.1B and restructuring expenses ¥0.9B pressured margins. Others: Revenue ¥31.1B (+9.4%), Operating loss ¥0.2B. Recovery in the Equipment Business supported consolidated profits, while Chemicals and Processing have room to strengthen cost management.
[Profitability] Operating margin 10.7% (down 0.6pt from 11.3% prior year), Net margin 15.3% (up 8.9pt from 6.4% prior year, largely due to special items), ROE 9.5% (calculated from equity ¥2,214.6B and Net Income ¥210.7B). Operating-stage profitability retreated modestly due to higher SG&A, but one-off gains substantially increased final-stage Net margin.
[Cash Quality] Operating Cash Flow (OCF) ¥254.0B equals 1.21x Net Income ¥210.7B. OCF/EBITDA (EBITDA = Operating Income ¥148.1B + Depreciation ¥72.2B = ¥220.3B) is 1.15x, indicating strong cash backing of earnings. From the operating subtotal ¥270.9B (adding back depreciation ¥72.2B to Pretax Income ¥229.5B, adjusting for equity-method income -¥14.5B, investment securities sale gains -¥42.4B, impairment losses ¥8.1B, etc.), working capital changes (trade receivables collection +¥32.7B, inventories decrease +¥1.8B, trade payables decrease -¥5.3B, etc.) produced ¥254.0B.
[Investment Efficiency] Total asset turnover 0.506x (Revenue ¥1,381.5B ÷ Total Assets ¥2,730.9B). Capital expenditures ¥117.8B (from cash flow disclosure), with depreciation ¥72.2B gives CapEx/Depreciation 1.63x, indicating continued active investment. Construction in progress ¥82.3B (up from ¥26.6B prior year +210%) shows an expanding investment pipeline.
[Financial Soundness] Equity ratio 81.1% (Net assets ¥2,214.6B ÷ Total Assets ¥2,730.9B), current ratio 348.8% (Current Assets ¥1,271.0B ÷ Current Liabilities ¥364.4B), quick ratio 338.0% — short-term liquidity is extremely strong. Interest-bearing debt is immaterial at short-term borrowings ¥2.0B + long-term borrowings ¥2.5B = ¥4.5B, and cash & deposits ¥727.6B yield a net cash position. Debt/EBITDA 0.02x, interest coverage 2,540x (operating CF subtotal ¥270.9B - corporate tax payments ¥41.4B + interest paid ¥0.1B ≒ operating CF + interest ≒ ¥254.1B ÷ interest ¥0.1B), indicating minimal debt burden.
Operating Cash Flow was ¥254.0B (YoY +111.5%), a substantial increase. From the operating subtotal ¥270.9B (Pretax Income ¥229.5B plus Depreciation ¥72.2B, less equity-method income -¥14.5B, less investment securities sale gains -¥42.4B, plus impairment losses ¥8.1B, etc.), working capital movements included decrease in trade receivables +¥32.7B (collection acceleration), inventories decrease +¥1.8B, trade payables decrease -¥5.3B, contract liabilities decrease -¥14.5B, and after corporate tax payments -¥41.4B, OCF generated ¥254.0B. Investing Cash Flow was an inflow of ¥6.2B, driven by time deposit withdrawals +¥207.2B, time deposit placements -¥131.1B, capital expenditures -¥117.8B, investment securities sales +¥53.4B, investment securities purchases -¥0.9B, intangible asset acquisitions -¥3.5B, etc. Free Cash Flow was ¥260.2B (OCF ¥254.0B + Investing CF ¥6.2B), ample. Financing Cash Flow was -¥258.6B: dividend payments -¥57.5B (to owners of the parent -¥56.1B, to non-controlling interests -¥73.1B), share buybacks -¥86.4B, changes in subsidiary ownership interests -¥41.0B, proceeds from non-controlling interests +¥2.5B, short-term borrowings repayments -¥2.0B, long-term borrowings repayments -¥2.5B, etc. Cash and cash equivalents increased by ¥17.5B from beginning-of-period ¥520.9B to end-of-period ¥538.5B (including foreign exchange effects +¥15.9B). Improved OCF and cash-in from investment securities sales sufficiently funded dividends, buybacks, and CapEx, further strengthening liquidity.
Recurring income is represented by Ordinary Income ¥196.7B, derived from Operating Income ¥148.1B plus net non-operating items ¥48.5B. Non-operating income totaled ¥56.9B (interest income ¥10.4B, dividend income ¥8.1B, equity-method investment income ¥14.5B, foreign exchange gains ¥2.7B, rental income from real estate ¥7.7B, etc.), equivalent to 4.1% of Revenue, indicating moderate repeatability from financial, equity-method, and real estate income. One-off items net to +¥32.8B (Special Gains ¥47.9B—mainly investment securities sale gains ¥42.4B and gain on sales of fixed assets ¥2.1B; Special Losses ¥15.1B—impairment losses ¥8.1B, loss on disposal of fixed assets ¥3.9B, restructuring costs ¥0.9B), representing about 15.6% of Net Income attributable to owners of the parent ¥210.7B, indicating risk of a negative reversal next fiscal year. The accrual ratio (Net Income - OCF)/Total Assets = (¥210.7B - ¥254.0B)/¥2,730.9B = -1.6%, showing cash generation surpasses profit and implying high earnings quality. Comprehensive income ¥232.9B vs Net Income ¥210.7B leaves a difference of ¥22.2B from foreign currency translation adjustments ¥19.7B, valuation difference on available-for-sale securities ¥43.5B, retirement benefit adjustments ¥23.0B, and equity-method investee OCI ¥3.8B; the valuation gains on securities are a significant contributor and suggest potential future realized gains. The uplift from Ordinary Income ¥196.7B to Net Income ¥210.7B reflects a mix of special items and corporate tax effects (effective tax rate 37.7%), indicating a combination of structurally high tax burden and contributions from one-off gains.
The company guidance forecasts Revenue ¥1,340.0B (YoY -3.0%), Operating Income ¥150.0B (+1.3%), Ordinary Income ¥190.0B (-3.4%), EPS ¥139.65. The plan anticipates lower revenue but higher operating income (on an operating basis), signaling a shift toward quality over quantity. Operating margin is expected to improve to 11.2% (+0.5pt), assuming continued margin recovery in the Equipment Business and strengthened cost management. The projected decline in Ordinary Income likely reflects normalization of last year’s equity-method income and foreign exchange gains. Dividend forecast is ¥25.00 per interim and ¥25.00 per year-end (annual ¥25.00? — company states annual ¥25.00? Note: company forecast shows annual 25.00 yen; prior year total 50 yen (interim 25 + year-end 25) — company indicates maintenance at prior-year level). Progress for the full year is undisclosed at the half-year stage, so quarterly trends should be monitored to assess full-year achievement.
Dividends are interim ¥25.00 and year-end ¥25.00, annual ¥50.00. Payout ratio 44.6% (annual dividend ¥50 × shares outstanding 108,253 thousand shares = ¥5.41B ÷ Net Income attributable to owners of the parent ¥210.7B × adjusted shares after treasury ≒ EPS ¥117.16) is within a sustainable range. Free Cash Flow ¥260.2B vs dividends to owners of the parent ¥56.1B yields FCF coverage 4.6x, indicating ample capacity. Share repurchases of ¥86.4B were executed, and total shareholder return (dividends ¥56.1B + repurchases ¥86.4B = ¥142.5B) represents 54.8% of FCF, demonstrating an active return policy. Treasury stock at period-end ¥245.7B (up from ¥159.5B prior year +54.1%) reduced floating shares to 108,254 thousand (issued 132,605 thousand - treasury 24,351 thousand), aiming to improve capital efficiency. Note: The Board resolved share repurchases on May 14, 2026, suggesting potential continuity. Dividend policy emphasizes stable dividends combined with flexible share repurchases.
Demand volatility and margin risk in the Equipment Business: The Equipment Business (Revenue ¥283.9B, 20.5% of revenue) achieved a large YoY improvement in operating income (+208.9%), but order timing, delivery schedules, and margin variability on large projects directly affect profitability. Disclosure on backlog and contract liabilities is limited; monitor order trends and risks of construction delays or cost overruns. The large increase in construction in progress ¥82.3B highlights the importance of schedule control.
Progress risk in Processing Business structural reform: The Processing Business reported Revenue ¥486.4B and Operating Income ¥46.8B (-6.8%), with impairment losses ¥8.1B and restructuring costs ¥0.9B recorded. If fixed-cost absorption lags or demand weakness persists, further impairments or exit costs could materialize. A margin of 9.6% is substantially below the Chemicals Business 15.6%, raising questions on the path to improved profitability.
Risk of prolonged trade receivables collection: Trade receivables ¥415.8B (down from ¥445.3B prior year) imply DSO of approximately 110 days (based on Revenue ¥1,381.5B), which is long. If customer payment delays or credit deterioration occur, provisions for doubtful accounts or unrecoverable receivables may impact OCF and profits.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.7% | 7.8% (4.6%–12.3%) | +3.0pt |
| Net Margin | 15.3% | 5.2% (2.3%–8.2%) | +10.1pt |
Profitability substantially exceeds industry medians, with Operating Margin +3.0pt and Net Margin +10.1pt. Note the contribution of one-off items to Net Margin.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.4% | 3.7% (-0.4%–9.3%) | +0.7pt |
Revenue growth slightly exceeds the median, driven by strong Equipment Business performance.
※Source: Company compilation
Robust OCF and financial solidity: OCF ¥254.0B, Free Cash Flow ¥260.2B, cash & deposits ¥727.6B, equity ratio 81.1% — the company maintains a very strong financial position. It can simultaneously execute dividends, share repurchases, and CapEx, leaving significant room for growth investments, M&A, and increased shareholder returns.
Distinguishing one-off gains from recurring earning power: Net Income ¥210.7B includes net special items +¥32.8B (≈15.6%), presenting a one-off risk for next year. Operating Income ¥148.1B (-1.2%) and Ordinary Income ¥196.7B (-1.3%) represent the core earning power. The next-year forecast targets Operating Income ¥150.0B (+1.3%), but managing SG&A and sustaining Equipment Business margins will be critical. Monitor progress on SG&A ratio management and segment margin improvements to evaluate durable profit growth.
Sustainability of Equipment Business recovery and Processing Business restructuring: The Equipment Business operating income +208.9% is the primary driver of performance improvement, but order and delivery timing risk warrants quarterly monitoring of margins. Processing Business remains lower margin (9.6% vs Chemicals 15.6%) even after recording impairment ¥8.1B; effectiveness of restructuring and fixed-cost reductions will be key. The build-up of construction in progress ¥82.3B indicates a thickening investment pipeline but also necessitates monitoring of schedules and impairment risk.
This report is an analysis document automatically generated by AI based on XBRL financial statement filings. 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 the responsibility of the investor; please consult professionals as needed.