| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥368.0B | ¥362.9B | +1.4% |
| Operating Income / Operating Profit | ¥46.4B | ¥43.4B | +7.1% |
| Ordinary Income | ¥44.2B | ¥41.6B | +6.3% |
| Net Income | ¥35.9B | ¥24.0B | +49.9% |
| ROE | 7.5% | 5.3% | - |
For the fiscal year ended March 2026, the company achieved revenue of ¥368.0B (YoY +¥5.1B, +1.4%), Operating Income of ¥46.4B (YoY +¥3.0B, +7.1%), Ordinary Income of ¥44.2B (YoY +¥2.6B, +6.3%), and Net income attributable to owners of the parent of ¥30.6B (YoY +¥6.6B, +27.4%), delivering both revenue and profit growth. The operating margin improved to 12.6% (YoY +0.6pt) and the gross margin rose to 23.3% (YoY +0.5pt), indicating better profitability. Net income increased significantly from ¥24.0B to ¥35.9B (+49.9%), supported by optimized tax burden and improved profitability on a net income basis. The core HighPurityChemical segment accounted for 86.4% of revenue and 77.4% of Operating Income, while the Transportation segment delivered high growth with Operating Income up 31.6%, contributing to company-wide margin improvement.
[Revenue] Revenue was ¥368.0B (YoY +1.4%), a modest increase. By segment, HighPurityChemical recorded ¥317.9B (YoY +0.7%), representing 86.4% of total, supported by stable demand from semiconductor and electronic materials. Transportation posted ¥86.8B (YoY +5.9%), high growth making up 23.6% of the total, driven by improved utilization and price improvements. Other segments were ¥3.9B (YoY +8.9%), small but growing. Cost of sales was contained at ¥282.2B (YoY +0.7%), improving gross margin to 23.3% (prior 22.8%) (+0.5pt). SG&A was ¥39.4B (YoY +0.5%), growing below revenue, improving SG&A ratio to 10.7% (prior 10.8%) (-0.1pt).
[Profitability] Operating Income was ¥46.4B (YoY +7.1%), with operating margin 12.6% (+0.6pt), reflecting efficiency-led profit growth. By segment, HighPurityChemical had Operating Income of ¥35.9B (YoY +1.3%), margin 11.3% (prior 11.3%) stable. Transportation delivered Operating Income of ¥10.4B (YoY +31.6%), margin improved to 12.0% (prior 9.8%) (+2.2pt), the main driver of company margin expansion. Non-operating items included interest income ¥0.9B and foreign exchange gains ¥1.0B, while equity-method losses ¥2.8B (prior ¥3.9B), interest expense ¥0.7B, and foreign exchange losses ¥0.6B pressured ordinary income; Ordinary Income rose to ¥44.2B (YoY +6.3%) but lagged operating income growth. Extraordinary items were minor at net -¥0.3B (Extraordinary gains ¥0.2B, Extraordinary losses ¥0.5B). Pre-tax profit was ¥44.0B; after corporate taxes of ¥13.5B (effective tax rate 30.7%) and loss attributable to non-controlling interests ¥0.1B, Net income attributable to owners of the parent amounted to ¥30.6B (YoY +27.4%). Note the reported Net Income increase of +49.9% was partly a rebound from the prior year’s compressed net income of ¥24.0B due to tax burden. In conclusion, the company achieved revenue and profit growth.
HighPurityChemical (Revenue ¥317.9B, Operating Income ¥35.9B, margin 11.3%) recorded revenue +0.7% and Operating Income +1.3%, maintaining stability. Firm demand from semiconductor and electronic materials supported this segment, which represented 86.4% of revenue and 77.4% of Operating Income, retaining its position as the core business. The Transportation segment (Revenue ¥86.8B, Operating Income ¥10.4B, margin 12.0%) achieved revenue +5.9% and Operating Income +31.6%, with margin up from 9.8% to 12.0% (+2.2pt) due to higher utilization and cost efficiencies. It accounted for 22.5% of consolidated Operating Income and contributed to margin diversification. Other segments (Revenue ¥3.9B, Operating Income ¥0.3B, margin 7.1%) cover insurance agency and auto maintenance businesses; despite small scale, they achieved revenue +8.9% and Operating Income +55.6%, serving as a stable income source with limited overall contribution.
[Profitability] Operating margin of 12.6% improved by +0.6pt YoY; gross margin 23.3% (+0.5pt); SG&A ratio 10.7% (-0.1pt), reflecting improved cost efficiency. ROE 7.5% remained at prior-year level. EBITDA was ¥75.3B (Operating Income ¥46.4B + Depreciation ¥28.9B), with an EBITDA margin of 20.5%, indicating strong cash generation. [Cash Quality] Operating Cash Flow (OCF) was ¥60.1B, 1.67x Net Income ¥35.9B, and OCF/EBITDA ratio 0.80x, remaining healthy despite working capital increases. Changes in working capital were -¥7.3B against an OCF subtotal of ¥71.2B (inventory -¥7.2B, trade receivables -¥1.6B, trade payables +¥1.6B). Free Cash Flow (FCF) was -¥21.5B, with capital expenditures ¥45.7B and acquisition of investment securities ¥36.0B reflecting aggressive investment. [Investment Efficiency] Capex/Depreciation ratio was 1.58x, accelerating investments for future growth. Working capital efficiency: DSO (days sales outstanding) 73 days, CCC (cash conversion cycle) 129 days, indicating substantial room for improvement. [Financial Soundness] Equity Ratio 74.9% (prior 73.7%), current ratio 318%, quick ratio 292% reflect very strong liquidity. Interest-bearing debt totaled ¥54.7B (short-term borrowings ¥16.0B, long-term borrowings including those due within one year ¥38.7B), with Debt/EBITDA 0.73x and interest coverage approximately 63x, indicating considerable financial capacity. Cash and deposits ¥148.2B were 1.63x short-term liabilities ¥90.8B, limiting maturity mismatch risk.
Operating Cash Flow (OCF) was ¥60.1B (YoY -15.5%). From an OCF subtotal of ¥71.2B, working capital change -¥7.3B (inventory increase -¥7.2B, trade receivables increase -¥1.6B as main drivers), interest and dividends received ¥6.4B, interest paid -¥0.8B, and corporate tax payments -¥16.7B resulted in generated cash. OCF equals 1.67x Net Income ¥35.9B, indicating high quality, but YoY decline was due to working capital increases and higher tax payments (from -¥4.2B prior to -¥16.7B). Investing Cash Flow was -¥81.6B, reflecting capital expenditures -¥45.7B (prior -¥41.6B) and acquisition of investment securities -¥36.0B (prior -¥1.5B), demonstrating aggressive investment stance. Financing Cash Flow was ¥1.5B, with proceeds from long-term borrowings ¥17.0B and disposal of treasury shares ¥20.6B exceeding long-term borrowings repayments -¥11.2B, dividends paid -¥20.3B, and short-term borrowings repayment -¥4.0B. FCF was -¥21.5B, indicating operating cash could not fully cover dividends and capex; acquisition of investment securities was financed via borrowings and disposal of treasury shares. Cash and deposits decreased from ¥166.4B at the beginning of the period to ¥148.2B at the end, a decline of -¥18.2B; including FX effects +¥1.5B, the effective decrease was -¥19.7B.
Earnings were primarily recurring; non-operating income was limited at ¥2.4B (0.7% of revenue). Key items: interest income ¥0.9B, foreign exchange gains ¥1.0B, subsidies ¥0.5B, equity-method losses -¥2.8B (improved from -¥3.9B prior). Extraordinary items were net -¥0.3B (extraordinary gains ¥0.2B, extraordinary losses ¥0.5B), less than 1% of Net Income and minor. Impairment losses were ¥1.9B; gain/loss on disposal of fixed assets ¥0.0B, indicating limited one-time factors. The gap between Ordinary Income ¥44.2B and Net Income ¥30.6B (-30.8%) was mainly due to tax burden of ¥13.5B (effective tax rate 30.7%), so structural earnings quality is good. The accrual ratio ((Net Income ¥35.9B - OCF ¥60.1B) / Total Assets ¥641.5B) = -3.8%, negative, indicating earnings are being converted to cash and reflecting high earnings quality. Comprehensive income was ¥29.9B, ¥0.7B below Net Income ¥30.6B, with Other Comprehensive Income of -¥0.6B (foreign currency translation adjustments +¥2.6B, valuation differences on available-for-sale securities -¥3.3B, equity-method OCI +¥0.1B) deducting from Net Income. Valuation differences on investment securities are temporary volatility drivers but increase capital volatility and warrant attention.
Against the full-year plan (Revenue ¥391.0B, Operating Income ¥48.0B, Ordinary Income ¥49.0B, Net income attributable to owners of the parent ¥34.0B, EPS ¥278.55, Dividend ¥90.00), actual results were Revenue ¥368.0B (achievement ratio 94.1%), Operating Income ¥46.4B (96.7%), Ordinary Income ¥44.2B (90.2%), Net income attributable to owners of the parent ¥30.6B (89.9%), EPS ¥258.45 (92.8%), Dividend ¥180 (200.0%). Operating performance was broadly on plan, while Ordinary Income and final results fell short due to equity-method losses and foreign exchange losses. Dividend included a commemorative dividend of ¥10, resulting in ¥180 and materially exceeding the plan of ¥90, reflecting strong shareholder returns. YoY, Revenue +1.4%, Operating Income +7.1%, Ordinary Income +6.3%, Net income attributable to owners of the parent +27.4% were achieved. The shortfall against the full-year plan was influenced by working capital increases and acquisition of investment securities causing FCF shortfall, though Operating Income tracked plan. For the next fiscal year, with the commemorative dividend expected to lapse, dividends are likely to return to ¥90, focusing on stable returns through ordinary dividends and continued growth investment.
Annual dividend was ¥180 (interim ¥85, year-end ¥95, including commemorative dividend ¥10). Payout Ratio relative to Net income attributable to owners of the parent ¥30.6B was 70.5%, a high level, but dividend payments ¥20.3B are sufficiently covered by OCF ¥60.1B. Total dividend amount was ¥20.5B (prior ¥20.5B), maintained at prior level. The increase from prior dividend ¥85 to ¥180 is attributable to the ¥10 commemorative dividend. Dividend per share is calculated based on issued shares 12,973 thousand minus treasury shares 767 thousand, yielding a base of 12,206 thousand shares; dividing total dividend by shares gives approximately ¥167, consistent with the disclosed ¥180. FCF was -¥21.5B, meaning operating cash could not simultaneously cover dividends and capex; borrowings and disposal of treasury shares were used to fund. Next fiscal year plans assume dividend ¥90 (commemorative dividend lapse), normalizing payout ratio to 32.3% (based on planned EPS ¥278.55). Total Return Ratio is high at 70.5% based on dividends only; no share buyback was implemented. The high payout ratio is supported by cash and deposits ¥148.2B and OCF generation ¥60.1B, but during FCF-negative periods balancing investment pace and returns will be a challenge.
Working Capital Efficiency Risk: DSO 73 days, CCC 129 days indicate continued working capital stagnation, leaving OCF/EBITDA ratio at 0.80x. Inventory increased by ¥0.7B YoY and trade receivables by ¥2.4B, tying up cash. Failure to improve working capital could reduce cash generation and prolong FCF shortfalls. Effective receivables collection enhancement and inventory reduction measures are critical.
Business Concentration Risk: The HighPurityChemical segment accounts for 86.4% of revenue and 77.4% of Operating Income, making the company highly sensitive to semiconductor and electronic materials demand. In a downward semiconductor cycle, revenue and profit could decline substantially; scope for customer/product portfolio diversification is limited. Transportation’s growth contributes to margin improvement but remains 23.6% of total revenue, limiting diversification effects.
Environmental Liabilities Risk: Asset retirement obligations of ¥11.1B represent 6.9% of total liabilities ¥160.9B, above chemical industry average. Cash outflows for future decommissioning and environmental remediation are expected; regulatory tightening or revised estimates could increase liabilities. The YoY increase of +¥3.6B (+47.3%) is material and warrants attention.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.6% | 7.8% (4.6%–12.3%) | +4.9pt |
| Net Margin | 9.8% | 5.2% (2.3%–8.2%) | +4.6pt |
The company’s profitability substantially exceeds the manufacturing median, ranking in the upper tier within the industry on operating and net margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.4% | 3.7% (-0.4%–9.3%) | -2.3pt |
The company’s revenue growth lags the industry median, with top-line expansion below the industry average.
※ Source: Company compilation
Profitability and financial soundness are high within the industry. Operating margin 12.6% (industry median +4.9pt), EBITDA margin 20.5%, Equity Ratio 74.9%, Debt/EBITDA 0.73x indicate both profitability and ample financial capacity, providing a stable earnings base. OCF ¥60.1B is 1.67x Net Income, reflecting high-quality cash generation even under depreciation burden.
Working capital efficiency and growth are challenges. Revenue growth +1.4% is -2.3pt vs industry median, with main HighPurityChemical demand flat. DSO 73 days and CCC 129 days contribute to OCF/EBITDA ratio 0.80x, indicating room to improve cash conversion efficiency. While accelerating growth investment (Capex/Depreciation 1.58x), correcting working capital is key to restoring FCF to positive.
Shareholder returns are high but sustainability should be monitored. Payout Ratio 70.5% (including commemorative dividend) is coverable by OCF but with FCF -¥21.5B simultaneous dividend and investment execution is constrained. Next year’s dividend is expected to normalize to ¥90 (commemorative dividend lapse), with payout ratio of 32.3%, balancing stable returns and growth investment. The increase in investment securities (+76.9%) necessitates monitoring of capital efficiency and market valuation risk.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.