| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥13092.8B | ¥12977.5B | +0.9% |
| Operating Income / Operating Profit | ¥1064.8B | ¥1079.5B | -1.4% |
| Ordinary Income | ¥1172.2B | ¥1109.6B | +5.6% |
| Net Income / Net Profit | ¥602.0B | ¥601.0B | +0.2% |
| ROE | 6.8% | 7.2% | - |
For the fiscal year ending March 2026, Revenue / Net Sales amounted to ¥13092.8B (YoY +¥115.3B +0.9%), Operating Income was ¥1064.8B (YoY -¥14.7B -1.4%), Ordinary Income was ¥1172.2B (YoY +¥62.6B +5.6%), and Net Income attributable to owners of the parent was ¥602.0B (YoY +¥1.0B +0.2%). Revenue was slightly up due to growth in the Housing Business and steady performance in High-Performance Plastics, but at the operating level SG&A ratio rose to 24.3% (from 24.1% prior year, +0.2pt) and with a stable gross margin of 32.4% the operating profit margin fell to 8.1% (from 8.3% prior year, -0.2pt). At the ordinary income level, foreign exchange gains of ¥47.5B and an improvement in equity-method investment income to ¥24.4B (prior year loss ¥10.9B) improved non-operating items by ¥107.4B, lifting the ordinary income margin to 9.0% (from 8.6% prior year, +0.4pt). At the net income stage, tax‑before profit decreased to ¥1,050.2B (from ¥1,199.7B prior year, -12.5%) due mainly to special losses including impairment losses of ¥233.0B which increased special loss to ¥271.4B (prior year ¥55.5B → this period ¥271.4B). However, improvement in the effective tax rate (29.9% prior year → 26.3% this period) and a slight decline in non‑controlling interests’ share supported final net income to land slightly higher. By segment, Housing led with Operating Income up +17.9%, Urban Infrastructure contributed +1.3% stably, while High‑Performance Plastics declined -3.1% due to European demand adjustment and impairment impacts, pressuring consolidated profit.
Revenue: Revenue was ¥13092.8B (YoY +0.9%), with segment mix: Housing 41.0% (¥5362.3B), High‑Performance Plastics 34.9% (¥4565.8B), Urban Infrastructure & Environmental Products 18.4% (¥2404.0B), Other 0.6% (¥77.7B). Housing revenue of ¥5362.3B (from ¥5240.1B prior year, +2.3%) remained firm, supported by recovery in renovation demand and resilient new detached housing. High‑Performance Plastics increased to ¥4565.8B (from ¥4473.5B prior year, +2.1%) but was impacted by a pause in laminated glass interlayer demand in Europe and intensified price competition. Urban Infrastructure & Environmental Products was flat at ¥2404.0B (from ¥2403.9B prior year, +0.0%), with domestic public investment timing and slower overseas expansion offsetting each other. By region, Japan was resilient at ¥8914.6B (from ¥8746.3B prior year, +1.9%), North America ¥1437.4B (from ¥1413.0B prior year, +1.7%), and Europe ¥986.3B (from ¥1037.5B prior year, -4.9%), with Europe’s decline constraining overall growth.
Profitability: Operating Income was ¥1064.8B (YoY -1.4%), with operating margin down to 8.1% (from 8.3% prior year, -0.2pt). Cost of sales ratio was stable at 67.6% (prior year 67.6%), maintaining a gross margin of 32.4%, but SG&A increased to ¥3177.0B (from ¥3126.6B prior year, +1.6%), raising the SG&A ratio to 24.3% (from 24.1% prior year, +0.2pt). The main drivers of higher SG&A were increased personnel expenses and higher R&D spending; goodwill amortization was ¥12.5B (from ¥14.0B prior year, -10.7%) and remained modest. Segment operating income: Housing ¥371.5B (from ¥315.0B prior year, +17.9%, margin 6.9%) improved significantly; Urban Infrastructure ¥232.5B (from ¥229.6B prior year, +1.3%, margin 9.7%) contributed stably; High‑Performance Plastics ¥593.2B (from ¥612.4B prior year, -3.1%, margin 13.0%) contracted; Other segments continued a loss of ¥-127.1B (from -¥141.1B prior year). Ordinary Income rose to ¥1172.2B (from ¥1109.6B prior year, +5.6%) aided by higher non‑operating income of ¥165.2B (from ¥106.8B prior year, +54.7%). Components included foreign exchange gains ¥47.5B (prior year foreign exchange loss ¥4.1B, improvement ¥51.6B), equity‑method investment income ¥24.4B (prior year loss ¥10.9B, improvement ¥35.3B), and dividend income ¥34.5B (from ¥32.5B prior year, +6.2%). Non‑operating expenses decreased to ¥57.9B (from ¥76.8B prior year, -24.6%); interest expense increased to ¥14.4B (from ¥10.4B prior year, +38.5%) but overall non‑operating balance improved. Net Income attributable to owners of the parent was ¥602.0B (from ¥601.0B prior year, +0.2%), nearly flat. Profit before tax decreased to ¥1,050.2B (from ¥1,199.7B prior year, -12.5%), but income taxes decreased to ¥276.7B (from ¥358.7B prior year, -22.9%) and the effective tax rate improved to 26.3% (from 29.9% prior year, -3.6pt), supporting net income. Extraordinary items were net -¥121.9B (deterioration of -¥212.1B from prior year profit of ¥90.2B), with extraordinary gains ¥149.5B (mainly gain on sale of investment securities ¥147.5B) versus extraordinary losses ¥271.4B (impairment losses ¥233.0B, loss on disposal of fixed assets ¥27.3B, valuation losses on investment securities ¥11.0B), with one‑time charges pressuring net income. Non‑controlling interests’ share of profit was ¥21.8B (unchanged). In conclusion, the result was slight revenue growth and a small operating decline, but an increase in one‑time losses prevented operating performance from fully translating into net income.
Housing Business: Revenue ¥5362.3B (YoY +2.3%), Operating Income ¥371.5B (YoY +17.9%), improving margin to 6.9% (from 6.0% prior year, +0.9pt). Recovery in renovation demand, resilience in new detached housing, stabilization of raw material costs and effective price pass‑through supported margin improvement. Urban Infrastructure & Environmental Products: Revenue ¥2404.0B (YoY +0.0%), Operating Income ¥232.5B (YoY +1.3%), margin 9.7% (from 9.6% prior year, +0.1pt), maintaining stable earnings supported by steady domestic public investment and rising demand for overseas pipeline rehabilitation materials, offset by intensified competition for new domestic pipelines. High‑Performance Plastics: Revenue ¥4565.8B (YoY +2.1%), Operating Income ¥593.2B (YoY -3.1%), margin fell to 13.0% (from 13.7% prior year, -0.7pt). European demand adjustment for laminated glass interlayers, intensified price competition, rising raw material costs for foamed polyolefin and lagging price adjustments pressured margins; an impairment loss of ¥20.0B depressed results. Other Businesses: Revenue ¥77.7B (YoY +2.8%), operating loss ¥127.1B (improvement from prior year loss ¥141.1B, deficit narrowed by 9.7%), with delays in commercialization of film‑type lithium‑ion battery business and impairment losses of ¥149.5B weighing heavily. Corporate expenses increased to ¥110.1B (from ¥87.1B prior year, +26.4%), including corporate function strengthening costs and ¥0.1B impairment at the corporate level.
Profitability: Operating margin 8.1% (from 8.3% prior year, -0.2pt), Ordinary Income margin 9.0% (from 8.6% prior year, +0.4pt), Net Income margin 4.6% (unchanged from prior year). ROE was 6.8% (from 7.2% prior year, -0.4pt), decomposed as Net Income margin 4.6% × Total Asset Turnover 0.92x × Financial Leverage 1.62x; the slight decline in net income margin and slowdown in total asset turnover (from 0.98x prior year, -0.06x) were primary drivers. Operating margin at 8.1% exceeds the industry median 7.8% by +0.4pt, but net income margin of 4.6% is -0.6pt below the median 5.2%, suggesting an impact from extraordinary losses. High‑Performance Plastics’ operating margin of 13.0% remains high but down from 13.7% prior year, indicating room for structural improvement in segment profitability.
Cash Quality: Operating Cash Flow (OCF) was ¥783.0B (from ¥1,192.3B prior year, -34.3%), supporting profits at 1.04× of net income ¥751.7B (including non‑controlling interests), but deterioration in working capital is notable. Operating cash flow subtotal (before working capital changes) was ¥1,095.3B (from ¥1,536.5B prior year, -28.7%), with inventory increases of ¥196.1B (expanded from prior year increase ¥164.1B), decrease in trade receivables ¥41.3B (improved from prior year increase ¥41.4B), and decrease in trade payables ¥122.5B (deteriorated from prior year increase ¥43.4B) causing working capital change of -¥277.3B (from -¥62.1B prior year) — a significant deterioration. OCF/EBITDA ratio was 0.48x (EBITDA ¥1,633.5B = Operating Income ¥1,064.8B + Depreciation ¥568.7B), low, with inventory days of 110 days (from 96 days prior year, +14 days) absorbing cash. Days sales outstanding 50 days (from 47 days prior year, +3 days), days payable outstanding 44 days (from 45 days prior year, -1 day), suggesting a tendency to pay suppliers earlier relative to inventory increases.
Investment Efficiency: Total asset turnover was 0.92x (from 0.98x prior year, -0.06x), and tangible fixed asset turnover 2.83x (from 3.21x prior year, -0.38x), both declining. Capital expenditures of ¥1007.8B were 1.77× depreciation ¥568.7B, indicating aggressive investment; construction in progress rose sharply to ¥820.0B (from ¥460.9B prior year, +77.9%), accelerating growth investment. Net tangible fixed assets expanded to ¥4625.5B (from ¥4038.7B prior year, +14.5%), the primary driver of lower asset turnover. Investment securities were ¥1016.0B (from ¥1051.0B prior year, -3.3%), modestly down, and the ¥147.5B gain on sale of investment securities indicates ongoing portfolio rebalancing.
Financial Soundness: Equity Ratio was 61.7% (from 62.7% prior year, -1.0pt), Current Ratio 185.7% (from 206.8% prior year, -21.1pt) — still high but declining. Cash and deposits decreased to ¥971.9B (from ¥1425.9B prior year, -31.8%); driven by increased working capital, active investment and shareholder returns, short‑term borrowings rose sharply to ¥200.0B (from ¥23.4B prior year, +754.7%). D/E ratio 0.62x (from 0.55x prior year, +0.07pt), Net D/E ratio -0.05x (cash ¥971.9B exceeds interest‑bearing debt ¥917.7B, effectively net debt‑free), indicating ample financial capacity. Interest coverage 73.8x (OCF ¥783.0B ÷ interest paid ¥10.6B, CF basis) showing light interest burden. Breakdown of interest‑bearing debt: corporate bonds ¥500.0B, bonds maturing within one year ¥101.8B, long‑term borrowings ¥411.8B, short‑term borrowings ¥200.0B — good maturity balance. Lease liabilities total ¥234.2B (current ¥57.6B + noncurrent ¥176.6B), at manageable levels.
Operating Cash Flow was ¥783.0B (from ¥1,192.3B prior year, -34.3%), calculated from operating cash flow subtotal ¥1,095.3B less working capital change -¥277.3B and income taxes paid -¥359.0B. Working capital change breakdown: inventory increase -¥196.1B, trade receivables decrease +¥41.3B, trade payables decrease -¥122.5B, advances received decrease -¥30.0B — inventory build and earlier payment of trade payables absorbed cash. Investing Cash Flow was -¥691.0B (from -¥615.1B prior year, -12.3%), with capital expenditures -¥1,007.8B and intangible asset acquisitions -¥128.1B offset by subsidies received +¥214.9B, proceeds from sale of investment securities +¥170.6B, and net decrease in time deposits +¥173.0B. Free Cash Flow was ¥92.0B (from ¥577.2B prior year, -84.1%), a sharp decline; dividend payments -¥341.8B and share buybacks -¥364.1B were financed by short‑term borrowings increase +¥25.6B and bond issuance +¥199.4B. Financing Cash Flow was -¥465.5B (from -¥612.0B prior year, -23.9%), with dividend payments -¥341.8B (of which -¥14.2B to non‑controlling interests), share buybacks -¥364.1B, long‑term borrowings repayments -¥17.8B, and sources including bond issuance +¥199.4B, short‑term borrowings increase +¥25.6B, long‑term borrowings +¥104.6B. Cash and cash equivalents decreased to ¥924.4B (from ¥1,208.9B prior year, -23.5%), despite foreign exchange translation gains +¥81.6B, with reduced free cash flow and continued shareholder returns pressuring cash balances.
Of Ordinary Income ¥1172.2B, Operating Income ¥1064.8B accounts for 91%, indicating earnings are primarily from business activities. Non‑operating income ¥165.2B comprised foreign exchange gains ¥47.5B, dividend income ¥34.5B, and equity‑method investment income ¥24.4B — foreign exchange gains include one‑time elements, while dividend income and equity‑method income can be considered continued income sources. Non‑operating expenses ¥57.9B, mainly interest expense ¥14.4B, are at recurring levels. Extraordinary items were net -¥121.9B: despite gain on sale of investment securities ¥147.5B, impairment losses ¥233.0B overwhelmingly outweighed gains, and one‑time losses depressed net income. Impairments were concentrated in Medical business ¥63.1B, Other businesses ¥149.5B (film‑type lithium‑ion battery related), and High‑Performance Plastics ¥20.0B, suggesting impacts from business restructuring and delayed investment recovery. Comprehensive income was ¥1,172.0B (¥1,140.2B attributable to owners of the parent), which is +94.6% above net income ¥602.0B, with other comprehensive income ¥398.5B consisting of foreign currency translation adjustments ¥310.0B, actuarial differences on retirement benefits ¥125.9B, and valuation differences on available‑for‑sale securities -¥34.1B. The large foreign currency translation gain reflects yen‑weak currency valuation gains on overseas assets, indicating significant shareholder value increase on a comprehensive income basis, while net income was materially impacted by extraordinary losses. Operating cash flow ¥783.0B was 1.04× net profit ¥751.7B, securing cash backing for profit, but OCF/EBITDA 0.48× was low and working capital increases pressured earnings quality. Overall, ordinary income is stable but one‑time losses and working capital deterioration reduce earnings quality, with improvement next fiscal year a key issue.
For FY2027 ending March 2027, the company plans Revenue ¥14084.0B (YoY +7.6%), Operating Income ¥1150.0B (YoY +8.0%), Ordinary Income ¥1140.0B (YoY -2.7%), and Net Income attributable to owners of the parent ¥760.0B (YoY +26.2%). Given first‑half results (Revenue ¥13092.8B, Operating Income ¥1064.8B), the second half is assumed to deliver substantial growth, with revenue progress rate at 93.0% and operating income progress rate at 92.6% — high levels. Projected operating margin improves slightly to 8.2% (from 8.1% prior year, +0.1pt), while ordinary income margin is forecast at 8.1% (from 9.0% prior year, -0.9pt) reflecting normalization of non‑operating items (decline of foreign exchange gains). At net income level, elimination of one‑time impairment losses is expected to raise net income margin to 5.4% (from 4.6% prior year, +0.8pt). Revenue assumptions include recovery in Housing orders, normalization of demand and improved price pass‑through in High‑Performance Plastics, and accelerated overseas expansion in Urban Infrastructure; operating income increase assumptions include working capital improvement through inventory correction, containment of SG&A ratio, and the end of impairment losses. The expectation that ordinary income trails operating income assumes conservative scenarios including the disappearance of foreign exchange gains and higher interest burden. EPS forecast ¥188.26 (from actual ¥182.70, +3.0%), dividend forecast annual ¥40 (actual ¥80, halved, payout ratio 21.2%) reflects the removal of prior year special dividend and normalization of dividend policy. Given the high full‑year progress rates and the heavy reliance on a sharp second‑half recovery, progress in inventory reduction and demand recovery are key to achieving targets.
Annual dividend is ¥80 (interim ¥40 + year‑end ¥40; maintained from prior year), with payout ratio 40.4% (based on Net Income attributable to owners of the parent ¥602.0B). Total dividend amount was ¥341.8B (from ¥330.6B prior year, +3.4%); a slight reduction in shares outstanding and share buybacks reduced average shares outstanding (41.146 million shares, from 41.810 million shares prior year, -1.6%), tempering total dividend increase. Dividend payment of ¥341.8B versus Free Cash Flow ¥92.0B yields FCF coverage 0.27×, low, so this period was funded from retained earnings and external financing. Share buybacks totaled ¥364.1B (from ¥89.2B prior year, +308.2%), and total shareholder returns including dividends amounted to ¥705.9B; total return ratio to net income ¥751.7B was 93.9%, extremely high. Treasury shares held are 268.0 million shares (6.2% of shares outstanding), maintained at prior‑year level. Dividend payout ratio 40.4% is within sustainable range, but low FCF coverage and high total return ratio mean sustainability depends on inventory correction and cash generation improvements next fiscal year. Next fiscal year dividend forecast is ¥40 annual (payout ratio 21.2%), halved reflecting removal of prior year special dividend. With shareholders’ equity ¥8811.2B and BPS ¥2,108.44, dividend yield indicates a stable dividend orientation, but medium‑term sustainability depends on working capital improvement and FCF recovery.
Excess inventory and working capital deterioration risk: Inventories ¥1249.7B (from ¥1107.2B prior year, +12.9%), inventory days 110 days (from 96 days prior year, +14 days) remain elevated and are pressuring OCF ¥783.0B (from ¥1,192.3B prior year, -34.3%). Product inventories have accumulated due to European demand adjustment in High‑Performance Plastics and order delays in Urban Infrastructure, raising discount pressure and obsolescence risk. Together with a decrease in trade payables of ¥122.5B, working capital change of -¥277.3B (from -¥62.1B prior year) worsened, and delayed inventory reduction is the largest risk to next period’s cash generation and margins.
Recurrence of extraordinary losses and earnings volatility: This period recognized impairment losses ¥233.0B (Medical ¥63.1B, Other ¥149.5B, High‑Performance Plastics ¥20.0B), driving extraordinary losses to ¥271.4B (from ¥55.5B prior year, +388.8%) and reducing profit before tax by 12.5%. Impairments stem from business restructuring and delayed investment recovery, particularly Other segment’s film‑type lithium‑ion battery impairment ¥149.5B reflecting commercialization delays. Medical business also faces impairment risk due to difficulty recovering new investments; if segment restructuring and investment discipline are delayed, further impairment losses may recur and increase net income volatility.
Demand adjustment and price competition in High‑Performance Plastics: High‑Performance Plastics reported Operating Income ¥593.2B (from ¥612.4B prior year, -3.1%), margin 13.0% (from 13.7% prior year, -0.7pt), with European laminated glass interlayer market demand adjustment and intensified price competition as main causes. European revenue decline to ¥986.3B (from ¥1,037.5B prior year, -4.9%) indicates cooling auto and building demand and Chinese competitors’ entry making price pass‑through difficult. Foamed polyolefin margins are also pressured by delayed pass‑through of higher input costs. If demand recovery and restoration of price competitiveness are delayed, poor performance in this segment — which accounts for over 30% of consolidated operating income — may persist and hinder achievement of companywide profit targets.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.1% | 7.8% (4.6%–12.3%) | +0.4pt |
| Net Income Margin | 4.6% | 5.2% (2.3%–8.2%) | -0.6pt |
Operating margin exceeds the industry median by 0.4pt, contributed by structural profitability of High‑Performance Plastics. Net income margin is 0.6pt below the median, suggesting impact from extraordinary losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.9% | 3.7% (-0.4%–9.3%) | -2.8pt |
Revenue growth rate is 2.8pt below the industry median, placing growth in the lower range within the industry; inventory adjustment phase and Europe demand pause are likely primary causes.
※ Source: Company compilation
Progress in inventory correction and cash generation improvement is the most important monitoring metric: Inventory days at 110 and OCF/EBITDA 0.48× show notable working capital deterioration, and inventory compression is essential for FCF recovery next fiscal year. Quarterly monitoring of inventory levels and operating cash flow trends will be key to achieving full‑year guidance (Revenue +7.6%, Operating Income +8.0%). Delays in inventory correction could cause discounting pressure, margin deterioration, and affect sustainability of shareholder returns.
Demand recovery and price pass‑through in High‑Performance Plastics will determine consolidated profit direction: Accounting for 44% of operating income, High‑Performance Plastics’ margin of 13.0% remains high but down -0.7pt year‑on‑year, with European demand adjustment and price competition evident. Recovery in auto and building demand and differentiation from Chinese competitors are prerequisites for margin recovery and achievement of consolidated operating income target ¥1150B. Order trends and regional mix improvements are key to watch.
Reduction of one‑time losses and improvement in earnings quality are conditions for achieving net income targets: Impairment losses ¥233B reduced profit before tax by 12.5%, keeping net income flat. Next fiscal year assumes impairments subside and plans net income ¥760B (+26.2%), but progress in Medical and Other segment restructuring and stronger investment discipline are prerequisites. Risk of recurring extraordinary losses and delayed working capital improvement will determine achievement of net income and shareholder return plans. Timing of capitalization and operational start of construction in progress ¥820B and progress in investment recovery are also important observation points.
This report is an AI‑generated earnings analysis document created by analyzing 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 responsibility; please consult a professional advisor as needed.