| Metric | Current Period | Previous Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1094.7B | ¥1030.8B | +6.2% |
| Operating Income | ¥163.0B | ¥121.3B | +34.4% |
| Ordinary Income | ¥188.5B | ¥119.7B | +57.4% |
| Net Income | ¥127.4B | ¥75.1B | +69.6% |
| ROE | 3.2% | 2.0% | - |
In Q1, the Company posted increases in both revenue and profit, with profit growth substantially outpacing revenue growth as a result of the high profitability of the High-Performance Materials Business and the effects of operating leverage. Revenue increased to ¥1,094.7B (¥1,030.8B in the previous year period, YoY+6.2%), Operating Income to ¥163.0B (¥121.3B, YoY+34.4%), Ordinary Income to ¥188.5B (¥119.7B, YoY+57.4%), and Net Income attributable to owners of the parent to ¥127.1B (¥75.1B, YoY+69.4%). The factors behind the significant outperformance of profit growth relative to revenue growth included operating leverage from improved gross margins and a lower SG&A ratio, together with an increase in non-operating income, including foreign exchange gains and insurance proceeds.
【Revenue】Revenue increased 6.2% year on year to ¥1,094.7B. By segment, based on revenue including intersegment transactions, the High-Performance Materials Business grew 15.5% to ¥338.4B and led overall growth; the Elastomer Materials Business was essentially flat at ¥581.6B (+0.2%), while Other Businesses generated ¥184.9B (+12.9%). Revenue composition was approximately 53% for elastomers, approximately 31% for high-performance materials, and approximately 17% for other businesses, indicating a slight expansion in the share of the highly profitable High-Performance Materials Business.
【Profit and Loss】Operating Income increased 34.4% YoY to ¥163.0B, and the operating margin improved to 14.9% from 11.8% a year earlier, a +3.1pt improvement. The gross margin rose to 34.0% (+1.4pt), while the SG&A ratio declined to 19.1% (-1.7pt), with revenue growth and cost-efficiency improvements jointly generating operating leverage. Segment profit for the High-Performance Materials Business increased 36.8% to ¥101.1B, with a 29.9% margin, driving overall Company profit; the Elastomer Materials Business also improved to ¥55.5B (+31.2%), with a 9.5% margin. Ordinary Income increased 57.4% YoY to ¥188.5B, with a 17.2% margin, supported by ¥3.11B in non-operating income, including ¥1.08B in dividend income, ¥0.47B in foreign exchange gains, and ¥1.297B in insurance proceeds. Extraordinary losses included an impairment loss of ¥0.29B, while extraordinary income and losses had only a minor temporary net impact of △¥0.15B. Net Income attributable to owners of the parent increased 69.4% YoY to ¥127.1B, with an 11.6% net profit margin, up +4.3pt, while the effective tax rate was 31.9%, a normal level. The period ended with increases in both revenue and profit.
There is a significant difference in profitability between segments, with the high profitability of the High-Performance Materials Business driving overall Company profitability.
The total segment profit of ¥166.2B, less adjustments for corporate expenses and other items of △¥3.2B, reconciles to consolidated Operating Income of ¥163.0B, confirming that the expanding contribution of the High-Performance Materials Business was the primary factor behind the margin improvement.
【Profitability】ROE was 3.2%, based on Net Income attributable to owners of the parent and average equity during the period. Both the operating margin of 14.9% and the net profit margin of 11.6% improved from the previous year (11.8% and 7.3%, respectively). 【Cash Flow Quality】Cash and deposits increased by ¥114.7B (+40.0%) year on year to ¥401.4B, while inventories of ¥981.5B (¥933.6B in the previous year) and trade receivables of ¥658.6B (¥637.8B in the previous year) also increased. Comprehensive income reached ¥252.7B, approximately twice Net Income of ¥127.1B; however, most of the difference was attributable to an increase of +¥112.3B in the valuation difference on investment securities and should be distinguished from the recurring earnings power of the business. 【Investment Efficiency】Construction in progress was ¥841.1B, accounting for 40.6% of property, plant and equipment (36.2% in the previous year), indicating that capital investment is continuing. 【Financial Soundness】The equity ratio was 65.6% (68.9% in the previous year), while the current ratio was 156.7% and the quick ratio was 102.9%, indicating a stable financial base. However, in addition to short-term borrowings of ¥8.96B, commercial paper increased from ¥7.00B to ¥28.00B, bringing total short-term interest-bearing debt to ¥36.96B, almost equivalent to cash and deposits of ¥40.14B.
Based on changes in the balance sheet, cash and deposits increased by ¥114.7B (+40.0%) to ¥401.4B from ¥286.8B in the previous year period, suggesting that earnings growth contributed to an increase in on-hand liquidity. Meanwhile, trade receivables increased to ¥658.6B (¥637.8B in the previous year, +¥20.8B), and inventories increased to ¥981.5B (¥933.6B in the previous year, +¥47.9B), indicating that the expansion of working capital may have partially offset the conversion of profit into cash. On the financing side, the balance of commercial paper expanded from ¥7.00B to ¥28.00B, indicating greater use of short-term market-based funding. On the investment side, construction in progress increased from ¥703.5B to ¥841.1B, indicating that capital investment is continuing.
Recurring earnings power is centered on Operating Income of ¥163.0B, and the improvement in the operating margin to 14.9% indicates an improvement in the quality of the business structure. Of non-operating income of ¥31.1B, dividend income amounted to ¥10.8B and foreign exchange gains to ¥4.7B, while insurance proceeds of ¥12.97B were also included; the latter can be considered a temporary factor with low recurrence. Extraordinary income of ¥2.5B, including gains on business transfers, and extraordinary losses of ¥4.0B, including impairment losses of ¥2.9B, largely offset each other, leaving a net amount of △¥1.5B. Accordingly, the difference between Profit Before Tax of ¥187.0B and Ordinary Income of ¥188.5B was minor. Income taxes and other taxes were ¥5.96B, resulting in an effective tax rate of 31.9%, with no particular abnormalities. Comprehensive income reached ¥252.7B, approximately twice Net Income of ¥127.1B; however, most of the difference was attributable to an increase in the valuation difference on investment securities and must be evaluated separately from Net Income, which represents the current period’s business earnings power.
Progress against the full-year plan was 27.0% for revenue (¥1,094.7B/¥4,050.0B), compared with 42.9% for Operating Income (¥163.0B/¥380.0B), 51.0% for Ordinary Income (¥188.5B/¥370.0B), and 35.3% for Net Income (¥127.1B/¥360.0B), indicating that profit progress is substantially ahead of revenue progress. Compared with the standard quarterly progress rate of approximately 25%, progress for Operating Income and Ordinary Income is significantly ahead, partly due to the high profitability of the High-Performance Materials Business and non-operating income such as insurance proceeds. No revisions were made to the earnings forecast or dividend forecast during the current quarter. The full-year revenue forecast calls for a YoY decline of -1.7%, Operating Income is expected to increase YoY+4.5%, and Ordinary Income is expected to decline YoY-7.6%. Demand trends toward the second half and the potential reversal of temporary earnings factors will influence the sustainability of progress.
The full-year dividend forecast is ¥39.00 per share, representing an increase from ¥36.00 in the previous fiscal year. Based on forecast EPS of ¥185.51, the Payout Ratio is approximately 21.0% (¥39.00/¥185.51), indicating that dividends remain conservative relative to earnings growth. The number of treasury shares was unchanged from the previous year, and no changes associated with the acquisition or disposal of treasury shares were identified during the current quarter. Given the financial base, including cash and deposits of ¥401.4B and an equity ratio of 65.6%, dividends are being managed within the scope of earnings and cash flow.
Dependence on short-term funding: The balance of commercial paper surged from ¥7.00B to ¥28.00B, and short-term interest-bearing debt, including short-term borrowings of ¥8.96B, reached ¥36.96B. This is almost equivalent to cash and deposits of ¥401.4B, making rollover management in response to changes in the interest-rate environment and market liquidity an ongoing priority.
Expansion of working capital: Inventories increased to ¥981.5B (¥933.6B in the previous year, +¥47.9B), while trade receivables increased to ¥658.6B (¥637.8B in the previous year, +¥20.8B). Working capital growth exceeding revenue growth (+6.2%) may affect the speed at which profit is converted into cash.
Business concentration by segment: The Elastomer Materials Business accounts for more than half of total revenue, approximately 53%, creating a structure in which automotive and tire-related demand and fluctuations in raw material prices can readily affect performance.
Profitability and Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.9% | 8.8% (4.4%–14.3%) | +6.1pt |
| Net Profit Margin | 11.6% | 7.3% (3.3%–10.6%) | +4.4pt |
The Company’s operating margin and net profit margin are above the industry median and upper quartile.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 6.2% | 6.6% (-0.3%–14.8%) | -0.4pt |
The revenue growth rate is approximately in line with the industry median, positioning the Company at an average level in terms of growth.
※Source: Compiled by the Company
The operating margin improved to 14.9% from 11.8% in the previous year, while the 29.9% margin of the High-Performance Materials Business, compared with 25.2% in the previous year, lifted overall profitability. An expanding contribution from the highly profitable segment is a structural factor that will influence future margin trends.
Progress against the full-year plan was 42.9% for Operating Income and 51.0% for Ordinary Income, substantially exceeding the standard progress rate of approximately 25%. The contribution of items with low recurrence, such as insurance proceeds of ¥12.97B included in non-operating income, should be considered when evaluating progress.
The balance of commercial paper expanded from ¥7.00B to ¥28.00B, bringing total short-term interest-bearing debt to approximately the same level as cash and deposits. Although financial soundness remains strong, with an equity ratio of 65.6% and a current ratio of 156.7%, the change in the short-term funding composition is an important monitoring point for liquidity management.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson type, with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥2,047 |
| base | ¥2,112 |
| bull | ¥2,139 |
| Calculation Assumption | Value |
|---|---|
| Book Value Per Share (BPS) | ¥2,069 |
| Adjusted Forecast EPS | ¥204.1 |
| Cost of Equity r | 9.15% (10-year JGB 2.65% + equity risk premium 6.00% + size premium 0.50%) |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 21.0% |
| Forecast EPS Confidence Adjustment | ×1.100 (based on progress ahead of the full-year forecast) |
| Implied PBR / PER | 1.02x / 10.3x |
Sensitivity: ¥2,051–¥2,175 at ±1% for the cost of equity, and ¥2,111–¥2,113 at ±0.1 for ω.
Notes:
(Model used: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not forecast or guarantee a future share price)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility and, where necessary, after consulting a professional.
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These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.