Aica Kogyo (4206) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of FY2026, while Revenue remained nearly flat, Operating Income, Ordinary Income, and Net Income all grew at higher rates, resulting in earnings growth driven by profitability. Revenue was ¥1862.4B (¥1847.8B in the previous year, YoY +0.8%), Operating Income was ¥220.8B (¥212.0B in the previous year, YoY +4.2%), Ordinary Income was ¥240.3B (¥225.5B in the previous year, YoY +6.6%), and Net Income was ¥166.1B (¥156.8B in the previous year, of which ¥153.9B was attributable to owners of the parent, YoY +7.3%). The Operating Margin was 11.9%, improving from 11.5% in the same period of the previous year. Earnings growth exceeding Revenue growth indicates the emergence of operating leverage through the securing of gross profit and control of selling, general and administrative expenses.

Factors Affecting Earnings

【Revenue】Revenue was ¥1862.4B, representing a modest increase of +0.8% year on year. By segment, BuildingPanels generated ¥849.2B (profit margin 21.8%), while ChemicalProducts generated ¥1043.7B (profit margin 6.7%). In terms of the Revenue mix, ChemicalProducts accounted for approximately 56% and BuildingPanels approximately 44%. The substantial difference in profit margins between the two segments indicates a structure in which profitability is heavily dependent on BuildingPanels.

【Profit and Loss】Operating Income was ¥220.8B (YoY +4.2%), while Ordinary Income was ¥240.3B (YoY +6.6%), with Ordinary Income exceeding Operating Income by ¥19.5B. This difference reflects substantive financial income rather than a temporary factor, as Non-operating Income of ¥26.4B (dividend income of ¥6.4B and other income of ¥15.3B) exceeded Non-operating Expenses of ¥6.8B. Net Income attributable to owners of the parent was ¥153.9B, up YoY +7.3%, further exceeding the growth rate of Ordinary Income. While Revenue remained nearly flat, profit growth accelerated in stages, indicating a structure in which profit growth exceeded Revenue growth despite both Revenue and profit increasing.

Segment Analysis

BuildingPanels is a highly profitable segment, with Revenue of ¥849.2B, Operating Income of ¥185.3B, and a profit margin of 21.8%. ChemicalProducts had Revenue of ¥1043.7B, Operating Income of ¥69.9B, and a profit margin of 6.7%; although it exceeded BuildingPanels in Revenue scale, its profitability was substantially inferior. BuildingPanels generated approximately 84% of the Company-wide Operating Income of ¥220.8B, resulting in a structure in which the imbalance in profit contribution between segments determines the Company-wide Operating Margin of 11.9%.

Key Financial Indicators

【Profitability】The Operating Margin of 11.9% and Net Profit Margin of 8.9% were both above the levels recorded in the same period of the previous year. The structure of Gross Margin of 28.0% less an SG&A Expense Ratio of 16.2% supported the increase in Operating Income.【Cash Flow Quality】Comprehensive Income of ¥158.4B was broadly close to Net Income attributable to owners of the parent of ¥153.9B; however, a Foreign Currency Translation Adjustment of negative ¥35.3B was recorded, indicating that the yen-based valuation of overseas assets exerted downward pressure on Comprehensive Income.【Investment Efficiency】ROE was 8.5%, and the relatively low level of Total Asset Turnover represents room for improvement in capital efficiency.【Financial Soundness】The Equity Ratio remained high at 64.6%, and Long-term Borrowings stood at only ¥8.6B. However, the fact that most Interest-bearing Debt consists of Short-term Borrowings is a point requiring attention from a funding-structure perspective.

Cash Flow Analysis

Although detailed disclosure of the Statement of Cash Flows is not available, an analysis of funding trends based on changes in the Balance Sheet shows that Cash and Deposits decreased to ¥552.5B from ¥595.7B in the same period of the previous year, while Total Assets increased to ¥3015.5B from ¥2880.6B in the previous year. During this period, Property, Plant and Equipment remained broadly flat at ¥731.9B, while Accounts Receivable and Notes Receivable stood at ¥506.5B and Inventories at ¥174.6B, with no significant changes in either item. Net Assets increased to ¥1948.7B, suggesting that the accumulation of Retained Earnings contributed to the expansion of shareholders’ equity. Short-term Borrowings increased significantly from the previous year to ¥244.7B, indicating greater use of short-term funding in terms of financing.

Earnings Quality

Examining the factors behind the difference between Ordinary Income and Net Income, Ordinary Income of ¥240.3B less Income Taxes and Other of ¥74.2B and Net Income attributable to non-controlling interests of ¥12.2B resulted in Net Income attributable to owners of the parent of ¥153.9B. Of Non-operating Income of ¥26.4B, dividend income of ¥6.4B is recurring in nature, and no temporary extraordinary gains or losses were identified. Comprehensive Income of ¥158.4B was close to Net Income attributable to owners of the parent of ¥153.9B, while a Foreign Currency Translation Adjustment of negative ¥35.3B and Valuation Difference on Available-for-Sale Securities of positive ¥28.1B had offsetting effects. The difference between the two can be broadly understood as an accrual arising from market-related factors. Overall, current-period earnings were primarily driven by recurring income based on operating activities, and earnings quality can be assessed as sound.

Earnings Forecast and Guidance

The full-year Company forecast is Revenue of ¥2650.0B (YoY +6.6%), Operating Income of ¥290.0B (YoY +5.8%), and Ordinary Income of ¥300.0B (YoY +4.6%). The cumulative Q3 progress rates were 70.3% for Revenue, 76.1% for Operating Income, and 80.1% for Ordinary Income, with profit progress exceeding Revenue progress. Revenue of approximately ¥787.6B and Operating Income of approximately ¥69.2B are required in Q4, implying a Q4 Operating Margin of approximately 8.8%, below the cumulative Q3 result of 11.9%. While Revenue progress is somewhat delayed, profit progress is ahead, making the balance between securing Revenue and maintaining margins toward the fiscal year-end the key focus for achieving the full-year targets.

Shareholder Returns

The Q2 dividend was ¥66.00 per share, and the full-year forecast dividend is ¥138.00 (interim ¥66.00, year-end ¥72.00). The forecast Payout Ratio against full-year forecast EPS of ¥291.55 is 47.3%. This ratio is based solely on dividends, and data on the Total Return Ratio, including share repurchases, has not been disclosed. Cash and Deposits of ¥552.5B provide a sufficient level of liquidity to support the planned dividend payments.

Risk Factors

1. Raw Material and Energy Cost Increase Risk: Against Cost of Sales of ¥1340.6B, Revenue growth was limited to +0.8%. The ability to pass on cost increases through pricing will determine whether the Operating Margin of 11.9% can be maintained.

2. Risk of Prolonged Collection Periods for Accounts Receivable: Accounts Receivable and Notes Receivable amounted to ¥506.5B, accounting for 16.8% of Total Assets. As a prolonged collection period could increase working capital requirements, monitoring of developments is necessary.

3. Dependence on Short-term Funding Risk: Short-term Borrowings amounted to ¥244.7B, while Long-term Borrowings stood at only ¥8.6B, meaning that most Interest-bearing Debt consists of short-term funding. Cash and Deposits of ¥552.5B provide a buffer, but refinancing terms and interest rate trends could affect finance costs.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The Company’s profitability exceeds the industry median and is at a level close to the upper bound of the IQR.

Growth and Capital Efficiency

The Revenue growth rate is below the industry median, indicating a relatively slower pace of Revenue growth.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. While Revenue growth was limited to +0.8%, Operating Income and Net Income increased by +4.2% and +7.3%, respectively, indicating earnings growth driven by margin improvement in the current period.

2. The full-year progress rates were 76.1% for Operating Income, 80.1% for Ordinary Income, and 84.1% for Net Income attributable to owners of the parent, all exceeding the Revenue progress rate of 70.3%. Securing Revenue toward the fiscal year-end will be key to achieving the full-year plan.

3. By segment, BuildingPanels maintained high profitability with a profit margin of 21.8%, while ChemicalProducts remained at a profit margin of 6.7%. The structure in which BuildingPanels generates the majority of Company-wide profit therefore continues.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,095–¥3,274 for Cost of Equity ±1%, and ¥3,181–¥3,185 for ω ±0.1.

Notes:

• Net Assets as of the quarter-end are used (there is a timing difference relative to the full-year forecast).
• As Net Assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（Valuation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it does not constitute a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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