| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥781.6B | ¥742.3B | +5.3% |
| Operating Income | ¥56.9B | ¥50.1B | +13.4% |
| Ordinary Income | ¥62.6B | ¥54.5B | +14.9% |
| Net Income | ¥30.0B | ¥31.4B | -4.4% |
| ROE | 3.0% | 3.2% | - |
For the fiscal year ending March 2026, Revenue was ¥781.6B (YoY +¥39.3B +5.3%), Operating Income was ¥56.9B (YoY +¥6.7B +13.4%), Ordinary Income was ¥62.6B (YoY +¥8.1B +14.9%), and Net Income attributable to owners of the parent was ¥30.0B (YoY -¥1.4B -4.4%). Revenue and profits increased, with Operating margin improving to 7.3% (up 0.5pt from 6.8% prior year) and gross margin improving to 31.1% (up 1.1pt from 30.0%), indicating higher profitability. The Public sector recorded strong growth with Revenue +7.2% and Operating Income +46.8%, while the Private sector grew Revenue +3.0% and maintained a high margin (10.6%). Operating Cash Flow was ¥79.9B (YoY +28.7%), over twice Net Income, demonstrating robust cash generation. Free Cash Flow was ¥36.7B, remaining positive while covering Capital Expenditure of ¥42.7B (5.5% of Revenue). Equity Ratio was 70.9% (prior year 68.5%), and Debt/EBITDA was 1.14x, indicating strong financial health. Meanwhile, Net Income declined due to reduced extraordinary gains and higher tax burden. Full-year guidance anticipates Revenue ¥840B (+7.5%) and Operating Income ¥63B (+10.8%), continuing growth in both top- and bottom-line stages.
[Revenue] Revenue was ¥781.6B (YoY +5.3%). By segment, the Public sector accounted for ¥416.3B (+7.2%), representing 53.2% of total, supported by expanded orders for infrastructure and traffic safety products and resilience in public investment. The Private sector reported ¥366.0B (+3.0%), 46.8% of total, with steady demand for fences, packaging materials, and agricultural materials. By region, Japan was ¥637.6B (81.6% of sales), Europe ¥122.7B (15.7%, YoY +4.6%), and Other ¥21.4B (2.7%, YoY +6.1%), showing growth both domestically and internationally. Gross margin improved to 31.1% (up 1.1pt from 30.0%) due to price revisions taking hold, improved product mix, and stabilization of raw material costs.
[Profitability] Operating Income was ¥56.9B (YoY +13.4%), with Operating margin at 7.3% (up 0.5pt from 6.8%). The improvement in gross margin was the main driver. Selling, General and Administrative expenses (SG&A) were ¥186.5B (YoY +7.8%), growing faster than Revenue, but an absolute increase in gross profit (+¥20.3B) absorbed this. SG&A ratio rose to 23.9% (up 0.6pt from 23.3%), affected by wage increases, R&D investment, and sales enhancement costs. Goodwill amortization was ¥14.9B (prior year ¥13.8B), 1.9% of Revenue. By segment, Public sector Operating Income improved significantly to ¥27.3B (YoY +46.8%, margin 6.6%), while Private sector Operating Income was ¥38.8B (YoY -4.4%, margin 10.6%), declining but maintaining high margins. Ordinary Income was ¥62.6B (YoY +14.9%), with non-operating income of ¥10.2B (dividends received ¥3.4B, interest received ¥1.6B, equity-method investment income ¥2.2B, etc.) exceeding non-operating expenses of ¥4.4B (interest paid ¥2.3B, etc.), boosting profits. Profit before tax was ¥64.0B (YoY +19.0%), supported by extraordinary gains of ¥3.6B (gain on sale of investment securities). However, corporate tax and related taxes were ¥23.1B (effective tax rate 36.1%, up 4.6pt from 31.5% prior year), increasing tax burden and resulting in Net Income attributable to owners of the parent of ¥30.0B (YoY -4.4%). In summary, there was growth at Operating and Ordinary levels, but higher tax burden led to a decline in final profit.
The Public sector posted Revenue ¥416.3B (YoY +7.2%), Operating Income ¥27.3B (YoY +46.8%), and Operating margin 6.6% (up 1.8pt from 4.8%). Strong orders for soundproof wall materials, traffic safety products, and road signs improved profitability and efficiency. The Private sector reported Revenue ¥366.0B (YoY +3.0%), Operating Income ¥38.8B (YoY -4.4%), and Operating margin 10.6% (down 0.8pt from 11.4%). Sales of fences, packaging materials, and agricultural materials increased, but intensified price competition on some products and higher SG&A reduced profits. After deducting corporate-level expenses of ¥9.3B (prior year ¥9.1B), consolidated Operating Income was ¥56.9B. Segment assets were Public ¥610.5B and Private ¥410.3B, with asset turnover of 0.68x for Public and 0.89x for Private.
[Profitability] Operating margin was 7.3% (up 0.5pt from 6.8%), aided by gross margin improvement to 31.1% (up 1.1pt). Net margin was 3.8% (down 0.4pt from 4.2%) due to higher tax burden. ROE was 3.0% (down 0.2pt from 3.2%), impacted by lower net margin and higher equity. ROA was 4.4% (up 0.4pt from 4.0%). [Cash Quality] Operating Cash Flow (OCF) of ¥79.9B was 2.01x Net Income, with an accrual ratio of -5.2%, indicating solid cash backing of profits. OCF/EBITDA was 0.97x, a high level. Working capital: Days Sales Outstanding (DSO) 63 days (improved from 68), Inventory turnover days 34 days (slightly up from 31), Days Payable Outstanding (DPO) 53 days (shortened from 61); collection efficiency improved but reduced supplier payment terms slightly increased working capital. [Investment Efficiency] Capital Expenditure was ¥42.7B, 1.68x depreciation of ¥25.4B, indicating an active investment phase. CapEx/Revenue ratio rose to 5.5% (prior year 3.5%). [Financial Soundness] Equity Ratio 70.9% (prior year 69.8%), Debt/Equity 0.41x (prior year 0.45x), indicating low financial leverage. Debt/EBITDA was 1.14x, and Interest Coverage 24.4x (EBITDA / interest paid), showing strong interest-bearing capability. Current ratio 219% (prior year 161%), Quick ratio 200% (prior year 149%), indicating notable liquidity improvement. Cash and deposits ¥183.0B cover 70% of short-term liabilities ¥262.4B, providing ample liquidity on hand.
Operating Cash Flow was ¥79.9B (YoY +28.7%), 1.25x profit before tax of ¥64.0B. Subtotal OCF before working capital changes was ¥91.7B (YoY +14.8%), and after non-cash expenses of depreciation ¥25.4B and goodwill amortization ¥14.9B and deduction of equity-method investment income ¥2.2B, cash generation remained strong. In working capital changes, a decrease in trade receivables of ¥10.2B contributed positively, while an increase in inventories of -¥6.2B and a decrease in trade payables of -¥12.0B were negative, resulting in net working capital absorption of ¥8.0B. After corporate tax paid of ¥14.9B, Operating Cash Flow was ¥79.9B. Investing Cash Flow was -¥43.3B, mainly CapEx -¥42.7B (Public ¥24.5B, Private ¥13.5B). Acquisition of subsidiary shares -¥15.7B and acquisition of investment securities -¥1.3B added outflows, partially offset by proceeds from sale of investment securities ¥4.5B. Free Cash Flow was ¥36.7B (Operating CF + Investing CF), sufficient to cover dividend payments of ¥21.8B. Financing Cash Flow was -¥46.3B, with repayment of short-term borrowings -¥64.2B, repayment of long-term borrowings -¥2.1B, and share buybacks -¥20.9B as main outflows. Issuance of bonds ¥46.6B and long-term borrowings ¥20.0B provided financing, lengthening debt maturity. Cash and cash equivalents decreased from ¥158.4B at the beginning of the period to ¥153.0B at the end (down ¥5.4B), but considering foreign exchange effects of +¥4.3B, the balance was essentially stable.
Earnings quality is high, driven by recurring income. Compared to Operating Income ¥56.9B, non-operating income ¥10.2B (dividends received ¥3.4B, interest received ¥1.6B, equity-method investment income ¥2.2B, other ¥3.1B) represents 1.3% of Revenue, indicating limited dependency. Extraordinary gains ¥3.6B (gain on sale of investment securities) account for 12.0% of Net Income ¥30.0B, a temporary factor but limited in scale. Of Profit before tax ¥64.0B, ordinary (recurring) profit excluding special items was ¥62.6B, or 97.8% of total, showing core business profitability explains the majority of profits. The accrual ratio ((Net Income - Operating CF) / Total Assets) was -5.2%, substantially negative, indicating Operating CF significantly exceeded Net Income and cash backing of profits is strong. Comprehensive income was ¥79.4B, ¥49.4B higher than Net Income ¥30.0B, with Other Comprehensive Income ¥38.5B (currency translation adjustments ¥25.1B, valuation differences on securities ¥13.2B, etc.) boosting equity. Currency translation adjustments and valuation differences on securities are temporary valuation gains, but the large increase in comprehensive income indicates an increase in balance sheet value.
Full-year guidance projects Revenue ¥840B (YoY +7.5%), Operating Income ¥63B (YoY +10.8%), Ordinary Income ¥65B (YoY +3.8%), and Net Income attributable to owners of the parent ¥44B (YoY +46.7%). Compared with first-half results, the second half requires incremental Revenue of ¥58.4B (+7.5%) and Operating Income of ¥6.1B (+10.8%). The plan assumes continued Public sector order pipeline, steady Private sector demand, and sustained gross margin improvements. Projected Operating margin is 7.5% (up 0.2pt from H1 7.3%), Ordinary margin 7.7% (down 0.3pt from H1 8.0%). Net margin is expected to improve significantly to 5.2% (up 1.4pt from H1 3.8%), assuming normalization of tax burden and elimination of one-off factors. EPS forecast is ¥146.83 with dividend forecast ¥46, implying a Payout Ratio of 31.3%, set at a conservative level to balance growth investment and shareholder returns. H1 progress rates are Revenue 93.0%, Operating Income 90.3%, Ordinary Income 96.3%, largely on plan.
Annual dividend is ¥72 (interim ¥36, year-end ¥36), an increase of ¥37 from the prior year dividend ¥35 (+105.7%). Payout Ratio is 57.6% (total dividends ¥21.8B / Net Income ¥30.0B × based on average shares outstanding during the period), a high level. Dividend coverage against Free Cash Flow ¥36.7B is 1.68x, indicating strong sustainability of dividends. Share buybacks totaled ¥20.9B, making total shareholder returns ¥42.7B (dividends ¥21.8B + share buybacks ¥20.9B). Total Return Ratio is 107.5% (total returns ¥42.7B / Net Income ¥39.8B), slightly above FCF, and shareholder returns were implemented using on-hand cash and long-term financing. Treasury stock increased from ¥18.5B at the beginning of the period to ¥38.5B at period-end, with treasury stock as a percentage of issued shares at 5.8%. Full-year dividend forecast is ¥46, below H1 actual ¥72, which suggests either H1 included a special dividend or a revision of dividend policy for the second half.
Public investment dependence risk: The Public sector accounts for 53.2% of Revenue, exceeding half, making the company sensitive to public investment budgets, bid prices, and policy changes. The Public sector Operating margin of 6.6% is 4.0pt below the Private sector 10.6%, so an increase in the Public sector share could pressure consolidated margins. Monitoring backlog and order pipeline is important.
Working capital efficiency risk: DSO 63 days and DPO 53 days yield a short working capital cycle of 10 days, but CCC (including inventory turnover days 34) is 44 days. Inventory is ¥50.3B (prior year ¥44.4B, +13.3%), increasing faster than Revenue growth (+5.3%), which may strain working capital due to deteriorating inventory efficiency. Trade receivables ¥136.0B decreased from ¥140.0B prior year, but prolonged collections present credit cost risk.
Tax burden & capital efficiency risk: Effective tax rate 36.1% (prior year 31.5%) is high, pressuring Net Income. ROE 3.0% and ROIC 3.9% (estimated NOPAT / invested capital) indicate low capital efficiency and potential underperformance relative to capital cost. Goodwill amortization ¥14.9B accounts for 15.3% of EBITDA ¥97.2B, and JGAAP goodwill amortization persistently compresses reported profits. Goodwill balance ¥122.9B (12.4% of equity) carries impairment risk, and M&A-driven dilution of capital efficiency requires attention.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.3% | 7.8% (4.6%–12.3%) | -0.5pt |
| Net Margin | 3.8% | 5.2% (2.3%–8.2%) | -1.3pt |
Operating margin is slightly below industry median, affected by goodwill amortization burden and relatively high SG&A ratio. Net margin is 1.3pt below the industry median, mainly due to higher tax burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 5.3% | 3.7% (-0.4%–9.3%) | +1.6pt |
Revenue growth rate exceeds industry median by 1.6pt, driven by solid orders in both Public and Private segments.
※Source: Company compilation
Improvement in gross margin and recovery of Public sector margins are the primary drivers of profitability improvement. Gross margin improved to 31.1% (YoY +1.1pt), and Public sector Operating margin significantly improved to 6.6% (YoY +1.8pt). Price revisions taking hold, optimization of product mix, and stabilization of material costs contributed; future bid prices and material cost trends will determine sustainability of gross margin. SG&A ratio rose to 23.9% (YoY +0.6pt); if wage increases, R&D investment, and sales strengthening persist, maintaining operating leverage will require continued Revenue growth.
Strong OCF and active CapEx indicate a growth investment phase. OCF ¥79.9B is 2.01x Net Income and OCF/EBITDA 0.97x, showing strong cash generation. CapEx ¥42.7B (5.5% of Revenue, 1.68x depreciation) increased significantly YoY (+65.0%), accelerating investment for capacity expansion and efficiency. FCF ¥36.7B sufficiently covers dividends ¥21.8B, and total shareholder returns ¥42.7B are balanced with on-hand cash and long-term financing. Equity Ratio 70.9% and Debt/EBITDA 1.14x indicate high financial soundness and substantial room for further growth investment.
JGAAP goodwill amortization burden and low capital efficiency are medium-term challenges. Goodwill amortization ¥14.9B accounts for 15.3% of EBITDA ¥97.2B, creating a disadvantage compared with IFRS-based profit comparisons. EBITDA margin before goodwill amortization is 12.4%, but ROE 3.0% and ROIC 3.9% (estimate) are low, suggesting potential inability to sufficiently exceed cost of capital. Goodwill balance ¥122.9B (12.4% of equity) poses impairment risk, and M&A-related dilution of capital efficiency requires caution. In working capital, inventory increase (+13.3%) outpaced Revenue growth (+5.3%), indicating room to improve inventory efficiency.
This report is an AI-generated financial analysis document automatically produced by analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are compiled by the Company based on public financial statements and are provided for reference only. Investment decisions should be made at your own discretion and, if necessary, after consulting a professional advisor.