| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥240.3B | ¥216.9B | +10.8% |
| Operating Income / Operating Profit | ¥22.4B | ¥16.8B | +33.8% |
| Ordinary Income | ¥22.1B | ¥16.8B | +31.7% |
| Net Income / Net Profit | ¥14.7B | ¥12.5B | +17.1% |
| ROE | 2.3% | 2.0% | - |
The 2026 FY Q1 results achieved revenue of ¥240.3B (YoY +¥23.4B +10.8%), Operating Income of ¥22.4B (YoY +¥5.7B +33.8%), Ordinary Income of ¥22.1B (YoY +¥5.3B +31.7%), and Net Income of ¥14.7B (YoY +¥2.1B +17.1%), representing year-on-year increases across all profit lines. The core Plastic Business performed well with revenue of ¥156.2B (+17.0%), and the New Material Business recorded high growth with Operating Income of ¥8.1B (+63.2%). In contrast, the Construction Material Business was affected by demand softness and rising costs, with revenue of ¥31.6B (-4.2%) and Operating Income of ¥1.6B (-36.3%). Gross margin improved to 22.8% (from 20.3% a year earlier, +2.5pt), and operating margin improved to 9.3% (from 7.7% a year earlier, +1.6pt). Progress against the Full Year plan stands at 24.5% of Revenue and 34.5% of Operating Income, indicating an accelerated pace on the profit side.
[Revenue] Revenue was ¥240.3B (YoY +10.8%), marking a second consecutive period of growth. By segment, the Plastic Business led with ¥156.2B (65.0% of total, +17.0%), the New Material Business continued stable growth at ¥49.0B (20.4%, +6.4%). The Construction Material Business declined to ¥31.6B (13.2%, -4.2%) due to demand softness, while Other Businesses, though small, showed high growth at ¥7.8B (3.2%, +24.6%). Gross profit was ¥54.7B (gross margin 22.8%), improving by 2.5pt year-on-year, supported by price/mix improvements and expansion of high-value products in New Material.
[Profit & Loss] Cost of goods sold was ¥185.6B (COGS ratio 77.2%), yielding gross profit of ¥54.7B. SG&A was ¥32.2B (SG&A ratio 13.4%), up 0.9pt from the prior year, driven by growth investments and higher personnel costs. R&D expense was ¥3.8B (1.6% of sales), up from ¥3.5B a year earlier. Operating Income of ¥22.4B (operating margin 9.3%) increased significantly YoY by +33.8%, driven by margin expansion across the company. Non-operating income included dividend income of ¥1.1B and interest income of ¥0.1B, while non-operating expenses included commission expenses of ¥1.9B, foreign exchange losses of ¥0.9B, and interest expenses of ¥0.4B, resulting in a non-operating loss of ¥0.2B. Extraordinary losses amounted to ¥0.5B (including loss on disposal of fixed assets ¥0.2B), which had a limited impact at around 3.5% of Net Income. After tax expense with an effective tax rate of 32.2%, Net Income was ¥14.7B (net margin 6.1%, up +0.3pt from 5.8% a year earlier). In conclusion, revenue and profit growth was achieved due to higher sales in the core Plastic Business and high-margin growth in New Material.
The Plastic Business reported revenue of ¥156.2B (+17.0%) and Operating Income of ¥18.6B (+24.3%), with an operating margin of 11.9%, making it the largest contributor to company profits. Volume recovery and improved product mix supported profitability. The New Material Business posted revenue of ¥49.0B (+6.4%) and Operating Income of ¥8.1B (+63.2%), achieving the highest segment operating margin at 16.5%. Expansion of high-value products and margin improvements were notable and played a key role in lifting overall company margins. The Construction Material Business saw revenue of ¥31.6B (-4.2%) and Operating Income of ¥1.6B (-36.3%), with operating margin falling to 4.9% due to demand softness and cost inflation; it was the only segment with both revenue and profit decline. Other Businesses recorded revenue of ¥7.8B (+24.6%) and Operating Income of ¥1.4B (+34.3%), maintaining high profitability at an operating margin of 18.7% despite small scale.
[Profitability] Operating margin of 9.3% improved by 1.6pt from 7.7% the prior year, driven by expansion of gross margin to 22.8% (up +2.5pt from 20.3%). SG&A ratio rose to 13.4% (from 12.5% a year earlier, +0.9pt) due to growth investments and higher personnel costs. ROE was 2.3%, decomposed into net margin 6.1%, total asset turnover 0.204 (annualized 0.82), and financial leverage 1.87x. While margin improvement is the main driver, low asset turnover constrains capital efficiency. [Cash Quality] Accounts receivable of ¥185.3B (equivalent to 77.1% of sales) and inventories of ¥65.5B (27.3% of sales) suggest working capital stagnation, with lengthening receivable and inventory turnover periods constraining cash conversion. [Investment Efficiency] With total assets of ¥1,176.9B and quarterly sales of ¥240.3B, total asset turnover annualized is 0.82x, which is low. Tangible fixed assets were ¥400.2B and construction in progress ¥62.96B, indicating large ongoing investments; improving ROIC post-commissioning is a key challenge. [Financial Soundness] Equity ratio declined to 53.6% (from 61.2% a year earlier, -7.6pt) but remains at a stable level. Interest-bearing debt totaled ¥209.6B (short-term borrowings ¥51.8B, current portion of long-term borrowings ¥25.9B, long-term borrowings ¥132.0B), a substantial increase from ¥65.3B a year earlier. Cash and deposits also increased to ¥184.7B from ¥79.8B, a 131.4% rise, suggesting fundraising to secure liquidity for growth investments and M&A. Net debt is modest at approximately ¥24.9B, and interest coverage is very high at Operating Income ¥22.4B ÷ Interest Expense ¥0.4B = 56x, indicating ample financial capacity.
Profit growth in operating activities is the main earnings driver, with non-operating income low at ¥2.0B (0.8% of sales), making Operating Income ¥22.4B the primary source of earnings. Balance sheet movements indicate cash trends: cash and deposits increased by ¥104.9B from ¥79.8B to ¥184.7B, and long-term borrowings rose by ¥123.3B from ¥8.7B to ¥132.0B, implying that externally raised funds accumulated as on-hand liquidity. Accounts receivable decreased by ¥7.3B from ¥192.6B to ¥185.3B, while inventories increased by ¥6.0B from ¥59.5B to ¥65.5B, so net working capital increase was limited. Accounts payable decreased by ¥16.7B from ¥169.1B to ¥152.4B, indicating tightening of trade payables as a cash outflow factor. Tangible fixed assets increased by ¥51.0B from ¥349.2B to ¥400.2B, and construction in progress rose by ¥10.9B from ¥52.1B to ¥63.0B, confirming continued capital expenditure. The primary driver of cash increase was long-term borrowing, suggesting a financing strategy that balances investment execution and liquidity retention.
Earnings quality is centered on operating activities, and recurring revenue structure is healthy. Operating Income of ¥22.4B versus non-operating income of ¥2.0B (0.8% of sales) indicates low reliance on non-operating items, with core business as the earnings source. Of non-operating expenses totaling ¥2.3B, commission expenses ¥1.9B are recorded and are presumed to be temporary fees related to borrowing, with limited impact on the recurring cost structure. Foreign exchange losses of ¥0.9B are a quarterly volatility factor, equivalent to about 4.0% of Operating Income, but not at a level that would excessively distort earnings. Extraordinary losses of ¥0.5B account for about 3.5% of Net Income and are within normal bounds of business activities (including loss on disposal of fixed assets ¥0.2B). Comprehensive income of ¥13.6B was ¥1.1B below Net Income of ¥14.7B, affected by Other Comprehensive Income of -¥1.0B (Unrealized gains/losses on available-for-sale securities -¥1.1B, Remeasurements of defined benefit plans -¥0.1B, Foreign currency translation adjustment ¥0.2B). From an accrual perspective, lengthening receivable collection periods and inventory turnover suggests potential challenges for cash conversion of profits, but Operating Income itself is supported by core business improvements, and accounting-quality concerns are limited.
The Full Year plan is Revenue ¥980.0B (YoY +13.1%), Operating Income ¥65.0B (+5.1%), Ordinary Income ¥67.0B (+4.2%), and Net Income ¥43.0B, with EPS forecast at ¥380.66. Q1 progress ratios vs Full Year forecasts are Revenue 24.5% (standard pace 25%: -0.5pt), Operating Income 34.5% (+9.5pt), Ordinary Income 33.0% (+8.0pt), and Net Income 34.2% (+9.2pt), indicating an accelerated pace on profits. Improvements in gross margin and high-margin growth in New Material are believed to be driving performance ahead of plan. There is no revision to forecasts at the quarterly stage; the company will monitor demand trends in the first half, raw material prices, and currency movements.
The company forecasts an annual dividend of ¥110 per share, implying a payout ratio of 28.9% against forecast EPS of ¥380.66, which is at a sustainable level. Q1-based EPS was ¥130.54 (up from ¥108.52 a year earlier, +20.3%), supporting an expansion of dividend capacity from profit growth. Shares outstanding (after deducting treasury stock) are approximately 11,296 thousand shares, making the annual dividend cash outflow approximately ¥1.24B. Coverage against forecast Net Income of ¥43.0B is ample, and given cash and deposits of ¥184.7B, dividend continuity is evaluated as highly likely. There was no disclosure of share buybacks; shareholder returns are focused on dividends.
Segment concentration risk: The Plastic Business accounts for 65.0% of Revenue and 82.9% of Operating Income, creating a structure where performance is sensitive to supply-demand and price trends in the core business. Changes in raw material prices or competitive conditions could directly affect gross margin and increase operating profit volatility.
Working capital efficiency deterioration: Accounts receivable ¥185.3B (equivalent to 77.1% of sales) and inventories ¥65.5B (27.3% of sales) indicate notable working capital stagnation, and lengthening receivables and inventory turnover periods constrain cash conversion. Additional working capital requirements could strain financial flexibility.
Sharp increase in long-term borrowings and investment recovery risk: Long-term borrowings rose from ¥8.7B to ¥132.0B, a 1,418.6% increase, with construction in progress of ¥62.96B and large-scale investments underway. If investments are delayed to start-up or expected returns are not achieved, impairment risk or increased financial cost burden may arise. Enhancing transparency on fund usage and capital recovery is important.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.3% | 6.8% (2.9%–9.0%) | +2.5pt |
| Net Margin | 6.1% | 5.9% (3.3%–7.7%) | +0.2pt |
Operating margin exceeds the industry median by 2.5pt, indicating relatively high profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.8% | 13.2% (2.5%–28.5%) | -2.3pt |
Revenue growth rate is slightly below the industry median but remains within the IQR, indicating stable growth.
※ Source: Company aggregation
Sustainability of margin improvement and acceleration of New Material growth: Gross margin improved by +2.5pt YoY, and New Material increased operating margin to 16.5% (from 9.9% a year earlier, +6.6pt), driving company-wide profitability. Continued expansion of high-value products in New Material could further lift company margins and present upside to the Full Year plan.
Room to improve working capital efficiency and strengthen cash generation: Stagnation in receivables and inventories suggests that shortening receivable collection period and inventory compression to improve the cash conversion cycle are keys to enhancing shareholder value. Improving working capital efficiency could expand free cash flow and raise capital efficiency.
Transparency of growth investment and capital allocation: Simultaneous increases in long-term borrowings and cash suggest fundraising for growth investment, M&A, and equipment renewal. Clarifying the timing of commissioning for construction in progress ¥62.96B and the capital recovery profile will help assess potential ROIC improvement and the sustainability of medium-to-long-term shareholder returns.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference data compiled by the Company from publicly disclosed financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary before making investment decisions.