Sekisui Kasei Co.,Ltd. FY2026 FY Earnings Report

クイックビュー

Executive Summary

The fiscal year ended March 2026 reported Revenue of ¥1139.3B (YoY -¥231.4B -16.9%) with a significant decline in top-line, but Operating Income of ¥25.5B (YoY +¥19.1B +298.0%), Ordinary Income of ¥22.5B (YoY +¥21.5B +2,105.9%), and Net Income attributable to owners of the parent of ¥57.9B (YoY +¥142.3B +169.4%, prior year loss of ¥-84.0B) all showed dramatic profit improvement. The revenue decline was mainly due to demand adjustments and selective order intake for European automotive customers in the Industry Business, but price revisions, cost reductions and smaller impairments improved the operating margin from 0.5% to 2.2% (+1.7pt). Although pre-tax result was a loss of ¥-2.1B, a reversal of deferred tax assets and related items led to Income Taxes of ¥-23.7B (benefit), resulting in a return to profitability. Operating Cash Flow was ¥66.5B (YoY +40.0%), Free Cash Flow was ¥22.1B, improving cash generation. Short-term borrowings were reduced by ¥154.6B and refinanced into long-term borrowings (+¥151.3B), reducing maturity mismatch risk. Interest-bearing debt was ¥317.5B and Debt/EBITDA was 4.17x, indicating relatively high leverage, but Interest Coverage (EBIT/Interest Expense) of 3.23x provides minimum interest resilience. By segment, Industry Revenue was ¥616.5B (-25.1%) and HumanLife Revenue was ¥526.0B (-4.8%), showing divergence; however, Industry segment profit surged to ¥25.3B (prior year ¥5.3B), indicating progress in profit-structure reform. Guidance for FY2027 (year ending March 2027) assumes Revenue of ¥1050.0B (-7.8%) with Operating Income of ¥31.0B (+21.5%) and Ordinary Income of ¥26.0B (+15.6%), reflecting improved profitability.

業績変動要因

【売上高】Revenue was ¥1139.3B (YoY -16.9%). By segment, Industry Business was ¥616.5B (-25.1%) with a large decline due to demand adjustments for European automotive and digital appliance customers and withdrawal from unprofitable areas, while HumanLife Business was ¥526.0B (-4.8%) with a slight decrease. By region, Japan was ¥765.5B (67.2% of domestic sales) slightly down from ¥778.1B the prior year; Europe fell by half from prior total ¥40.1B to ¥21.6B this term, with Czech Republic ¥70.1B (prior ¥139.6B, -49.8%) and Germany ¥68.4B (prior ¥113.4B, -39.7%) deeply impacted. Asia was ¥103.4B (prior ¥141.7B, -27.0%), and sales to major customer FP Corporation were ¥184.4B (prior ¥200.2B). Sales composition was HumanLife 46.2%, Industry 54.1%, with Industry accounting for the majority. The primary drivers of top-line decline were production adjustments and inventory reductions in Europe and selective order intake focusing on profitability; while price revisions had an effect, volume declines outweighed them.

【損益】Cost of sales was ¥873.4B (prior ¥1,097.4B, -20.4%), and Gross Profit was ¥265.9B (Gross Margin 23.3%, prior 27,333百万円・Gross Margin 19.9% → +3.4pt) with gross margin significantly improved by lower raw material costs and price revisions. Selling, General & Administrative expenses were ¥240.4B (SG&A ratio 21.1%, prior ¥266.9B・19.5% → +1.6pt), where the ratio rose because fixed-cost reductions did not keep pace with sales decline, though absolute SG&A decreased by ¥-26.5B. As a result, Operating Income was ¥25.5B (Operating Margin 2.2%, prior ¥6.4B・0.5% → +1.7pt) and expanded into positive territory. Non-operating items included Interest and Dividend Income of ¥4.1B, while Interest Expense was ¥7.9B and Foreign Exchange Loss ¥1.1B, making non-operating expenses ¥13.6B, leaving Ordinary Income at ¥22.5B (Ordinary Income Margin 2.0%, prior ¥1.0B・0.1%). Extraordinary items included Special Gains of ¥14.2B (gain on sale of investment securities ¥7.1B, gain on sale of fixed assets ¥7.1B) and Special Losses of ¥38.9B (impairment losses ¥3.7B, loss on business transfer ¥35.0B, etc.), netting to ¥-24.7B and producing a pre-tax loss of ¥-2.1B. However, Income Taxes were ¥-23.7B (mainly due to reversal of deferred tax assets) turning the effective tax rate negative and Net Income attributable to owners of the parent reached ¥57.9B (Net Margin 5.1%, prior ¥-84.0B), a large swing to profit. By segment, HumanLife segment profit was ¥30.3B (prior ¥30.1B, +0.9%) providing stable earnings, and Industry segment profit recovered sharply to ¥25.3B (prior ¥5.3B, +376.8%), contributing to overall profitability. In conclusion, despite revenue decline, price and cost measures plus tax effects produced significant profit growth.

セグメント別分析

The HumanLife segment reported Revenue of ¥526.0B (YoY -4.8%) and Segment Profit of ¥30.3B (prior ¥30.1B, +0.9%) with a stable profit margin of 5.8%. Key products are agricultural and marine transport containers, food containers and construction materials; being domestic-market centric limited the decline. The Industry segment reported Revenue of ¥616.5B (YoY -25.1%) and Segment Profit of ¥25.3B (prior ¥5.3B, +376.8%), rapidly improving to a margin of 4.1%. Sales were hit by reduced demand for components to European automotive and digital appliance customers, but withdrawal from unprofitable contracts and fixed-cost cuts dramatically improved profitability. By region, Japan sales were ¥765.5B (67.2% of total), Europe total ¥216.4B (19.0%, of which Czech Republic ¥70.1B and Germany ¥68.4B), and Asia ¥103.4B (9.1%), reducing Europe dependency from 29.3% to 19.0% year-over-year. HumanLife is a stable earnings source and Industry restructuring is progressing; going forward, margin improvements and volume recovery in both segments will be growth drivers.

主要財務指標

【収益性】Operating Margin of 2.2% improved +1.7pt from 0.5% last year but remains well below the industry median of 7.8% (-5.5pt). Net Margin of 5.1% was temporarily boosted by tax effects and is roughly in line with the industry median of 5.2%, but given the low Operating Margin, sustainability is a concern. ROE of 11.4% (Net Margin 1.9% × Total Asset Turnover 0.93 × Financial Leverage 2.40) swung from -12.0% last year to positive and is above industry level. ROA (on an Ordinary Income basis) of 1.7% improved from 0.1% but profitability remains incomplete. Gross Margin 23.3% (up +3.4pt from 19.9%) improved via price revisions and lower raw material costs, but SG&A ratio rose to 21.1% (from 19.5% → +1.6pt), indicating weak fixed-cost absorption in a sales decline. 【キャッシュ品質】Operating Cash Flow (OCF) of ¥66.5B is 1.15x Net Income of ¥57.9B; OCF subtotal including Depreciation of ¥50.6B is ¥99.5B and working capital changes were slightly negative. Accounts receivable collection +¥11.5B and inventory reduction +¥8.2B contributed positively, while accounts payable decrease -¥13.9B offset part of the benefit. Accrual ratio ((Net Income - OCF)/Total Assets) was -0.7%, a slight negative, indicating cash backing for profits is generally sound. DSO was 61 days (Accounts receivable ¥190.7B ÷ Daily Sales ¥3.12B), above peer average and showing signs of delayed collections. DIO 24 days, DPO 46 days, resulting in CCC 39 days—working capital efficiency is standard but DSO has room for improvement. 【投資効率】CapEx was ¥42.1B, below Depreciation of ¥50.6B, indicating maintenance/renewal-focused investment with limited expansion. CapEx/Sales 3.7% is within the normal range for manufacturing; balancing asset aging and productivity is key. Fixed asset turnover was 2.34x (Revenue ¥1139.3B ÷ Tangible Fixed Assets ¥487.5B), down from 2.78x last year, reflecting lower utilization. 【財務健全性】Equity Ratio improved to 41.6% (from 35.9% → +5.7pt), and Debt/Equity improved to 63.2% (from 176.0%), lowering dependence on debt. Interest-bearing debt was ¥317.5B (Short-term borrowings ¥69.7B, Bonds maturing within one year ¥70.0B, Long-term borrowings ¥247.8B); EBITDA was ¥76.1B, giving Debt/EBITDA 4.17x which is somewhat high. Interest Expense ¥7.9B against EBIT of ¥25.5B yields Interest Coverage of 3.23x, a minimum acceptable level. Current Ratio 129.3% and Quick Ratio 110.4% secure short-term liquidity and refinancing into long-term debt has mitigated maturity risk. Payout Ratio 31.8% (Dividend ¥15 ÷ EPS ¥47.15) is in a reasonable range, and Free Cash Flow ¥22.1B sufficiently covers dividends of ¥6.8B.

キャッシュフロー分析

OCF ¥66.5B (prior ¥47.5B, +40.0%) was driven by an OCF subtotal of ¥99.5B (after pre-tax profit adjustments) plus working capital changes and corporate tax payments; Depreciation ¥50.6B was the largest non-cash item. Decrease in Accounts Receivable ¥11.5B and Inventory ¥8.2B contributed to CF improvement, while decrease in Accounts Payable -¥13.9B was a negative, leaving net working capital change of +¥5.8B. OCF ¥66.5B is 1.15x Net Income ¥57.9B, indicating cash generation above accounting profit. Investing Cash Flow was -¥44.4B, primarily Capital Expenditures -¥42.1B, partly offset by proceeds from sale of investment securities ¥9.7B and sale of fixed assets ¥13.5B. Free Cash Flow ¥22.1B (OCF ¥66.5B + Investing CF -¥44.4B) turned significantly positive from prior ¥-11.4B, creating capacity for growth investment and shareholder returns. Financing Cash Flow was -¥20.8B, reflecting net short-term borrowings decrease -¥114.7B and long-term borrowings repayments -¥154.2B, refinanced by long-term borrowings procured ¥256.0B. Cash increased by ¥2.2B to an ending balance of ¥95.5B, maintaining liquidity at prior-year levels. OCF/Sales was 5.8%, standard, but OCF/EBITDA 0.87x slightly misses the target 0.9x, indicating room to improve working capital management.

収益の質

There is a large divergence between pre-tax loss of ¥-2.1B and Net Income attributable to owners of the parent of ¥57.9B, necessitating a cautious assessment of earnings quality. The primary cause of this divergence was Income Taxes of ¥-23.7B (reversal of deferred tax assets, etc.) producing a negative effective tax rate. Net extraordinary items were ¥-24.7B (Special Gains ¥14.2B, Special Losses ¥38.9B) where loss on business transfer ¥35.0B and impairment losses ¥3.7B were one-off items causing pre-tax deficits. The movement from Operating Income ¥25.5B to Ordinary Income ¥22.5B can be explained by non-operating net of ¥-3.0B (Interest Expense ¥7.9B, etc.). Non-operating income ¥10.6B (including received dividends ¥3.8B) is 0.9% of sales and provides limited recurring contribution. Accrual ratio ((Net Income - OCF)/Total Assets) of -0.7% is a slight negative, with cash generation exceeding accounting profit and no obvious signs of earnings management. OCF ¥66.5B exceeds Net Income ¥57.9B, indicating high realization of profits at the operating level. Comprehensive Income ¥12.5B (attributable to owners of the parent) was ¥9.0B lower than Net Income ¥21.5B, explained by net Other Comprehensive Income items: Valuation differences on available-for-sale securities ¥-12.1B, retirement benefit adjustments ¥-1.2B, and foreign currency translation adjustment ¥3.1B. Because one-time items (Special items -¥24.7B and tax effects +¥23.7B) account for roughly 50% of Net Income, the persistence of Net Income going forward depends on operating earnings power.

業績予想・ガイダンス

Guidance for FY2027 (year ending March 2027) forecasts Revenue ¥1050.0B (YoY -7.8%), Operating Income ¥31.0B (YoY +21.5%), Ordinary Income ¥26.0B (YoY +15.6%), and Net Income attributable to owners of the parent ¥25.0B (EPS forecast ¥54.83, YoY -56.8%). Continued top-line decline is expected due to demand adjustments in Europe and selective order intake in non-profitable areas, but Operating Margin is planned to improve to 2.7% (from 2.2% → +0.5pt). The decline in Net Income is due to the one-off tax benefit in the current term cycling out and a return to normal tax rates; therefore, fundamental profitability should be evaluated at the operating and ordinary income levels. Dividend guidance is ¥5 (down from ¥15 this term), reflecting a cautious stance and priority on performance linkage and internal reserves. Keys to achieving guidance are maintaining gross margin through price/mix improvements, reducing SG&A ratio via fixed-cost control, and suppressing interest costs by reducing interest-bearing debt. Progress rate shows current Ordinary Income ¥22.5B vs full-year forecast ¥26.0B, an achievement rate of 86.5%, indicating a conservative target. Expected scenarios assume Europe market bottoming and stable domestic HumanLife growth.

株主還元

A year-end dividend of ¥15 (interim dividend ¥0) was paid, resulting in an annual dividend of ¥15 and a Payout Ratio of 31.8% (Dividend ¥15 ÷ EPS ¥47.15). Prior-year dividend was ¥3, so this represents an increase of ¥12 following the return to profitability. Total dividends amounted to ¥6.8B (Issued shares 46,988 thousand - Treasury shares 1,391 thousand = 45,597 thousand shares basis), giving coverage vs Free Cash Flow ¥22.1B of 3.25x, indicating sufficient capacity. The forecasted dividend for FY2027 is ¥5, a substantial reduction, reflecting that current Net Income ¥57.9B included a temporary tax-driven uplift; the payout ratio vs full-year forecast Net Income ¥25.0B is 27.4%, within a reasonable range. No share buyback has been confirmed; shareholder returns are limited to dividends and Total Return Ratio is 31.8%. Under high leverage (Debt/EBITDA 4.17x), priority is internal reserves and debt reduction; medium-term scope for progressive dividend increases depends on expansion of OCF and reduction of interest-bearing debt. Given cash and deposits ¥95.5B and OCF ¥66.5B, a dividend of ¥5 is sustainable.

リスク要因

1. Industry demand volatility risk: The Industry Business accounts for 54.1% of sales and centers on European automotive and digital appliance markets; this term experienced a large decline of -25.1%. If global economic slowdown or supply-chain adjustments persist, revenue and profit impacts may continue. Although Europe sales halved from ¥40.1B to ¥21.6B, reducing dependency, if substitute growth in Asia and domestic markets does not keep pace, company-wide earnings could be pressured downward.

2. High leverage and interest burden: Interest-bearing debt ¥317.5B and Debt/EBITDA 4.17x indicate high leverage; Interest Expense ¥7.9B accounts for 31% of Operating Income ¥25.5B. Interest Coverage 3.23x (EBIT/Interest Expense) is a minimum level; rising interest rates or falling operating profits could squeeze interest burden. While refinancing into long-term debt reduced maturity risk, slow pace of debt reduction via OCF would erode financial flexibility.

3. Working capital management and earnings quality: DSO 61 days suggests a tendency toward delayed collections; if customer payment delays or bad debts materialize, OCF could deteriorate. Net Income this term fluctuated significantly due to tax effects and extraordinary items, and Operating Margin of 2.2% is well below industry average. With tax normalizing next year, Net Margin will decline and if Operating Margin fails to improve, the company risks generating returns below shareholders’ cost of capital.

業種ベンチマーク（参考・当社調べ）

収益性・リターン

Operating Margin is well below the industry median and profitability lags peers. Net Margin is median-like due to tax effects, but operating earning power is weak.

成長性・資本効率

Revenue growth rate is -20.6pt below the industry median, impacted by demand adjustments in Europe and automotive exposure.

※Source: Company compilation

決算上の注目ポイント

1. Progress in profitability improvement and normalization of Operating Margin: Operating Margin improved from 0.5% to 2.2% (+1.7pt) supported by Gross Margin +3.4pt and fixed-cost compression. Next-year guidance targets Operating Income ¥31.0B (margin 2.7%) indicating further improvement; if price/mix and fixed-cost control continue, a medium-term return to industry standards (above 5%) is conceivable. Notably, Industry segment profitability improved from 0.6% to 4.1%, evidencing the effects of structural reforms.

2. Improvement in financial health and path to lower interest burden: By reducing short-term borrowings by ¥154.6B and refinancing into long-term borrowings, maturity mismatch risk significantly decreased. Positive Free Cash Flow ¥22.1B provides a resource to reduce interest-bearing debt, and depending on the pace of Debt/EBITDA improvement from 4.17x, Interest Expense ¥7.9B could decline stepwise, lifting Ordinary Income. Interest Coverage 3.23x has room to improve; monitoring OCF expansion and debt reduction in subsequent periods is essential.

3. True earnings power after tax effect normalization and dividend sustainability: Current Net Income ¥57.9B includes a one-time tax benefit of +¥23.7B; the projected decline to Net Income ¥25.0B next term reflects normalization of tax burden. If operating and ordinary income growth continues, the Net Margin decline will be temporary and dividend ¥5 (Payout Ratio 27.4%) is sustainable. Improving DSO from 61 days and working capital efficiency would stabilize OCF and create scope for medium-term progressive dividend increases.

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This report is an earnings analysis document automatically generated by AI analyzing XBRL financial results data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial data. Investment decisions are your responsibility; please consult professionals as needed.