| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥313.1B | ¥305.4B | +2.5% |
| Operating Income | ¥25.7B | ¥22.9B | +12.0% |
| Ordinary Income | ¥29.6B | ¥27.2B | +9.0% |
| Net Income | ¥17.8B | ¥18.4B | -3.0% |
| ROE | 3.1% | 3.5% | - |
For the fiscal year ended March 2026, revenue was ¥313.1B (YoY +¥7.6B +2.5%), operating income was ¥25.7B (YoY +¥2.7B +12.0%), ordinary income was ¥29.6B (YoY +¥2.4B +9.0%), and net income attributable to owners of the parent was ¥19.7B (YoY +¥0.5B +2.7%), achieving year-on-year increases in both revenue and profit. The core Chemicals Business drove performance with revenue of ¥264.96B (+4.1%) and operating income of ¥23.8B (+13.3%), improving gross margin to 22.6% (YoY +1.2pt) and operating margin to 8.2% (YoY +0.7pt). Comprehensive income was ¥58.8B (YoY +3.6x), with an increase in valuation difference on available-for-sale securities (+¥33.8B) contributing significantly to the build-up of equity. Operating Cash Flow (OCF) was ¥45.8B (+5.8%), Free Cash Flow was ¥18.2B, indicating solid cash generation ability, and the company demonstrated the financial capacity to fund aggressive capital expenditures of ¥51.7B (16.5% of revenue) from internal funds.
[Revenue] Revenue was ¥313.1B (YoY +2.5%). By segment, the Chemicals Business led the company with ¥264.96B (+4.1%, 84.6% of total). Demand for industrial phenolic resins and high-performance fibers remained firm, and product mix improvements contributed. Conversely, the Grocery Business declined to ¥45.6B (-5.7%, 14.6% of total) due to price competition and softening demand in the isomerized sugar and corn syrup markets. The Real Estate Utilization Business increased slightly to ¥2.5B (+0.8%, 0.8% of total), with rental income remaining stable. By region, foreign exchange translation adjustment contributed +¥2.7B, indicating contributions from overseas sales.
[Profitability] Gross profit was ¥70.6B (YoY +¥5.4B +8.3%), and gross margin improved to 22.6% (from 20.5% last year, +2.1pt). Cost of sales was restrained, rising to ¥242.4B (YoY +¥2.2B), as optimization of raw material procurement and cost control were effective. Selling, general and administrative expenses (SG&A) were ¥45.0B (YoY +¥2.6B +6.2%, 14.4% of revenue), growing faster than revenue, but operating income still achieved double-digit growth at ¥25.7B (+12.0%). Operating margin improved to 8.2% (from 7.5% last year, +0.7pt), with gross margin improvement being the main driver. Non-operating items included dividend income of ¥3.0B and interest income of ¥1.1B, totaling non-operating income of ¥5.1B, resulting in ordinary income of ¥29.6B (+9.0%). Extraordinary gains were ¥0.15B and extraordinary losses ¥0.6B, with minor impact on net income. After corporate taxes of ¥7.4B (effective tax rate 25.4%) and net income attributable to non-controlling interests of ¥2.0B, net income attributable to owners of the parent was ¥19.7B (+2.7%), with a net income margin of 6.3% (flat YoY). In conclusion, the results reflect revenue and profit growth driven by the Chemicals Business’s product strength and cost improvements.
The Chemicals Business reported revenue of ¥264.96B (YoY +4.1%) and operating income of ¥23.8B (YoY +13.3%), achieving a segment margin of 9.0% (from 8.2% last year, +0.8pt). Strong sales of industrial phenolic resins and high-performance fibers, product mix improvements, and optimized raw material procurement contributed to higher margins. The Grocery Business recorded revenue of ¥45.6B (YoY -5.7%) but maintained profitability with operating income of ¥0.35B (YoY +2.9%), improving segment margin slightly to 0.8% (from 0.7% last year, +0.1pt). Despite a challenging competitive environment in isomerized sugar and corn syrup markets, cost reduction efforts preserved profitability. The Real Estate Utilization Business posted revenue of ¥2.5B (YoY +0.8%) and operating income of ¥1.55B (YoY -3.1%), maintaining a high segment margin of 62.8% (from 65.3% last year, -2.5pt). Rental income was stable and functions as a steady revenue source accounting for roughly 6% of consolidated operating income.
[Profitability] Operating margin of 8.2% (from 7.5% last year, +0.7pt) and net income margin of 6.3% (flat YoY) indicate that gross margin improvement drove profitability. ROE was 3.5% (from 3.9% last year, down), as the increase in net income was outpaced by a substantial build-up in equity (+¥51.2B). ROA on an ordinary income basis was 4.5% (from 4.4% last year, +0.1pt), a slight increase. [Cash Quality] OCF was ¥45.8B, 2.6x net income of ¥17.8B, and OCF/EBITDA ratio was 1.04x, indicating strong cash conversion of profits. The accrual ratio was -3.8%, reflecting healthy earnings quality. [Investment Efficiency] Total asset turnover was 0.46x (from 0.48x last year, down), with an increase in investment securities (+¥28.2B) pushing up the denominator. Capital expenditure was ¥51.7B, 2.8x depreciation of ¥18.3B, indicating expansionary investments to enhance medium-term production capacity. [Financial Soundness] Equity ratio was 83.6% (from 79.0% last year, +4.6pt), D/E ratio was 0.20x, reflecting very strong financials. Current ratio was 381% and quick ratio 346%, indicating solid short-term liquidity. Interest coverage was 327x (Operating Income / Interest Expense), showing minimal interest burden. Working capital efficiency estimates: DSO ~80 days, DIO ~35 days, DPO ~61 days, giving a CCC of ~54 days — acceptable but with room to shorten DSO.
Operating Cash Flow was ¥45.8B (YoY +¥2.5B +5.8%), supported by pretax income before tax adjustments of ¥29.2B, add-backs of depreciation of ¥18.3B and working capital improvements. In working capital, inventory decrease (+¥4.2B) and accounts receivable decrease (+¥2.8B) contributed cash inflows, partially offset by a decrease in accounts payable (-¥3.2B). Corporate tax payments were ¥6.7B. Investing cash flow was -¥27.6B, driven mainly by capital expenditure of ¥51.7B, but proceeds from sales/redemptions of securities amounted to ¥13.0B, limiting net outflows. Free Cash Flow was ¥18.2B (OCF + Investing CF) and after dividend payments of ¥6.6B and share buybacks of ¥0.0B, cash and cash equivalents increased by ¥11.4B. Financing Cash Flow was -¥8.2B, primarily due to dividends of ¥6.6B, lease liability repayments of ¥0.6B, and dividends to non-controlling interests of ¥1.0B. Cash and deposits at the end of the period were ¥102.0B, and together with short-term investment securities of ¥14.9B, liquid assets totaled ¥116.9B. OCF/EBITDA ratio was 1.04x and FCF/OCF ratio was 39.7%, indicating continued healthy cash generation despite active investments.
Of ordinary income ¥29.6B, operating income accounted for ¥25.7B (87%), indicating core business earnings dominate. Non-operating income of ¥5.1B (1.6% of revenue) comprised dividend income ¥3.0B and interest income ¥1.1B from financial assets, representing stable recurring income. Non-operating expenses of ¥1.1B were mainly foreign exchange losses of ¥0.8B, reflecting temporary FX-related factors. Extraordinary items consisted of extraordinary gains ¥0.15B (gain on sale of investment securities ¥0.1B, gain on sale of fixed assets ¥0.2B) and extraordinary losses ¥0.6B (impairment of fixed assets, etc.), with net impact on net income being minor at ¥0.4B. OCF being 2.6x net income and an accrual ratio of -3.8% indicate strong cash backing for profits and low risk of accounting profit adjustments. The gap of approximately ¥41B between comprehensive income ¥58.8B and net income ¥17.8B is mainly due to an increase in valuation difference on available-for-sale securities of ¥33.8B, reflecting market gains on equity securities—these are unrealized gains and not realized profits, warranting attention.
Annual dividend is ¥100 per share (interim ¥50, year-end ¥50), with total dividends of ¥6.6B. Based on net income attributable to owners of the parent ¥19.7B, the payout ratio is 33.5%, a conservative level that balances retained earnings and growth investment. The prior fiscal year had a payout ratio of 34.5% with the same annual dividend, indicating continuation of stable dividends. Dividend coverage relative to Free Cash Flow (¥18.2B) is 2.8x, showing ample capacity to sustain dividends under current investment levels. The company holds 2,362 thousand treasury shares (26.3% of issued shares), maintaining flexibility in capital policy. The dividend forecast for the year ending March 2027 is undecided in disclosed materials and is expected to be determined after assessing business developments. Evaluation of dividend yield and Total Return Ratio requires share price data, but based on payout ratio and cash generation, the ability to continue stable dividends is assessed as high.
Concentration risk in the Chemicals Business: The Chemicals Business accounts for 84.6% of revenue and about 93% of operating income, so performance is highly sensitive to demand fluctuations, raw material price spikes, and customer industry cycles. Demand for industrial phenolic resins and high-performance fibers is linked to capex trends across manufacturing, so in economic downturns both revenue and margins could be pressured.
Low capital efficiency: With ROE at 3.5% and estimated ROIC at 4.1%, the company may be below its cost of capital, and if returns on aggressive capital expenditures (¥51.7B, 2.8x depreciation) do not materialize as planned, shareholder value creation could stagnate. Low total asset turnover of 0.46x and holding of investment securities of ¥160.4B (23.6% of total assets) weigh on asset efficiency, making optimization of the asset portfolio a key challenge.
Market valuation risk of investment securities: The company holds ¥160.4B in investment securities (YoY +21.4%), and valuation difference on available-for-sale securities of ¥69.9B is bolstering equity, but market declines in equities or bonds could reduce valuation differences and, through deferred tax liabilities of ¥31.4B, materially affect equity. This increases volatility in comprehensive income and could impact the stability of the equity ratio.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.2% | 7.8% (4.6%–12.3%) | +0.4pt |
| Net Margin | 5.7% | 5.2% (2.3%–8.2%) | +0.5pt |
Both operating margin and net margin slightly exceed manufacturing medians, placing the company in the mid-to-upper range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.5% | 3.7% (-0.4%–9.3%) | -1.2pt |
Revenue growth trails the industry median by 1.2pt, indicating somewhat modest growth compared with the broader manufacturing sector.
※Source: Company compilation
Continued trend of profitability improvement: Gross margin improved to 22.6% (YoY +2.1pt) and operating margin to 8.2% (YoY +0.7pt), with the Chemicals Business segment margin rising to 9.0%. As product mix shifts to higher value-added products and cost optimization progresses, and if the launch of aggressive capital expenditures (¥51.7B, 16.5% of revenue) proceeds smoothly, there is scope for medium-term expansion of EBITDA margins. High OCF/EBITDA ratio of 1.04x indicates quality of earnings, and confirmation of investment recovery would strengthen the sustainability of profitability improvements.
Financial soundness and investment capacity: With an equity ratio of 83.6%, current ratio of 381%, and interest coverage of 327x, the financial base is extremely solid. Liquid assets of ¥116.9B (cash ¥102.0B + short-term investment securities ¥14.9B) are ample. Low leverage (D/E 0.20x) provides resilience to rising interest rates and affords capacity for additional investments, dividend increases, or M&A. However, low ROE of 3.5% suggests capital efficiency is weak, and strategic use of ¥160.4B in investment securities or revision of capital policy will be key to enhancing shareholder value.
Opportunities to improve capital efficiency and working capital management: Estimated ROIC of 4.1% and total asset turnover of 0.46x indicate modest capital efficiency; the outcome of aggressive investments will be scrutinized. DSO of approximately 80 days points to lengthy receivable collection periods and scope to improve cash efficiency by shortening CCC. High concentration in the Chemicals Business (84.6% of revenue) suggests that diversifying the product portfolio and improving the Grocery Business’s profitability (segment margin 0.8%) are important for medium-term stable growth. With a conservative payout ratio of 33.5% and sufficient FCF coverage, measures to improve capital efficiency—such as reviewing dividend policy or conducting share cancellations—are of interest from the perspective of strengthening shareholder returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional as appropriate before making investment decisions.