| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2418.5B | ¥2225.8B | +8.7% |
| Operating Income / Operating Profit | ¥224.5B | ¥204.0B | +10.1% |
| Ordinary Income | ¥254.8B | ¥222.7B | +14.4% |
| Net Income / Net Profit | ¥308.3B | ¥113.8B | +171.0% |
| ROE | 11.0% | 4.2% | - |
The year ended March FY2026 closed with Revenue of ¥2418.5B (YoY +¥192.7B +8.7%), Operating Income of ¥224.5B (YoY +¥20.5B +10.1%), Ordinary Income of ¥254.8B (YoY +¥32.1B +14.4%), and Net Income of ¥246.4B (YoY +¥134.6B +40.7%), delivering both revenue and profit growth. Operating margin was 9.3% (prior year 9.2%), a marginal increase, while foreign exchange gains of ¥16.7B and gain on sale of investment securities of ¥94.3B (special gain) boosted Net Income margin to 10.2% (prior year 7.9%), an improvement of +2.3pt returning it to double digits. All three business segments achieved revenue growth, led by Life Sciences (+12.3%) and Fine Chemicals (+11.8%); however, gross margin declined to 30.1% (prior year 32.1%) down -2.0pt, and SG&A ratio improved to 20.9% (prior year 23.0%) down -2.1pt. Operating Cash Flow (OCF) was ¥287.8B (YoY +¥25.5B +12.7%) indicating healthy cash generation, but inventory increase of -¥96.3B pressured working capital and Free Cash Flow remained at ¥116.0B. ROE improved to 8.8% (prior year 6.5%) though much of the improvement reflects transitory factors; recurring earning power shows only modest improvements at the operating level.
【Revenue】 Consolidated Revenue expanded steadily to ¥2418.5B (YoY +8.7%). By segment, Mobility & Imaging Business amounted to ¥947.7B (+3.7%), Fine Chemicals Business ¥742.3B (+11.8%), and Life Sciences Business ¥729.9B (+12.3%), with all areas posting growth. Fine Chemicals saw steady demand across functional materials, dye materials, and catalysts; Life Sciences benefited from new product launches in pharmaceuticals and agrochemicals and overseas expansion. Mobility & Imaging showed increased sales of automotive safety components but limited growth rate. Revenue mix was approximately Mobility & Imaging 39.2%, Fine Chemicals 30.7%, Life Sciences 30.2%, a roughly even distribution.
【Profitability】 Cost of sales was ¥1689.7B (prior year ¥1511.0B), up ¥178.7B, and gross margin declined to 30.1% (prior year 32.1%) down -2.0pt. SG&A was ¥504.3B (prior year ¥510.8B), down ¥6.5B, improving the SG&A ratio to 20.9% (prior year 23.0%) down -2.1pt, reflecting effective cost control. As a result, Operating Income was ¥224.5B (YoY +10.1%) and Operating margin modestly improved to 9.3%. Non-operating income totaled ¥41.5B, with foreign exchange gains of ¥16.7B contributing; non-operating expenses were minimal at ¥11.2B, leading to Ordinary Income of ¥254.8B (YoY +14.4%). Special gains totaled ¥96.6B (of which gain on sale of investment securities was ¥94.3B) and special losses were ¥15.5B, bringing Profit before Tax to ¥335.9B (YoY +52.6%). After deducting corporate taxes of ¥88.8B (effective tax rate 26.4%), Net Income was ¥246.4B (YoY +40.7%), a substantial increase. Net margin improved to 10.2% (prior year 7.9%) up +2.3pt, though much of this reflects one-time items (foreign exchange gains, gain on sale of investment securities); recurring profit levels show only modest operating-level improvement. In conclusion, while the company achieved revenue and profit growth, the growth in final net profit depends heavily on transitory factors.
The Mobility & Imaging Business recorded Revenue of ¥947.7B (YoY +3.7%), Operating Income of ¥106.5B (YoY -20.0%), and margin of 11.2% (prior year 14.6%). Revenue grew but profitability deteriorated significantly. Increased sales from Safety Systems and Polatechno were offset by cost increases and price competition. The Fine Chemicals Business posted Revenue of ¥742.3B (YoY +11.8%), Operating Income of ¥119.3B (YoY +20.5%), and margin of 16.1% (prior year 16.1%), maintaining high profitability with balanced expansion across functional materials, dye materials, and catalysts, driving consolidated profits. The Life Sciences Business recorded Revenue of ¥729.9B (YoY +12.3%), Operating Income of ¥96.8B (YoY +52.3%), and margin of 13.3% (prior year 9.8%), achieving both revenue growth and substantial margin improvement. New pharmaceutical and agrochemical product effects and leverage from overseas expansion drove a +3.5pt increase in margin. Consolidated profit growth was led by Fine Chemicals and Life Sciences, while the decline in Mobility & Imaging profits constrained overall growth.
【Profitability】Operating margin at 9.3% (prior year 9.2%) showed modest improvement; Net margin at 10.2% (prior year 7.9%) rose +2.3pt returning to double digits. Gross margin at 30.1% (prior year 32.1%) declined -2.0pt indicating cost pressures, but SG&A ratio improved to 20.9% (prior year 23.0%) down -2.1pt contributing to cost efficiency. ROE at 8.8% (prior year 6.5%) increased due to Net margin improvement, though one-time gains contributed materially and recurring ROE is modest. ROA (on Ordinary Income basis) was 6.6% (prior year 6.0%) with slight improvement. 【Cash Quality】OCF/Net Income was 1.17x in a healthy range, indicating profit is backed by cash. However, OCF/EBITDA at 0.76x falls below the recommended range (≥0.9x), with working capital increases (Inventory -¥96.3B, Accounts Receivable -¥26.6B) suppressing cash conversion. Working capital cycle days (CCC) were 224 days (estimate), with DIO 182 days and DSO 94 days indicating notable inventory and receivables buildup. 【Investment Efficiency】Capital expenditure was ¥244.98B, 1.57x depreciation of ¥156.2B, indicating continued growth/renewal investment. Goodwill was ¥5.0B (0.01x relative to EBITDA), minimal and indicating low M&A burden. 【Financial Soundness】Equity Ratio was 70.2% (prior year 71.6%), maintaining high level; Current Ratio 338%, Quick Ratio 256%, securing ample liquidity. Debt/EBITDA 0.92x and Interest Coverage 80.7x indicate very strong financial resilience.
Operating Cash Flow was ¥287.8B (YoY +12.7%), progressing steadily. Operating cash subtotal (before working capital changes) was ¥322.6B, but inventory increase of -¥96.3B and accounts receivable increase of -¥26.6B pressured working capital; increase in trade payables of +¥32.7B partially offset these. After corporate tax payments of -¥50.9B, net OCF was ¥287.8B. Investing Cash Flow was -¥171.8B, driven primarily by capital expenditure of -¥245.0B, partially offset by proceeds from sale of investment securities of ¥132.97B. Free Cash Flow (OCF + Investing CF) was ¥116.0B, remaining positive. Financing Cash Flow was -¥202.3B, with share buybacks of -¥165.8B and dividend payments of -¥105.6B as major outflows, while long-term borrowings +¥150.0B and bond issuance +¥140.0B were inflows. Cash and cash equivalents at period-end were ¥533.7B (prior year ¥579.3B), a decrease of -¥45.6B but still ample. OCF/Net Income of 1.17x indicates high quality of earnings, but OCF/EBITDA 0.76x is below benchmark and deterioration in cash conversion due to inventory and receivables buildup is a concern.
The core of recurring profitability is Operating Income of ¥224.5B (Operating margin 9.3%), with cash generation from core operations as the foundation. At the non-operating level, foreign exchange gains of ¥16.7B boosted Ordinary Income but FX is volatile and non-recurring in nature. Special gains amounted to ¥96.6B (approximately 39% of Net Income), most of which was gain on sale of investment securities ¥94.3B and thus transient. As a result, of Net Income ¥246.4B, recurring profit is estimated to be roughly Operating Income ¥224.5B, and non-operating plus special items added approximately ¥62.0B (difference between Ordinary Income and Operating Income ¥30.3B plus net special items difference ¥81.1B). Accrual quality is good as OCF ¥287.8B exceeded Net Income ¥246.4B; accrual ratio is -1.0% ((Net Income - OCF) / Total Assets) and is healthy. Comprehensive income was ¥386.5B, ¥78.2B above Net Income, principally due to foreign currency translation adjustments of +¥145.4B which are valuation changes on the balance sheet and not realized. For the next fiscal year, assuming the one-time gains from sale of investment securities drop out, the company’s recurring earnings power will be tested.
The company’s full-year guidance is Revenue ¥2606.0B (YoY +7.8%), Operating Income ¥254.0B (YoY +13.1%), Ordinary Income ¥252.0B (YoY -1.1%), Net Income ¥223.0B, EPS ¥154.50, and dividend ¥33.00. Revenue is expected to continue growing across all segments, and Operating margin is planned to improve to 9.7% (this period 9.3%) up +0.4pt. Ordinary Income is expected to be roughly flat as some reversal of this period’s foreign exchange gains and non-operating income is assumed. Net Income assumes the drop-off of special gains such as this period’s ¥94.3B sale of investment securities, forecasting EPS ¥154.50 (from this period ¥161.18, -4.1%). Progress rates versus guidance are Revenue 92.8%, Operating Income 88.4%, Ordinary Income 101.1%, Net Income 110.5% — operating-level results slightly below plan but Ordinary and Net Income exceeded plan due to one-time items. Next year, strengthening operating-level earnings (margin improvement) will be the focus, and normalization of working capital and inventory reduction are additional key points.
Interim dividend was ¥30 per share and year-end dividend ¥36 per share for a total of ¥66, resulting in a Payout Ratio of 42.9% (¥66 ÷ EPS ¥161.18), within an appropriate range. Total dividends were approximately ¥105.6B, with coverage against Free Cash Flow ¥116.0B at 1.10x, a sustainable level. Share buybacks totaled ¥165.8B, and combined with dividends total shareholder returns were approximately ¥271.4B; Total Return Ratio was 110.2% (relative to Net Income ¥246.4B), slightly aggressive but financial capacity is ample given cash balance (¥500.3B) and low Debt/EBITDA (0.92x). The company forecasts next year’s dividend at ¥33, implying a cut from this year’s ¥66 (annualized), but this year may have included special elements. The company is expected to maintain a stable dividend policy, with a flexible combination of dividends and share buybacks over the medium term.
Working capital efficiency deterioration: Inventory Days 182 days, DSO 94 days, CCC 224 days indicate pronounced inventory/receivables buildup suppressing OCF generation. Inventory increase -¥96.3B and Accounts Receivable increase -¥26.6B totaling -¥122.9B resulted in cash outflow; inventory reduction and improved collections are urgent next-year priorities. High inventory levels carry markdown/obsolescence risk that could pressure gross margin.
Dependence on one-time gains: Of Net Income ¥246.4B, gain on sale of investment securities ¥94.3B (special gain) and foreign exchange gains ¥16.7B (non-operating income) sum to approximately ¥111.0B, about 45%. Reversal of these special items is expected next year; without operating-level improvement, ROE could decline materially. The company’s plan also assumes Net Income ¥223.0B (YoY -9.5%), incorporating the drop in one-time gains.
Profitability deterioration in Mobility & Imaging Business: The segment’s Operating Income fell sharply to ¥106.5B (YoY -20.0%), with margin declining to 11.2% (prior year 14.6%) down -3.4pt. Continued price competition and demand volatility in automotive safety components and weakness in imaging materials market could exert downward pressure on consolidated margins. Given the segment’s 39.2% share of Revenue, restoring profitability here is key to overall margin recovery.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.3% | 7.8% (4.6%–12.3%) | +1.5pt |
| Net Margin | 12.7% | 5.2% (2.3%–8.2%) | +7.6pt |
Both Operating and Net Margins exceed industry medians, placing profitability high within manufacturing peers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.7% | 3.7% (-0.4%–9.3%) | +5.0pt |
Revenue growth rate significantly outperforms industry median, placing the company in the upper group for growth.
※ Source: Company aggregation
Operating-level profitability improvement is limited, and the large increase in Net Income (+40.7%) depends on one-time items—gain on sale of investment securities ¥94.3B and foreign exchange gains ¥16.7B. Next year the company assumes the drop-out of special gains and forecasts EPS ¥154.50 (from ¥161.18 this period, -4.1%); improving recurring earnings is the key focus. The offsetting pattern of gross margin down -2.0pt and SG&A ratio improving -2.1pt may be sustainable short-term, but medium-term profit growth depends on recovery of gross margin through price pass-through and product mix improvements.
Deterioration in working capital efficiency (inventory increase -¥96.3B, accounts receivable increase -¥26.6B) is suppressing cash generation and OCF/EBITDA at 0.76x falls below benchmark. Inventory Days 182 and CCC 224 days indicate notable buildup; inventory reduction and stronger collections next year are top priorities to restore cash generation and asset efficiency. Financial base is very solid (Debt/EBITDA 0.92x, Current Ratio 338%), so short-term liquidity risk is low, but normalization of working capital is essential for sustainable ROE improvement and investment capacity.
By segment, Fine Chemicals (Operating margin 16.1%) and Life Sciences (13.3%, YoY +3.5pt) are driving consolidated profit growth, while profitability recovery in Mobility & Imaging (11.2%, YoY -3.4pt) remains a challenge. The company plans Operating margin improvement to 9.7% next year (+0.4pt), and recovery in Mobility & Imaging plus continued growth in high-value-add segments will be drivers of margin expansion. Capital expenditure is 1.57x depreciation, indicating active investment, so outcomes in production capacity and product mix improvements over the medium term will be watched.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions are your responsibility; please consult a professional advisor as appropriate.