| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥769.3B | ¥695.0B | +10.7% |
| Operating Income | ¥188.5B | ¥162.3B | +16.1% |
| Ordinary Income | ¥195.7B | ¥165.6B | +18.2% |
| Net Income | ¥146.4B | ¥108.5B | +34.9% |
| ROE | 12.5% | 10.4% | - |
For the fiscal year ended March 2026, Revenue was ¥769.3B (YoY +¥74.2B +10.7%), Operating Income was ¥188.5B (YoY +¥26.2B +16.1%), Ordinary Income was ¥195.7B (YoY +¥30.1B +18.2%), and Net Income attributable to owners of the parent was ¥146.4B (YoY +¥37.9B +34.9%), achieving year-over-year increases at all profit levels. Operating margin remained high at 24.5% (YoY +1.1pt), supported by sales growth in the Electronic Materials Business and controlled SG&A expense growth (+7.5%) which leveraged operating leverage. At the ordinary income level, foreign exchange gains of ¥4.0B and interest income of ¥4.3B provided additional uplift, and at the net income level the effective tax rate settled at 26.7% representing a standard tax burden. On the balance sheet, cash and deposits increased to ¥410.1B (YoY +¥97.1B), and the company maintained a very strong financial position with an Equity Ratio of 77.0% and a Current Ratio of 395.5%.
[Revenue] Revenue was ¥769.3B (YoY +10.7%), marking the second consecutive year of revenue growth. By segment, the Electronic Materials Business recorded ¥415.1B (+25.0%), a substantial increase and accounted for 54% of total revenue, with sales to a major customer, FUJIFILM Electronic Materials Taiwan, expanding to ¥106.7B (from ¥90.0B last year; +18.7%). Meanwhile, the Life Sciences Business declined to ¥354.1B (-2.4%), creating a divergence between segments. By region, North America grew to ¥121.3B (from ¥108.1B; +12.2%) and Asia expanded to ¥295.0B (from ¥235.4B; +25.3%), with overseas markets driving growth. Gross profit was ¥293.2B and gross margin improved to 38.1% (from 37.4%; +0.7pt), reflecting a favorable product mix and absorption of fixed costs.
[Profitability] SG&A expenses were controlled at ¥104.7B (+7.5%), growing at a rate below revenue growth (+10.7%), and SG&A ratio declined to 13.6% (from 14.0%; -0.4pt). As a result, Operating Income rose to ¥188.5B (+16.1%) and operating margin improved to 24.5% (+1.1pt). Non-operating income was ¥8.8B, mainly interest income of ¥4.3B and foreign exchange gains of ¥4.0B; after deducting non-operating expenses of ¥1.6B (interest expense ¥1.2B), Ordinary Income was ¥195.7B (+18.2%). Extraordinary items were minor at net -¥0.5B (extraordinary gains ¥1.9B, extraordinary losses ¥2.4B). Pre-tax income of ¥195.3B less income taxes of ¥52.2B resulted in Net Income of ¥146.4B (+34.9%). Overall, the company delivered a year of higher revenue and profit.
The Electronic Materials Business posted Revenue of ¥415.1B (YoY +25.0%), Operating Income of ¥159.3B (+20.9%), and an operating margin of 38.4%, driven by expanding semiconductor-related demand. Growth in sales to major customers and a shift to higher-value-added products supported high profitability. The Life Sciences Business recorded Revenue of ¥354.1B (-2.4%) but Operating Income was ¥53.1B (+0.4%), effectively flat, maintaining an operating margin of 15.0%. The Electronic Materials Business generated 84.5% of consolidated Operating Income, increasing the company’s concentration in electronic materials.
[Profitability] Operating margin 24.5% (prior 23.4%), Net margin 19.0% (prior 15.6%)—profitability improved for the second consecutive year. ROE was 12.5%, decomposed as Net margin 19.0% × Total Asset Turnover 0.51 × Financial Leverage 1.30. Expansion of Net margin contributed the most, aided by operating leverage and higher non-operating income. Gross margin 38.1% improved by 0.7pt year-on-year, reflecting a favorable product mix and fixed-cost absorption.
[Cash Quality] Operating Cash Flow (OCF) was ¥247.9B, 1.69x Net Income ¥146.4B, indicating strong cash conversion; the accrual ratio was -7.0%, confirming high cash backing of profits. However, OCF subtotal was ¥286.4B versus actual OCF ¥247.9B, with working capital changes reducing cash by ¥38.5B. EBITDA was ¥298.2B (Operating Income ¥188.5B + Depreciation & Amortization ¥109.4B), and OCF/EBITDA was 0.83x, below 0.9x, affected by increases in accounts receivable and inventory.
[Investment Efficiency] Total Asset Turnover improved slightly to 0.51x (prior 0.49x), but Days Sales Outstanding (DSO) 79 days, Days Inventory Outstanding (DIO) 141 days, and Cash Conversion Cycle (CCC) 198 days all lengthened year-on-year, indicating deterioration in working capital efficiency. Capital expenditure was ¥73.5B, only 0.67x depreciation expense ¥109.4B, below maintenance levels.
[Financial Soundness] Equity Ratio 77.0% (prior 73.5%), Current Ratio 395.5% (prior 362.7%), Quick Ratio 323.9% (prior 286.8%)—liquidity and capital base are very strong. Interest-bearing debt totaled ¥169.0B (long-term borrowings ¥129.0B and short-term borrowings equivalent ¥40.0B), Debt/EBITDA 0.57x, and Interest Coverage 153x (Operating Income ¥188.5B ÷ Interest Expense ¥1.2B), indicating very low leverage and minimal interest burden.
OCF was ¥247.9B (YoY +9.2%), demonstrating solid cash generation at 1.69x Net Income ¥146.4B. The OCF subtotal was ¥286.4B, with depreciation ¥109.4B and Net Income as main sources. In working capital changes, accounts receivable increased by ¥2.8B, inventories decreased by ¥0.7B, and accounts payable decreased by ¥3.1B, so the build-up of receivables and inventories alongside payable outflows pressured cash flow. Corporate tax payments were -¥41.7B. Although liquidity is ample, there is room to improve working capital management. Investing Cash Flow was -¥110.7B, centered on CapEx -¥73.5B and intangible asset acquisitions -¥27.6B, and net decrease in time deposits resulted in -¥8.1B outflow. Free Cash Flow was ¥137.2B (YoY +24.1%) and, in Financing Cash Flow, long-term borrowings were repaid -¥31.0B and dividends paid -¥27.8B; cash and cash equivalents increased from ¥292.4B at the beginning of the period to ¥378.9B at the end of the period (+¥86.6B).
The bulk of this period’s profit was generated from recurring operating activities; net extraordinary items were minor at -¥0.5B (extraordinary gains ¥1.9B, extraordinary losses ¥2.4B), representing 0.3% of Net Income ¥146.4B. Of Non-operating Income ¥8.8B, interest income ¥4.3B and foreign exchange gains ¥4.0B were the main items—both include temporary elements linked to cash management and currency movements, but at 1.1% of Revenue their scale is limited. The OCF subtotal of ¥286.4B versus actual OCF ¥247.9B indicates working capital build-up caused a cash outflow of ¥38.5B, yet an accrual ratio of -7.0% shows strong cash backing for earnings. The gap between Ordinary Income ¥195.7B and Net Income ¥146.4B is due to income taxes at an effective rate of 26.7%; abnormal items are minimal and overall quality of earnings is high. However, OCF/EBITDA 0.83x below 0.9x signals that increases in accounts receivable and inventory point to room for improvement in working capital efficiency.
Full-year guidance projects Revenue ¥858.0B (YoY +11.5%), Operating Income ¥243.0B (+28.9%), Ordinary Income ¥245.0B (+25.2%), and Net Income attributable to owners of the parent ¥166.0B (+13.4%). Operating margin is planned to expand to 28.3% from 24.5% in the current period, presumably premised on continued product mix improvements and scale benefits in the Electronic Materials Business. Progress against initial forecasts stands at Revenue ¥769.3B / ¥858.0B = 89.7%, Operating Income ¥188.5B / ¥243.0B = 77.6%, Ordinary Income ¥195.7B / ¥245.0B = 79.9%—somewhat behind for operating and ordinary income, but assumes profit expansion in the second half. EPS forecast is ¥156.90, implying +16.0% from this period’s ¥135.28, and annual dividend per share after the 1:3 stock split on April 1 is ¥14.00 (split-adjusted), equivalent to ¥42.00 on a pre-split basis; this represents a reduction from the current period’s ¥82.00 but is effectively maintained on a split-adjusted basis. Normalization of inventory and receivables and appropriate capital expenditure discipline are key to achieving the plan.
Annual dividend is ¥82.00 per share (interim ¥41.00, year-end ¥41.00), with total dividends of ¥27.9B against Net Income ¥146.4B, implying a Payout Ratio of 22.1%, a conservative level. No share buybacks were executed (Financing CF -¥0.0B), so Total Return Ratio equals the Payout Ratio at 22.1%. Free Cash Flow ¥137.2B covers dividends of ¥27.9B by 4.92x, indicating very high dividend sustainability. Next fiscal year the company will implement a 1:3 stock split, and the annual dividend forecast ¥14.00 (post-split basis) equals ¥42.00 on a pre-split basis; although this is lower than this period’s ¥82.00, it is effectively maintained after split adjustment. Dividend policy is conservative—ample retained earnings and low payout demonstrate a focus on preserving growth investment capacity and financial stability.
Business concentration risk: The Electronic Materials Business accounts for 54% of revenue and 84.5% of Operating Income, making performance highly sensitive to the semiconductor demand cycle. Sales to a major customer, FUJIFILM Electronic Materials Taiwan, amount to ¥106.7B or 13.9% of total revenue, increasing customer concentration. Fluctuations in semiconductor market conditions or changes in major customers’ procurement policies could directly impact results.
Working capital efficiency deterioration risk: With DSO 79 days, DIO 141 days, and CCC 198 days, the working capital cycle has lengthened and receivables and inventories have increased. OCF/EBITDA 0.83x falls below the benchmark of 0.9x; during inventory adjustment phases there is risk of price pressure and obsolescence. The ability to flexibly execute sales and production plans during demand shifts may be constrained.
Underinvestment risk: CapEx ¥73.5B is only 0.67x depreciation expense ¥109.4B, continuing a level below replacement investment. Progressing equipment aging and widening gaps in technology or supply capacity versus competitors could constrain medium- to long-term growth and profitability. Sustaining high profitability in the Electronic Materials Business requires continuous CapEx and R&D investment.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 24.5% | 7.8% (4.6%–12.3%) | +16.8pt |
| Net Margin | 19.0% | 5.2% (2.3%–8.2%) | +13.8pt |
Both operating and net margins substantially exceed the industry median, placing the company among the top profitability levels in manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.7% | 3.7% (-0.4%–9.3%) | +7.0pt |
Revenue growth also exceeds the median, with expansion of the Electronic Materials Business driving above-industry growth.
※ Source: Company compilation
High profitability and growth in the Electronic Materials Business are driving results—operating margin 24.5% and net margin 19.0% are among the highest in manufacturing. The Electronic Materials Business is offsetting stagnation in Life Sciences, increasing portfolio concentration. This is advantageous in an upswing of the semiconductor cycle but increases earnings volatility risk when demand reverses.
Deterioration in working capital efficiency is prominent, with DSO 79 days, DIO 141 days, and CCC 198 days reflecting increased receivables and inventories; OCF/EBITDA 0.83x falls below the preferred benchmark. Cash generation has not kept pace with profit growth, so improving receivables and inventory management is a priority. Normalization of working capital is essential to achieve next-period OPM 28.3%.
Continued restraint in capital expenditure (CapEx/Depreciation 0.67x) raises concerns over medium- to long-term supply capacity and competitiveness. Given ample retained earnings (Retained Earnings ¥1,029.2B) and cash deposits (¥410.1B) and low leverage (Debt/EBITDA 0.57x), capacity for growth investment exists. To sustain high profitability in the Electronic Materials Business, timely capacity expansion and resumption of R&D investment are important.
This report is an AI-generated financial analysis document created by analyzing XBRL earnings disclosure 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 disclosures. Investment decisions are your own responsibility; please consult a professional advisor as needed before making investment decisions.