| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥74.9B | ¥65.7B | +14.0% |
| Operating Income / Operating Profit | ¥20.7B | ¥17.1B | +20.8% |
| Ordinary Income | ¥24.9B | ¥16.4B | +51.5% |
| Net Income / Net Profit | ¥18.6B | ¥12.1B | +53.6% |
| ROE | 5.0% | 3.3% | - |
FY2027 Q1 results recorded Revenue ¥74.9B (vs prior year +¥9.2B +14.0%), Operating Income ¥20.7B (vs prior year +¥3.6B +20.8%), Ordinary Income ¥24.9B (vs prior year +¥8.5B +51.5%), and Net Income ¥18.6B (vs prior year +¥6.5B +53.6%), achieving double-digit profit growth at all stages. Operating margin improved to 27.6% (vs prior year +155bp), and net margin improved to 24.8% (vs prior year +640bp), driven by a decline in SG&A ratio to 9.8% (vs prior year -201bp), which revealed operating leverage. At the ordinary income level, in addition to equity-method investment income of ¥2.9B, forex gains of ¥1.4B exceeded non-operating expenses (interest and forex losses totaling ¥3.6B), resulting in net non-operating income of ¥4.1B (vs prior year +¥3.3B). In cash flows, Operating Cash Flow was ¥17.8B (vs prior year +157.9%), while capital expenditures were ¥24.2B (4.0x depreciation), resulting in Free Cash Flow of -¥6.5B. On the financing side, long-term borrowings increased to ¥51.4B (vs prior year +66.8%), indicating ongoing financing for large-scale investments.
【Revenue】
Revenue ¥74.9B (+14.0%) was driven by recovery in customer CAPEX cycles and higher volumes in the core high-purity chemical compounds business for semiconductor and related manufacturing. Cost of goods sold was ¥46.9B (vs prior year +¥6.8B); although COGS rose with higher sales, gross margin slightly declined to 37.4% (vs prior year -44bp), suggesting impacts from product mix or raw material prices. Segment sales breakdown is not disclosed in detail because the company operates a single segment (High-Purity Chemical Compounds for Semiconductor and Related Manufacturing), but finished goods inventory decreased to ¥4.6B (¥14.3B prior year) — down -68.1% — while work-in-process increased to ¥27.6B (¥23.0B prior year) +20.0%, indicating changes in production and shipment structure.
【Profitability】
Operating Income ¥20.7B (+20.8%) was mainly driven by SG&A restraint, improving operating margin to 27.6% (vs prior year +155bp). SG&A decreased by ¥0.4B to ¥7.3B (¥7.7B prior year), and SG&A ratio declined to 9.8% (vs prior year 11.8%) -201bp. Ordinary Income ¥24.9B (+51.5%) benefited from a large increase in non-operating income to ¥4.4B (¥2.7B prior year). Breakdown centers on equity-method investment income ¥2.9B and forex gains ¥1.4B; non-operating expenses were limited to ¥0.3B including interest paid ¥0.2B and forex losses ¥3.4B, yielding net non-operating income of +¥4.1B (prior year -¥0.7B). Pre-tax profit was ¥24.9B and income taxes were ¥6.3B (effective tax rate 25.3%), resulting in Net Income ¥18.6B (+53.6%). No one-off factors were identified; the company appears to be strengthening its recurring earnings base. Overall, revenue and profit both increased.
【Profitability】Operating margin 27.6% improved by +155bp from prior-year 17.1B/65.7B=26.1%, and ROE was 5.0% (Net Income ¥18.6B / Net Assets ¥367.6B annualized over 4 quarters). Net margin rose to 24.8% from 18.4% prior year (+640bp), mainly due to SG&A efficiency and the contribution of equity-method investment income. EBITDA equals Operating Income ¥20.7B + Depreciation ¥6.0B = ¥26.7B, and EBITDA margin remained high at 35.7% (prior year 32.2%). 【Cash Quality】Operating Cash Flow / Net Income ratio was 0.96x and Operating Cash Flow / EBITDA ratio was 0.66x. On working capital efficiency, DSO (days sales outstanding) is equivalent to 41.5B ÷ (¥74.9B / 90 days) = ~50 days; DIO (days inventory outstanding) shows an extension trend when considering finished goods inventory ¥4.6B and longer production cycle reflected in WIP ¥27.6B. CCC is volatile: accounts receivable +¥5.1B and inventories +¥8.5B increased while accounts payable decreased -¥9.1B, suggesting changes in collection and payment terms. 【Investment Efficiency】Total asset turnover is 0.16x (¥74.9B / ¥471.7B × annualized 4 quarters), and ROIC is approximately Operating Income ¥20.7B / Invested Capital (Net Assets ¥367.6B + Interest-bearing Debt ¥62.6B) = ~4.8%, indicating a challenge to improve efficiency amid a high-investment phase. Capital expenditures were ¥24.2B, 4.0x depreciation ¥6.0B, and tangible fixed asset turnover was 0.17x (¥74.9B / Tangible Fixed Assets ¥174.9B × annualized 4 quarters). 【Financial Soundness】Equity Ratio was 77.9% (prior year 76.5%), Current Ratio 468% (Current Assets ¥227.0B / Current Liabilities ¥48.5B), and Quick Ratio 459%, indicating very strong liquidity. Interest-bearing debt was Long-term borrowings ¥51.4B + Short-term borrowings ¥8.2B = ¥62.6B, Debt/EBITDA ratio about 2.3x (Interest-bearing Debt ¥62.6B / EBITDA ¥26.7B), and interest coverage using Operating Cash Flow was Operating Cash Flow ¥17.8B / Interest Paid ¥0.2B = 89x, which is healthy.
Operating Cash Flow was ¥17.8B (vs prior year +157.9%). From pre-tax profit ¥24.9B, adding non-cash depreciation ¥6.0B yields subtotal Operating Cash Flow ¥25.6B, from which working capital changes (accounts receivable +¥5.1B, inventories +¥8.5B increase, accounts payable -¥9.1B decrease) caused approximately -¥7.8B impact, and after corporate tax payments of ¥7.7B the result was ¥17.8B. Investing Cash Flow was -¥24.3B, mainly due to capital expenditures ¥24.2B, reflecting proactive growth investment at 4.0x depreciation. Free Cash Flow was ¥17.8B - ¥24.3B = -¥6.5B, i.e., net cash outflow. Financing Cash Flow was +¥11.2B, net of long-term borrowings raised ¥24.0B, long-term borrowing repayments -¥1.6B, dividends paid -¥10.9B, and lease liability repayments -¥0.3B. Cash and cash equivalents were ¥78.0B (vs prior year +¥5.2B), maintaining abundant liquidity; short-term CF pressure from working capital and large capex are being financed by existing cash and increased borrowing.
Operating Income ¥20.7B represents sustainable core earnings, and the gap to Ordinary Income ¥24.9B (¥4.2B) arises from net non-operating income +¥4.1B, primarily equity-method investment income ¥2.9B and forex gains ¥1.4B less non-operating expenses ¥0.3B. Equity-method investment income depends on partner performance and entails variability risk, but it is becoming an established part of recurring earnings. Forex gains ¥1.4B are offset by forex losses ¥3.4B in non-operating expenses, resulting in a net forex impact of -¥2.0B, which has been absorbed by strong operating performance. No extraordinary items were recorded, so there are no one-off boosts to profit. Operating Cash Flow ¥17.8B / Net Income ¥18.6B = 0.96x indicates reasonable cash realization of profits and low accruals. The difference between Ordinary Income ¥24.9B and Net Income ¥18.6B is income taxes ¥6.3B (effective tax rate 25.3%), which is within a normal range. Comprehensive income ¥17.5B was ¥1.1B below Net Income ¥18.6B, comprised of FX translation adjustment +¥0.8B, valuation difference on available-for-sale securities +¥0.1B, actuarial gains/losses +¥0.1B, and equity-method investee OCI share -¥2.0B, with OCI changes at equity-method investees weighing on comprehensive income.
Full Year guidance: Revenue ¥270.0B (+13.1% YoY), Operating Income ¥60.0B (+1.7%), Ordinary Income ¥63.0B (-11.1%), and Net Income ¥46.0B. Q1 results represent progress rates of 27.7% for Revenue, 34.5% for Operating Income, 39.5% for Ordinary Income, and 40.3% for Net Income, all well above the standard quarterly pace of 25%. Operating Income and Net Income in particular are front-loaded, likely reflecting SG&A efficiency improvements and contribution from equity-method investment income. The full-year Ordinary Income forecast -11.1% embeds deterioration in non-operating results compared with Operating Income forecast +1.7%; however, non-operating results improved YoY in Q1, making forex and equity-method income/loss volatility a focus going forward. Q1 EPS of ¥57.09 against full-year EPS forecast ¥141.55 represents 40.3% progress. Dividend forecast is ¥0 (¥0 prior year). No forecast revisions were made this quarter.
A dividend payment of ¥10.9B was made during the quarter, representing a payout ratio of approximately 58.5% relative to quarterly Net Income ¥18.6B. However, the full-year dividend forecast is ¥0, so the quarter dividend payment is likely the year-end dividend for the prior fiscal year paid in this quarter. Share buybacks were effectively zero on the cash flow statement (-¥0.0B), so Total Return Ratio is equivalent to the dividend payout ratio. As Free Cash Flow was -¥6.5B, the dividend payment was funded by on-hand cash and increased borrowings. With cash and cash equivalents of ¥78.0B and ample liquidity, securing dividend funding is feasible over the full year assuming recovery in Operating Cash Flow and normalization of working capital. The full-year dividend forecast of ¥0 suggests a no-dividend policy, but consistency with historical practice should be verified.
Working capital efficiency volatility: Accounts receivable +¥5.1B and inventories +¥8.5B increased while accounts payable decreased -¥9.1B, lengthening the CCC. Operating Cash Flow / EBITDA ratio 0.66x indicates reduced cash conversion efficiency, making optimization of collection terms, inventory management, and payment terms urgent.
Recovery risk on large-scale capital expenditures: Capital expenditures ¥24.2B (4.0x depreciation) were made, and long-term borrowings increased YoY +66.8%. Total asset turnover 0.16x and ROIC ~4.8% indicate low invested capital efficiency; if new plant ramp-up and yield improvements are delayed, earnings and cash generation could deteriorate.
Volatility in equity-method investment income: Of Ordinary Income ¥24.9B, equity-method investment income ¥2.9B (approx. 12%) is relied upon, so partner performance and market fluctuations can swing non-operating results. In comprehensive income, equity-method investee OCI share was -¥2.0B, so changes in partners’ financial structures require attention.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 27.6% | 8.8% (4.4%–14.3%) | +18.8pt |
| Net Margin | 24.8% | 7.3% (3.3%–10.6%) | +17.5pt |
Both operating margin and net margin materially exceed industry medians, placing profitability at the upper end among manufacturers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.0% | 6.6% (-0.3%–14.8%) | +7.4pt |
Revenue growth outperforms the industry median by +7.4pt, indicating relatively healthy growth.
※ Source: Company compilation
Operating margin improved substantially to 27.6% (vs prior year +155bp), with operating leverage emerging from SG&A efficiency. Equity-method investment income ¥2.9B is steadily supporting the ordinary income level, confirming structural contribution from non-operating income.
Aggressive growth investment with capital expenditures ¥24.2B (4.0x depreciation) has been undertaken, and long-term borrowings increased YoY +66.8%. Free Cash Flow is -¥6.5B, but liquidity is ample with cash ¥78.0B and Current Ratio 468%; medium-term benefits depend on improving utilization and income contributions from new assets, while ROIC (~4.8%) improvement will be a catalyst for valuation revision.
Full-year guidance progress is front-loaded: Revenue 27.7%, Operating Income 34.5%, Net Income 40.3%, suggesting first-half concentration or upside to the full year. Working capital movements (AR and inventory increases, AP decrease) lengthen CCC, so improving cash conversion efficiency is the next focus.
This report was 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 from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.