HARIMA CHEMICALS GROUP (4410) FY2027 Q1 Earnings Report

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Executive Summary

The quarter concluded with increases in both revenue and earnings, while the operating margin improved significantly year on year, primarily due to a lower SG&A ratio. Revenue was ¥286.8B (+11.5% YoY), Operating Income was ¥13.1B (+71.8%), Ordinary Income was ¥14.6B (+117.1%), and consolidated Net Income, including income attributable to non-controlling interests, was ¥10.0B (+156.7%; of which Net Income attributable to owners of the parent was ¥9.96B). Revenue growth was driven by strong growth in Electronic Materials and solid increases in the core segments. Earnings growth reflected fixed-cost dilution resulting from the containment of SG&A expenses relative to revenue growth, as well as the contribution from higher non-operating income, including equity-method investment income and foreign exchange gains.

Factors Affecting Performance

【Revenue】Revenue was ¥286.8B, representing an increase of +11.5% year on year. By segment, Electronic Materials posted the highest growth among all segments at ¥43.6B (+38.8%), while Lawter recorded ¥101.5B (+9.7%), Resins and Tall Oil Products ¥62.2B (+9.6%), and Paper Chemicals ¥70.9B (+5.2%), with all major segments securing revenue growth.

【Profit and Loss】Operating Income was ¥13.1B (+71.8% YoY), and the operating margin improved to 4.6% from 2.96% in the previous year, an improvement of +1.6pt. The primary driver was the decline in the SG&A ratio (19.7%→18.0%), with fixed-cost dilution contributing as revenue growth (+11.5%) outpaced SG&A growth (+2.1%). Meanwhile, the gross margin was 22.6%, virtually unchanged from the previous year (22.6%), indicating limited improvement on the cost side. Ordinary Income was ¥14.6B (+117.1%), exceeding the growth rate of Operating Income due to the addition of ¥3.0B in equity-method investment income and ¥0.8B in foreign exchange gains. After deducting ¥0.2B in extraordinary losses (temporary factors), Profit Before Tax was ¥14.4B, and after deducting income taxes and other taxes of ¥4.4B, consolidated Net Income was ¥10.0B (+156.7%). Of this amount, Net Income attributable to owners of the parent was ¥9.96B (¥3.9B in the previous year, +153.4%). Both revenue and earnings exceeded the previous year, resulting in higher revenue and earnings.

Segment Analysis

By segment Operating Income, Paper Chemicals recorded ¥7.7B (+60.4% YoY; margin of 10.8%), while Resins and Tall Oil Products recorded ¥6.2B (+72.8%; margin of 9.9%), maintaining high profitability and serving as the primary contributors to company-wide earnings. Lawter was the largest segment by revenue, at ¥101.5B (+9.7%), but Operating Income declined to ¥1.4B (-13.9%), with its margin falling to 1.4%. Electronic Materials posted the highest revenue growth rate, with revenue of ¥43.6B (+38.8%), and Operating Income increased substantially to ¥0.6B (+375.0%); however, its margin remained at 1.3%. Company-wide Operating Income of ¥13.1B represents the segment profit total of ¥16.1B less adjustments of (△¥2.95B), including inventory adjustments and corporate expenses. The low profitability of Lawter and Electronic Materials is a factor depressing the company-wide margin.

Key Financial Indicators

【Profitability】The operating margin was 4.6%, improving +1.6pt from 2.96% in the same period of the previous year. The Net Income margin, based on Net Income attributable to owners of the parent, was 3.5%, improving +1.9pt from 1.5% in the previous year. ROE was 2.4% on the same basis, and despite the earnings growth phase, its absolute level remained low. 【Cash Quality】Accounts receivable were ¥238.8B (+15.5% from the end of the previous fiscal year), and inventories were ¥110.3B (+3.3%), with both increasing at a faster pace than revenue growth (+11.5%), indicating a time lag between earnings growth and cash conversion. 【Investment Efficiency】Property, plant and equipment increased to ¥354.0B (+4.8%), reflecting continued capital investment, while total assets expanded to ¥1097.7B (+6.7%). 【Financial Soundness】The Equity Ratio was 38.8%, the current ratio was 124.8%, and the quick ratio was 100.9%, indicating that short-term payment capacity was secured. However, short-term borrowings increased to ¥225.7B (+7.6%), while the ratio to cash and deposits of ¥59.4B remained at 26.3%, and interest expense increased to ¥0.314B (¥0.257B in the previous year).

Cash Flow Analysis

As cash flow statement items have not been disclosed, funding trends are assessed based on changes in the balance sheet. Accounts receivable increased by +¥32.1B from the end of the previous fiscal year, inventories increased by +¥3.5B, and investment in property, plant and equipment also increased by +¥16.1B. These funding needs were financed by increasing short-term borrowings by +¥16.0B, resulting in cash and deposits declining to ¥59.4B, down -¥3.3B (-5.2%) from the end of the previous fiscal year. Net assets increased by +¥10.3B due to the recognition of current-period earnings and the accumulation of comprehensive income, with no impairment of shareholders’ equity. Overall, the expansion of working capital appears to have tightened liquidity, with short-term financing used to cover the funding gap.

Quality of Earnings

Of Ordinary Income of ¥14.6B, Operating Income of ¥13.1B was the core earnings source, while net non-operating income contributed an increase of +¥1.6B. The ¥5.1B in non-operating income consisted mainly of equity-method investment income of ¥3.0B, foreign exchange gains of ¥0.8B, and dividend income of ¥0.4B. The primary component of non-operating expenses of ¥3.6B was interest expense of ¥3.1B. Equity-method investment income and foreign exchange gains are highly volatile items linked to market conditions and foreign exchange rates, respectively. Accordingly, the +117.1% growth in Ordinary Income includes a meaningful contribution from factors with temporary characteristics. Extraordinary losses were ¥0.2B, or approximately 2% of consolidated Net Income of ¥10.0B, and were not large enough to materially distort the earnings level. Comprehensive income was ¥15.4B, exceeding consolidated Net Income, with the primary source of the difference being foreign currency translation adjustments of +¥4.1B. This divergence results from translation differences related to overseas subsidiaries, and its different nature from Net Income, which reflects the profitability of the business activities themselves, should be noted. Increases in accounts receivable and inventories suggest that the conversion of recorded earnings into cash is lagging, making them monitoring points when assessing earnings quality.

Earnings Forecast and Guidance

Progress against the full-year company plan in Q1 was 26.1% for revenue, 37.3% for Operating Income, 52.2% for Ordinary Income, and 37.6% for Net Income based on income attributable to owners of the parent. All exceeded the 25% benchmark based on simple progress. The particularly high progress for Ordinary Income was attributable to the contribution of non-operating income, including equity-method investment income and foreign exchange gains, and was also high compared with progress on an Operating Income basis (37.3%). For the full year, the company plans revenue of ¥1100.0B (+6.0%), Operating Income of ¥35.0B (+6.6%), and Ordinary Income of ¥28.0B (-6.6%). While the company expects a decline in Ordinary Income year on year, it recorded substantial growth of +117.1% year on year as of Q1. No revision to the earnings forecast was made during the quarter, and the full-year plan remains unchanged.

Shareholder Returns

The company forecasts an annual dividend of ¥42.00 and did not revise its dividend forecast during the quarter. Based on the company’s forecast EPS of ¥109.07, the Payout Ratio is approximately 38.5%. Q1 EPS was ¥40.99, representing progress of 37.6% against the full-year forecast.

Risk Factors

1. Expansion of working capital and impact on cash generation: Accounts receivable were ¥238.8B (+15.5% from the end of the previous fiscal year), and inventories were ¥110.3B (+3.3%), with both increasing faster than revenue growth of +11.5%. Asset growth is preceding earnings growth, requiring monitoring from the perspective of cash-generation capacity.

2. Dependence on short-term funding and interest burden: Short-term borrowings reached ¥225.7B (+7.6% from the end of the previous fiscal year), while the ratio to cash and deposits of ¥59.4B remained at 26.3%. Interest expense was ¥0.314B, increasing from ¥0.257B in the previous year, and the impact of changes in the interest-rate environment on future earnings should be monitored.

3. Profitability disparities among segments: Lawter’s operating margin was 1.4% and Electronic Materials’ margin was 1.3%, both remaining below the levels of Paper Chemicals at 10.8% and Resins and Tall Oil Products at 9.9%. The two lower-margin segments account for approximately half of total revenue (Lawter 35.4%, Electronic Materials 15.2%), and company-wide margin improvement may depend on progress in improving the profitability of these segments.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Both the operating margin and Net Income margin are below the industry median, indicating that profitability is relatively low within the industry.

Growth and Capital Efficiency

The revenue growth rate exceeds the industry median, indicating that top-line growth is relatively strong within the industry.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The operating margin improved to 4.6% from 2.96% in the same period of the previous year, an improvement of +1.6pt. The primary driver was the decline in the SG&A ratio (19.7%→18.0%), while the gross margin remained virtually unchanged at 22.6%. This reflects the operation of positive operating leverage, namely fixed-cost dilution resulting from revenue growth.

2. The 52.2% progress rate for Ordinary Income exceeded the 37.3% progress rate for Operating Income and included the contribution of non-operating income such as equity-method investment income and foreign exchange gains. Compared with growth in core earnings, or Operating Income, growth at the Ordinary Income level includes a meaningful contribution from highly volatile, temporary factors.

3. By segment, Paper Chemicals (margin of 10.8%) and Resins/Tall Oil Products (9.9%) maintained high profitability, while Lawter (1.4%) and Electronic Materials (1.3%) remained low-margin businesses. Electronic Materials recorded a high growth rate of +38.8% in revenue, making progress toward monetization a key focus going forward.

Theoretical Stock Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,570–¥1,661 at ±1% for the cost of equity, and ¥1,610–¥1,617 at ±0.1 for ω.

Notes:

• Because Net Income progress against the full-year forecast (38%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with leading progress tend to exceed forecasts; adjustments may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end have been used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest-rate reference month: 2026-06 / This value does not predict or guarantee future stock prices)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.

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AI Financial Analysis

Executive Summary

Harima Chemicals Group delivered a strong FY2027 Q1 profit recovery, with operating leverage and improved non-operating income lifting earnings materially ahead of the prior-year quarter. Revenue rose 11.5% year on year to ¥28.68bn. Operating income increased 71.8% to ¥1.31bn, while ordinary income more than doubled to ¥1.46bn. Profit attributable to owners of parent rose 153.4% to ¥1.00bn, or ¥40.99 per share. The gross margin was broadly stable at 22.6%, down approximately 6bp year on year. The SG&A-to-sales ratio improved to 18.0% from 19.7%, a 166bp reduction, which was the principal driver of the 160bp expansion in operating margin to 4.6%. Net margin increased to 3.5% from 1.5%, reflecting both operating improvement and a stronger contribution from non-operating income. Equity-method earnings of ¥0.30bn and foreign-exchange gains of ¥0.79bn supported ordinary income, although interest expense of ¥3.14bn remained substantial relative to operating profit. The core business by segment operating-income contribution was Paper Chemicals, which generated ¥0.77bn of segment profit on ¥7.09bn of external sales. Resin & Chemicals also performed strongly, with segment profit increasing 72.8% year on year to ¥0.62bn. Electronic Materials returned to profitability, recording segment profit of ¥0.06bn compared with a ¥0.02bn loss a year earlier. The Lawter segment expanded revenue but saw segment profit decline 13.9% to ¥0.14bn, leaving its margin well below those of Paper Chemicals and Resin & Chemicals. Full-year guidance was maintained, despite Q1 operating-income progress of 37.3% and profit-attributable progress of 37.6%, both more than 10 percentage points above the standard 25% first-quarter run rate. Ordinary-income progress is particularly high at 52.2%, suggesting that the full-year plan embeds a meaningful normalization in later quarters. The balance sheet remains leveraged, with debt-to-equity of 1.58x and 58.9% of interest-bearing debt classified as short term. Working-capital intensity is a central issue, as receivable days of 76, inventory days of 103, and a 134-day cash conversion cycle constrain cash efficiency. The near-term outlook therefore depends on sustaining the improved segment mix and SG&A discipline while converting higher sales into cash and managing refinancing exposure.

Profitability Analysis

Annualized ROE is 9.4%, based on the disclosed DuPont decomposition of a 3.5% net profit margin, 1.045x asset turnover, and 2.58x financial leverage. The largest positive change in the quarter was margin recovery rather than a demonstrated change in balance-sheet efficiency: operating margin improved 160bp year on year to 4.6%, driven by SG&A leverage, while gross margin was essentially unchanged at 22.6%. Revenue growth of 11.5% outpaced SG&A growth of 2.1%, reducing the SG&A ratio by 166bp and indicating favorable fixed-cost absorption. This operating leverage was reinforced by segment profit growth in Resin & Chemicals and Paper Chemicals, as well as Electronic Materials' swing into profit. Paper Chemicals was the largest earnings contributor, producing an estimated 10.8% segment margin, followed by Resin & Chemicals at approximately 10.0%. Electronic Materials generated an estimated 1.3% segment margin after returning to profitability, while Lawter generated approximately 1.4%, despite 9.3% revenue growth. The consolidated operating margin remains below the 5% efficiency threshold, principally because corporate and inventory-related adjustments were a ¥0.30bn drag, versus a ¥0.24bn drag in the prior-year quarter. Financial leverage supports reported ROE but also makes returns more sensitive to interest costs and refinancing conditions. The 5-factor DuPont tax burden was 0.692, close to a normal effective-tax outcome, while the interest burden exceeded 1.0 because non-operating income more than offset net interest costs. Annualized ROE of 9.4% is a clear improvement from the weak earnings base implied by the prior-year quarter, but it remains below the 10-15% range generally associated with strong equity returns. The quality of the margin recovery will depend on whether the lower SG&A ratio can persist and whether the low-margin Lawter and Electronic Materials businesses can improve further.

Growth Assessment

Top-line growth was broad based across the principal operating segments. Resin & Chemicals external sales increased 9.6% year on year to ¥6.15bn, and segment profit increased 72.8% to ¥0.62bn. Paper Chemicals sales rose 5.2% to ¥7.09bn, with segment profit up 60.4% to ¥0.77bn. Electronic Materials recorded the fastest revenue growth, rising 38.8% to ¥4.36bn, and moved from a loss to a ¥0.06bn segment profit. Lawter sales increased 9.3% to ¥9.98bn, but its segment profit fell to ¥0.14bn from ¥0.17bn, highlighting margin pressure despite volume growth. Other businesses grew modestly, with sales up 2.1% to ¥1.05bn and segment profit at ¥0.02bn. Full-year revenue guidance of ¥110.0bn implies Q1 progress of 26.1%, broadly consistent with the standard first-quarter 25% pace. Operating-income guidance of ¥3.50bn implies 37.3% Q1 progress, 12.3 percentage points ahead of the standard pace. Profit attributable to owners guidance of ¥2.65bn implies 37.6% progress, also 12.6 percentage points ahead of the standard pace. Management's unchanged forecast therefore appears prudent but assumes a deceleration in the earnings run rate, particularly after the Q1 contribution from foreign-exchange gains and equity-method earnings. The revenue outlook is supported by growth in all four reported business segments, but sustainable earnings growth requires improved profitability in Lawter and retention of the recovered profitability in Electronic Materials.

Financial Health

Liquidity is adequate on a headline current-asset basis but is constrained by the composition and maturity of funding. The current ratio is 124.8%, above 1.0x, and the quick ratio is 100.9%, marginally above 1.0x. Working capital totals ¥11.46bn, as current assets of ¥57.69bn exceed current liabilities of ¥46.23bn. However, short-term loans are ¥22.57bn, equivalent to 58.9% of ¥38.36bn in total interest-bearing debt, creating a material refinancing requirement. Cash and deposits of ¥5.94bn cover only 0.26x of short-term debt, which is the root cause of the liquidity-stress alert. This maturity profile is not fully offset by current assets because receivables and inventories account for ¥23.88bn and ¥11.03bn, respectively, and are less immediately liquid than cash. Debt-to-equity is 1.58x, below the 2.0x aggressive-leverage warning threshold but still indicative of a debt-supported capital structure. Debt-to-capital is 47.4%, above the sub-40% level generally associated with investment-grade balance-sheet conservatism. Interest coverage is 4.16x, below the 5x strong-coverage benchmark, leaving earnings exposed to higher financing costs. Total assets increased ¥6.89bn year on year, but total liabilities increased ¥5.85bn, causing the capital adequacy ratio to decline to 38.1% from 39.7%. Asset retirement obligations of ¥0.53bn represent only about 0.1% of total liabilities, indicating limited disclosed environmental-remediation balance-sheet exposure.

Notable B/S Changes

Total assets: +¥6.89bn (+6.7%) year on year to ¥109.77bn, led by higher working-capital balances and reinforcing the need to improve asset productivity. Accounts receivable: +¥3.21bn (+15.5%) to ¥23.88bn, outpacing revenue growth and consistent with the elevated 76-day receivable cycle. Short-term loans: +¥1.60bn (+7.6%) to ¥22.57bn, increasing near-term refinancing dependence. Total liabilities: +¥5.85bn (+9.5%) to ¥67.23bn, growing faster than total equity and reducing the capital adequacy ratio to 38.1% from 39.7%. Property, plant and equipment: +¥1.61bn (+4.8%) to ¥35.40bn, reflecting the capital-intensive manufacturing asset base. Investment securities: +¥0.37bn (+4.0%) to ¥9.84bn, maintaining a meaningful 9.0% share of total assets. Total equity: +¥1.03bn (+2.5%) to ¥42.54bn, supported by Q1 earnings and positive comprehensive-income movements but rising more slowly than liabilities.

Cash Flow Quality

The key cash-conversion risk is working-capital intensity rather than the reported accounting profit level. Receivable days are 76 days, above the 60-day warning threshold, indicating slower collection relative to manufacturing efficiency benchmarks. Inventory days are 103 days, above the 90-day warning threshold, increasing exposure to inventory carrying costs, demand changes, and potential valuation pressure. Together with the disclosed payable cycle, these metrics result in an annualized cash conversion cycle of 134 days, exceeding the 120-day warning threshold. This is the root cause of the long-cash-conversion-cycle alert: capital is tied up for an extended period between procurement and customer collection. Accounts receivable increased ¥3.21bn year on year to ¥23.88bn, faster than the 11.5% increase in revenue, which heightens the importance of collection discipline. Inventories increased ¥0.35bn year on year to ¥11.03bn, while raw-material balances increased ¥0.62bn to ¥14.00bn, leaving the group exposed to chemical feedstock price movements and demand volatility. Accounts payable increased ¥1.66bn to ¥10.99bn, providing some supplier-financing offset, but not enough to eliminate the elevated cash conversion cycle. Earnings quality also benefits from only a modest extraordinary loss of ¥0.23bn, equal to roughly 2.3% of profit attributable to owners. Nevertheless, the gap between ordinary income of ¥1.46bn and profit attributable to owners of ¥1.00bn is 31.9%, chiefly reflecting ¥0.44bn of income tax expense and the extraordinary loss. Foreign-exchange gains of ¥0.79bn and equity-method earnings of ¥0.30bn enhanced Q1 ordinary income, so cash conversion and the recurrence of these non-operating contributions are important for assessing the durability of earnings.

Dividend Sustainability

The full-year dividend forecast is ¥42.00 per share, unchanged from the forecast revision status disclosed for the quarter. Based on forecast EPS of ¥109.07, the implied dividend payout ratio is approximately 38.5%. This is below the 60% sustainability benchmark and leaves a meaningful earnings retention buffer. The forecast dividend represents an increase from the ¥21.00 per-share dividend disclosed for the prior-year comparative period. Retained earnings were ¥18.37bn at Q1-end, providing an equity cushion for the planned shareholder distribution. Dividend sustainability is therefore supported by the forecast earnings payout ratio, but the balance-sheet burden from ¥38.36bn of interest-bearing debt and the extended working-capital cycle make preservation of earnings and liquidity discipline important. No share-repurchase activity is identified in the supplied period data, so the assessment is based on the dividend payout ratio rather than a total return ratio.

Risk Assessment

Business risks include Chemical-industry demand and feedstock-price volatility could pressure the gross margin, which was only 22.6% and broadly unchanged year on year., Lawter recorded 9.3% sales growth but a 13.9% decline in segment profit, indicating that revenue growth in this business is not currently translating into adequate profitability., Electronic Materials returned to profitability but generated an estimated segment margin of only about 1.3%, leaving its recovery vulnerable to product mix, pricing, and customer-demand fluctuations., Foreign-exchange gains of ¥0.79bn were equivalent to about 60% of operating income, creating sensitivity to currency movements even though they supported Q1 ordinary income., Receivable days of 76 and inventory days of 103 create risks of slower customer collections, inventory obsolescence, and higher carrying costs..

Financial risks include Refinancing risk is elevated because ¥22.57bn of loans are short term, representing 58.9% of interest-bearing debt. This is materially above the 40% alert threshold and exposes the group to lender appetite and interest-rate conditions., Liquidity stress is elevated because cash and deposits of ¥5.94bn cover only 0.26x of short-term debt. Although the current ratio is above 1.0x, a substantial part of current assets is tied up in receivables and inventories., Interest coverage of 4.16x is below the 5x strong-coverage benchmark. Rising borrowing costs or a reversal in operating earnings would reduce debt-service headroom., Debt-to-equity of 1.58x and debt-to-capital of 47.4% indicate moderate-to-high leverage, even though the debt-to-equity ratio remains below the 2.0x aggressive threshold., The capital adequacy ratio fell to 38.1% from 39.7% year on year as liabilities increased faster than equity..

Key concerns include Low operating efficiency remains a material concern: the 4.6% EBIT margin is below the 5% alert threshold. The Q1 margin improved sharply, but further resilience depends on sustained SG&A control and segment-margin improvement., Capital efficiency is modest, with disclosed ROIC of 4.9%, below the 5% alert threshold. This indicates returns remain only marginally above a level that would compensate for the group's operating and funding risk., The annualized 134-day cash conversion cycle is above the 120-day warning threshold. The combination of high DSO and DIO can absorb liquidity precisely when short-term debt requires refinancing., The ordinary-income run rate was supported by ¥0.79bn of FX gains and ¥0.30bn of equity-method earnings. These items improve reported earnings but are less directly controllable than operating profit., Full-year guidance assumes lower profitability in subsequent quarters than implied by Q1 progress, making the pace of margin normalization and working-capital release key monitoring items..

Investment Implications

Key takeaways include Q1 showed a meaningful earnings recovery: revenue rose 11.5%, operating income rose 71.8%, and profit attributable to owners rose 153.4% year on year., The earnings improvement was driven primarily by a 166bp decline in the SG&A ratio rather than gross-margin expansion, demonstrating operating leverage but requiring evidence of persistence., Paper Chemicals is the core earnings contributor, while Resin & Chemicals also delivered strong profit growth and Electronic Materials returned to profit., Low operating margin, modest ROIC, and low-margin performance in Lawter and Electronic Materials remain structural return challenges., Short-term debt concentration, 0.26x cash-to-short-term-debt coverage, and a 134-day annualized cash conversion cycle are the principal balance-sheet and liquidity sensitivities., The forecast payout ratio of approximately 38.5% is moderate, while Q1 profit progress materially exceeds the normal seasonal benchmark..

Metrics to watch include Operating margin versus the Q1 level of 4.6% and the sustainability of the 18.0% SG&A-to-sales ratio, Paper Chemicals and Resin & Chemicals segment-profit momentum, Lawter segment margin recovery and Electronic Materials' ability to sustain profitability, Receivable days, inventory days, and the annualized cash conversion cycle from Q1 levels of 76 days, 103 days, and 134 days, Short-term loan balance, cash-to-short-term-debt coverage, and interest coverage, Foreign-exchange gains and equity-method earnings relative to ordinary income, Progress against full-year operating-income guidance of ¥3.50bn and profit-attributable guidance of ¥2.65bn.

Regarding relative positioning, The company combines a broad specialty-chemical and materials portfolio with improving Q1 operating leverage, but its 4.6% operating margin and 4.9% ROIC place it below stronger manufacturing profitability and capital-efficiency benchmarks. Its balance-sheet profile is more leveraged and less liquid than a conservatively financed peer set, particularly because of the high short-term debt share and elongated working-capital cycle.