| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥828.9B | ¥732.5B | +13.1% |
| Operating Income / Operating Profit | ¥101.1B | ¥53.5B | +88.9% |
| Ordinary Income | ¥103.7B | ¥57.4B | +80.8% |
| Net Income / Net Profit | ¥62.5B | ¥18.1B | +244.7% |
| ROE | 10.7% | 4.1% | - |
For the full year ending March 2026, Revenue was ¥828.9B (YoY +¥96.3B, +13.1%), Operating Income was ¥101.1B (YoY +¥47.6B, +88.9%), Ordinary Income was ¥103.7B (YoY +¥46.3B, +80.8%), and Net Income attributable to owners of the parent was ¥61.7B (YoY +¥35.8B, +138.6%), delivering revenue growth with a large rise in profits. Operating margin improved to 12.2% from 7.3% a year earlier (+4.9pt), and net margin expanded to 7.4% (from 3.5%) (+3.9pt), indicating a substantial improvement in the quality of the earnings structure. By segment, Electronic & Information led with Revenue ¥305.1B (+21.8%) and Operating Income ¥62.0B (OPM 20.3%), while Environment & Energy contributed with Revenue ¥233.0B (+24.5%) and Operating Income ¥31.4B (turning sharply profitable from ¥-1.0B). In contrast, Core Materials posted Revenue ¥151.8B (-3.6%) and Operating Income ¥1.6B (-46.4%) as commoditized product markets remained unfavorable. Operating Cash Flow (OCF) was ¥99.6B (+32.3%), 1.6x Net Income, funding ¥36.2B of capital expenditures and leaving Free Cash Flow of ¥64.3B. Cash balance rose to ¥240.3B (+43.5%), Equity Ratio was 50.7%, and Debt/EBITDA was 1.63x, signaling strong financial safety. Dividends were ¥150 per share annually (Payout Ratio 37.0%), supporting sustainability. Prolonged working capital (Inventory +¥26.6B, Accounts Receivable +¥11.5B) left OCF/EBITDA at 0.75x, indicating room to improve cash conversion.
【Revenue】 Revenue ¥828.9B (+13.1%) was led by expansion in high value-added segments. Electronic & Information contributed the most at ¥305.1B (+21.8%), driven by demand in semiconductor and electronic materials and expanded sales of low-dielectric resins. Environment & Energy also grew rapidly to ¥233.0B (+24.5%), supported by increased sales of EV battery materials and cellulose-based polymer materials. Life & Wellness rose slightly to ¥138.9B (+1.1%) with stable demand for health foods and deodorizing/disinfectant products. Conversely, Core Materials declined to ¥151.8B (-3.6%) as commodity surfactant price declines and higher raw material costs pressured the segment. Regionally, Japan was ¥580.6B (+8.9%), China ¥143.4B (+68.7%) with significant growth in China, while Other Asia was ¥81.5B (-12.8%). Gross margin improved to 29.9% (prior year 24.9%) (+5.0pt), aided by a higher-value product mix and price pass-through.
【Profitability】 Operating Income ¥101.1B (+88.9%) was driven primarily by margin expansion; Operating Margin improved to 12.2% (prior year 7.3%) (+4.9pt). Cost of goods sold ratio fell to 70.1% (prior year 75.1%) (-5.0pt), reflecting a higher share of high value-added products and absorption of fixed costs. Selling, General & Administrative expenses (SG&A) were ¥146.8B (+13.9%), roughly in line with sales growth, leaving the SG&A ratio nearly flat at 17.7% (prior year 17.6%). By segment, Electronic & Information Operating Income of ¥62.0B (+27.8%) accounted for 61% of consolidated profit, and Environment & Energy Operating Income of ¥31.4B (from ¥-1.0B prior) was the largest driver of profit improvement. Core Materials remained weak with Operating Income ¥1.6B (-46.4%, OPM 1.1%), suggesting the need for restructuring. Non-operating results were +¥2.6B, primarily from dividend income ¥2.8B and foreign exchange gains ¥1.2B, offset by interest expense ¥2.4B. Ordinary Income ¥103.7B (+80.8%) moved in line with Operating Income. Extraordinary losses of ¥4.8B included impairment losses ¥2.9B related to the rationalization of unprofitable businesses in Kyoto Elex and Suzhou Kaiyi Electronic Materials within the Environment & Energy segment. Income taxes were ¥25.9B (effective tax rate 26.2%), resulting in profit after tax ¥62.5B (+244.7%). After deducting non-controlling interests of ¥11.3B, Net Income attributable to owners of the parent was ¥61.7B (+138.6%). In conclusion, the company achieved revenue increase and substantial profit growth with structural improvements in profitability.
Electronic & Information (Revenue ¥305.1B, Operating Income ¥62.0B, OPM 20.3%): Revenue +21.8% and profit +27.8%, achieving both high growth and high profitability. Strong demand for electronic materials such as low-dielectric resins, waterborne polyurethane resins, and ionic liquids, supported by semiconductor and 5G-related capex expansion, was favorable. Sales to major customer Koyo Boeki were ¥91.1B (11% of consolidated revenue), increasing concentration to a large customer—an item to monitor—but technical superiority and high value-add sustain margins in the 20% range.
Environment & Energy (Revenue ¥233.0B, Operating Income ¥31.4B, OPM 13.5%): Revenue +24.5%, and profit turned sharply positive from ¥-1.0B the prior year (+3,339.2%), making this the largest driver of profit increase. Growth was driven by battery materials (lithium-ion secondary batteries for EVs) and expanded sales of cellulose-based polymer materials. The ¥2.9B impairment was related to rationalization of unprofitable operations in Kyoto Elex and Suzhou Kaiyi Electronic Materials; even including this one-time loss, the segment achieved a major improvement at the operating profit level, indicating structural earnings power improvement.
Life & Wellness (Revenue ¥138.9B, Operating Income ¥6.0B, OPM 4.3%): Revenue +1.1% and profit +105.8% (approximately doubled). Stable-demand products such as sucrose fatty acid esters, health foods, and deodorizing/disinfectant products steadily improved margins. OPM is low at 4.3% but improved by 2.2pt from 2.1% the prior year, supported by product mix adjustments and SG&A efficiency.
Core Materials (Revenue ¥151.8B, Operating Income ¥1.6B, OPM 1.1%): Revenue -3.6% and profit -46.4%, the only segment with declines. The portfolio is centered on commodity products such as nonionic and anionic surfactants, suffering from high raw material costs and weak market conditions. With OPM at a very low 1.1%, urgent transition to higher value-added products or restructuring is required. Profitability has halved from prior year ¥3.0B, and there is risk of further deterioration.
【Profitability】Operating Margin 12.2% improved by 4.9pt from 7.3% last year, realized by a combination of Gross Margin 29.9% (prior year 24.9%, +5.0pt) and SG&A ratio 17.7% (prior year 17.6%, +0.1pt). ROE was 10.7% (up +3.8pt from 6.9% prior year); in DuPont terms, Net Margin 7.4% × Total Asset Turnover 0.721 × Financial Leverage 1.97x, with margin improvement as the largest contributor. Equity Ratio rose to 50.7% (prior year 45.8%), slightly reducing financial leverage, but margin expansion more than offset this effect. 【Cash Quality】Operating Cash Flow ¥99.6B is 1.6x Net Income ¥62.5B; OCF/EBITDA is 0.75x, reflecting strong cash generation but pressured by prolonged working capital (Inventory +¥26.6B, Accounts Receivable +¥11.5B). DSO is 93 days (prior estimated in the 80s) and DIO is 118 days (prior estimated in the 100s), showing a clear elongation and indicating the need to normalize the cash conversion cycle. 【Investment Efficiency】CapEx ¥36.2B was 1.12x Depreciation ¥32.2B, indicating a balanced mix of expansion and renewal. Construction in progress was ¥26.9B (prior ¥4.4B, +510%), reflecting ongoing projects expected to contribute to production from next fiscal year onward. Total Asset Turnover was 0.721x (prior 0.754x), a slight decline driven by increases in inventory and receivables. 【Financial Soundness】Equity Ratio 50.7%, Debt/EBITDA 1.63x, Interest Coverage (EBITDA / Interest Expense) 54.9x indicate very high financial resilience. Current Ratio 175.4% and Quick Ratio 142.5% show sufficient liquidity. Cash ¥240.3B covers short-term interest-bearing debt ¥138.3B (short-term borrowings ¥72.3B + bonds maturing within one year ¥60.0B) by 1.7x. Long-term borrowings ¥144.3B and bonds ¥60.0B are reasonably distributed, limiting maturity mismatch risk. Investment securities ¥86.0B (prior ¥57.0B, +51.0%) reflect expanded unrealized gains and act as a capital cushion, though market volatility risk should be monitored.
Operating Cash Flow was ¥99.6B (prior ¥75.3B, +32.3%), producing 1.6x Net Income ¥62.5B and demonstrating strong cash generation. Operating cash flow before working capital changes was ¥113.5B, reflecting core earnings including depreciation ¥32.2B and tax/interest adjustments. Working capital changes were Inventory -¥26.6B, Accounts Receivable -¥11.5B, Accounts Payable +¥17.8B, totaling a cash outflow of -¥20.3B, with inventory and receivables build-up to support sales growth pressuring OCF. Corporate tax payments were ¥13.8B, dividend/interest receipts ¥2.7B, and interest paid ¥2.8B—minor amounts. Investing Cash Flow was -¥35.4B, driven by CapEx ¥36.2B, partially offset by proceeds from disposal of tangible fixed assets ¥2.5B and sale of investment securities ¥0.1B, resulting in net outflow. The rise in construction in progress (¥26.9B, from ¥4.4B prior, +¥22.5B) indicates more projects under construction, expected to contribute to production capacity and cash inflows in future periods. Free Cash Flow was ¥64.3B (Operating CF ¥99.6B - Investing CF ¥35.4B), ample to more than cover dividends ¥11.6B and minority dividends ¥7.4B. Financing Cash Flow was a net inflow of ¥8.5B, comprising long-term borrowings procured ¥30.0B, net increase in short-term borrowings ¥10.7B, long-term borrowings repayments ¥58.7B, lease repayments ¥4.9B, dividend payments ¥11.6B, and proceeds from disposal of treasury stock ¥51.5B. Proceeds ¥51.5B from disposal of treasury stock contributed to capital enhancement. Cash and cash equivalents increased from ¥165.6B at the beginning of the period to ¥238.3B at the end (+¥72.7B), with FX impact -¥0.1B; net inflows from operating and financing activities contributed to the cash build-up. OCF/EBITDA 0.75x falls short of an ideal level (>0.9x), indicating scope to improve working capital efficiency. Inventory days 118 and receivable days 93 are the main causes of elongation; next fiscal year priority is inventory reduction and faster receivables collection to normalize the cash conversion cycle.
Earnings quality is generally good, with recurring earnings comprising the bulk of profits. Operating Income ¥101.1B demonstrates core operating earnings power, and non-operating results +¥2.6B (Non-operating income ¥6.8B - Non-operating expenses ¥4.1B) were minor in scale—dividend income ¥2.8B, foreign exchange gains ¥1.2B, and interest income ¥0.6B—amounting to 0.3% of Revenue and minimally dependent on Operating Income. Equity-method investment gains ¥0.4B were limited. Extraordinary losses ¥4.8B centered on impairments ¥2.9B tied to rationalization in Kyoto Elex and Suzhou Kaiyi Electronic Materials—one-off items with low likelihood of recurrence. The ratio of one-time items to Net Income is approx. 7.7%, under 10%, indicating high quality of net income this period. Comprehensive income ¥104.0B exceeded Net Income ¥62.5B by ¥41.5B; other comprehensive income was mainly unrealized gains on securities ¥21.6B, actuarial gains/losses adjustments ¥5.8B, and foreign currency translation adjustments ¥4.1B. Expansion of unrealized gains on investment securities ¥86.0B (prior ¥57.0B, +51.0%) reflects market appreciation, providing a capital cushion but also exposing the company to market volatility. The OCF to EBITDA ratio 0.75x (OCF ¥99.6B / EBITDA ¥133.3B [Operating Income ¥101.1B + Depreciation ¥32.2B]) suggests accruals from inventory and receivables build-up, creating a timing gap between revenue recognition and cash collection. The accrual ratio ((Net Income - OCF) / Total Assets) is -3.3%, within a healthy range, and normalization of working capital next year should further expand OCF. The difference between Ordinary Income ¥103.7B and profit before tax ¥98.9B (¥4.8B) aligns with extraordinary losses, supporting the view that core earnings are sustainable.
Full year guidance remains Revenue ¥840.0B (YoY +1.3%), Operating Income ¥110.0B (+8.8%), Ordinary Income ¥110.0B (+6.0%), EPS ¥631.42, and Dividend ¥75, unchanged. Compared with results, Revenue ¥828.9B (progress 98.7%), Operating Income ¥101.1B (progress 91.9%), and Ordinary Income ¥103.7B (progress 94.3%) show Operating Income slightly missed plan by -8.1%. The shortfall is mainly attributable to Core Materials’ revenue and profit declines (Revenue -3.6%, Operating Income -46.4%) and efficiency deterioration from working capital buildup. Conversely, strong revenue and profit growth in Electronic & Information and Environment & Energy underpinned overall performance, and the improvement trends in Gross Margin 29.9% (prior 24.9%) and Operating Margin 12.2% (prior 7.3%) were achieved with quality that exceeded plan. For next fiscal year, if working capital normalizes (inventory reduction and accelerated receivables) and Core Materials’ restructuring progresses, continued revenue and profit growth and maintaining double-digit Operating Margin are well within reach. The dividend forecast of ¥75 is conservative, being half of the ¥150 actual payout; given the midterm dividend ¥60 and year-end ¥90 actuals, there is potential for dividend increase.
Annual dividend was ¥150 (interim ¥60, year-end ¥90), yielding a Payout Ratio of 37.0% relative to Net Income attributable to owners of the parent ¥61.7B, which is within a sustainable range. This is a significant increase from prior year dividend ¥45 (annualized), reflecting profit growth passed to shareholders. Total dividends ¥11.6B against Free Cash Flow ¥64.3B (Payout Ratio on FCF basis 37.0%) gives FCF coverage of 4.0x, indicating ample capacity. Share buybacks were ¥0.0B, so returns were dividend-centric. The dividend forecast ¥75 for next year is half of this year’s actual ¥150; if results remain similar, the payout ratio would stay in the low-30% range, leaving room for future increases. Cash balance ¥240.3B (20.9% of total assets) and investment securities ¥86.0B (7.5% of total assets) provide a solid liquidity buffer; with working capital normalization and Core Materials restructuring, maintaining stable dividends and gradual increases is highly feasible. Equity Ratio 50.7% and Debt/EBITDA 1.63x show strong financial health, supporting a balanced approach between growth investment and shareholder returns.
Working Capital Prolongation Risk: Inventory ¥130.1B (prior ¥119.9B, +8.5%) and Accounts Receivable ¥211.5B (prior ¥196.1B, +7.9%) increases are pressuring cash conversion. DIO 118 days and DSO 93 days show pronounced elongation; mismatches between demand forecasts and actual demand or loosening credit management are concerns. If inventory write-downs or receivable credit losses materialize, they would depress profitability and cash flows. OCF/EBITDA 0.75x lags best-in-class peers (>0.9x), making improvement in capital efficiency urgent.
Segment Profitability Disparity Risk: While Electronic & Information (OPM 20.3%) and Environment & Energy (OPM 13.5%) drive performance, Core Materials (OPM 1.1%) remains low-margin and a drag on the portfolio. Core Materials accounts for 18% of revenue (¥151.8B) but only 1.6% of operating income (¥1.6B). Prolonged commodity downturns or high raw material costs could force impairments or business exits, creating restructuring costs and destabilizing the earnings base.
Market Volatility Risk of Investment Securities: Investment securities ¥86.0B (prior ¥57.0B, +51.0%) contributed to expanded unrealized gains and the large increase in comprehensive income (Other Comprehensive Income +¥41.5B). Unrealized gains on securities ¥21.6B reflect equity market appreciation but may decline in adverse market conditions, reducing comprehensive income and equity. Deferred tax liabilities ¥20.7B (prior ¥11.2B) rose alongside unrealized gains; in market downturns, deferred tax asset recognition and impacts on effective tax rate are possible. Monitoring the fair value volatility of investment securities is necessary for assessing impacts on financial stability and capital policy.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.2% | 7.8% (4.6%–12.3%) | +4.4pt |
| Net Margin | 7.5% | 5.2% (2.3%–8.2%) | +2.3pt |
Operating Margin 12.2% exceeds the manufacturing median 7.8% by 4.4pt, reflecting a shift to a high value-added product portfolio and strong price pass-through. Net Margin 7.5% also exceeds the median 5.2% by 2.3pt, placing the company among the upper ranks in the industry for profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 13.1% | 3.7% (-0.4%–9.3%) | +9.4pt |
Revenue growth 13.1% outpaces the industry median 3.7% by 9.4pt, driven by double-digit increases in Electronic & Information and Environment & Energy, demonstrating outstanding growth within the sector.
※ Source: Company aggregation
Portfolio shift to high value-added segments improved the earnings structure: Electronic & Information (OPM 20.3%) and Environment & Energy (OPM 13.5%, turnaround from prior-year loss) accounted for 93% of consolidated operating income, driving Operating Margin to 12.2% (prior 7.3%, +4.9pt). Gross Margin improvement to 29.9% (prior 24.9%) reflects a higher-value product mix and confirms structural earnings improvement. ROE improvement to 10.7% (prior 6.9%) was mainly driven by margin expansion; continued penetration of high value-added products supports the prospect of maintaining double-digit ROE.
Working capital elongation is the focal point for improving cash efficiency: Inventory +¥26.6B and Accounts Receivable +¥11.5B resulted in OCF/EBITDA 0.75x, trailing best peers. DIO 118 days and DSO 93 days suggest demand-supply mismatch or looser credit control; inventory reduction and accelerated receivables collection next fiscal year are key to restoring leverage on Operating CF. Free Cash Flow ¥64.3B and dividends ¥11.6B (FCF coverage 4.0x) provide ample flexibility; following working capital normalization, options for dividend increases or M&A expand.
Restructuring Core Materials is essential for the next leg of growth: Revenue ¥151.8B (-3.6%), Operating Income ¥1.6B (OPM 1.1%, -46.4%) remain low-margin and a drag on the portfolio. The ¥2.9B impairment was part of rationalizing unprofitable businesses, but unless Core Materials shifts to higher value-added products or accelerates downsizing, further improvement in consolidated margins will be constrained. Sustained growth in Electronic & Information and Environment & Energy alongside completion of Core Materials restructuring will be the two pillars for continued profit growth and shareholder value enhancement.
This report is an earnings analysis document automatically generated by AI based on 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 own responsibility; consult professionals as needed before making investment decisions.