| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1278.6B | ¥1422.6B | -10.1% |
| Operating Income / Operating Profit | ¥100.1B | ¥84.4B | +18.6% |
| Ordinary Income | ¥122.6B | ¥96.7B | +26.7% |
| Net Income / Net Profit | ¥137.1B | ¥27.4B | +400.2% |
| ROE | 8.4% | 2.0% | - |
For the fiscal year ended March 2026, Revenue was ¥1278.6B (¥-144.0B YoY, -10.1%) reflecting a revenue decline, while Operating Income was ¥100.1B (¥+15.7B, +18.6%), Ordinary Income was ¥122.6B (¥+25.9B, +26.7%), and Net Income attributable to owners of the parent was ¥137.1B (¥+109.7B, +400.2%), representing a significant profit increase. Revenue decreased due to withdrawal from the superabsorbent polymer business, but profitability improved from that withdrawal, strong performance in the semiconductor sector, and supply-chain-wide efficiency improvements boosted Operating Income. At the Ordinary Income level, foreign exchange gains (net ¥8.3B, prior year foreign exchange loss ¥5.2B) and dividend income of ¥13.3B contributed. The sharp rise in Net Income was mainly due to a one-off factor: additional recognition of deferred tax assets associated with the absorption-type merger of subsidiaries, which resulted in Income Taxes of -¥59.4B (tax expense negative; prior year +¥15.5B). The effective tax rate was an unusual -56.5%.
[Revenue] Revenue was ¥1278.6B, a decrease of -10.1% YoY. The main driver was a steep decline in the Life & Healthcare Industry-related segment of ¥175.6B (-42.8%), due to withdrawal from the superabsorbent polymer business and intensified competition from low-cost Chinese products. Environment & Housing Industry-related and others declined to ¥131.6B (-10.6%). In contrast, the Information & Electrical/Electronic Industry-related segment increased to ¥225.2B (+7.7%), led by a recovery in semiconductor-related demand. Petrochemical & Transportation Industry-related was ¥483.3B (-1.8%) and Plastics & Textile Industry-related was ¥265.1B (-1.2%), both showing only slight declines. Gross profit was ¥331.6B (gross margin 25.9%), up ¥11.1B from ¥320.5B (gross margin 22.5%) in the prior year, an improvement of 3.4 percentage points.
[Profitability] Operating Income was ¥100.1B (Operating margin 7.8%), up ¥15.7B (+18.6%) from ¥84.4B (5.9%) in the prior year, an improvement of 1.9 percentage points in margin. Selling, General & Administrative expenses were ¥231.6B (SG&A ratio 18.1%), down ¥4.6B from ¥236.1B (16.6%) in the prior year, but the SG&A ratio rose by 1.5 percentage points due to lower Revenue. R&D expense was ¥52.8B (R&D-to-sales 4.1%, prior year ¥51.6B), essentially flat. Ordinary Income was ¥122.6B, up ¥25.9B (+26.7%) from ¥96.7B in the prior year. Non-operating income of ¥26.3B included dividend income of ¥13.3B (prior year ¥11.9B) and foreign exchange gains of ¥8.3B; non-operating expenses of ¥3.8B included foreign exchange losses of ¥5.2B and interest expense of ¥1.1B (foreign exchange had a net gain as ¥8.3B gain exceeded ¥5.2B loss). Profit before tax was ¥105.2B, up ¥40.6B from ¥64.6B. Income taxes were -¥59.4B (current tax ¥13.3B, deferred -¥72.8B), a large negative amount due to additional recognition of deferred tax assets associated with an absorption-type merger of subsidiaries. After deducting Net Income attributable to non-controlling interests of ¥8.2B, Net Income attributable to owners of the parent was ¥137.1B, up ¥109.7B (+400.2%) from ¥27.4B in the prior year. In conclusion, the company achieved higher profits on lower sales, driven by withdrawal from unprofitable businesses, price/mix improvements, and favorable tax effects.
Petrochemical & Transportation Industry-related segment recorded Revenue of ¥483.3B (-1.8%) and Operating Income of ¥56.3B (+41.4%, margin 11.6%), a substantial profit increase. Improved profitability of urethane beads for automotive interiors and raw materials for polyurethane foam contributed. Information & Electrical/Electronic Industry-related segment posted Revenue of ¥225.2B (+7.7%) and Operating Income of ¥36.0B (+42.0%, margin 16.0%), a high-growth segment. Toner binders, materials for polymerized toner, and electrolytes for aluminum electrolytic capacitors grew with semiconductor demand recovery, yielding the highest margin within segments. Plastics & Textile Industry-related segment had Revenue ¥265.1B (-1.2%) and Operating Income ¥24.4B (-15.0%, margin 9.2%), a profit decline as demand weakened for permanent antistatic agents and agents for carbon/glass fiber. Life & Healthcare Industry-related segment saw Revenue ¥175.6B (-42.8%) and an Operating Loss of ¥1.7B (prior year Operating Income ¥1.8B, turning to loss), impacted by withdrawal from the superabsorbent polymer business and intensified competition in surfactants for detergents/cleaning agents. Environment & Housing Industry-related and others recorded Revenue ¥131.6B (-10.6%) and an Operating Loss of ¥1.2B (prior year ¥0.04B), slightly into the red; polymer flocculants for wastewater treatment and polyurethane raw materials for furniture/insulation underperformed. Corporate expenses (new business R&D not allocated to reportable segments, etc.) increased to ¥13.6B (prior year ¥11.2B). After deducting from total segment profits, Consolidated Operating Income was ¥100.1B.
[Profitability] Operating margin improved to 7.8% (up 1.9 percentage points from 5.9%), and gross margin improved to 25.9% (up 3.4 percentage points from 22.5%). Net margin jumped to 10.7% (prior year 1.9%), but this was materially affected by a one-off tax benefit; underlying performance should be evaluated on Operating margin. ROE improved to 8.4% (prior year 2.0%), though a decline is anticipated in FY2027 due to the lapse of tax effects. ROA (on Ordinary Income basis) improved to 6.3% (prior year 5.5%). EBITDA margin is estimated at 15.0% (EBITDA = Operating Income ¥100.1B + Depreciation ¥91.2B = ¥191.3B ÷ Revenue ¥1,278.6B).
[Cash Quality] Operating Cash Flow (OCF) was ¥202.1B, 1.47x Net Income of ¥137.1B. The accrual ratio is (Net Income - OCF) ÷ Total Assets = (¥137.1B - ¥202.1B) ÷ ¥1,955.3B = -3.3%, indicating good quality. OCF/EBITDA ratio was 1.06x (¥202.1B ÷ ¥191.3B), showing solid cash backing for profits. Days Sales Outstanding (DSO) = (Accounts receivable ¥325.5B ÷ Revenue ¥1,278.6B) × 365 = 93 days. Days Inventory Outstanding (DIO) = (Inventory ¥119.5B ÷ Cost of sales ¥946.9B) × 365 = 46 days. Days Payables Outstanding (DPO) = (Accounts payable ¥154.3B ÷ Cost of sales ¥946.9B) × 365 = 59 days. Cash Conversion Cycle (CCC) = 93 + 46 - 59 = 80 days.
[Investment Efficiency] Total asset turnover = Revenue ¥1,278.6B ÷ ((Beginning ¥1,763.7B + Ending ¥1,955.3B) ÷ 2) = 0.69x. Fixed asset turnover = Revenue ¥1,278.6B ÷ Fixed assets ¥1,041.3B = 1.23x. Capital expenditures were ¥62.5B, below Depreciation of ¥91.2B, indicating a cash-conservative stance. R&D-to-sales ratio is 4.1%, demonstrating continued investment in high value-added areas.
[Financial Soundness] Equity Ratio is 83.1% (prior year 76.8%), an extremely high level. Interest-bearing debt (short-term borrowings ¥4.1B + long-term borrowings ¥15.5B + assumed borrowings included in current liabilities) totals approximately ¥19.7B. Cash & deposits are ¥345.2B, yielding Net Cash of +¥325.5B. Debt/EBITDA ratio is ¥19.7B ÷ ¥191.3B = 0.10x, extremely low, and Interest Coverage is Operating Income ¥100.1B ÷ Interest expense ¥1.1B ≈ 91x, indicating no concern. Current ratio = Current assets ¥914.0B ÷ Current liabilities ¥297.6B = 307.1%. Quick ratio = (Current assets ¥914.0B - Inventory ¥119.5B) ÷ Current liabilities ¥297.6B = 266.9%, indicating solid short-term liquidity.
Operating Cash Flow was ¥202.1B (+45.1% YoY). Starting from Profit before tax ¥105.2B, non-cash charges such as Depreciation ¥91.2B and Impairment losses ¥3.1B were added back, and working capital adjustments included decrease in inventories ¥10.2B (cash inflow), decrease in accounts receivable ¥30.1B (cash inflow), decrease in accounts payable -¥20.3B (cash outflow), and income tax paid -¥15.8B, among others. Investing Cash Flow was -¥56.8B, mainly due to expenditures of -¥62.5B for acquisition of tangible and intangible fixed assets, partly offset by recovery of long-term loans receivable of ¥7.7B. Financing Cash Flow was -¥51.7B, including dividend payments -¥37.6B, long-term borrowings repayments -¥7.9B, and dividends paid to non-controlling interests -¥4.8B. Free Cash Flow was OCF ¥202.1B + Investing CF -¥56.8B = ¥145.2B, covering dividend payments -¥37.6B by 3.9x and increasing Net Cash. Cash and cash equivalents at end of period were ¥343.8B (+¥100.0B YoY), with foreign exchange translation differences +¥6.5B and increases from newly consolidated subsidiaries ¥3.7B also contributing.
Of Ordinary Income ¥122.6B, Operating Income ¥100.1B represents recurring earnings, and net non-operating contribution was +¥22.5B (Non-operating income ¥26.3B — including dividend income ¥13.3B, foreign exchange gains ¥8.3B, interest income ¥1.8B — less non-operating expenses ¥3.8B including foreign exchange losses ¥5.2B and interest expense ¥1.1B). The net difference between foreign exchange gains ¥8.3B and losses ¥5.2B (net +¥3.1B) reflects FX impact; a contraction in FX gains is expected in FY2027. Special losses of ¥17.9B (loss on retirement of fixed assets ¥11.9B, impairment losses ¥3.1B, business structure reform costs ¥4.3B, loss on valuation of investment securities ¥1.6B) were one-off items that pressured Profit before tax ¥105.2B. Conversely, Income Taxes of -¥59.4B (current tax ¥13.3B, deferred -¥72.8B) were a large negative, substantially boosting Net Income ¥137.1B. The additional recognition of deferred tax assets is largely a one-time effect associated with the absorption-type merger of subsidiaries; sustainable earning power should be assessed using Operating Income ¥100.1B and EBITDA ~¥191B. Operating Cash Flow exceeded Net Income (¥202.1B vs ¥137.1B) and the accrual ratio was -3.3%, indicating strong cash backing for profits. However, DSO of 93 days indicates relatively long receivable collection periods and management should monitor working capital stickiness risk.
For FY2027 (fiscal year ending March 2027) the full-year forecast is Revenue ¥1,500.0B (+17.3% YoY), Operating Income ¥100.0B (-0.1%), Ordinary Income ¥115.0B (-6.2%), Net Income attributable to owners of the parent ¥90.0B (-34.4%), EPS forecast ¥406.85, and Dividend forecast ¥87.5 (total midterm & year-end). Revenue is expected to rise as the impact of withdrawal from the superabsorbent polymer business dissipates and price pass-through of higher raw material costs occurs; Operating Income is expected to be roughly flat, as increases from structural reforms and expansion of high value-added products are offset by higher expenses from growth investments. Ordinary Income is expected to decline due to a reduction in FX gains, and Net Income is forecast to decline substantially due to the lapse of the deferred tax asset addition recorded in FY2026. FY2026 results are 85.2% of the FY2027 Revenue forecast (¥1,278.6B vs ¥1,500.0B), Operating Income essentially met the forecast (¥100.1B vs ¥100.0B), Ordinary Income exceeded the forecast by ¥7.6B (¥122.6B vs ¥115.0B), and Net Income exceeded the forecast by ¥47.1B (¥137.1B vs ¥90.0B). However, the Net Income upside was due to a one-off tax effect and normalization is expected in FY2027.
For FY2026 the Company paid interim dividend ¥85 and year-end dividend ¥85, annual total ¥170 (prior year ¥85). With average shares outstanding during the period of 22,121 thousand shares, total dividends were approximately ¥37.6B. Dividend payout ratio relative to Net Income attributable to owners of the parent ¥137.1B is approximately 27.4%. Using EPS ¥706.89, DPS ¥170 implies a payout ratio of 24.0%. Free Cash Flow ¥145.2B covers the total dividend ¥37.6B by 3.9x, indicating sufficient cash coverage. The dividend forecast for FY2027 is ¥87.5 (assumed total midterm & year-end), which implies a payout ratio of about 21.5% versus EPS forecast ¥406.85, showing an intent to keep dividends roughly flat even in a profit decline. Cash & deposits ¥345.2B and Net Cash +¥325.5B indicate abundant liquidity and high dividend sustainability. No share buybacks were executed this fiscal year; shareholder returns remain dividend-focused.
Raw material price increases and delayed price pass-through risk: Geopolitical tensions in the Middle East may cause continued raw material price increases, and delays in passing costs through to customers could compress gross margins. Although gross margin improved to 25.9% in FY2026 (prior year 22.5%), accelerated raw material inflation could push FY2027 Operating Income guidance lower.
Polarization of segment performance: Life & Healthcare and Environment & Housing segments are loss-making and weigh on consolidated Operating margin. If intense competition continues after withdrawal from the superabsorbent polymer business, widening losses in these segments could stall company-wide margin improvements. Conversely, Information & Electrical/Electronic and Petrochemical & Transportation segments are driving results, but cyclical semiconductor demand and possible slowdown in automotive production could cause significant profit volatility.
Receivables collection delays and working capital expansion risk: DSO of 93 days indicates long collection terms and Accounts receivable ¥325.5B equates to roughly 25% of Revenue. If customer credit risk materializes, bad debt losses or further working capital deterioration could pressure Operating Cash Flow. CCC of 80 days has room for improvement; shortening DSO is a key management task going forward.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 7.8% | 7.8% (4.6%–12.3%) | +0.1pt |
| Net margin | 10.7% | 5.2% (2.3%–8.2%) | +5.5pt |
Operating margin is broadly in line with the industry median of 7.8%, representing standard profitability within manufacturing. Net margin of 10.7% exceeds the median 5.2% by +5.5 percentage points, but this is due to a one-off deferred tax asset recognition and caution is warranted when comparing sustainably.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | -10.1% | 3.7% (-0.4%–9.3%) | -13.8pt |
Revenue growth rate of -10.1% trails the industry median of +3.7% by -13.8 percentage points, reflecting a contraction phase due to withdrawal from the superabsorbent polymer business. Growth is expected to recover +17.3% in FY2027.
※ Source: Company aggregation
Profitability improvement amid revenue decline and progress on structural reforms: Despite Revenue down -10.1%, Operating Income rose +18.6% and Operating margin improved to 7.8% from 5.9%. Withdrawal from the superabsorbent polymer business, pruning of unprofitable areas, and price/mix improvements raised gross margin to 25.9% (up 3.4 percentage points). Information & Electrical/Electronic led growth with Revenue +7.7% and Operating Income +42.0%, and Petrochemical & Transportation delivered Operating Income +41.4%. Life & Healthcare and Environment & Housing segments turned loss-making but structural reforms are underway and recovery is expected. FY2027 expects Revenue +17.3% recovery but Operating Income is guided flat, incorporating growth investment burdens and expected reduction in FX gains.
Robust financial base and cash generation: Equity Ratio 83.1%, Net Cash +¥325.5B, Debt/EBITDA 0.10x, Interest Coverage ~91x — financial health is extremely strong. OCF ¥202.1B generated Free Cash Flow ¥145.2B, covering dividends ¥37.6B by 3.9x. Cash & deposits ¥345.2B equals about 27% of Revenue, providing flexibility for M&A, capex, and shareholder returns. Dividend payout is around 27% and the Company plans to keep dividends roughly unchanged in FY2027 despite forecast lower profits, suggesting high sustainability. Investment securities at ¥443.8B (¥+136.6B YoY) have expanded financial assets, so strategy for their utilization will be important from a marketable securities volatility and capital efficiency perspective.
This report was automatically generated by AI analyzing XBRL financial statement data to produce a financial analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on published financial statements. Investment decisions are your own responsibility; consult professionals as needed before making investment decisions.