| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥937.6B | ¥725.1B | +29.3% |
| Operating Income / Operating Profit | ¥38.5B | ¥47.2B | -18.3% |
| Ordinary Income | ¥44.8B | ¥52.0B | -13.8% |
| Net Income | ¥20.5B | ¥22.6B | -9.3% |
| ROE | 2.7% | 3.0% | - |
For the fiscal year ended March 2026, revenue was ¥937.6B (YoY +¥212.5B +29.3%), Operating Income was ¥38.5B (YoY -¥8.6B -18.3%), Ordinary Income was ¥44.8B (YoY -¥7.2B -13.8%), and Net Income attributable to owners of the parent was ¥16.9B (YoY -¥77.5B -82.1%). The company posted revenue growth but lower profitability. Revenue increased mainly due to a 40.0% rise in the Domestic Coatings Business and the impact of a large M&A, but operating margin deteriorated materially to 4.1% (down 2.4pt from 6.5% a year earlier). Non-operating income was supported by equity-method investment gains of ¥3.6B, but special losses included impairment losses of ¥9.96B and subsidiary liquidation losses of ¥10.43B, which significantly compressed Net Income.
【Revenue】Revenue rose sharply to ¥937.6B (+29.3%). By breakdown, Domestic Coatings was ¥728.4B (77.7% of total, +40.0%) and drove the increase, primarily reflecting consolidation of Shinto Coatings Co., Ltd. as a consolidated subsidiary in the prior year. Overseas Coatings was ¥86.1B (+5.8%) and performed steadily due to local-currency growth and FX effects. Lighting Equipment was ¥105.6B (+0.9%) and was essentially flat. Fluorescent Colorants was ¥12.1B (-3.3%) declining. Other was ¥42.4B (+0.2%) flat. By region, Domestic sales were ¥839.3B (+32.0%) and Overseas sales were ¥98.3B (+10.5%), with domestic growth particularly pronounced.
【Profitability】Cost of sales was ¥678.8B, raising the cost-of-goods-sold ratio to 72.4% (up 3.4pt from 69.0% a year earlier). Gross margin fell to 27.6% (down 3.4pt from 31.0%). SG&A was ¥220.2B (23.5% of sales), increasing by ¥43.0B YoY, leaving SG&A ratio improved only slightly by -1.0pt from 24.5% last year. As a result, Operating Income declined to ¥38.5B (-18.3%) and operating margin fell to 4.1%. By segment, Domestic Coatings’ operating margin deteriorated significantly to 1.7% (down 2.1pt from 3.8%), weighing on consolidated profits. Overseas Coatings achieved an operating margin of 4.3% (up 1.4pt from 2.9%), and Lighting Equipment maintained high profitability at 18.3% (down 1.4pt from 19.7%). Non-operating income amounted to ¥12.2B (dividend income ¥2.8B, equity-method investment profit ¥3.6B, etc.) and non-operating expenses were ¥5.9B (interest expense ¥2.2B, etc.), producing non-operating net income of +¥6.3B and Ordinary Income of ¥44.8B (-13.8%). Extraordinary income was ¥16.3B (mainly gain on sale of investment securities ¥14.1B) and extraordinary loss was ¥26.7B (mainly impairment loss ¥9.96B, loss on liquidation of subsidiaries ¥10.43B), yielding net extraordinary items of -¥10.4B. Pre-tax profit was ¥34.3B, from which income taxes of ¥16.5B (effective tax rate 48.1%) and non-controlling interests of ¥1.0B were deducted, resulting in Net Income attributable to owners of the parent of ¥16.9B (-82.1%). In summary, revenue increased but profit decreased materially due to lower margins in Domestic Coatings and one-off losses.
Domestic Coatings: Revenue ¥728.4B (+40.0%), Operating Income ¥12.3B (-37.4%), Operating Margin 1.7%. While revenue expanded from M&A, delayed price pass-through, adverse product mix, and integration costs pressured margins. Overseas Coatings: Revenue ¥86.1B (+5.8%), Operating Income ¥3.7B (+54.6%), Operating Margin 4.3%. Local sales expansion and improved profitability contributed to a 1.4pt margin improvement from 2.9% last year. Lighting Equipment: Revenue ¥105.6B (+0.9%), Operating Income ¥19.3B (-6.5%), Operating Margin 18.3%. This high-margin segment accounts for more than half of consolidated operating income. Fluorescent Colorants: Revenue ¥12.1B (-3.3%), Operating Income ¥0.6B (+8.5%), Operating Margin 5.3%. Small but stable profitability. Other: Revenue ¥42.4B (+0.2%), Operating Loss ¥0.4B. Of consolidated Operating Income ¥38.5B, Lighting Equipment contributed 50.1% while Domestic Coatings contributed only 31.9%. Inter-segment profitability disparities determine consolidated margins.
【Profitability】Operating margin 4.1% (down 2.4pt from 6.5%), Net Profit Margin 1.8% (down 11.2pt from 13.0%) — both markedly worse. ROE 2.7% (down 12.5pt from 15.2%), indicating lower capital efficiency. Gross margin 27.6% (down from 31.0%) deteriorated due to rising cost ratios. 【Cash Quality】Operating Cash Flow (OCF) was ¥30.1B, with OCF/Net Income 1.78x indicating reasonable cash backing of profits, but OCF/EBITDA was 0.43x, showing weak cash conversion. OCF subtotal was ¥44.2B; working capital movements (accounts receivable +¥13.6B, accounts payable -¥22.0B, etc.) produced cash outflow of -¥14.1B, and tax payments of ¥17.5B were also a drag. 【Investment Efficiency】Capital expenditure was ¥48.8B, 1.58x depreciation of ¥30.9B, indicating aggressive investment. FCF was -¥3.9B, reflecting investment-led net cash outflow. ROIC is estimated in the low-3% range given low ROE (2.7%) and declining operating margin, suggesting monetization of investments remains an issue. 【Financial Soundness】Equity Ratio 55.8% (prior year 57.1%), D/E ratio 0.19x indicating low leverage. Interest-bearing debt was ¥145.0B (short-term borrowings ¥86.7B, long-term borrowings ¥58.3B), with Debt/EBITDA 2.09x and Interest Coverage (EBITDA / interest) 30.9x, suggesting solid financial resilience. Cash was ¥113.3B, with Current Ratio 136.7% and Quick Ratio 114.1%, indicating adequate liquidity.
OCF was ¥30.1B (YoY -15.7%), derived from OCF subtotal of ¥44.2B less working capital changes -¥14.1B and tax payments ¥17.5B. OCF subtotal was supported by depreciation ¥30.9B and non-cash charges such as impairment ¥9.96B, but in working capital accounts receivable decreased by ¥13.6B while accounts payable decreased by ¥22.0B, creating a cash outflow. Investing CF was -¥34.0B, mainly due to capital expenditure -¥48.8B, including payments related to subsidiary acquisitions -¥8.0B and proceeds from sale of fixed assets ¥2.2B. Financing CF was -¥1.9B, with long-term borrowings executed ¥48.0B offset by net decrease in short-term borrowings -¥18.8B, dividend payments -¥13.96B, and dividends to non-controlling interests -¥15.2B. Resulting FCF was -¥3.9B, and cash increased by ¥11.3B (including FX effect ¥0.2B) to ending cash of ¥113.3B. The YoY decline in OCF was mainly driven by margin deterioration in Domestic Coatings and changes in accounts payable payment cycles; going forward, working capital management and margin recovery are key to cash generation.
Of Ordinary Income ¥44.8B, ¥38.5B was from core operations (Operating Income), and non-operating net income ¥6.3B (dividend income ¥2.8B, interest income ¥1.0B, equity-method gain ¥3.6B, etc.) added value. Non-operating income represented 1.3% of sales, indicating limited dependence. Extraordinary items comprised Extraordinary Income ¥16.3B (gain on sale of investment securities ¥14.1B, gain from negative goodwill ¥52.0B) and Extraordinary Loss ¥26.7B (impairment loss ¥9.96B, loss on liquidation of subsidiaries ¥10.43B), netting -¥10.4B and acting as a downside to earnings. One-off items largely drove Net Income volatility; Net Income attributable to owners of the parent of ¥16.9B (-82.1%) was heavily affected by these non-recurring losses. Pre-tax profit ¥34.3B and income taxes ¥16.5B imply an effective tax rate of 48.1%, which further compressed Net Income. While OCF of ¥30.1B is 1.78x Net Income ¥16.9B, indicating good cash backing, the OCF/EBITDA ratio of 0.43x shows weak cash conversion and adverse working capital dynamics. The recurring earnings base remains intact at the operating level, but one-off losses and high tax burden have reduced Net Income quality; next fiscal year should see improved earnings quality if one-off items subside and tax burden normalizes.
Full Year / FY guidance: Revenue ¥960.0B (+2.4%), Operating Income ¥55.0B (+42.7%), Ordinary Income ¥58.0B (+29.5%), Net Income attributable to owners of the parent ¥34.0B (+101.4%). Operating margin is expected to improve by +1.6pt from 4.1% to 5.7%, assuming penetration of price revisions in Domestic Coatings, realization of integration benefits, and cost optimization. At the ordinary income level, stable non-operating results are assumed, and at the net income level, the disappearance of extraordinary items and tax normalization are expected to leverage recovery. Compared to the current year, revenue growth decelerates to +2.4% while profits are forecast to rebound materially, making realization of the margin recovery scenario the focal point. Pace of margin improvement in Domestic Coatings, raw material prices and FX trends, and presence or absence of one-off costs will determine achievability of the forecasts.
A year-end dividend of ¥58 per share was paid, with total dividends approximately ¥13.96B. Against Net Income attributable to owners of the parent of ¥16.88B, the payout ratio was 82.7%, a high level. Dividend policy states a target of "approximately 14.8% of Net Income attributable to owners of the parent" (per XBRL filing), but the effective payout ratio significantly exceeded this target. Meanwhile, FCF was -¥3.9B and FCF coverage (FCF / dividends) was -0.28x, indicating dividends were not covered by internal cash flow this period and were funded via cash drawdown and increased borrowings. With cash ¥113.3B and interest-bearing debt ¥145.0B (Net Debt ¥31.7B) there is financial capacity, but maintaining high dividends while FCF is negative poses sustainability risk. Future dividend sustainability will depend on returning to FCF positive through improved OCF and investment efficiency.
Domestic Coatings low-profitability risk: Domestic Coatings operating margin 1.7% (down 2.1pt from 3.8%) deteriorated materially. Integration costs post-M&A, delayed price pass-through, and adverse product mix are primary causes. Given this business accounts for 77.7% of revenue, continued low profitability would directly hit consolidated profits; if planned price revisions and cost reductions do not proceed as forecast, achieving operating margin target of 5.7% will be difficult.
Working capital management risk: Accounts payable decreased by ¥22.0B causing cash outflow, with OCF/EBITDA 0.43x at a low level. Continued shortening of payment terms or working capital swings due to integration could pressure OCF and prolong FCF negative status. Delays in improving working capital turnover would affect dividend funding and investment capacity.
Financial structure risk: Short-term borrowings of ¥86.7B account for 59.8% of interest-bearing debt, resulting in high refinancing dependence. Long-term borrowings rose sharply to ¥58.3B (from ¥10.4B prior year, +¥47.9B), increasing sensitivity to changes in borrowing costs and covenant terms. High effective tax rate of 48.1% also depresses Net Income; delayed normalization of tax burden would limit recovery in capital efficiency.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.1% | 7.8% (4.6%–12.3%) | -3.6pt |
| Net Profit Margin | 2.2% | 5.2% (2.3%–8.2%) | -3.0pt |
Both operating margin and net profit margin are below industry medians, placing the company in the lower tier for manufacturing profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 29.3% | 3.7% (-0.4%–9.3%) | +25.6pt |
Revenue growth substantially exceeds the industry median, reflecting top-tier growth within manufacturing driven by M&A.
※ Source: Company compilation
Divergence between top-line growth and margin recovery: Despite substantial revenue growth of +29.3%, operating margin deteriorated to 4.1% (down 2.4pt from 6.5%). Low profitability in Domestic Coatings (operating margin 1.7%) is the main cause; next fiscal year’s margin recovery assumes integration benefits from M&A and successful price pass-through. Lighting Equipment’s high profitability (operating margin 18.3%) supports consolidated profits, but portfolio concentration risks should be monitored.
Expectation of one-off item normalization: Net Income attributable to owners of the parent ¥16.9B (-82.1%) was heavily influenced by one-off losses including impairment loss ¥9.96B and subsidiary liquidation loss ¥10.43B. High effective tax rate of 48.1% also squeezed Net Income. Next fiscal year assumes disappearance of one-off losses and tax normalization, leading to Net Income ¥34.0B (+101.4%). Improvement in earnings quality will be a key inflection point for investment decisions.
Rebuilding cash generation: With OCF ¥30.1B and capex ¥48.8B, FCF was -¥3.9B and net cash outflow occurred. Working capital management (accounts payable -¥22.0B) and weak OCF/EBITDA 0.43x are issues. Maintaining high payout ratio 82.7% while FCF is negative poses sustainability risks. Optimizing working capital and improving OCF are critical.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to buy or sell any specific securities. Industry benchmarks are reference information compiled by the firm based on publicly disclosed financial statements. Investment decisions should be made at your own discretion and, where appropriate, after consulting a qualified professional.
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