| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue | ¥4902.8B | ¥4057.2B | +20.8% |
| Operating Income | ¥709.5B | ¥497.3B | +42.7% |
| Profit Before Tax | ¥678.7B | ¥464.9B | +46.0% |
| Net Income | ¥519.5B | ¥363.7B | +42.8% |
| ROE | 2.7% | 2.0% | - |
FY2026 Q1 recorded strong topline and profit growth: Revenue ¥4902.8B (YoY +¥845.6B +20.8%), Operating Income ¥709.5B (YoY +¥212.2B +42.7%), Ordinary Income ¥683.3B (YoY +¥241.2B +57.4%), and Net Income attributable to owners of the parent ¥515.2B (YoY +¥158.3B +44.3%), with all four key metrics materially higher year-on-year. Operating margin improved by +2.2pt from 12.3% to 14.5%; gross margin 43.9% (YoY +1.4pt) and SG&A ratio 29.6% (YoY -0.9pt) indicate a strengthened profitability structure. By segment, Nipsea formed the earnings core with Revenue ¥2501.4B (YoY +12.7%) and Operating Income ¥418.4B (YoY +20.3%), while AOC achieved high growth and high margin with Revenue ¥485.4B (YoY +189.8%) and Operating Income ¥143.4B (YoY +236.6%) (margin 29.5%). Conversely, Operating Cash Flow (OCF) was limited to ¥154.5B; increases in trade receivables (-¥624.5B) and inventories (-¥42.3B) left OCF/Net Income at a low 0.30x. Free Cash Flow was -¥63.8B, and dividends (¥185.5B) plus capex (¥121.3B) were not covered by internal funds, requiring partial drawdown of cash on hand (¥3965.5B). Progress against full-year guidance stands at Revenue 25.5%, Operating Income 25.1%, Net Income 26.0%, broadly on plan.
【Revenue】Revenue rose robustly to ¥4902.8B (YoY +20.8%). By segment, Nipsea was the largest revenue source at ¥2501.4B (51.0% share, YoY +12.7%), driven by steady demand for general-purpose coatings in China and Southeast Asia. DuluxGroup reported ¥1085.9B (22.2% share, YoY +20.9%) with growth in architectural coatings in Australia and New Zealand. AOC expanded dramatically to ¥485.4B (9.9% share, YoY +189.8%) due to integration effects, with a high-value CASE product mix driving group growth. Japan recorded ¥524.4B (10.7% share, YoY +8.4%) maintaining stable growth including marine coatings. Americas reached ¥305.6B (6.2% share, YoY +5.7%) with a gradual recovery in North America. By product, general-purpose coatings were largest at ¥2830.4B (57.7% share); automotive coatings ¥544.7B (YoY +12.9%) and industrial coatings ¥274.2B (YoY +12.5%) also expanded. FX tailwinds and price adjustments likely contributed to revenue growth.
【P&L】Cost of sales was ¥2752.4B (cost of sales ratio 56.1%, improved -1.4pt from 57.5%), and gross profit ¥2150.3B (gross margin 43.9%, YoY +1.4pt), supported by easing raw material costs and improved product mix. SG&A was ¥1452.3B (SG&A ratio 29.6%, improved -0.9pt from 30.5%), rising only +17.2% versus Revenue +20.8%, indicating effective operating leverage. Operating Income improved materially to ¥709.5B (Operating margin 14.5%, +2.2pt). By segment margins, AOC was standout at 29.5%, followed by Nipsea 16.7%, Japan 11.5%, and DuluxGroup 8.3%. Americas lagged at 3.7% with room for improvement. Financial income was ¥38.0B and financial expenses ¥75.8B (down from ¥81.6B prior year), resulting in net financial expense of -¥37.8B. Equity-method investment results added ¥7.0B, bringing Profit Before Tax to ¥678.7B (YoY +46.0%). After corporate tax of ¥159.1B (effective tax rate 23.4%), quarterly profit was ¥519.5B (YoY +42.8%). Deducting non-controlling interests of ¥4.3B, Net Income attributable to owners of the parent was ¥515.2B (YoY +44.3%). Special items were minor; the core driver was operating profit increase underpinning revenue and earnings growth.
Nipsea: Revenue ¥2501.4B (YoY +12.7%), Operating Income ¥418.4B (YoY +20.3%), margin 16.7% — the core earnings driver. Strong demand for general-purpose and industrial coatings in China and Southeast Asia contributed, with operating margin up +1.3pt from 15.4% a year earlier. DuluxGroup: Revenue ¥1085.9B (YoY +20.9%), Operating Income ¥89.9B (YoY +23.3%), margin 8.3% — benefiting from recovery in Australia/New Zealand construction markets and price adjustments. AOC: Revenue ¥485.4B (YoY +189.8%), Operating Income ¥143.4B (YoY +236.6%), margin 29.5% — highly profitable post-integration with strong high-value CASE product mix. Japan: Revenue ¥524.4B (YoY +8.4%), Operating Income ¥60.4B (YoY +36.7%), margin 11.5% — domestic business including marine coatings showing stable growth. Americas: Revenue ¥305.6B (YoY +5.7%), Operating Income ¥11.3B (YoY +5.3%), margin 3.7% — low profitability and opportunity for improvement. Segment profit total ¥723.5B less HQ adjustments -¥14.0B equals consolidated Operating Income ¥709.5B.
【Profitability】Operating margin 14.5% (vs 12.3% prior year, +2.2pt) and Net margin 10.5% (vs 9.0% prior year, +1.5pt) indicate improved profitability. Annualized ROE based on the quarterly result is approximately 10.8% (Net Income ¥519.5B ×4 ÷ average equity ~¥1.93T). Gross margin 43.9% (YoY +1.4pt) and SG&A ratio 29.6% (YoY -0.9pt) improved concurrently, contributing to operating leverage. EBIT margin 14.5% substantially exceeds industry median 6.8%, maintaining a high-return profile. 【Cash Quality】OCF ¥154.5B vs Net Income ¥519.5B results in OCF/Net Income 0.30x, a low conversion. Pre-working-capital OCF subtotal was ¥379.7B, but trade receivables increase -¥624.5B, inventory increase -¥42.3B, and decrease in trade payables -¥38.9B materially worsened working capital and reduced cash generation. Interest coverage (Operating Income ¥709.5B ÷ interest paid ¥61.0B) is about 11.6x, strong. 【Investment Efficiency】Total asset turnover 0.118 (Revenue ¥4902.8B ÷ average total assets ~¥4.16T) is low, constrained by receivables and inventory buildup. ROIC: NOPAT approx ¥533B (Operating Income ¥709.5B × (1-23.4%)) ÷ Invested Capital approx ¥3.36T (equity ¥1.92T + interest-bearing debt ¥1.44T) yields about 15.9%. 【Financial Soundness】Equity Ratio 45.9% (improved from 44.9% at prior fiscal year-end) and Current Ratio 1.89x (current assets ¥1.35T ÷ current liabilities ¥0.71T) indicate a stable financial base. Interest-bearing debt ¥1,4421.3B, Net Debt ¥1,455.8B (interest-bearing debt - cash ¥3965.5B), and Net D/E ratio 0.54x denote sound leverage. Goodwill ¥1.50T equals 78.2% of equity and remains a medium-term impairment sensitivity point.
OCF was ¥154.5B (improved from -¥271.3B a year earlier) but only ~30% of Net Income ¥519.5B, indicating low cash conversion quality. Pre-working-capital OCF subtotal was ¥379.7B, aided by depreciation ¥213.9B and other non-cash charges, converting part of Operating Income ¥709.5B. However, trade receivables increased -¥624.5B (worsening DSO to ~356 days), inventories increased -¥42.3B (DIO ~311 days), and trade payables decreased -¥38.9B, materially deteriorating working capital and constraining cash inflows. After corporate tax payments ¥195.6B and interest paid ¥61.0B (including lease payments ¥56.2B), OCF settled at ¥154.5B. Investing Cash Flow was -¥218.3B, driven by capex ¥121.3B and net increase in marketable securities ¥85.1B. Financing Cash Flow was -¥302.6B, with dividend payments ¥185.5B, share buybacks ¥50.3B, and long-term debt repayments ¥255.6B; partially offset by net short-term borrowings ¥0.3B and long-term borrowings ¥247.6B. Free Cash Flow (OCF + Investing CF) was -¥63.8B, insufficient to cover dividends and capex totaling ¥306.8B, requiring use of cash on hand. Including FX translation impact +¥79.1B, cash and cash equivalents decreased ¥277.8B from opening ¥4243.4B to closing ¥3965.5B. With cash ¥3965.5B and highly liquid financial assets ¥2074.3B, liquidity remains ample, but working-capital normalization is a prerequisite for FCF positive conversion.
Operating Income ¥709.5B vs Ordinary Income ¥683.3B reflects net financial expense -¥37.8B (Financial income ¥38.0B - Financial expenses ¥75.8B) and equity-method gains ¥7.0B adjusted off operating income. The deterioration in financial results is roughly flat versus -¥37.2B prior year, indicating limited temporary FX losses. From Ordinary Income to Profit Before Tax, Other income ¥16.8B (prior ¥27.1B) and Other expenses ¥5.3B (prior ¥16.6B) resulted in net special items +¥11.5B, minor overall. Effective tax rate 23.4% rose slightly from 21.8% but remains stable without notable one-off tax distortions. Comprehensive income ¥1289.4B (Quarter profit ¥519.5B + Other comprehensive income ¥769.9B) largely reflects translation differences on foreign operations ¥772.5B (reversing from -¥1113.8B prior year), with FX translation gains bolstering equity. FVOCI financial assets valuation loss -¥3.2B (prior +¥0.5B), cash flow hedges ¥0.1B (prior -¥105.8B), and remeasurement of defined benefit plans ¥0.6B (prior -¥1.0B) were minor. The fact OCF is only 30% of Net Income highlights large accruals from receivable and inventory increases, delaying revenue cash conversion. While recurring profits are stable, improving working-capital cash conversion is key to enhancing earnings quality.
Full-year guidance remains: Revenue ¥1,9200.0B (no YoY rate provided), Operating Income ¥2830.0B (YoY +10.1%), Net Income attributable to owners of the parent ¥1980.0B (YoY +10.1%), EPS ¥85.34, dividend ¥8 (unchanged). Q1 progress rates are Revenue 25.5%, Operating Income 25.1%, Net Income 26.0%, roughly aligning with a standard one-quarter progression (~25%) and showing no signal for upward or downward revisions. The slightly modest Operating Income progress may reflect seasonality and conservative planning for H2 investments/costs. Dividend guidance ¥8 is unchanged versus prior year; implied payout ratio from full-year EPS ¥85.34 is ~9.4%, highly conservative. Achievement of guidance assumes Nipsea maintains market share, AOC sustains high margins, Americas improves profitability, and working-capital normalizes to restore cash generation. FX assumptions are undisclosed, but if the Q1 positive FX translation continues into H2 it would be a tailwind.
Q1 dividend payments totaled ¥185.5B (¥187.2B prior year, essentially flat). Dividend payout ratio versus current-quarter Net Income ¥519.5B is ~36%, but this is a quarter-only view; annualized, DPS ¥8 × shares outstanding 23.2B ≈ total annual dividends ¥185.6B => payout ratio ≈9.4% vs full-year Net Income ¥1980.0B, conservative. Free Cash Flow -¥63.8B and inability to internally fund dividends is a short-term concern, but ample cash on hand ¥3965.5B supports dividend continuity. Share buybacks ¥50.3B were executed; combined with dividends, total shareholder returns ≈¥236B. Total return ratio on quarterly Net Income basis is about 45%, but shareholder returns under negative FCF require working-capital normalization. The dividend policy remains a stable dividend approach, with DPS ¥8 maintained. Treasury stock increased to ¥359.6B at quarter-end (prior ¥268.9B, +¥90.7B), indicating ongoing efforts to improve capital efficiency.
Deterioration of cash generation due to working-capital expansion: Trade receivables ¥4775.3B (up from ¥4090.1B prior year, +16.7%) and inventories ¥2346.9B (up from ¥2251.5B prior year, +4.2%) continue to increase, pushing DSO ~356 days, DIO ~311 days, and CCC ~278 days long. OCF/Net Income 0.30x is low; delayed working-capital normalization could necessitate additional borrowing or strain liquidity. Tight credit control and inventory management during a growth phase are essential.
Goodwill impairment risk: Goodwill ¥1.50T (78.2% of equity ¥1.92T) is high; failure to meet CGU-level plans or macro deterioration could trigger impairment losses. Nipsea, DuluxGroup, and AOC carry substantial goodwill from large acquisitions; variation in discount rates or growth assumptions in annual impairment tests could materially erode equity.
Segment concentration and profitability disparity: Nipsea accounts for 51.0% of Revenue, so slowdown or regulatory tightening in China/Southeast Asia could materially impact consolidated results. Americas is small in revenue share (6.2%) but low margin (3.7%); delayed margin recovery there could dilute overall group margins. Regional and product mix concentration embed structural concentration risks.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating margin | 14.5% | 6.8% (2.9%–9.0%) | +7.6pt |
| Net margin | 10.6% | 5.9% (3.3%–7.7%) | +4.7pt |
Operating and Net margins significantly exceed industry medians, establishing a high-profit position within manufacturing.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 20.8% | 13.2% (2.5%–28.5%) | +7.7pt |
Revenue growth surpasses industry median, driven by AOC integration effects and strong Asia market trends, indicating relatively high growth within manufacturing.
※Source: company aggregation
Price/mix improvements and cost control raised Operating margin to 14.5% (+2.2pt), far above industry median 6.8%, sustaining a high-return structure. AOC’s high margin (29.5%) and Nipsea’s stable growth (16.7%) underpin portfolio profitability and effective operating leverage. Guidance progress near 25% implies a high probability of full-year profit growth.
OCF ¥154.5B (OCF/Net Income 0.30x) is low; trade receivables +¥624.5B and inventories +¥42.3B worsened working capital. CCC ~278 days and FCF -¥63.8B indicate constrained cash generation. Cash on hand ¥3965.5B secures short-term liquidity, but working-capital normalization is a precondition for medium-term valuation recovery. Improvements in credit control and inventory efficiency are next-period focal points.
Goodwill ¥1.50T (78.2% of equity) is high, and impairment sensitivity to macro deterioration or missed plans is significant. Monitoring CGU performance and impairment indicators is critical. Conversely, Equity Ratio 45.9% and Interest Coverage 11.6x indicate solid financial health and limited short-term financial risk.
This report was automatically generated by AI analyzing XBRL earnings disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm from public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.