| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1138.3B | ¥1103.9B | +3.1% |
| Operating Income / Operating Profit | ¥381.0B | ¥397.4B | -4.1% |
| Profit Before Tax | ¥383.9B | ¥393.6B | -2.5% |
| Net Income / Net Profit | ¥280.1B | ¥277.4B | +1.0% |
| ROE | 25.6% | 28.9% | - |
For the fiscal year ended March 2026, Revenue was ¥1,138.3B (YoY +¥34.4B, +3.1%), Operating Income was ¥381.0B (YoY -¥16.4B, -4.1%), Ordinary Income was ¥368.9B (YoY -¥64.1B, -14.8%), and Net Income was ¥280.1B (YoY +¥2.7B, +1.0%). Revenue increased, but Operating Income and Ordinary Income declined, while Net Income edged up. Growth was driven by double-digit expansion in the Electronic Materials segment (+10.5%), but a decline in the Optical Materials segment (-5.7%), a decrease in other income (¥25.7B → ¥4.8B) and an increase in other expenses (¥9.0B → ¥17.3B) pressured Operating Income. Operating margin declined 2.5pp to 33.5% (prior year 36.0%). Gross margin remained roughly flat at 56.0% (prior year 56.3%), but changes in segment mix and one-off cost recognition dragged on margins. The Ordinary Income decline could not be offset by a small increase in equity-method investment income (¥3.0B → ¥4.1B) and was exacerbated by lower financial income (¥2.7B → ¥0.8B), worsening non-operating results. Net Income was preserved at prior-year levels due to a reduction in corporate tax expense (¥116.2B → ¥103.8B).
Revenue of ¥1,138.3B (YoY +3.1%) reflected Electronic Materials at ¥666.7B (+10.5%) achieving double-digit growth, which offset a decline in Optical Materials to ¥471.6B (-5.7%). Electronic Materials benefited from solid demand for smartphone and electronic component applications, contributing via both volume and price. Optical Materials saw softer sales due to weakness in the display-related market, worsening segment mix. By region, Japan expanded to ¥577.4B (from ¥368.3B, +56.7%), while China declined to ¥276.7B (-4.3%), Korea to ¥70.3B (-50.3%), and Taiwan to ¥131.0B (-25.5%). FX effects and localization trends altered regional composition. Gross margin was 56.0% (prior year 56.3%), with cost of sales ratio roughly 44.0%, similar to prior year.
Operating Income of ¥381.0B (YoY -4.1%) was reduced despite revenue growth primarily due to a decline in other income (¥25.7B → ¥4.8B, -¥20.9B) and an increase in other expenses (¥9.0B → ¥17.3B, +¥8.3B), a combined negative impact of about ¥29B. SG&A was ¥244.1B (+1.4%), growing less than revenue, so operating leverage was roughly neutral. By segment, Electronic Materials reported segment profit ¥250.4B (+6.5%, margin 37.6%), Optical Materials reported segment profit ¥143.1B (-1.7%, margin 30.3%); the higher-profit Electronic Materials drove earnings. Ordinary Income was ¥368.9B (YoY -14.8%); reduced financial income (¥2.7B → ¥0.8B) and improved financial expenses (¥9.4B → ¥2.0B) led to worse non-operating income/expense, amplifying the decline from Operating Income. Profit Before Tax was ¥383.9B and corporate tax and similar charges were ¥103.8B (effective tax rate 27.0%), resulting in Net Income of ¥280.1B (YoY +1.0%). Comprehensive income was ¥288.9B (YoY +9.6%), aided by an improvement in foreign currency translation differences (prior year -¥9.8B → current +¥6.6B). In conclusion, growth was led by Electronic Materials, but one-off costs and Optical Materials’ slowdown resulted in group-level revenue growth with earnings decline.
Electronic Materials posted Revenue ¥666.7B (YoY +10.5%), Operating Income ¥250.4B (YoY +6.5%), and an operating margin of 37.6%, achieving double-digit growth while maintaining high profitability. Demand for smartphone electronic materials and semiconductor-related components remained firm, expanding both price and volume. Depreciation increased to ¥40.4B (prior year ¥32.7B) as new capital expenditures began operations, slightly pressuring margins, but revenue growth absorbed this. Optical Materials reported Revenue ¥471.6B (YoY -5.7%), Operating Income ¥143.1B (YoY -1.7%), and margin 30.3%, marking revenue and profit declines. Weakness in the display market and lower sales of optical components for smartphones were the main drivers; slight depreciation increase to ¥35.6B (prior year ¥34.3B) kept margins broadly flat year-over-year. There is a 7.3pp operating margin gap between segments, and mix shift toward Electronic Materials is key for overall profitability.
Profitability: ROE was 27.3% (down from 30.6% prior year) but remained high. The decline was driven by worsened total asset turnover (0.689x, prior year 0.727x) and a slight reduction in net profit margin (24.6%, prior year 25.1%), reflecting total assets expanding +8.7% due to large-scale CapEx while revenue grew only +3.1%. Operating margin fell to 33.5% (prior year 36.0%), while gross margin 56.0% (prior year 56.3%) remained in a stable range; segment mix changes and deterioration in other income/expenses pressured operating margin. EBIT margin was 31.8% (prior year 31.6%), a marginal increase, indicating maintained profitability at business profit level though non-operating items pulled down group results.
Cash Quality: Operating Cash Flow (OCF) was ¥275.4B, about 0.98x of Net Income ¥280.1B, largely in line. However, from the OCF subtotal of ¥411.8B, corporate tax payments ¥135.4B and working capital increases (accounts receivable +¥28.7B, inventories +¥18.4B) were significant deductions, weakening cash conversion efficiency. OCF/EBITDA ratio fell to approximately 0.60x (EBITDA calculated as segment profit ¥393.5B + depreciation ¥76.1B ≒ ¥469.6B), with inventory and receivables build-up deteriorating cash quality. DSO (days sales outstanding) is about 68 days, and inventory days about 78 days, highlighting working capital management challenges amid demand volatility.
Investment Efficiency: ROA (Ordinary Income / Total Assets) was 24.2% (prior year 26.9%), declining as Ordinary Income fell -14.8% against total assets growth (¥1,651.0B, YoY +8.7%). CapEx totaled ¥237.2B (CapEx / Revenue 20.8%), about 3.1x depreciation ¥76.1B, indicating an aggressive investment posture; tangible fixed assets rose to ¥768.6B (prior year ¥497.0B), +54.6%. The pace of investment payback will determine margin and turnover improvements over the next 2–3 years.
Financial Soundness: Equity Ratio improved to 66.2% (prior year 63.2%). Interest-bearing debt was ¥165.1B (short-term ¥31.8B + long-term ¥133.3B), D/E ratio approximately 0.15x (interest-bearing debt / shareholders’ equity), very low. Debt/EBITDA ≈ 0.35x, interest coverage ≈ 182x (Operating Income ¥381.0B / estimated interest ¥2.1B), indicating very strong financial resilience. Goodwill was ¥212.9B, 19.5% of equity and about 0.45x of EBITDA, within acceptable range.
Operating Cash Flow was ¥275.4B (prior year ¥404.3B, -31.9%), a significant decrease. Main causes were a decline in OCF subtotal (prior year ¥491.9B → current ¥411.8B), higher corporate tax payments (prior year ¥87.6B → current ¥135.4B), and worsening working capital: accounts receivable increased by ¥28.7B, inventories increased by ¥18.4B, while accounts payable increased only ¥0.9B. Even adding non-cash charges—depreciation ¥76.1B and stock-based compensation ¥13.6B—inventory and receivables accumulation and tax burdens constrained cash generation. Investing Cash Flow was -¥250.6B (prior year -¥223.2B) as CapEx of ¥237.2B (prior year ¥140.7B) rose substantially in active growth investments. Including proceeds from sale of tangible fixed assets ¥2.6B and intangible asset acquisition -¥15.2B, Free Cash Flow (OCF - Investing CF) was ¥24.8B (¥275.4B - ¥250.6B), down sharply from prior year ¥181.2B. Financing Cash Flow was -¥214.4B (prior year -¥212.9B), reflecting dividend payments ¥102.8B, share buybacks ¥59.9B, short-term borrowings repayments ¥40.0B, and long-term borrowings repayments ¥45.3B, balancing shareholder returns and debt reduction. As a result, cash and cash equivalents decreased to ¥166.6B (opening ¥349.8B), down ¥183.2B; even with FX translation effect +¥6.4B, liquidity declined substantially. OCF/EBITDA ≈ 0.60x, FCF coverage of total shareholder returns (¥162.7B) was only 0.15x, signaling weaker short-term cash quality. Normalizing working capital and improving utilization of new assets are key to restoring cash generation capacity.
Quality of earnings shows segment operating profit ¥393.5B (prior year ¥380.7B, +3.4%) evidencing recurring earning power, but other income fell sharply to ¥4.8B (prior year ¥25.7B) and other expenses rose to ¥17.3B (prior year ¥9.0B), causing Operating Income ¥381.0B to be depressed by one-off factors. Gains on sale of fixed assets were recorded (appearing as an adjustment in OCF for fixed asset sale/loss of -¥3.57B) and impairment/retirement losses of fixed assets ¥5.1B occurred, so one-time items affected non-operating income/expense. Financial income was ¥0.8B (prior year ¥2.7B) reflecting lower interest/dividend receipts, while financial expenses were ¥2.0B (prior year ¥9.4B) due to reduced interest burden. Equity-method investment income was ¥4.1B (prior year ¥3.0B), a small increase with limited impact on the whole. The gap between OCF subtotal ¥411.8B and Net Income ¥280.1B was mainly due to depreciation ¥76.1B, working capital increases and tax payments; the accrual ratio ((Net Income - OCF) / Total Assets) is about 0.3%, indicating reasonable accrual quality, but receivables and inventory build-up (AR +¥28.7B, inventory +¥18.4B) hinder cash conversion. The difference between Ordinary Income ¥368.9B and Profit Before Tax ¥383.9B is explained by equity-method income and other non-operating items; special/extraordinary items were minimal. Overall, profitability at the business profit level is sound, but one-off costs and working capital increases have weakened cash quality, leaving room to improve cash conversion efficiency despite high revenue sustainability.
Full Year guidance is Revenue ¥1,230.0B (YoY +8.1%), Operating Income ¥385.0B (YoY +1.1%), EPS forecast ¥163.45, Dividend forecast ¥32.00 (including interim dividend already paid ¥29.00). Compared with current results, Revenue is expected to increase +8.1% assuming continued Electronic Materials growth and a recovery in Optical Materials, while Operating Income is forecast to rise only modestly by +1.1%, implying an Operating margin decline to about 31.3% (current 33.5%). This likely reflects conservative assumptions for startup costs of large-scale CapEx and higher depreciation. Net Income is expected at ¥275.0B (current ¥280.1B, -1.8%) assuming normalized tax rate and non-operating items. Dividend forecast ¥32 per share aims to maintain prior-year level on a post-split basis compared with current-year payout ¥58 (pre-split). Progress rates are Revenue 92.6% (¥1,138.3B / ¥1,230.0B) and Operating Income 99.0% (¥381.0B / ¥385.0B), indicating Operating Income is nearly achieved and remaining contributions are limited. Disclosure of order backlog / contract liabilities is absent, limiting visibility into future revenue, but the assumption is that investment contribution will materialize from next fiscal year onwards.
Dividends paid were ¥58 per share (interim ¥29 + year-end ¥29), with total dividends ¥102.8B (prior year ¥81.9B). Payout ratio was 35.8% (total dividends ¥102.8B / consolidated Net Income ¥280.1B), a sustainable level, unchanged from prior year 35.8%. Share buybacks executed amounted to ¥59.9B, and treasury stock acquisition recorded ¥60.2B. Total shareholder return amount was ¥162.7B (dividends ¥102.8B + buybacks ¥59.9B), and total return ratio was approximately 58.1% (total return ¥162.7B / Net Income ¥280.1B), demonstrating an aggressive capital return policy. However, FCF was only ¥24.8B, leaving FCF coverage of total return at approximately 0.15x and funds were supplemented by drawing down cash on hand. Cash and cash equivalents fell from ¥349.8B at the beginning of the period to ¥166.6B at period-end, signaling notable liquidity decline. Next fiscal year dividend guidance is ¥32 per share (annual), roughly maintaining level when adjusted for the current year’s stock split. While CapEx continues, the company intends to maintain dividends stably and conduct share buybacks flexibly, contingent on earnings recovery and improved cash generation. Payout ratio can be maintained around 36% but sustainability of total returns depends on FCF improvement.
Segment Concentration Risk: The Electronic Materials segment accounts for 58.6% of Revenue and 63.6% of segment profit; demand fluctuations or price declines in this segment directly impact corporate performance. If cyclical shifts in display and smartphone markets prevent maintenance of high-margin structure (37.6% operating margin), group margins could deteriorate rapidly. Convergence of Optical Materials margin toward 30.3% is also a concern.
Working Capital Risk: Accumulation of accounts receivable ¥211.7B (as a % of Revenue 18.6%, DSO ≈ 68 days) and inventories ¥106.7B (as a % of cost of sales 21.3%, inventory days ≈ 78 days) is impeding cash conversion; OCF/EBITDA has declined to 0.60x. Risks include inventory valuation losses in the event of demand drops or shipment delays and credit concentration leading to bad debt; if realized, both cash flow and profits would be affected. Delays in normalizing working capital could constrain continuity of shareholder returns and capacity for additional investment.
Investment Startup Risk: Large increase in tangible fixed assets from CapEx ¥237.2B (CapEx / Revenue 20.8%, CapEx ≈ 3.1x depreciation) to ¥768.6B (YoY +54.6%) carries risk that if utilization rates or yields fall short of plan, higher depreciation charges and delayed revenue contribution could reduce operating margins more than expected. The next fiscal year guidance incorporates a decline in operating margin to about 31.3% (from 33.5%), and delayed investment recovery could depress medium-term profitability and ROE.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 27.3% | 6.3% (3.2%–9.9%) | +21.0pt |
| Operating Margin | 33.5% | 7.8% (4.6%–12.3%) | +25.7pt |
| Net Margin | 24.6% | 5.2% (2.3%–8.2%) | +19.4pt |
The company ranks substantially above peers in manufacturing on profitability metrics, exceeding industry medians by over 20ppt in ROE and Operating Margin.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.1% | 3.7% (-0.4%–9.3%) | -0.6pt |
Revenue growth is in line with industry median and represents a standard growth pace within manufacturing.
Source: Company compilation based on public financial statements
The high-margin structure led by Electronic Materials remains intact, with Operating Margin 33.5% and ROE 27.3% standing out in manufacturing. However, one-off costs and Optical Materials’ slowdown caused a 2.5pp decline in Operating Margin this period, and guidance factors in further decline to about 31.3% next year, implying startup costs and higher depreciation will compress margins. Sustainability of Electronic Materials growth and the recovery pace of Optical Materials are keys to mid-term margin recovery.
Aggressive investment (CapEx ¥237.2B, CapEx/Revenue 20.8%) increased tangible fixed assets +54.6%, building growth capacity, but OCF/EBITDA 0.60x, DSO 68 days, and inventory days 78 indicate weaker cash conversion. FCF was ¥24.8B, significantly below total shareholder returns ¥162.7B, and cash on hand fell to ¥166.6B. While equity ratio 66.2% and Debt/EBITDA 0.36x show strong balance sheet resilience, delayed working capital normalization or slow ramp-up of new assets could constrain continuation of shareholder returns and further investment. Short-term improvement in cash quality is important to monitor.
Next year’s outlook assumes Revenue +8.1% and only Operating Income +1.1%, conservatively embedding margin compression. Progress rate of Operating Income is 99.0%, essentially achieved, so remaining contributions are limited. The assumption that large-scale investment contributions materialize from the subsequent fiscal year makes monitoring utilization rates, segment-level margin trends (Electronic vs Optical), and working capital efficiency essential for investment decisions.
This report is an earnings analysis document auto-generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference data compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.