| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥479.1B | ¥447.8B | +7.0% |
| Operating Income | ¥63.4B | ¥62.7B | +1.1% |
| Ordinary Income | ¥63.0B | ¥61.6B | +2.4% |
| Net Income | ¥45.1B | ¥47.4B | -4.7% |
| ROE | 5.5% | 5.8% | - |
FY2026 Q1 results: Revenue ¥479.1B (YoY +¥31.3B +7.0%), Operating Income ¥63.4B (YoY +¥0.7B +1.1%), Ordinary Income ¥63.0B (YoY +¥1.4B +2.4%), Quarterly Net Income attributable to owners of parent ¥45.1B (YoY -¥2.3B -4.7%). Top-line grew driven by both the Household Products Business and the Comprehensive Environmental Hygiene Business, securing revenue growth. However, SG&A increased to ¥147.2B (YoY +¥11.7B +8.6%), rising faster than sales growth, compressing the operating margin to 13.2% (down 0.8pt from 14.0% a year earlier). Net income declined due to the absence of last year’s gain on step acquisitions of ¥3.5B (special income) and an increase in the effective tax rate, though on an ordinary basis income growth was maintained.
[Revenue] Revenue grew steadily to ¥479.1B (+7.0%). By segment, the Household Products Business recorded ¥429.6B (+5.6%) and accounted for 89.7% of consolidated revenue, serving as the main driver. The Comprehensive Environmental Hygiene Business expanded to ¥84.2B (+8.9%), nearly double-digit growth, contributing to improvement in operating income. Gross profit was ¥210.6B (gross margin 44.0%, down 0.3pt from 44.3% a year earlier), with some margin pressure from raw material prices and product mix.
[Profitability] Cost of sales rose to ¥268.5B (+5.2%) alongside revenue growth, while SG&A expanded to ¥147.2B (+8.6%), outpacing sales growth. Within SG&A, advertising expenses increased to ¥13.8B (from ¥9.0B a year earlier, +53.8%), salaries and allowances to ¥40.1B (+5.9%), and rents to ¥4.7B (+16.8%), reflecting increased promotional investment and higher personnel costs, which pushed SG&A ratio to 30.7% (up 0.4pt from 30.3%). R&D expenses were ¥7.7B (1.6% of sales), essentially flat. As a result, Operating Income was limited to ¥63.4B (+1.1%), and operating margin declined to 13.2%. Ordinary Income rose to ¥63.0B (+2.4%), outpacing the operating-stage increase due to improvement in non-operating items. Non-operating activities included a foreign exchange loss of ¥1.7B; year-on-year FX losses remained flat at ¥1.7B, while non-operating income such as interest income of ¥0.5B provided some support. Profit before tax was ¥63.0B (YoY -3.1%), corporate taxes were ¥17.9B (effective tax rate 28.4%, up 1.2pt from 27.2% a year earlier), resulting in Quarterly Net Income attributable to owners of parent of ¥45.1B (-4.7%). The absence of last year’s gain on step acquisitions of ¥3.5B (special income) and the higher effective tax rate were the main factors behind the net income decline. In conclusion, the company experienced revenue growth but profit contraction, while maintaining an uptrend on an ordinary income basis.
The Household Products Business recorded Revenue ¥429.6B (+5.6%), Operating Income ¥62.8B (+3.2%), and a margin of 14.6%, driving the company as the core business and generating approximately 99% of consolidated operating income. The Comprehensive Environmental Hygiene Business posted Revenue ¥84.2B (+8.9%), Operating Income ¥2.8B (+32.5%), and a margin of 3.3%, showing near double-digit growth in both revenue and income and improvement in profitability. The gap in margins between the two segments remains wide (14.6% vs 3.3%), preserving a structure highly dependent on the Household Products Business for earnings.
[Profitability] Operating margin was 13.2% (down 0.8pt from 14.0% a year earlier), Net margin was 9.4% (down 1.1pt from 10.5% a year earlier), with SG&A increases weighing on profitability. Gross margin remained high at 44.0% (down 0.3pt from 44.3%), but SG&A ratio expanded to 30.7% (up 0.4pt from 30.3%), weakening operating leverage. ROE remained at 5.5%, roughly flat year-over-year. [Cash Quality] Operating Cash Flow (OCF) data is undisclosed, but Days Sales Outstanding (DSO) is 276 days, Days Inventory Outstanding (DIO) is 514 days, and Cash Conversion Cycle (CCC) is 432 days, indicating prolonged cash conversion and inventory holding. [Investment Efficiency] Total asset turnover is 0.30x, equity turnover is 0.58x, both low, indicating room to improve asset efficiency. R&D expenses remained ¥7.7B (1.6% of sales), suggesting limited new product investment. [Financial Soundness] Equity Ratio is 50.9% (up 0.7pt from 50.2% a year earlier), D/E ratio is 0.03x, maintaining a conservative capital structure. Cash and deposits decreased to ¥173.9B (from ¥233.3B a year earlier, -25.5%), while short-term borrowings surged to ¥214.2B (from ¥74.2B a year earlier, +188.7%). The current ratio stands at 130.5%, indicating a generally safe zone, but the quick ratio is only 89.1%, reflecting a liquidity structure highly dependent on inventories.
Operating Cash Flow (OCF) data is undisclosed, but balance sheet movements reveal a significant expansion in working capital. Accounts receivable rose to ¥362.6B (from ¥258.9B a year earlier, +¥130.6B +56.3%), and inventories increased to ¥309.3B (from ¥258.6B a year earlier, +¥50.7B +19.6%), with working capital accumulation far outpacing revenue growth (+7.0%). To finance this, short-term borrowings jumped to ¥214.2B (YoY +¥140.0B +188.7%), and cash and deposits decreased to ¥173.9B (YoY -¥59.4B -25.5%). Accounts payable increased to ¥263.4B (YoY +¥29.5B +12.6%) but did not fully offset the rises in receivables and inventory, clarifying a reliance on short-term funding to meet working capital demand. The levels of DSO 276 days, DIO 514 days, and CCC 432 days strongly suggest delays in cash conversion and inventory stagnation, raising the risk of weaker OCF generation. The cash/short-term liabilities ratio is 0.81x, meaning cash alone cannot cover short-term borrowings of ¥214.2B, highlighting high refinancing dependence.
Earnings quality is largely ordinary in nature. Operating Income of ¥63.4B is the principal earnings source, while non-operating income of ¥1.7B (interest income ¥0.5B, dividend income ¥0.1B, foreign exchange gains ¥0.1B, etc.) is minor at 0.35% of revenue. Non-operating expenses totaled ¥2.0B (interest expense ¥0.4B, foreign exchange losses ¥1.7B, etc.), indicating some volatility from FX-related non-operating items. Special items in the period were limited to special losses of ¥0.03B (such as impairment of fixed assets), and the absence of last year’s gain on step acquisitions of ¥3.5B (special income) contributed to the decline in net income. That gain was a one-off item; therefore, recurring earning power should be evaluated by Operating and Ordinary Income. On the accrual side, accounts receivable increased by ¥130.6B and inventories by ¥50.7B, suggesting that OCF may not be tracking net income. The decrease in cash and deposits (¥-59.4B) combined with the rapid rise in short-term borrowings (¥+140.0B) implies that OCF is likely below net income and working capital expansion is weighing on cash generation. The gap between Ordinary Income ¥63.0B and Net Income ¥45.1B is attributable to corporate taxes of ¥17.9B (effective tax rate 28.4%) and net income attributable to non-controlling interests of ¥0.5B, and does not indicate a structural issue.
Full Year guidance is unchanged: Revenue ¥1,880.0B (+4.9%), Operating Income ¥90.0B (+11.3%), Ordinary Income ¥95.5B (+7.4%), and Net Income attributable to owners of parent ¥62.0B (Basic EPS ¥283.79). Q1 progress rates against the full year are: Revenue 25.5% (¥479.1B/¥1,880.0B), Operating Income 70.4% (¥63.4B/¥90.0B), Ordinary Income 66.0% (¥63.0B/¥95.5B), Net Income 71.9% (¥44.6B/¥62.0B — based on parent-company attributable basis excluding non-controlling interests). Compared to a standard quarterly progression (around 25%), Operating Income and Net Income progress rates are significantly ahead, indicating profit concentration in Q1. This may reflect earlier shipment timing of core products, seasonality (demand peaks for spring/summer products), and improved promotional efficiency; however, there is also the possibility that advertising and promotional expenses or product mix changes in H2 could lower margins. The company has not revised its guidance; achieving the full-year plan will depend on expense control in H2 and sustaining sales.
Working capital management risk: DSO 276 days, DIO 514 days, CCC 432 days are extremely prolonged, indicating marked delays in cash conversion and inventory accumulation. Accounts receivable increased by ¥130.6B YoY (+56.3%), and inventories increased by ¥50.7B (+19.6%), with working capital expanding far faster than revenue growth (+7.0%). As a result, cash and deposits fell by ¥59.4B (-25.5%), and short-term borrowings surged by ¥140.0B (+188.7%). If working capital management does not improve, weakened OCF generation and increased refinancing dependence could reduce financial flexibility.
Short-term funding risk: Short-term borrowings surged to ¥214.2B (from ¥74.2B a year earlier, +188.7%), and the cash/short-term liabilities ratio is 0.81x, meaning cash alone cannot cover short-term borrowings of ¥214.2B. The short-term liabilities ratio is 99.4%, which is very high and warrants vigilance regarding refinancing risk. In a rising interest rate environment, there is risk of higher refinancing costs, making it imperative to compress working capital or refinance into longer-term funding to resolve maturity mismatches.
Business concentration risk: The Household Products Business accounts for 89.7% of revenue and about 99% of Operating Income, leaving earnings highly exposed to external factors such as weather (temperature/precipitation), seasonality, and retail channel order trends. Q1 profit progress rates exceeding 70% indicate concentration in the period, and H2 demand trends or occurrences of returns/discounts could significantly affect full-year results. R&D spending at ¥7.7B (1.6% of sales) is low, posing a medium- to long-term risk to new product investment depth and competitive positioning.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 13.2% | 6.8% (2.9%–9.0%) | +6.4pt |
| Net Margin | 9.4% | 5.9% (3.3%–7.7%) | +3.5pt |
Both operating and net margins materially exceed the industry median, placing profitability relatively high within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.0% | 13.2% (2.5%–28.5%) | -6.2pt |
Revenue growth lags the industry median, indicating weaker growth relative to peers.
※ Source: Company compilation
High profitability versus working capital management issues: Operating margin 13.2% and Net margin 9.4% substantially exceed industry medians, with the Household Products Business margin of 14.6% supporting the earnings base. However, SG&A growth (+8.6%) outpaced revenue growth (+7.0%), leading to a 0.8pt year-on-year decline in operating margin. The increase in advertising expenses (+53.8%) appears to be a temporary promotional investment, but whether it will become a sustained margin pressure depends on future expense control. Additionally, DSO 276 days, DIO 514 days, and CCC 432 days indicate severe deterioration in working capital management, making it urgent to strengthen receivables collection and optimize inventories to normalize the cash conversion cycle.
Rising reliance on short-term funding and financial flexibility: Short-term borrowings increased sharply by ¥140.0B YoY (+188.7%), while cash and deposits decreased by ¥59.4B (-25.5%). With a cash/short-term liabilities ratio of 0.81x and a short-term liabilities ratio of 99.4%, refinancing dependence has increased. Although the Equity Ratio is 50.9% and D/E ratio is 0.03x, the funding of working capital expansion through short-term financing creates a maturity mismatch and raises refinancing cost risk in a rising rate environment. Restoring cash generation by compressing working capital and stabilizing funding via longer-term refinancing are key to maintaining financial flexibility.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on publicly disclosed financial statements. Investment decisions are your responsibility; consult professionals as needed.