| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥81058.9B | ¥91902.2B | -11.8% |
| Operating Income / Operating Profit | ¥2122.0B | ¥1621.8B | +30.8% |
| Ordinary Income | ¥2296.5B | ¥2147.6B | +6.9% |
| Net Income / Net Profit | ¥1434.3B | ¥289.8B | +395.0% |
| ROE | 7.4% | 1.7% | - |
For the fiscal year ended March 2026, Revenue was ¥81058.9B (¥▲1,0843B YoY ▲11.8%) resulting in a decline in sales, while Operating Income grew substantially to ¥2122.0B (¥+500.2B YoY +30.8%). Ordinary Income was ¥2296.5B (¥+148.9B +6.9%), and Net Income attributable to owners of the parent was ¥1434.3B (¥+1,144.5B +395.0%), delivering increases from operating level through to the bottom line. The sales decline was mainly driven by price factors such as softer crude oil prices, but gross margin improved to 9.3% (up +1.8pt from 7.5% prior year) and refining margin improvements lifted the operating margin to 2.6% (up +0.8pt from 1.8%). In special items, the company recorded ¥84.0B of negative goodwill gain (related to acquisitions in resources and fuel oil) and total special gains of ¥275B, while booking special losses of ¥350B including impairment losses of ¥181B and fixed asset retirement losses of ¥115B. Compared with the large impairments in the prior year (¥272B), impairment burden eased and contributed to the large increase in Net Income.
[Revenue] Revenue was ¥81058.9B (YoY ▲11.8%). The largest segment, Fuel Oil, posted Revenue of ¥68072.0B (YoY ▲11.8%) showing a similar decline rate year-on-year, affected by softer crude prices and lower volumes. Basic Chemicals declined sharply to ¥5006.0B (YoY ▲21.2%) due to weaker market conditions, and Resources fell to ¥2035.0B (YoY ▲23.3%) amid adjustments in coal and gas prices. Power & Renewable Energy decreased to ¥1005.0B (YoY ▲23.5%) as power market conditions normalized. Conversely, High-Performance Materials remained resilient at ¥5268.0B (YoY ▲0.7%), and Other Businesses grew to ¥241.0B (YoY +31.4%) driven by expansion in insurance and related operations. By region, Domestic Sales were ¥55572.0B (Prior year ¥65521.0B), and Singapore was ¥8270.0B (prior disclosure aggregated “Asia & Oceania” ¥17043.0B), reflecting changes in disclosure categories; overall both domestic and export sales declined due to price factors.
[Profitability] Cost of sales was ¥73514.0B yielding Gross Profit of ¥7544.0B (Gross Margin 9.3%), improved by ¥650.0B from ¥6894.0B (Gross Margin 7.5%) a year earlier. Selling, General & Administrative expenses were ¥5422.0B (SG&A ratio 6.7%, prior year ¥5272.0B・5.7%), up ¥150.0B, but gross profit improvement outpaced sales decline resulting in Operating Income of ¥2122.0B (prior year ¥1621.8B, +30.8%). By segment, Fuel Oil Operating Income expanded sharply to ¥1750.0B (YoY +61.5%) due to improved refining margins; High-Performance Materials was steady at ¥347.0B (YoY +24.4%); Resources fell to ¥291.0B (YoY ▲57.3%) on weaker market conditions; Basic Chemicals reduced its operating loss to ▲¥73.0B; Power & Renewable Energy narrowed its loss to ▲¥19.0B (improvement +83.2%). Non-operating income totaled ¥449.0B (prior year ¥727.0B) including Interest Income ¥186.0B and Foreign Exchange Gains ¥87.0B, down from FX gains of ¥201.0B in the prior year. Non-operating expenses were ¥274.0B (prior year ¥201.0B) including Interest Expense ¥180.0B, and Ordinary Income was ¥2296.5B (YoY +6.9%), with the rate of increase moderating relative to operating profit. Special gains totaled ¥275.0B including negative goodwill gain ¥84.0B (¥79.0B related to additional acquisition of Australian mining interests in Resources segment, ¥4.9B for Fuji Oil acquisition in Fuel Oil segment), step-acquisition gain ¥81.0B, and gains on sales of investment securities ¥26.0B. Special losses were ¥350.0B including impairment losses ¥181.0B (Power & Renewable Energy ¥97.0B, Fuel Oil ¥36.0B, High-Performance Materials ¥33.0B, etc.) and fixed asset retirement losses ¥115.0B. Pre-tax profit was ¥2221.0B, income tax expense was ¥570.0B (effective tax rate 25.7%), and non-controlling interests were ▲¥68.0B, resulting in Net Income attributable to owners of the parent of ¥1434.3B (YoY +395.0%).
The Fuel Oil segment recorded Revenue of ¥68072.0B (YoY ▲11.8%), Operating Income ¥1750.0B (YoY +61.5%), and margin 2.6% (prior 1.4%), with profitability significantly improved due to gross margin expansion. Basic Chemicals reported Revenue ¥5006.0B (YoY ▲21.2%) and Operating Loss ▲¥73.0B (prior ▲¥99.0B), narrowing the loss but market headwinds persist. High-Performance Materials delivered stable Revenue ¥5268.0B (YoY ▲0.7%) and Operating Income ¥347.0B (YoY +24.4%) improving margin to 6.6% (prior 5.3%), serving as a stable non-resource earnings pillar. Power & Renewable Energy had Revenue ¥1005.0B (YoY ▲23.5%) and Operating Loss ▲¥19.0B (prior ▲¥113.0B), significantly reduced but still not profitable. Resources recorded Revenue ¥2035.0B (YoY ▲23.3%) and Operating Income ¥291.0B (YoY ▲57.3%) with margin 14.3% (prior 33.6%), reflecting substantial profit decline from weaker commodity markets. Other Businesses posted Revenue ¥241.0B (YoY +31.4%) and Operating Income ¥9.0B (YoY ▲20.0%), supported by expansion in insurance-related activities. Corporate adjustments after segment eliminations resulted in Operating Loss ▲¥185.0B, reflecting headquarters costs such as R&D. Segment contribution is highly concentrated in Fuel Oil, accounting for 83.4% of Revenue and 82.5% of Operating Income.
[Profitability] Operating Margin improved to 2.6% (up +0.8pt from 1.8%), and Net Income Margin attributable to owners of the parent improved to 1.8% (up +1.5pt from 0.3%), driven by refining margin improvement and reduced special losses. ROE was 7.4% (prior 5.9%), improved versus the company’s historical levels but capital efficiency remains relatively low. ROA (on Ordinary Income basis) was 4.5% (prior 4.4%) with slight improvement. [Cash Quality] Operating Cash Flow (OCF) was ¥3924.0B (prior ¥4767.0B, ▲17.7%) down year-on-year, but the OCF/Net Income ratio was 5.23x (prior year 16.5x) indicating good cash realization of profits; the prior year had one-off factors inflating OCF. OCF/EBITDA was 1.27x, indicating strong cash conversion. Accrual ratio ((OCF − Net Income) / Total Assets) was +4.7%, suggesting small divergence between profit and cash and high quality of accounting earnings. [Investment Efficiency] Total Asset Turnover was 1.52x (prior 1.92x) declining due to asset growth. Capital Expenditure was ¥1548.0B, 1.61x of Depreciation ¥959.0B, indicating continued growth investment; Construction in Progress rose to ¥829.0B (prior ¥552.0B), expected to contribute to operations from next fiscal year. [Financial Soundness] Equity Ratio was 36.6% (prior 36.0%), broadly stable; D/E ratio was 0.52x (prior 0.51x) with a slight increase in interest-bearing debt. Current Ratio was 126.1% (prior 126.4%) preserving short-term payment capability, but Quick Ratio was 67.6% (prior 63.6%) remaining low; Cash and Deposits ¥2123.0B / Short-term Debt ¥23514.0B = 0.42x indicating weak short-term liquidity. Interest Coverage was 17.0x (EBITDA ¥3081.0B / Interest Paid ¥180.0B) showing strong ability to service interest. Inventory turnover days were 68 days (Inventory ¥13755.0B / Daily Sales ¥1195.0B), somewhat elevated, and attention is needed for valuation loss risk in price downturns.
OCF was ¥3924.0B (prior ¥4767.0B, ▲17.7%) declining year-on-year but supported by increased Pre-tax Profit ¥2221.0B (prior ¥1583.0B); OCF subtotal (before working capital changes) was ¥4101.0B (prior ¥5592.0B). Add-backs included Depreciation ¥959.0B, Goodwill Amortization ¥90.0B, Impairment Losses ¥180.0B, and adjustments for equity method losses/gains ¥24.0B. Working capital changes contributed via Inventory decrease +¥440.0B (prior +¥1344.0B) and Trade Receivables decrease +¥1125.0B (prior +¥1484.0B), while Trade Payables decrease ▲¥335.0B (prior ▲¥215.0B) was a cash outflow. Payments of corporate taxes ▲¥341.0B, Interest & Dividends Received +¥346.0B, and Interest Paid ▲¥182.0B resulted in OCF of ¥3924.0B. Investing Cash Flow was ▲¥2916.0B (prior ▲¥1185.0B) reflecting Capital Expenditure ▲¥1548.0B (prior ▲¥865.0B) and outflows for acquisition of subsidiary shares ▲¥262.0B and purchase of investment securities ▲¥163.0B, partially offset by proceeds from disposals and recoveries of +¥57.0B. Free Cash Flow was ¥1008.0B (prior ¥3582.0B), down but positive, with FCF/EBITDA of 0.32x indicating some headroom. Financing Cash Flow was ▲¥1049.0B (prior ▲¥3434.0B) including net repayment of short-term borrowings ▲¥1466.0B and long-term borrowings +¥1215.0B, with dividends paid ▲¥441.0B and share buybacks ▲¥23.0B. Cash and deposits increased by ¥465.0B from ¥1657.0B at the beginning of the period to ¥2123.0B at year-end, improving liquidity. CapEx/Depreciation was 1.61x, continuing growth investment, and investments were financed within OCF, indicating healthy cash allocation.
Operating Income of ¥2122.0B is the core of recurring earnings. Of Non-operating Income ¥449.0B, Interest Income ¥186.0B and FX gains ¥87.0B include elements that are sensitive to market rates and conditions. Equity-method profit ¥24.0B (prior ¥226.0B) declined significantly reflecting resource market impact. One-off items include Special Gains ¥275.0B (negative goodwill ¥84.0B, step-acquisition gain ¥81.0B, gains on sales of investment securities ¥26.0B, gains on sales of fixed assets ¥30.0B) and Special Losses ¥350.0B (impairment losses ¥181.0B, fixed asset retirement losses ¥115.0B), netting to a deficit of ▲¥75.0B. However, compared with prior year Special Losses ¥695.0B (including impairments ¥272.0B), impairment burden substantially eased, contributing to a large increase at the Net Income level. Comprehensive Income was ¥2428.0B (¥1434.3B net income plus ¥994.0B other comprehensive income) driven primarily by Foreign Currency Translation Adjustments +¥597.0B, Remeasurements of Defined Benefit Plans +¥72.0B, and OCI of equity-method investees +¥60.0B, indicating FX movements were the primary driver of comprehensive income variability. OCF ¥3924.0B was 2.73x Net Income ¥1434.3B, and Accrual (OCF − Net Income) was +¥2490.0B mainly due to non-cash charges such as depreciation and working capital changes, indicating high quality of accounting earnings. The difference between Ordinary Income ¥2296.5B and Net Income ¥1434.3B is explained by taxes and net special items (net ▲¥75.0B), indicating limited structural divergence. Overall, operating-level earnings improvement driven by refining margin improvement shows some sustainability, while special items improved YoY but may continue to exhibit one-off volatility.
For the fiscal year ending March 2027 (next fiscal year), management forecasts Net Income attributable to owners of the parent of ¥750.0B (versus actual ¥1434.3B, ▼47.7%), EPS ¥62 (unchanged from actual ¥62), and annual dividend ¥18 (versus actual ¥36, halved). The marked decline in forecasted profit versus actual is interpreted as conservative assumptions reflecting that this fiscal year’s special gains (negative goodwill, step-acquisition gains, etc.) were one-off factors. Detailed guidance for Operating Income is not disclosed, but the baseline likely assumes normalization of refining margins and adjustments in resource prices. The planned annual dividend of ¥18 (half of this year’s ¥36) implies a Payout Ratio of 29.0% on EPS ¥62, a conservative level prioritizing cyclic cash allocation. Progress rates are not disclosed and thus not evaluated; next year’s profit level and cash generation will be key to dividend sustainability.
Annual dividend was ¥36 (Interim ¥18 + Year-end ¥18). Against Net Income attributable to owners of the parent ¥1434.3B, the Payout Ratio was approximately 46.3% (Total dividends ¥441.0B / shares outstanding ~1.22B shares basis), maintaining a similar payout level to the prior year. Share buybacks were ¥23.0B, modest, resulting in a Total Return Ratio of approximately 46.5%. Relative to OCF ¥3924.0B and Free Cash Flow ¥1008.0B, total dividends ¥441.0B yields an FCF coverage of 2.3x, indicating adequate capacity for dividend payments. Next year’s planned annual dividend ¥18 (half of current year) on forecast Net Income ¥750.0B implies a Payout Ratio of about 29.0%, set at a conservative level to buffer against cyclical cash flow volatility. Management indicates the Payout Ratio will be managed in the mid-term range of 30–50%, and if OCF and EBITDA expansion is sustained, staged dividend increases are possible; however, near-term policy is conservative. Share repurchases are limited and dividend-centric shareholder returns are expected to continue.
Volatility in crude prices and refining margins: The Fuel Oil segment accounts for 83.4% of Revenue and Fuel Oil Operating Income is highly dependent on refining margins. Changes in crude prices and product market conditions can materially impact earnings. Although Gross Margin improved to 9.3% year-on-year, in adverse market conditions Operating Margin of 2.6% may compress and the company faces risk of turning to losses. With Inventory of ¥13755.0B (25.8% of Total Assets), price declines could lead to valuation losses and inventory adjustments that pressure OCF and profits.
Liquidity and refinancing risk due to short-term debt concentration: Short-term Debt ¥23514.0B (69.6% of Total Liabilities) against Cash and Deposits ¥2123.0B results in Quick Ratio 67.6% and Cash/Short-term Debt ratio 0.42x, indicating fragile short-term liquidity. If CP or short-term borrowings become difficult to roll over, the company could face a liquidity crisis, and market dislocation or rating downgrades could raise funding costs.
Volatility in resource markets and equity-method investments: Resources segment Operating Income decreased to ¥291.0B (from ¥682.0B, ▲57.3%) due to market weakness. Equity-method income fell to ¥24.0B (prior ¥226.0B), reflecting sensitivity to coal and gas prices which materially influence consolidated earnings. Prolonged negative cycles in commodity prices could constrain ROE and dividend capacity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.6% | 7.8% (4.6%–12.3%) | -5.1pt |
| Net Income Margin | 1.8% | 5.2% (2.3%–8.2%) | -3.4pt |
The company’s Operating Margin and Net Income Margin are well below industry medians, and profitability remains low versus manufacturing peers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -11.8% | 3.7% (-0.4%–9.3%) | -15.5pt |
Revenue growth rate is substantially below the industry median, with price-driven declines running counter to the broader manufacturing trend.
※ Source: Company compilation
Structural improvement in Operating Margin from refining margin improvement: Gross Margin 9.3% (up +1.8pt from prior 7.5%) and Operating Margin 2.6% (up +0.8pt from prior 1.8%) reflect structural improvement from refining margins and cost controls. However, a gap of ▲5.1pt remains versus industry average Operating Margin 7.8%, and earnings remain dependent on cyclical resource and fuel oil markets. With next year’s forecast embedding lower profits, sustainability of current margin levels is a key point of focus.
Balance between cash generation and accelerated investment: OCF ¥3924.0B and FCF ¥1008.0B sufficiently cover CapEx ¥1548.0B and dividends ¥441.0B, indicating healthy cash allocation. Construction in Progress ¥829.0B (prior ¥552.0B) and accelerating CapEx may lift EBITDA and OCF from next fiscal year. Conversely, short-term debt concentration (short-term debt ratio 50.5%) and inventory holding (turnover days 68) are working capital and liquidity challenges; shifting to long-term debt and improving inventory efficiency are key to financial health.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the company based on publicly disclosed financial statements as reference information. Investment decisions are your responsibility; please consult a professional advisor as necessary.