| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1080.4B | ¥1091.1B | -1.0% |
| Operating Income / Operating Profit | ¥62.5B | ¥87.0B | -28.2% |
| Ordinary Income | ¥86.0B | ¥97.6B | -12.0% |
| Net Income | ¥63.1B | ¥87.5B | -27.9% |
| ROE | 5.7% | 9.3% | - |
For the fiscal year ended March 2026, Revenue was ¥1080.4B (YoY -¥10.7B -1.0%) and remained near flat, while Operating Income was ¥62.5B (YoY -¥24.5B -28.2%), Ordinary Income was ¥86.0B (YoY -¥11.6B -12.0%), and Net Income attributable to owners of the parent was ¥48.6B (YoY -¥18.2B -27.3%), representing a significant decline in profitability. Gross margin fell to 20.2% (from 21.9% prior year, -1.7pt) and operating margin deteriorated to 5.8% (from 8.0% prior year, -2.2pt), while SG&A ratio rose to 14.4% (from 13.9% prior year, +0.5pt). Despite deterioration in operating profitability, Ordinary Income was supported by non-operating income of ¥27.1B, including dividend income of ¥13.6B, which limited the decline. Extraordinary losses of ¥17.4B (primarily impairment losses of ¥16.6B) pressured final profit, and net margin fell to 4.5% (from 8.0% prior year). By segment, Industrial Products (Revenue ¥758.4B +1.5%, Operating Income ¥5.1B -61.7%, margin 0.7%) was the principal driver of the company-wide profitability decline, whereas Consumer Products (Revenue ¥325.6B -6.3%, Operating Income ¥76.4B -17.5%, margin 23.5%) maintained high margins and accounted for most of profits. Operating Cash Flow (OCF) was ¥57.5B (YoY -20.6%), Investing Cash Flow was -¥87.4B, and Free Cash Flow was negative ¥-29.9B. On the balance sheet, investment securities increased to ¥544.3B (+¥234.5B), and unrealized gains expanded, boosting Net Assets to ¥1106.3B (+¥161.7B). Progress against full-year guidance was: Revenue 95%, Operating Income 104%, Ordinary Income 113%, Net Income 101% — Revenue missed plan but profits exceeded guidance.
[Revenue] Revenue was ¥1080.4B, down -1.0% YoY. By segment, Industrial Products increased slightly to ¥758.4B (YoY +1.5%), while Consumer Products declined to ¥325.6B (YoY -6.3%), leading the overall revenue decline. Industrial Products was firm domestically, but Consumer Products was impacted by weaker consumer demand and price competition. By region, Japan revenue rose to ¥662.3B (YoY +3.5%), while North America declined to ¥226.6B (YoY -6.3%) and Asia declined to ¥187.7B (YoY -8.5%). Other businesses (logistics & solar) were ¥34.5B (YoY -1.7%), roughly flat. Progress vs. full-year forecast of ¥1140.0B was 95%, indicating limited demand recovery in the latter half of the year.
[Profitability] Operating Income was ¥62.5B (YoY -28.2%). Gross profit was ¥217.8B (gross margin 20.2%), down ¥21.4B YoY (-8.9%), with gross margin deteriorating -1.7pt from 21.9% due mainly to margin compression in Industrial Products (margin shrank to 0.7%). SG&A was ¥155.4B (SG&A ratio 14.4%), up ¥3.2B YoY (+2.1%), outpacing sales growth and reflecting the relative burden of fixed costs. By segment Operating Income: Industrial Products ¥5.1B (from ¥13.4B prior, -61.7%), margin down from 1.8% to 0.7%; Consumer Products ¥76.4B (from ¥92.7B prior, -17.5%), maintaining a high margin of 23.5% (from 27.1%) and accounting for the majority of consolidated operating profit; Other Businesses ¥3.8B (YoY -12.2%). Ordinary Income was ¥86.0B (YoY -12.0%), with non-operating income of ¥27.1B (including dividend income ¥13.6B and foreign exchange gains ¥3.2B) mitigating operating losses. Non-operating expenses were minor at ¥3.6B (including interest expense ¥0.5B). Net Income attributable to owners of the parent was ¥48.6B (YoY -27.3%), with the decline exceeding the operating-stage decrease due to extraordinary losses of ¥17.4B (impairment losses ¥16.6B, disaster losses ¥0.7B). Income taxes were ¥21.4B (effective tax rate 30.6% on pretax income ¥70.0B), down ¥8.0B YoY. In summary, modest revenue decline, gross margin deterioration, and rising fixed costs led to a large operating loss; non-operating income and lower tax burden partially offset this, but extraordinary losses and sharp deterioration in Industrial Products profitability resulted in consolidated revenue and profit decline.
The Industrial Products segment recorded Revenue ¥758.4B (YoY +1.5%) but Operating Income fell to ¥5.1B (YoY -61.7%), with margin declining to 0.7% (from 1.8%). This segment supplies processed products primarily using plastic resins to manufacturers; domestic demand remained firm but margin compression resulted from delayed pass-through of rising raw material prices and worsening product mix. Segment assets were ¥481.5B (from ¥493.2B prior, -2.4%). The Consumer Products segment posted Revenue ¥325.6B (YoY -6.3%) and Operating Income ¥76.4B (YoY -17.5%), maintaining a high margin of 23.5% (from 27.1%). This segment, which handles consumer daily necessities and consumables, saw sales decline due to demand weakness and price competition, but sustained high profitability through brand strength and efficient SG&A management. Segment assets were ¥308.8B (from ¥317.1B prior, -2.6%). Other segments (logistics, solar, etc.) reported Revenue ¥34.5B (YoY -1.7%) and Operating Income ¥3.8B (YoY -12.2%), with margin 11.0% (from 12.3%). At the consolidated level, the sharp profitability decline in Industrial Products is the primary challenge, while Consumer Products’ high margins underpin overall profit.
[Profitability] Operating margin was 5.8%, down -2.2pt from 8.0% prior year, driven by lower gross margin 20.2% (from 21.9%) and higher SG&A ratio 14.4% (from 13.9%). Net margin was 4.5% (from 8.0%), reflecting the impact of extraordinary losses. ROE was 4.7% (annualized; Net Income attributable to owners of the parent ¥48.6B divided by average shareholders’ equity ~¥1025B), down from 7.3% prior year, indicating low capital efficiency. Industrial Products’ operating margin of 0.7% drags on consolidated profitability. [Cash Quality] OCF/Net Income was 1.18x, maintaining minimal consistency, but OCF/EBITDA (Operating Income + Depreciation) was 0.63x (OCF ¥57.5B / EBITDA ¥91.6B), indicating weak cash conversion. In working capital, accounts payable decreased by -¥30.0B, a cash outflow, while inventories contributed +¥5.2B to cash, indicating solid inventory management. [Investment Efficiency] Total asset turnover was 0.66x (Revenue ¥1080.4B / average total assets ~¥1641B), roughly flat YoY. Capital expenditure was approx. ¥74.7B (acquisitions of tangible & intangible assets on the cash flow statement), 2.57x depreciation of ¥29.1B, indicating an active investment phase. ROIC (NOPAT / Invested Capital) is roughly 3.3% (estimated after-tax operating profit ~¥43.8B / interest-bearing debt + equity ~¥1140B), low with significant room to improve investment returns. [Financial Soundness] Equity Ratio improved to 67.4% (from 64.6%). Interest-bearing debt was ¥31.2B (short-term borrowings ¥31.2B, long-term borrowings ¥1.0B) yielding a D/E ratio of 0.03x and Debt/EBITDA ratio of 0.34x — extremely low leverage. Current ratio was 243% (current assets ¥819.2B / current liabilities ¥336.7B), and quick ratio 212%, indicating very strong short-term liquidity. Cash and deposits were ¥342.7B, approximately 11 times short-term liabilities, making refinancing risk very limited. Interest coverage was 121x (OCF ¥57.5B / interest paid ¥0.5B), showing minimal interest burden. Investment securities ¥544.3B (33.2% of total assets) increased due to unrealized gains, but attention is warranted for market volatility risk in valuation reserves.
OCF was ¥57.5B (YoY -20.6%), starting from pretax profit ¥70.0B and adding non-cash items including depreciation ¥29.1B and impairment losses ¥16.6B, with cash taxes paid of -¥24.2B and reflecting working capital changes. In working capital, inventory decrease of +¥5.2B improved cash flow, while a decrease in accounts payable of -¥30.0B was a major cash outflow, suggesting changes in purchase timing or payment terms. Accounts receivable increased by -¥1.6B, with minor impact. OCF/Net Income was 1.18x, providing minimal alignment, but OCF/EBITDA was weak at 0.63x (EBITDA ~¥91.6B), primarily due to the reduction in accounts payable. Investing Cash Flow was -¥87.4B, centered on acquisition of tangible and intangible fixed assets -¥74.7B, suggesting new capital expenditure and system investment. Acquisition of investment securities was -¥30.1B and sales +¥8.9B, netting -¥21.2B outflow. Time deposits had inflows of +¥15.1B (deposits -¥20.0B, withdrawals +¥35.1B). Free Cash Flow was negative ¥-29.9B, covered by internal reserves and cash position. Financing Cash Flow was -¥34.9B, primarily dividend payments -¥20.7B, treasury stock purchases -¥13.0B, and long-term borrowings repayment -¥0.3B. Cash and cash equivalents decreased from ¥389.3B at the beginning of the period to ¥325.7B at the end, a decline of -¥63.6B, including foreign exchange effects of +¥1.3B. Although FCF was negative, abundant liquidity (cash & deposits ¥342.7B and investment securities ¥544.3B) mitigated funding concerns; however, correcting working capital management associated with the large decrease in accounts payable and improving OCF are priorities for the next period.
Of Net Income attributable to owners of the parent ¥48.6B, extraordinary losses ¥17.4B (impairment losses ¥16.6B, disaster losses ¥0.7B) were temporary non-recurring items, meaning roughly 35% of net income depended on non-recurring items. At the Ordinary Income stage, non-operating income of ¥27.1B (including dividend income ¥13.6B and FX gains ¥3.2B) accounted for about 43% relative to Operating Income ¥62.5B, indicating high reliance on non-operating income. Comprehensive income was ¥194.9B, substantially exceeding Net Income ¥48.6B; other comprehensive income of ¥146.3B consisted of valuation differences on securities +¥140.2B, foreign currency translation adjustments +¥4.4B, and retirement benefit adjustments +¥1.6B, driven mainly by unrealized gains on investment securities. The majority of comprehensive income is unrealized valuation gains, which diverges from cash-generating ability. OCF was ¥57.5B, about 1.2x Net Income, but the decrease in accounts payable of -¥30.0B worsened working capital and widened the accrual (gap between profit and cash). Impairment losses ¥16.6B were one-off losses from reassessment of fixed asset profitability; recurrence risk is limited but indicates declining asset efficiency. Dividend income ¥13.6B is a stable income source from investment securities but is subject to market conditions and thus has sustainability risk. Overall, Ordinary Income is strongly affected by non-operating income and extraordinary items; the structure of covering weakened operating profitability with non-operating income is clear, and improving operating margins and normalizing working capital management are key to enhancing earnings quality.
Full-year guidance: Revenue ¥1140.0B (YoY +5.5%), Operating Income ¥60.0B (YoY -4.0%), Ordinary Income ¥76.0B (YoY -11.6%), Net Income attributable to owners of the parent ¥48.0B (YoY -27.3%). Compared with actuals, Revenue was ¥1080.4B (94.8% of guidance) below forecast, while Operating Income ¥62.5B (104.2% of guidance), Ordinary Income ¥86.0B (113.2%), and Net Income ¥48.6B (101.3%) all exceeded guidance. Revenue shortfall likely reflects weaker-than-expected demand recovery in the latter half, but profit outperformance resulted from cost control and contributions from non-operating income (dividends, etc.). Dividend guidance is annual ¥60 per share (interim ¥60, year-end ¥60 for total ¥120), and actual payout was annual ¥120 (interim ¥60 + year-end ¥60) as planned. EPS guidance was ¥279.62 vs. actual ¥282.84, above forecast. The full-year guidance assumes Revenue growth of +5.5% YoY, contrasting with the actual -1.0% YoY; next period’s growth plan depends on demand recovery and expansion of Industrial Products sales. While Operating Income guidance anticipated a -4.0% decline, the period ended with -28.2% decline, underscoring the urgency of profitability improvement. The upside vs. guidance reflects absorption of one-off losses and securing profits via non-operating income and reduced tax burden, but sustainable growth depends on recovery of operating profitability.
Dividends this period were annual ¥120 (interim ¥60 + year-end ¥60), totaling approximately ¥20.7B (dividend payments ¥20.7B). Payout ratio relative to Net Income attributable to owners of the parent ¥48.6B was 42.6%. Prior year dividend was also annual ¥120, maintaining a stable dividend policy. Treasury stock purchases totaled ¥13.0B (per cash flow statement), and combined with dividends, total shareholder returns were approx. ¥33.7B, implying a total return ratio of approx. 69% relative to Net Income. Prior year treasury purchases were ¥10.4B; returns were increased this period. Free Cash Flow was negative ¥-29.9B, and current returns were funded from retained earnings and strong liquidity (cash & deposits ¥342.7B, investment securities ¥544.3B). Payout ratio 42.6% is at a sustainable level, but given capital expenditure at 2.57x depreciation indicating a growth investment phase, medium-term sustainability of returns depends on OCF improvement and CapEx normalization. Shares outstanding were 17.699 million (after deducting treasury shares 0.610 million, shares outstanding 17.090 million); treasury purchases are part of active capital policy to prevent dilution and enhance shareholder value. Next period dividend forecast is annual ¥60 (year-end ¥60), effectively assuming ¥120/year maintained; policy is expected to remain unchanged. Overall, shareholder returns combining dividends and repurchases are active, but with FCF negative, further expansion of returns requires improvement in OCF and cash conversion efficiency.
Sharp deterioration in Industrial Products segment profitability: Operating margin declined from 1.8% to 0.7%, substantially weakening the profitability of the core segment which accounts for 67.8% of sales. Causes appear to be rising raw material (plastic resin) prices, delayed pass-through to selling prices, and worsening product mix. Short-term price revisions and productivity improvements are essential. Continued gross margin deterioration (-1.7pt) directly pressures operating income, and slow improvement would make company-wide recovery difficult (Probability: High, Impact: High).
Deterioration in working capital management and pressure on OCF: Accounts payable decreased by -¥30.0B, worsening working capital and cash flow. OCF/EBITDA is low at 0.63x, showing marked decline in cash conversion efficiency. In an investment phase (CapEx / depreciation 2.57x) with FCF negative ¥-29.9B, internal cash generation is constrained. Without normalization of accounts payable management and efficiency improvements in inventory and receivables, simultaneous execution of investment and shareholder returns may be restricted (Probability: Medium, Impact: Medium–High).
Market price volatility risk of investment securities: Investment securities increased to ¥544.3B (33.2% of total assets), with valuation differences on securities +¥140.2B (OCI) boosting Net Assets. Deferred tax liabilities also increased to ¥133.5B, raising dependence on unrealized gains. A downturn in equity markets could deteriorate valuation gains and reduce Net Assets; although the Equity Ratio is high at 67.4%, the quality of capital is increasingly market-linked. Effects on dividend funding and investment capacity are possible, making market risk resilience a strategic financial consideration (Probability: Medium, Impact: Medium).
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.8% | 7.8% (4.6%–12.3%) | -2.0pt |
| Net Margin | 5.8% | 5.2% (2.3%–8.2%) | +0.6pt |
Operating margin is -2.0pt below the manufacturing median of 7.8%, below industry average, but Net Margin at 5.8% is +0.6pt above the median 5.2%, reflecting better relative final-stage performance driven by non-operating income (dividends, etc.).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.0% | 3.7% (-0.4%–9.3%) | -4.7pt |
Revenue growth was -1.0%, -4.7pt below the manufacturing median of 3.7%, lagging industry growth trends. Declines in Industrial Products profitability and slowing Consumer Products demand constrain growth; revenue recovery next period is a challenge.
※Source: Company compilation based on public financial statements
Recovery of Industrial Products profitability is the top priority: Operating margin has fallen to 0.7%, pressuring consolidated profits. Monitor quarterly progress on accelerating pass-through of raw material price increases, improving product mix, and productivity enhancements to restore gross margin. If Industrial Products margin returns to historical levels (around 1.8%), consolidated operating margin could rise into the 7% range, contributing to ROE improvement.
Improve cash conversion efficiency and rebalance investment vs. shareholder returns: OCF/EBITDA at 0.63x is low, necessitating normalization of accounts payable and working capital. CapEx is aggressive at 2.57x depreciation, but given FCF deficit, improving investment returns (ROIC ~3.3%) is crucial. If OCF improves and investment pace stabilizes, sustainability of dividends (payout ratio 42.6%) and buybacks will be reinforced. Monitor CCC and OCF trends closely.
Evaluate unrealized gains on investment securities and market risk resilience: Investment securities ¥544.3B and valuation differences +¥140.2B substantially increased Net Assets, but equity quality is more market-linked. A market correction could impair valuation gains and reduce equity and Equity Ratio. However, stable dividend income ¥13.6B supports Ordinary Income; balancing dividend yield of the portfolio and market risk tolerance will be an important assessment point.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.