| Metric | This Year | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥818.0B | ¥790.9B | +3.4% |
| Operating Income / Operating Profit | ¥29.7B | ¥-4.4B | +379.7% |
| Ordinary Income | ¥39.2B | ¥-2.2B | +231.5% |
| Net Income / Net Profit | ¥21.4B | ¥15.1B | +41.4% |
| ROE | 4.9% | 3.8% | - |
For the fiscal year ended March 2026, Revenue was ¥818.0B (YoY +¥27.1B +3.4%), Operating Income was ¥29.7B (YoY +¥34.1B +379.7%), Ordinary Income was ¥39.2B (YoY +¥41.4B +231.5%), and Net Income was ¥21.4B (YoY +¥6.3B +41.4%), achieving revenue growth and a substantial profit increase. The prior year recorded an operating loss of ¥-4.4B, significantly impairing profitability, but this year Operating Income margin turned positive to 3.6% (improved +4.2pt from ▲0.6% last year) supported by volume recovery in the Shoes BU, established price revisions and absorption of fixed costs. Gross margin improved to 21.6% (+3.3pt) due to pricing policy and mix improvements, while SG&A ratio improved to 18.0% (▲0.9pt) with fixed-cost control progress. At the ordinary income level, foreign exchange gains of ¥6.9B (23.3% of Operating Income) made a significant contribution, and Ordinary Income exceeded Operating Income by ¥9.5B. Extraordinary items included impairment losses of ¥9.1B, substantially down from ¥32.6B in the prior year, reducing pressure at the Net Income level.
[Revenue] Revenue of ¥818.0B (+3.4%) was driven by recovery in the Shoes BU (+7.6%). By segment, Shoes BU accounted for ¥507.8B or 62.1% of the total, benefiting from volume recovery and price revisions. The Plastics Business recorded ¥230.1B (+0.5%), a slight increase, prioritizing margin maintenance through a shift to high value-added products. Industrial Materials posted ¥89.3B (▲11.7%) with double-digit revenue decline due to demand softness and price competition, indicating ongoing structural issues. Revenue composition by business unit was: First Business Unit (formerly Industrial Materials-centric) 61.0%, Second Business Unit (formerly Plastics-centric) 28.1%, Shoes BU 10.9%. While Shoes contributed strongly to revenue, the revenue decline in the Industrial Materials segment within the First Business Unit constrained company-wide growth.
[Profitability] Cost of goods sold was ¥641.1B (COGS ratio 78.4%), securing Gross Profit of ¥176.9B and a gross margin of 21.6% (up +3.3pt from 18.3% prior year). SG&A was ¥147.2B (18.0% of sales, down ▲0.9pt from 18.9%), with absolute SG&A down ¥1.7B, reflecting fixed-cost absorption and efficiency improvements. Operating Income was ¥29.7B (Operating Margin 3.6%), turning from an operating loss of ¥-4.4B in the prior year to profitability, demonstrating operating leverage. Of non-operating income of ¥12.3B, foreign exchange gains of ¥6.9B (23.3% of Operating Income) were the largest contributor; after non-operating expenses of ¥2.8B (including interest expense of ¥1.5B), Ordinary Income reached ¥39.2B (Ordinary Income margin 4.8%). Extraordinary items resulted in a net loss of ¥-9.7B, mainly due to impairment losses of ¥9.1B, but this was a significant improvement from a net loss of ¥-30.0B (impairment ¥32.6B) in the prior year. After deducting income taxes of ¥8.3B (effective tax rate 28.2%), Net Income was ¥21.4B (Net Income margin 2.6%, up +0.7pt from 1.9% prior year). In conclusion, revenue and profit growth were realized through Shoes performance and fixed-cost absorption, with foreign exchange gains and reduced impairment burdens boosting profit levels.
The First Business Unit (formerly Industrial Materials-centric) delivered Revenue of ¥507.8B (+7.6%), Operating Income of ¥32.9B (from ¥10.0B prior year, +228.0%), and margin of 6.5% (up +4.4pt from 2.1%), achieving substantial profitability improvement. The Shoes BU, the core of this unit, expanded profit contribution through volume recovery, price revisions and cost reductions, leading the First Business Unit. The Second Business Unit (formerly Plastics-centric) recorded Revenue of ¥230.1B (+0.5%), Operating Income of ¥23.9B (from ¥18.8B prior year, +27.0%), and margin of 10.4% (up +2.2pt from 8.2%), maintaining high margins and supporting overall company profitability. Stable demand and price pass-through in insulation and building materials contributed. Industrial Materials posted Revenue of ¥89.3B (▲11.7%) and an operating loss of ¥3.2B (improved from ▲9.7B prior year, a 67.0% reduction in loss), showing continued structural challenges though fixed-cost reductions have narrowed the deficit. Contribution to consolidated Operating Income was largest from the First Business Unit, complemented by the high-margin Second Business Unit; early return to profitability in Industrial Materials is key to further improving consolidated margins.
[Profitability] Operating Margin improved to 3.6% (from ▲0.6% prior year, +4.2pt), and Net Margin to 2.6% (from 1.9%, +0.7pt). ROE was 4.9% (from 1.1% prior year, +3.8pt) reflecting increased equity and higher Net Income, but remains below the cost of capital. [Cash Quality] Operating Cash Flow (OCF) was ¥26.4B, 1.23x Net Income of ¥21.4B, broadly reasonable, but OCF/EBITDA (Operating Income + Depreciation) was 0.47x, low and indicating room to improve cash conversion efficiency. Receivables DSO (Accounts Receivable ÷ Daily Sales) was 62 days, indicating somewhat long collection periods and a need to improve working capital efficiency. [Investment Efficiency] ROIC (NOPAT ÷ Invested Capital) is estimated around 4.2%, below the cost of capital, indicating a need to accelerate invested capital recovery. Capital expenditure was ¥28.8B, 1.05x depreciation of ¥27.4B, consistent with maintenance and renewal investment levels. Construction in progress was ¥23.3B (12.1% of tangible fixed assets), suggesting room for future capacity expansion. [Financial Soundness] Equity Ratio was 51.8% (from 49.5%, +2.3pt), Current Ratio 207.3% (from 156.8%, +50.5pt), and Quick Ratio 167.5%, indicating ample liquidity. Interest-bearing debt rose to ¥171.5B (from ¥105.0B, +63.3%), raising Debt/EBITDA to 3.0x. Interest coverage (EBIT / Interest Paid) was 19.3x, indicating sufficient interest-bearing capacity, but short-term debt ratio was 40.2% (short-term borrowings ¥69.0B / total interest-bearing debt ¥171.5B), posing refinancing risk.
OCF of ¥26.4B (YoY ▲1.7%) was 1.23x Net Income of ¥21.4B and at a reasonable level, but a ¥-38.9B decrease in accounts payable during the period (due to shortened payment terms or reduced raw material purchases) and corporate tax payments of ¥-6.5B caused working capital cash outflows. Inventory decrease of ¥+8.9B and a slight decrease in receivables of ¥-0.1B contributed to cash generation, while non-cash expenses—depreciation of ¥27.4B and impairment losses of ¥9.1B—supported OCF. Investing Cash Flow was ¥-28.6B, primarily acquisition of tangible fixed assets ¥-28.8B (maintenance/renewal of buildings and machinery and strategic investments), increasing the investment pace from ¥-19.2B in the prior year. Free Cash Flow (OCF + Investing CF) was ¥-2.2B; investments and dividends were mainly financed by increased borrowings (Financing CF +¥21.5B, including long-term borrowings +¥56.7B, net increase in short-term borrowings +¥25.0B, and repayments ▲¥57.5B). Cash and deposits at year-end were ¥97.5B (from ¥77.2B at the beginning of the period, +¥20.3B), providing a liquidity cushion, but working capital efficiency (particularly accounts payable timing) and shortening receivables DSO of 62 days are focal points for OCF improvement next fiscal year.
Operating Income of ¥29.7B is the core of operating performance, with foreign exchange gains of ¥6.9B (23.3% of Operating Income) out of non-operating income of ¥12.3B pushing Ordinary Income to ¥39.2B. Foreign exchange gains depend on exchange rate movements and lack durability. Extraordinary losses totaled ¥-9.7B, mainly impairment losses of ¥9.1B (recorded in the Second Business Unit) and disposal losses of ¥0.8B; gains on sales of investment securities of ¥2.2B were recorded as extraordinary income, making the net impact of one-off items sizable—approximately 45% of Net Income ¥21.4B—so earnings quality warrants attention. In the prior year, impairment losses of ¥32.6B depressed Net Income to ¥15.1B, but the reduced impairment burden this year contributed to the recovery in Net Income. On accrual quality, OCF / Net Income = ¥26.4B / ¥21.4B = 1.23x, which is good, but OCF / EBITDA (EBITDA = Operating Income ¥29.7B + Depreciation ¥27.4B = ¥57.1B) is 0.46x, low, indicating that working capital fluctuations and tax payment timing suppress cash conversion. The divergence between Ordinary Income and Net Income (¥39.2B → ¥21.4B) is due to extraordinary items and income taxes, so separating operating improvements from one-off effects is necessary when evaluating performance.
Full-year guidance was Revenue ¥825.0B (YoY +0.9%), Operating Income ¥22.0B (YoY ▲26.0%), Ordinary Income ¥20.0B (YoY ▲49.0%), and Net Income ¥13.0B. Actuals came in at Revenue ¥818.0B (achievement rate 99.2%), Operating Income ¥29.7B (achievement rate 135.0%), Ordinary Income ¥39.2B (achievement rate 196.0%), and Net Income ¥21.4B (achievement rate 164.6%), significantly outperforming profit guidance. Upside factors included stronger-than-expected volume recovery and pricing effects in the Shoes BU, progress in fixed-cost reductions, and foreign exchange gains (which boosted Ordinary Income by +¥9.5B). The company had projected Operating Income of ¥22.0B, implying a YoY decline of ▲26.0%, but actual Operating Income rose YoY +379.7%, far exceeding plan due to reduced impairment burden and realization of operating leverage. Going forward, assuming the risk of foreign exchange gains dissipating, the ability to maintain or improve operating margin (3.6%) and to achieve profitability improvements in Industrial Materials are key to meeting future plans.
Year-end dividend was ¥40 per share (interim dividend ¥0), yielding an annual dividend of ¥40 and a payout ratio of 27.5% (1.26% on a BPS basis), a sustainable level. The prior year had no dividend, and the company resumed dividends in line with the earnings recovery. Total shareholder returns comprised dividends of ¥2.73B only, with share buybacks negligible at ▲¥0.0B, indicating a dividend-only shareholder return policy. With Free Cash Flow of ¥-2.2B, dividends of ¥2.73B were paid, resulting in an FCF coverage of ▲0.81x; the dividend was not fully covered by internal cash and was supplemented by increased borrowings (Financing CF +¥21.5B). Going forward, improving working capital efficiency and restraining investments to return FCF to positive are expected to allow dividends to be funded internally and create room for dividend increases. Given cash and deposits of ¥97.5B and OCF of ¥26.4B, financial capacity to continue dividends is secured, but sustained dividend increases require stable growth in OCF and FCF.
Demand / Mix Concentration Risk: With the Shoes BU accounting for 62.1% of revenue, concentration is high and demand swings or intensified competition in that segment directly impact consolidated performance. Although the segment recovered from an operating loss of ▲¥9.7B last year to +¥32.9B this year, downside risk to profits remains significant in price competition or demand decline scenarios. Industrial Materials continues to report an operating loss of ▲¥3.2B, and delayed profitability improvement in this segment would dilute consolidated margins.
Foreign Exchange Sensitivity Risk: Foreign exchange gains of ¥6.9B accounted for 17.6% of Ordinary Income ¥39.2B and 23.3% of Operating Income ¥29.7B, indicating considerable impact from non-operating factors. In a yen-strengthening scenario, these could turn into FX losses, posing downside risk to Ordinary Income. Monitoring FX hedge policy and sensitivity to effective rate movements is important.
Financial Risk (Short-term Debt Concentration / Refinancing): Of interest-bearing debt ¥171.5B, short-term borrowings are ¥69.0B (short-term debt ratio 40.2%) and long-term borrowings with repayments within one year are ¥57.5B, creating a substantial short-term repayment burden. Debt/EBITDA is 3.0x and leverage dependence has increased, so rising interest rates or deteriorating refinancing conditions could strain liquidity and margins. Interest coverage is 19.3x, providing near-term resilience, but reducing short-term debt ratio and shifting toward long-term, stable funding is a priority.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.6% | 7.8% (4.6%–12.3%) | -4.1pt |
| Net Margin | 2.6% | 5.2% (2.3%–8.2%) | -2.6pt |
Profitability lags the industry median, with Operating Margin below by ▲4.1pt and Net Margin below by ▲2.6pt. Despite turning from an operating loss to profit, the company remains in the lower tier within the industry and needs further fixed-cost reductions and focus on high-margin businesses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.4% | 3.7% (-0.4%–9.3%) | -0.3pt |
Growth is roughly in line with the industry median, supported by recovery in Shoes, but declines in Industrial Materials restrained overall growth. The company is mid-ranked within the industry, and next fiscal year the focus will be sustaining growth in core segments and correcting loss-making businesses to improve growth.
※ Source: Company compilation
Sustainability of Profit Recovery: Operating Margin of 3.6% (up +4.2pt from ▲0.6%) and Gross Margin of 21.6% (up +3.3pt) drove a return to profitability. Price revision adoption in Shoes and fixed-cost absorption were primary drivers, confirming the realization of operating leverage. However, temporary factors—foreign exchange gains of ¥6.9B (23.3% of Operating Income) and reduced impairment burden (¥32.6B → ¥9.1B)—also elevated profit levels, so maintaining sustainable margins at the operating level is a key point to monitor.
Portfolio Structure Challenges and Room for Improvement: Shoes BU led the company with Operating Income of ¥32.9B, and the Plastics Business maintained high margins at 10.4%, while Industrial Materials continued to post an operating loss of ▲¥3.2B. Although the deficit narrowed from ▲¥9.7B last year, returning Industrial Materials to profitability is essential for further consolidated margin improvement. Organizational restructuring and selection-and-concentration measures are producing phased results, but the pace of correcting loss-making segments and lifting consolidated ROE (4.9%) and ROIC (estimated 4.2%) will be important KPIs next fiscal year.
Capital Efficiency and Cash Conversion Improvement Opportunities: OCF of ¥26.4B is 1.23x Net Income and at a reasonable level, but OCF/EBITDA of 0.47x is low, and receivables DSO of 62 days and accounts payable timing impact cash conversion efficiency. Interest-bearing debt has increased to ¥171.5B (Debt/EBITDA 3.0x) and short-term debt ratio is 40.2%, elevating refinancing risk somewhat. Next fiscal year, improving working capital efficiency (shortening DSO, improving CCC) and returning FCF to positive are keys to reducing leverage dependence and improving capital efficiency (raising ROE and ROIC).
This report is an earnings analysis automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.