| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5379.6B | ¥4995.8B | +7.7% |
| Operating Income / Operating Profit | ¥384.7B | ¥258.4B | +48.9% |
| Profit Before Tax | ¥349.6B | ¥169.6B | +106.2% |
| Net Income / Net Profit | ¥251.5B | ¥84.9B | +196.4% |
| ROE | 1.5% | 0.5% | - |
In FY2026 Q1, Revenue was ¥5379.6B (YoY +¥383.8B, +7.7%), Operating Income was ¥384.7B (YoY +¥126.3B, +48.9%), Ordinary Income was ¥349.6B (YoY +¥180.3B, +106.3%), and Net Income attributable to owners of parent was ¥228.4B (YoY +¥162.0B, +243.8%), delivering a large increase in profits. Operating margin expanded to 7.2% from 5.2% in the prior-year period (+2.0pt), and Net Income margin improved to 4.2% from 1.3% (+2.9pt). The Architectural Glass Business swung to profit (Operating loss ¥9.3B → Operating Income ¥46.8B) and the Chemicals Business increased profits (Operating Income ¥110.9B → ¥152.2B, +37.3%), driving company-wide profit improvement. Gross margin rose to 24.2% (from 23.3%, +0.9pt).
[Revenue] Revenue was ¥5379.6B (+7.7%), with 5 of 6 segments achieving revenue growth. The Chemicals segment recorded ¥1568.7B (+9.7%), accounting for 29.1% of company revenue, supported by spread improvement for caustic soda and fluorine products and volume recovery. Architectural Glass revenue was ¥1118.1B (+8.5%), with demand recovery and price adjustments progressing in both Europe/North America and Asia. Automotive revenue was ¥1375.8B (+6.9%), as the recovery trend in vehicle production continued. Electronics was ¥897.9B (+4.1%); display substrate demand remains firm but growth is slowing. Life Sciences was ¥349.1B (+16.4%), boosted by ramp-up of large contract projects. Ceramics & Others was ¥70.1B (-19.2%), impacted by declines in logistics and financial services. Cost of sales ratio improved to 75.8% from 76.7% (-0.9pt), with normalization of raw material and energy costs and improved product mix contributing to gross margin expansion.
[Profitability] Gross profit was ¥1304.1B (+11.8%), SG&A was ¥947.2B (+3.5%) with an SG&A ratio of 17.6% down from 18.3% (-0.7pt). Operating Income was ¥384.7B (+48.9%). By segment, Chemicals generated ¥152.2B (+37.3%) as the largest profit contributor; Architectural Glass returned to profit with ¥46.8B (from -¥9.3B prior-year); Automotive ¥86.4B (+12.5%); Electronics ¥122.7B (-12.6%). Life Sciences posted an operating loss of -¥33.2B, but the deficit narrowed 46.0% from -¥61.6B in the prior-year period. Net other income/expense was -¥26.6B (Other income ¥33.4B less Other expenses ¥60.0B), while equity in earnings of affiliates contributed ¥27.9B, limiting non-operating items to a net -¥8.5B. Financial items were Financial income ¥34.2B and Financial expenses ¥42.7B, net -¥8.5B. Profit Before Tax was ¥349.6B (+106.2%). After income taxes of ¥98.1B (effective tax rate 28.1%), Quarterly Net Income was ¥251.5B (+196.4%). The result was higher revenue and substantial profit growth.
Architectural Glass: Revenue ¥1118.1B (+8.5%), Operating Income ¥46.8B (turned to profit from -¥9.3B prior-year), achieving an operating margin of 4.2% as demand recovery and price adjustments took effect. Automotive: Revenue ¥1375.8B (+6.9%), Operating Income ¥86.4B (+12.5%), margin 6.3%, maintaining revenue and profit growth as automotive production recovers. Electronics: Revenue ¥897.9B (+4.1%), Operating Income ¥122.7B (-12.6%), margin 13.7%, retaining the highest profitability among segments but profit declined due to demand slowdown. Chemicals: Revenue ¥1568.7B (+9.7%), Operating Income ¥152.2B (+37.3%), margin 9.7%, with spread improvement across Integrated Chemicals and Essential Chemicals producing the company’s largest profit. Life Sciences: Revenue ¥349.1B (+16.4%), Operating Income -¥33.2B (deficit narrowed 46.0%), margin -9.5%; ramp-up costs for large contract projects in synthetic agrochemicals and biopharmaceuticals weighed on profits, but the deficit is shrinking. Ceramics & Others: Revenue ¥70.1B (-19.2%), Operating Income ¥7.7B (significant increase from ¥0.1B prior-year), margin 10.9%; profitability improved despite revenue declines in logistics and financial services.
[Profitability] Operating margin 7.2% (prior-year 5.2%) expanded by 2.0pt due to improved gross margin and lower SG&A ratio. Net Income margin 4.2% (prior-year 1.3%) improved 2.9pt due to better non-operating items and lower tax burden. ROE was 1.5% (annualized 6.0%), up from 0.4% in the prior-year period, but remains low due to capital-intensive operations. [Cash Quality] Operating Cash Flow (OCF) was ¥426.1B versus Net Income ¥251.5B, giving an OCF/Net Income ratio of 1.69x, indicating solid cash backing of profits. Working capital change was -¥143.9B (Accounts receivable increase △¥182.7B, Inventories increase △¥60.7B, Accounts payable decrease △¥83.5B), constituting a cash drain. [Investment Efficiency] Total asset turnover was 0.180x (annualized 0.72x), low for a capital-intensive manufacturer. Days sales outstanding 233 days, inventory days 423 days, and cash conversion cycle 474 days have lengthened, making working capital efficiency a priority. [Financial Soundness] Equity Ratio 49.9% (FY-end prior 50.3%) remains at a healthy level. Interest-bearing debt totaled ¥5884.5B (short-term ¥1349.8B, long-term ¥4534.7B), with a D/E ratio of 0.74x. Current ratio 1.41x (Current assets ¥1028.9B / Current liabilities ¥729.9B) indicates sufficient short-term liquidity. Interest coverage is Operating Income ¥384.7B / Interest expense ¥35.4B ≒ 10.9x, remaining at a high level.
Operating Cash Flow was ¥426.1B (YoY -5.3%). The subtotal was ¥569.9B, derived from Profit Before Tax ¥349.6B plus Depreciation & Amortization ¥481.4B, less working capital change -¥143.9B (mainly Accounts receivable increase △¥182.7B, Inventories increase △¥60.7B, Accounts payable decrease △¥83.5B) and income taxes paid ¥134.9B. Investing Cash Flow was -¥596.6B, mainly capital expenditures of ¥627.1B, partially offset by proceeds from disposals ¥5.4B and sale of financial assets ¥29.8B. Free Cash Flow was -¥170.6B (Operating CF ¥426.1B - Investing CF ¥596.6B), negative due to front-loaded investment. Financing Cash Flow was an inflow of ¥397.4B, with increases in short-term interest-bearing debt ¥356.9B and long-term borrowings ¥858.9B exceeding long-term repayments ¥584.2B and dividend payments ¥223.0B. Cash and cash equivalents increased ¥251.8B from opening ¥946.7B (including FX impact ¥24.9B), ending at ¥1198.5B. Working capital expansion was the driver of negative FCF; inventory reduction and accelerated receivables collection are future priorities.
Quarterly Net Income ¥251.5B vs Operating Cash Flow ¥426.1B gives OCF/Net Income ratio 1.69x, indicating high-quality cash-backed earnings. Non-operating items totaled -¥7.2B: Financial income ¥34.2B less Financial expenses ¥42.7B = -¥8.5B; Other income ¥33.4B less Other expenses ¥60.0B = -¥26.6B; plus equity in earnings of affiliates ¥27.9B. These limited non-operating impacts support a recurring earnings structure. The reduction from Gross Profit ¥1304.1B to Operating Income ¥384.7B is solely attributable to SG&A ¥947.2B; no one-off special items were recorded. Comprehensive Income ¥350.1B vs Net Income ¥251.5B difference ¥98.6B is due to Other Comprehensive Income (foreign currency translation ¥68.2B, cash flow hedges ¥34.9B, etc.) and does not represent temporary items affecting earnings quality. The accrual ratio is (Net Income ¥251.5B - Operating CF ¥426.1B) / Total Assets 2,995,531百万円 ≒ -0.6%, indicating conservative profit recognition.
Full Year guidance is maintained at Revenue ¥2兆2,000B (+6.9%), Operating Income ¥1500B (+17.7%), Net Income ¥900B (+11.3%), EPS ¥363.12, and Dividend ¥105. Progress toward the full-year forecast based on Q1 results is: Revenue 24.5% (¥5379.6B / ¥2兆2,000B), Operating Income 25.6% (¥384.7B / ¥1500B), Net Income 27.9% (¥251.5B / ¥900B), slightly above the standard quarterly run-rate of 25%—a strong start. Upside drivers include Architectural Glass returning to profitability and margin improvements in Chemicals, making the full-year targets likely achievable at this time. However, the Electronics segment’s profit decline and continued Life Sciences losses, together with working capital expansion constraining cash, are downside risks for H2. Exchange rate assumptions, raw material and energy price volatility, and progress on inventory correction will determine full-year volatility.
Dividend payments in Q1 amounted to ¥223.0B, on par with ¥222.9B in the prior-year period. Full-year dividend guidance is ¥105 (assumed interim and year-end ¥52.5 each), unchanged from prior-year actual ¥105. The payout ratio against full-year EPS ¥363.12 is about 29% (¥105 / ¥363.12), an appropriate level. Dividend payments of ¥223.0B against Quarterly Net Income ¥251.5B appear high (payout ratio ≈89%), but this reflects timing of year-end dividend payments based on prior-period earnings. Share buybacks were ¥4M, negligible; shareholder returns are dividend-focused. Free Cash Flow was negative ¥170.6B in Q1, but full-year dividend funding is expected to be secured through accumulated Operating CF and correction of working capital. Cash and cash equivalents ¥1198.5B and a solid financial base support dividend sustainability.
Working Capital Expansion Risk: Lengthened DSO 233 days, Inventory days 423 days, CCC 474 days are pronounced, with Accounts receivable up ¥182.7B and Inventories up ¥60.7B. Continued inventory build-up and collection delays from supply-demand mismatches could deepen cash constraints and trigger impairment or bad debt risk. Improving working capital efficiency is an immediate priority.
Segmental Earnings Risk: Electronics turned to lower profits with Operating Income ¥122.7B (-12.6%)—despite maintaining high margin 13.7%—and a downside in the demand cycle could pressure company profits. Life Sciences remains loss-making with Operating loss ¥33.2B (deficit narrowed 46%), and uncertainty over path to profitability means delays or loss of large contracts could widen losses. Architectural Glass’ return to profit depends on demand recovery and could revert to loss if market conditions deteriorate.
External Environment Risk: Exchange rate fluctuations (foreign operations translation difference ¥68.2B recorded in OCI) affect comprehensive income, and yen appreciation could impair earnings and competitiveness. Rebound in raw material and energy prices would compress Chemicals spreads and increase costs in Glass and Automotive. Rising interest rates would increase interest burden on ¥5884.5B interest-bearing debt; although current interest coverage is 10.9x, this could be pressured over the long term.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.2% | 6.8% (2.9%–9.0%) | +0.3pt |
| Net Income Margin | 4.7% | 5.9% (3.3%–7.7%) | -1.2pt |
Profitability slightly exceeds the industry median on operating margin, but Net Income margin is below median, suggesting the impact of non-operating items and tax burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.7% | 13.2% (2.5%–28.5%) | -5.5pt |
Revenue growth lags the industry median by 5.5pt, indicating relatively slower growth versus peers.
※Source: Company aggregation
The Architectural Glass division’s swing to profit (Operating loss ¥9.3B → Operating Income ¥46.8B) and profit increase in Chemicals (Operating Income +37.3%) led company-wide profit improvement, expanding Operating margin to 7.2% from 5.2% prior-year (+2.0pt). Gross margin improvement of 0.9pt and SG&A ratio decline of 0.7pt contributed to profitability; if cost efficiency and price revisions are sustained, this could form the basis for a medium-term trend of margin improvement.
Working capital expansion (DSO 233 days, Inventory days 423 days, CCC 474 days) contributed to FCF negative ¥170.6B. Accounts receivable up ¥182.7B, inventories up ¥60.7B, and accounts payable down ¥83.5B occurred concurrently; unless inventory reduction and receivables acceleration are realized, concerns remain about the sustainability of cash generation. Progress in working capital correction during the full year will determine the balance between shareholder returns and growth investment.
Q1 progress toward full-year guidance is Revenue 24.5%, Operating Income 25.6%, Net Income 27.9%, slightly exceeding standard progress and raising the probability of plan achievement. Risks include Electronics profit decline (-12.6%) and continued Life Sciences losses, but robust Chemicals margins and Architectural Glass returning to profit provide support. FX, raw material price trends, and the effectiveness of inventory correction will determine full-year volatility.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial results analysis document. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial data. Investment decisions are your responsibility; please consult a professional advisor as necessary.
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