| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2236.9B | ¥2194.7B | +1.9% |
| Operating Income | ¥136.5B | ¥93.5B | +45.9% |
| Ordinary Income | ¥144.1B | ¥93.7B | +53.8% |
| Net Income | ¥84.6B | ¥68.0B | +24.5% |
| ROE | 4.3% | 3.5% | - |
For the fiscal year ended March 2026, Revenue was ¥2,236.9B (YoY +¥42.2B +1.9%), Operating Income was ¥136.5B (YoY +¥43.0B +45.9%), Ordinary Income was ¥144.1B (YoY +¥50.4B +53.8%), and Net income attributable to owners of the parent was ¥84.6B (YoY +¥16.6B +24.5%), achieving both top-line and bottom-line growth. Operating margin improved 1.8pt to 6.1% (prior year 4.3%), and gross margin rose 2.5pt to 25.3% (prior year 22.8%). Core Cement recovered sharply with Operating Income of ¥55.0B (prior year ¥8.8B, +526.6%), New Materials secured Operating Income of ¥24.8B (+9.5%) on Revenue growth of +15.3%, and Mineral Products maintained double-digit margin with Operating Income of ¥29.9B (△5.1%) and margin 14.2%. At the ordinary level, equity in earnings of affiliates contributed ¥2.6B and dividend income ¥10.9B, absorbing interest expense of ¥12.8B. Extraordinary items included gain on sales of investment securities of ¥54.6B and gain on sales of fixed assets ¥4.6B which lifted special gains to ¥59.2B, while impairment losses of ¥32.4B (mainly cement) were recorded, resulting in a net uplift of about ¥16.4B.
Revenue: Revenue was ¥2,236.9B (YoY +1.9%), a slight increase. Cement accounted for ¥1,631.2B (+1.8%), representing 70.9% of the total, supported by resilient domestic demand and price revisions. New Materials grew strongly to ¥180.7B (+15.3%), Mineral Products expanded to ¥209.9B (+3.2%). Building Materials was ¥251.6B (△3.6%), and Optoelectronics was ¥27.3B (+8.8%) with modest changes. Geographic composition shows over 90% domestic in both sales and tangible fixed assets, indicating high sensitivity to domestic construction investment trends. By segment, while growth in core Cement was limited, high-margin New Materials and Mineral Products with double-digit growth drove overall performance.
Profitability: Cost of sales was ¥1,670.3B, yielding gross profit of ¥566.5B (gross margin 25.3%, up 2.5pt from 22.8%). SG&A was ¥430.0B (SG&A ratio 19.2%, prior year 18.6%)—an absolute increase—but improved gross profit led to Operating Income of ¥136.5B (Operating margin 6.1%, up 1.8pt from 4.3%), a substantial increase. By segment, Cement rebounded to Operating Income ¥55.0B (prior year ¥8.8B), improving margin to 3.4%. Mineral Products delivered ¥29.9B (margin 14.2%), New Materials ¥24.8B (margin 13.7%) maintaining high margins. Optoelectronics posted an operating loss of ¥0.6B, and Building Materials fell to ¥14.8B (△19.5%). Non-operating contributed dividend income ¥10.9B and equity in earnings ¥2.6B, offsetting interest expense ¥12.8B and foreign exchange losses ¥5.2B, lifting Ordinary Income to ¥144.1B (+53.8%). Extraordinary results comprised special gains of ¥59.2B (gain on sales of investment securities ¥54.6B, gain on sales of fixed assets ¥4.6B) offset by special losses ¥42.9B (impairment losses ¥32.4B, loss on retirement of fixed assets ¥7.8B, etc.), producing a net uplift of approx. ¥16.4B to pretax income of ¥160.4B. Income taxes ¥46.6B (effective tax rate 29.1%) and non-controlling interests ¥1.6B were deducted, resulting in Net income attributable to owners of the parent ¥84.6B (+24.5%). In conclusion, the company achieved revenue and profit growth, but the contribution of one-off items to Net income was significant; Ordinary Income of ¥144.1B (Operating Income ¥136.5B + financial income, etc.) is viewed as the sustainable earning power.
Cement: Revenue ¥1,631.2B (YoY +1.8%), Operating Income ¥55.0B (prior year ¥8.8B, +526.6%) achieving a large turnaround, improving margin to 3.4%. Price revisions and energy cost corrections contributed, but margin remains low and drags on the company average. Mineral Products: Revenue ¥209.9B (+3.2%), Operating Income ¥29.9B (△5.1%) with margin 14.2%, maintaining double-digit margins and supporting overall profitability. Building Materials: Revenue ¥251.6B (△3.6%), Operating Income ¥14.8B (△19.5%) with margin down to 5.9%, reflecting demand pause and margin deterioration. Optoelectronics: Revenue ¥27.3B (+8.8%) but operating loss ¥0.6B (prior year loss ¥3.5B, reduced deficit), margin △2.0% and still loss-making. New Materials: Revenue ¥180.7B (+15.3%), Operating Income ¥24.8B (+9.5%) with margin 13.7%, sustaining high margin and serving as the company’s growth driver. Improvement in core Cement margin and maintenance of double-digit margins in New Materials and Mineral Products drove the company-wide Operating margin to 6.1%.
Profitability: Operating margin improved to 6.1% (prior year 4.3%, +1.8pt), gross margin rose to 25.3% (prior year 22.8%, +2.5pt). ROE was 4.3% (XBRL data), improved from prior year but below the lower bound of capital cost. ROA (on an Ordinary Income basis) improved to 4.0% (prior year 2.6%). Cash Quality: Operating Cash Flow (OCF) ¥345.4B is 4.08x Net income ¥84.6B. OCF/EBITDA (EBITDA = Operating Income ¥136.5B + Depreciation ¥235.9B = ¥372.4B) is 0.93x, indicating high cash conversion. Accrual ratio = (OCF ¥345.4B - Net income ¥84.6B) / Total assets ¥3,619.8B = 7.2%, supporting cash earnings. Investment Efficiency: Capital expenditure ¥326.6B (CapEx/Sales 14.6%) exceeded depreciation ¥235.9B, reflecting investments to improve capacity and efficiency. ROIC (simple estimate: after-tax operating income ≒ Operating Income ¥136.5B × (1-0.291) ≒ ¥96.8B; invested capital = Net assets ¥1,979.5B + interest-bearing debt approx. ¥720.8B ≒ ¥2,700B; ROIC ≒ 3.6%) remains low, making accelerated recovery of invested capital a priority. Financial Soundness: Equity Ratio 54.7% (prior year 54.1%) is stable, D/E leverage = interest-bearing debt ¥720.8B / Net assets ¥1,979.5B ≒ 0.36x conservative. Current ratio 120% (current assets ¥1,036.5B / current liabilities ¥863.5B), quick ratio = (current assets - inventory ¥109.4B) / current liabilities ≒ 107% meets short-term liquidity standards. Debt/EBITDA ≒ 1.93x and interest coverage = Operating Income ¥136.5B / interest expense ¥12.8B ≒ 10.7x are healthy. Cash & deposits ¥166.3B / short-term liabilities (current liabilities ¥863.5B) ≒ 19% indicates manageable short-term funding dependence, though working capital efficiency can improve.
Operating CF was ¥345.4B (YoY +38.8%), with pretax income ¥160.4B plus non-cash charges depreciation ¥235.9B and impairment losses ¥32.4B, and limited working capital movements: increase in trade receivables △¥19.3B, decrease in inventories ¥15.9B, decrease in trade payables △¥6.5B. After corporate tax payments △¥21.6B, sufficient cash was generated. Investing CF was △¥285.7B, mainly due to CapEx △¥326.6B (aggressive investment equal to 14.6% of sales), partially offset by proceeds from sales of tangible fixed assets ¥6.2B and proceeds from sale of investment securities ¥63.8B. FCF (Operating CF + Investing CF) was ¥59.7B, covering dividend payments ¥38.9B by 1.5x. Financing CF was △¥59.5B, including borrowings of long-term debt ¥110.5B, net decrease in short-term borrowings △¥10.1B, long-term debt repayments △¥89.5B, dividends paid △¥38.9B, and share buybacks △¥50.2B, leaving cash & deposits almost unchanged at ¥166.3B (prior year ¥165.5B). Total return (dividend + share buybacks) ¥89.1B exceeded FCF ¥59.7B, but was covered by asset sale gains and borrowings, maintaining cash balance. Signs of working capital manipulation are limited, but days sales outstanding (DSO = trade receivables ¥421.2B / Revenue ¥2,236.9B × 365 ≒ 69 days) is relatively long and corrective action is desirable.
Ordinary Income ¥144.1B constitutes the core sustainable earning power, being Operating Income ¥136.5B plus net non-operating items: non-operating income ¥29.1B (dividend income ¥10.9B, equity in earnings ¥2.6B, foreign exchange gains ¥3.0B, etc.) less non-operating expenses ¥21.6B (interest expense ¥12.8B, foreign exchange losses ¥5.2B, etc.). Extraordinary items comprised special gains ¥59.2B (gain on sales of investment securities ¥54.6B, gain on sales of fixed assets ¥4.6B) less special losses ¥42.9B (impairment losses ¥32.4B, loss on retirement of fixed assets ¥7.8B, etc.), netting to about ¥16.4B that lifted pretax profit to ¥160.4B. One-off items contributed roughly 19% of Net income ¥84.6B, implying low repeatability into next year. Non-operating income accounted for 1.3% of sales, below the 5% threshold; dividend income and equity in earnings are relatively stable. Accrual quality is high: OCF/Net income 4.08x and OCF/EBITDA 0.93x support cash earnings. Comprehensive income was ¥132.4B, exceeding Net income ¥84.6B, with other comprehensive income ¥18.6B (net unrealized gains on securities ¥11.6B, actuarial differences on retirement benefits ¥7.4B, etc.) accumulating in equity. The divergence between Ordinary Income and Net income reflects net special items ¥16.4B and effective tax rate 29.1%, resulting in a somewhat elevated Net income.
Full Year guidance: Revenue ¥2,345.0B (YoY +4.8%), Operating Income ¥150.0B (+9.9%), Ordinary Income ¥145.0B (+0.7%), Net income attributable to owners of the parent ¥70.0B (△17.3%), EPS forecast ¥315.54, dividend forecast ¥60.00. Actuals were Revenue ¥2,236.9B (vs. plan △4.6%), Operating Income ¥136.5B (vs. plan △9.0%) short of plan, while Ordinary Income ¥144.1B basically landed on plan ¥145.0B. Net income attributable to owners of the parent was ¥84.6B, +20.9% above the plan ¥70.0B, driven by one-off gains from sale of investment securities. The revenue shortfall reflects slightly weaker-than-expected Cement demand; Operating Income shortfall appears driven by higher SG&A. Dividend was as forecast at annual ¥120 (interim ¥60 + year-end ¥60), and payout ratio was 34.3% (based on Net income ¥84.6B) at a sustainable level.
Annual dividend per share is ¥120 (interim ¥60 + year-end ¥60); payout ratio is 34.3% (Net income attributable to owners of the parent ¥84.6B / outstanding shares 32,068 thousand - treasury stock 377 thousand ≒ 31,691 thousand shares, EPS basis ¥349.58) at a sustainable level. Total dividends amount to approx. ¥38.9B, covering 65% of FCF ¥59.7B, with coverage of 1.5x. Additionally, share buybacks of ¥50.2B were executed, bringing total shareholder returns (dividend + buybacks) to ¥89.1B (Total Return Ratio = ¥89.1B / Net income ¥84.6B ≒ 105%), relatively high but acceptable this year due to gains from asset sales. Treasury stock increased to ¥14.5B (prior year ¥9.9B), expected to enhance per-share value and capital efficiency. Dividend policy is to maintain stable dividends while adopting flexible total returns considering FCF and the profitability of investment projects. Assuming one-off gains disappear next year, maintaining dividends and deploying share buybacks tactically is appropriate.
Domestic-concentrated Cement demand risk: Over 90% of sales and tangible fixed assets are domestic, making the company highly sensitive to domestic construction investment cycles. Declines in Cement sales volume or intensified price competition could materially compress margins. Core Cement margin is still low at 3.4%, representing a downside risk to company earnings.
Energy and raw material cost volatility risk: Cement production relies heavily on coal and power inputs; energy cost increases would pressure gross margins. This fiscal year improvements to gross margin to 25.3% were aided by price revisions and cost corrections, but sustainability depends on energy markets. Foreign exchange losses of ¥5.2B also demonstrate that FX movements affect imported fuel costs.
Low capital efficiency and slow recovery of invested capital: ROIC ~3.6% and ROE 4.3% are below the lower bound of capital cost, raising concerns about extended payback periods for large-scale CapEx (¥326.6B, CapEx/Sales 14.6%). The recording of impairment losses ¥32.4B (mainly Cement) signals revaluation of asset economic value; shifting portfolio to higher-margin businesses and improving working capital efficiency (DSO 69 days) are urgent.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.1% | 7.8% (4.6%–12.3%) | -1.6pt |
| Net Margin | 3.8% | 5.2% (2.3%–8.2%) | -1.4pt |
Operating margin 6.1% is 1.6pt below the manufacturing median 7.8%, somewhat lagging within the industry due to low-margin Cement. Net margin 3.8% is 1.4pt below the median 5.2%.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.9% | 3.7% (-0.4%–9.3%) | -1.8pt |
Revenue growth 1.9% trails the manufacturing median 3.7% by 1.8pt, reflecting domestic concentration and limited growth in core Cement.
※ Source: Company aggregation
Cement price policy and cost corrections improved Operating margin to 6.1% (prior year 4.3%), up 1.8pt, and gross margin to 25.3%, up 2.5pt. Core Cement Operating Income recovered sharply to ¥55.0B (prior year ¥8.8B, +526.6%) but margin remains low at 3.4%; the sustainability of structural margin improvement will be the watershed for next year’s assessment. Expansion of high-margin New Materials (+15.3% Revenue, margin 13.7%) and Mineral Products (margin 14.2%) is driving corporate profitability, making progress on portfolio shift noteworthy.
Cash generation is solid: OCF ¥345.4B equals 4.08x Net income and OCF/EBITDA 0.93x, indicating high quality. FCF ¥59.7B covered dividends ¥38.9B by 1.5x, and share buybacks ¥50.2B were executed. However, Total Return Ratio 105% is high and relied heavily on one-off gains such as ¥54.6B from sales of investment securities. Assuming those one-offs drop out next year, maintaining dividends and tactically employing buybacks will be central to cash allocation. CapEx of ¥326.6B (CapEx/Sales 14.6%) is aggressive; with ROIC ~3.6% below capital costs, improving invested capital recovery is key for mid-term growth.
Financial soundness is conservative with Equity Ratio 54.7%, D/E 0.36x, Debt/EBITDA 1.93x, and interest coverage 10.7x, leaving room for additional investment and shareholder returns. However, a relatively long DSO of 69 days is a working capital expansion risk that should be corrected. The impairment charge ¥32.4B signals asset efficiency reevaluation; reallocating resources to high-margin businesses and improving working capital efficiency are critical to lift capital efficiency. Full year forecasts slightly missed on Revenue and Operating Income, but Ordinary Income landed near plan and Net income exceeded plan due to one-off gains. Normalized Ordinary Income ¥144.1B serves as an indicator of sustainable earning power.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial results analysis document. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.