| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1917.7B | ¥2052.0B | -6.5% |
| Operating Income / Operating Profit | ¥98.1B | ¥137.5B | -28.6% |
| Ordinary Income | ¥110.9B | ¥154.2B | -28.1% |
| Net Income / Net Profit | ¥48.9B | ¥69.3B | -29.4% |
| ROE | 3.4% | 5.1% | - |
For the fiscal year ended March 2026, results were: Revenue ¥1917.7B (YoY -¥134.3B, -6.5%), Operating Income ¥98.1B (YoY -¥39.4B, -28.6%), Ordinary Income ¥110.9B (YoY -¥43.3B, -28.1%), and Net Income attributable to owners of the parent ¥48.9B (YoY -¥20.4B, -29.4%), reflecting lower revenue and profit. The core Steel Business was hit by softer steel market prices and weaker demand, compressing sales, while elevated energy and raw material costs reduced margins. Gross profit margin was 17.1% (prior 17.7%, -59bp), and operating margin was 5.1% (prior 6.7%, -158bp), indicating margin contraction from the gross-profit stage. Non-operating items included equity-method investment income ¥6.1B (prior ¥9.1B) and dividend income ¥7.5B, which supported Ordinary Income, while interest expense increased to ¥7.2B (prior ¥6.3B). Special items were minor net +¥1.4B (including negative goodwill gain ¥3.0B), so earnings quality is centered on recurring income.
【Revenue】 Revenue ¥1917.7B, down 6.5% YoY. By segment, the Steel Business accounted for ¥1743.1B (prior ¥1883.3B, -7.5%) and was the primary driver, with both volume and price pressured by weaker steel market conditions and slowing construction/civil-engineering demand. The Agricultural Materials Business increased to ¥127.2B (prior ¥122.0B, +4.3%) as demand for seeds and fertilizers remained firm. Other Businesses rose modestly to ¥51.1B (prior ¥48.2B, +6.1%). Sales mix: Steel 90.9%, Agricultural Materials 6.6%, Other 2.7%, indicating high dependence on the Steel Business and sensitivity to market fluctuations.
【Profitability】 Cost of sales was ¥1590.2B (82.9% of sales, prior 82.3%), with gross margin contracting by +59bp to gross profit ¥327.5B (gross margin 17.1%), a YoY decline of ¥9.7B. SG&A was ¥229.4B (12.0% of sales, prior 11.0%), increasing ¥4.5B in absolute terms, and the deterioration in fixed-cost absorption amid lower sales pressured Operating Income. Operating Income ¥98.1B (Operating margin 5.1%) fell ¥39.4B YoY. Non-operating income was ¥22.5B (led by dividend income ¥7.5B and equity-method investment income ¥6.1B), and non-operating expenses were ¥9.8B (led by interest expense ¥7.2B), resulting in Ordinary Income ¥110.9B (-28.1% YoY). Special gains were ¥3.3B (including negative goodwill ¥3.0B), special losses ¥2.0B (including loss on disposal of fixed assets ¥2.0B), yielding profit before income taxes ¥112.2B. After income taxes ¥31.6B, Net Income attributable to owners of the parent was ¥48.9B (Net margin 2.6%), down 29.4% YoY. In sum, delayed price pass-through and lower volumes reduced gross profit, and weakened fixed-cost absorption further drove the decline in revenue and earnings.
The Steel Business recorded segment profit (on an Ordinary Income basis) ¥102.9B (prior ¥152.6B, -32.6%), with margin declining to about 5.9% (prior 8.1%). Softer steel prices and high raw material/energy costs compressed margins, and volume declines from weaker demand worsened fixed-cost absorption. The Agricultural Materials Business turned to profit with segment profit ¥2.8B (prior -¥2.3B), improving margin to about 2.2% as robust demand for seeds and fertilizers, price revisions, and cost control were effective. Other Businesses posted segment profit ¥5.4B (prior ¥4.6B, +17.4%), maintaining a high margin of about 10.6%, with stable contributions from rental income, etc. Overall, the Steel Business’s profit decline drove consolidated results, while Agricultural Materials’ return to profitability provided some support; given the high dependence on steel, market recovery is key to a turnaround.
【Profitability】Operating margin 5.1% (prior 6.7%, -158bp), Net margin 2.6% (prior 3.4%, -88bp) — margins contracted. ROE 3.4% (prior 5.2%), ROA (Ordinary Income basis) 4.4% (prior 6.1%) — capital efficiency deteriorated, and ROIC 4.4% remains below cost of capital. EBITDA margin 7.6% (EBITDA ¥146.3B, prior ¥143.6B) was flat, but heavy depreciation reduced EBIT margin. 【Cash Quality】Operating Cash Flow (OCF) ¥214.3B is 2.66x Net Income ¥80.5B, and OCF/EBITDA is 1.47x, indicating strong cash conversion. Accrual ratio -5.2% shows strong cash linkage, aided by reductions in receivables and inventories. Free Cash Flow ¥118.4B sufficiently covers dividends and debt repayments, with FCF coverage 3.84x. 【Investment Efficiency】Total asset turnover 0.751x (prior 0.81x) declined, and working capital efficiency remains stretched: DSO 92 days, DIO 102 days, CCC 130 days. There is room to improve inventory and credit management to enhance cash generation sustainability. 【Financial Soundness】Equity Ratio 56.5% (prior 53.0%, +3.5pt), current ratio 181.2%, quick ratio 114.4% — liquidity is healthy. Debt/Equity 0.77x, Debt/Capital 23.4% — conservative capital structure, but Debt/EBITDA 3.01x is somewhat elevated. Interest coverage 13.6x (EBITDA/interest expense 20.2x) indicates sufficient debt-service capacity, though short-term debt ratio 59.7% necessitates maturity mismatch management. Goodwill is ¥13.9B (1.0% of net assets) and modest; goodwill/EBITDA 0.09x and amortization burden is 3.2% of EBITDA.
OCF was ¥214.3B (prior ¥191.4B, +12.0%), remaining robust at 2.66x Net Income ¥80.5B. OCF before working capital changes was ¥243.6B, including depreciation ¥48.1B, goodwill amortization ¥4.6B, and equity-method investment income -¥6.1B. Improvements in working capital were a major contributor: accounts receivable decrease +¥59.0B, inventory decrease +¥18.8B, and accounts payable increase +¥16.8B boosted OCF. After income taxes paid -¥32.7B and interest paid -¥7.2B, final OCF was formed. Investing Cash Flow was -¥95.9B, primarily PPE and intangible asset additions -¥89.9B (replacement/augmentation investment exceeding depreciation) and acquisition of subsidiary shares -¥7.3B. Financing Cash Flow was -¥137.3B, composed of net decrease in short-term borrowings -¥71.0B, repayments of long-term borrowings -¥103.9B (borrowings +¥24.0B), bond issuance +¥50.0B (redemption -¥0.9B), and dividend payments -¥35.1B. Free Cash Flow ¥118.4B is ample and funds dividends and debt repayment; cash and deposits remained ¥265.0B (prior ¥284.0B, -6.7%). The OCF boost from working capital compression supported both financial soundness and shareholder returns, but with DIO 102 days and CCC 130 days remaining long, normalizing inventory turnover would help sustain cash generation.
Most earnings derive from recurring operating activities; net contribution from special items was minor at +¥1.4B (1.7% of Net Income). Special gains ¥3.3B (negative goodwill ¥3.0B, gain on sale of investment securities ¥0.4B, etc.) and special losses ¥2.0B (loss on disposal of fixed assets ¥2.0B, disaster losses ¥1.5B, etc.) mean temporary factors only modestly boosted earnings. Non-operating income was ¥22.5B (1.2% of sales), mainly dividend income ¥7.5B, equity-method investment income ¥6.1B, and rental income, below the 5% threshold. OCF substantially exceeded Net Income (2.66x), accrual ratio -5.2%, and OCF/EBITDA 1.47x, indicating high earnings quality. The gap between Ordinary Income ¥110.9B and Net Income ¥80.5B (parent attributable basis) is due to tax expense ¥31.6B and minority interest ¥0.1B, with no structural divergence observed. Comprehensive income ¥130.2B exceeded Net Income, driven by valuation gains on investment securities +¥43.2B, actuarial adjustments related to retirement benefits +¥5.4B, and foreign currency translation adjustments +¥0.8B, with investment securities valuation gains lifting comprehensive income. Core profitability is on a downward trend due to margin compression, but cash-generation capacity is strong and the quality of recurring earnings is good.
Full-year guidance: Revenue ¥2000.0B (YoY +4.3%), Operating Income ¥65.0B (YoY -33.8%), Ordinary Income ¥70.0B (YoY -36.9%), Net Income attributable to owners of the parent ¥43.0B, EPS ¥294.04, DPS ¥40.00. Revenue is expected to tick up slightly, but Operating Income is projected to decline sharply from prior Operating Income ¥98.1B, conservatively assuming continued weak steel prices, sustained high costs, and delayed price pass-through. Operating margin is forecast at 3.3% (current 5.1%, -1.8pt), reflecting cautious assumptions on sales volume and deterioration in fixed-cost absorption. Dividends are being cut sharply from annual ¥180 to ¥40 to prioritize internal reserves in light of lower profit levels and market uncertainty. Forecast payout ratio is about 13.6%, a conservative stance aimed at preserving financial headroom and awaiting ROIC improvement.
Annual dividend for the current period is ¥180.00 (interim ¥100, year-end ¥80), with payout ratio 31.0% (dividends only), and Total Return Ratio at the same level (share buybacks -¥0.0B are negligible). Total dividend amount is ¥35.1B, and FCF coverage versus FCF ¥118.4B is 3.38x, indicating sustainability. Next fiscal year guidance plans a steep cut to annual DPS ¥40.00; based on forecast EPS ¥294.04, the payout ratio will be about 13.6%, a conservative level. The cut aims to secure financial flexibility amid uncertain steel market conditions and a large projected decline in Operating Income (¥65.0B), prioritizing growth investment and balance-sheet strengthening. Given cash and deposits ¥265.0B and strong OCF ¥214.3B, there remains flexibility to restore or increase dividends if market recovery and ROIC improvement are confirmed.
Steel market and raw material price volatility: In the Steel Business, which accounts for 90.9% of sales, steel prices and raw material prices such as scrap are highly market-linked. This fiscal year, gross margin fell by -59bp and operating margin contracted -158bp. If price pass-through lags while demand weakens, margin pressure could intensify. Inventory ¥443.7B (17.4% of total assets) is high, creating risk of valuation losses in a market downturn.
Working capital efficiency deterioration and cash flow volatility: With DSO 92 days, DIO 102 days, and CCC 130 days, working capital turnover is prolonged. Accounts receivable ¥484.9B (25.3% of sales) and inventory ¥443.7B (23.1% of sales) are sizable. Extended customer credit or inventory stagnation could cause large OCF swings, and combined with short-term debt ratio 59.7%, liquidity risk could rise. Although OCF was robust at ¥214.3B this period, working capital contributed significantly, and there is risk of reversal in a market deterioration.
Financial leverage and interest-rate rise risk: Debt/EBITDA 3.01x is somewhat elevated. Interest-bearing debt totals ¥540.0B comprising short-term borrowings ¥262.8B, long-term borrowings ¥177.2B, and bonds ¥100.0B. The short-term debt ratio 59.7% creates a maturity mismatch and refinancing risk. Interest coverage 13.6x suggests repayment capacity is adequate, but rising interest rates could increase interest burden and pressure earnings. Given guidance of Operating Income ¥65.0B for next fiscal year, preserving financial flexibility is important.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.1% | 7.8% (4.6%–12.3%) | -2.6pt |
| Net Margin | 2.6% | 5.2% (2.3%–8.2%) | -2.6pt |
Both operating and net margins are below industry medians, and weaker steel market conditions and higher costs are depressing profitability relative to peers.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -6.5% | 3.7% (-0.4%–9.3%) | -10.2pt |
Revenue growth is 10.2pt below the industry median, reflecting particularly weak steel demand relative to peers.
※Source: Internal company aggregation
Market recovery and progress on price pass-through are key to margin reversal: Operating margin fell to 5.1% (prior 6.7%, -158bp), and next-year guidance assumes a further compression to 3.3%. A rebound in steel prices, stabilization of raw material costs, and effective price pass-through are prerequisites for margin recovery. Trends in gross margin on a quarterly basis and the effectiveness of selling-price revisions are critical metrics to monitor.
Optimization of working capital will determine sustainability of cash generation: With CCC 130 days (DSO 92 days, DIO 102 days) prolonged, there is significant room for improvement within the industry. Normalizing inventory turnover and strengthening customer credit management will be crucial to sustaining the high OCF ¥214.3B. Reducing inventory ¥443.7B (17.4% of total assets) and accelerating collection of accounts receivable ¥484.9B (25.3% of sales) would bolster financial health and shareholder-return capacity.
Securing financial headroom under dividend cut and scope for reinstatement: The company cut DPS from ¥180 to ¥40, lowering the payout ratio from 31.0% to about 13.6%, but FCF coverage at 3.38x suggests financial capacity is adequate. If market recovery and ROIC 4.4% improvement (return above cost of capital) are confirmed, there remains flexibility for dividend restoration or increased growth investment. Achieving next-year guidance Operating Income ¥65.0B and progress on inventory/credit management are monitoring priorities.
This report is an earnings analysis document automatically generated by AI based on 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 public financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary before making investment decisions.
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