| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1953.7B | ¥2084.6B | -6.3% |
| Operating Income / Operating Profit | ¥118.7B | ¥138.9B | -14.5% |
| Ordinary Income | ¥175.2B | ¥215.5B | -18.7% |
| Net Income / Net Profit | ¥250.8B | ¥130.1B | +92.8% |
| ROE | 11.2% | 6.0% | - |
For the fiscal year ended March 2026, Revenue was ¥1,953.7B (YoY -¥130.9B -6.3%), Operating Income was ¥118.7B (YoY -¥20.2B -14.5%), Ordinary Income was ¥175.2B (YoY -¥40.3B -18.7%), and Net Income attributable to owners of the parent was ¥174.0B (YoY +¥43.9B +33.7%). Revenue and operating profit declined due to volume and price adjustments in the steel sheet–related business, but final profit rose significantly due to special gains of ¥20.1B including ¥17.6B gain on sale of subsidiary shares and a low tax rate (effective tax rate 5.5%) resulting from the reversal of deferred tax assets. Gross margin improved to 17.7% (up +1.3pt from 16.4% a year earlier) reflecting cost improvements, while SG&A ratio worsened to 11.6% (from 9.7%, +1.9pt), leading Operating Margin to decline to 6.1% (from 6.7%, -0.6pt). Ordinary Income margin fell to 9.0% (from 10.3%, -1.3pt) due to lower non-operating income, but Net Income margin improved substantially to 8.9% (from 6.5%, +2.4pt) driven by one-off factors.
Revenue: Revenue of ¥1,953.7B (YoY -6.3%) was led by the core steel sheet–related business at ¥1,846.8B (-6.9%). Lower shipment volumes and price/mix adjustments due to weaker market conditions impacted results. By segment, steel sheet–related accounted for 94.5% of total; the Roll Business ¥33.7B (+17.7%) and Real Estate Business ¥18.4B (+1.8%) increased but are too small to offset the decline. Grating Business ¥29.2B (-11.5%) and Other ¥48.6B (+3.0%) were also insufficient to compensate.
Profitability: Cost of sales was ¥1,608.4B (YoY -7.7%) producing gross profit of ¥345.3B (YoY -1.1%), with gross margin improving to 17.7% (from 16.4%, +1.3pt). However, SG&A increased to ¥226.6B (+11.8%), resulting in Operating Income of ¥118.7B (-14.5%). Non-operating income was ¥60.1B (from ¥79.4B, -24.3%) composed of securities disposal gains ¥34.8B, dividend income ¥11.8B, interest income ¥7.3B, etc.; the decline from prior-year securities disposal gains of ¥49.7B pushed Ordinary Income down to ¥175.2B (-18.7%). Extraordinary items resulted in net gains of ¥16.3B (special gains ¥20.1B including gain on sale of subsidiary shares ¥17.6B less special losses ¥3.8B). Income taxes were substantially reduced to ¥10.5B due to reversal of deferred tax assets (‑¥36.2B), producing a low effective tax rate of 5.5% and lifting Net Income attributable to owners of the parent to ¥174.0B (+33.7%). In summary, core business experienced revenue and operating profit declines, but non-operating and extraordinary gains plus low tax rate boosted final profit.
High dependence on steel sheets persists; expanding contribution from Roll and Real Estate businesses is a priority.
Profitability: Operating Margin 6.1% (from 6.7%, -0.6pt) — SG&A ratio 11.6% (from 9.7%, +1.9pt) offset gross margin improvement. Ordinary Income margin 9.0% (from 10.3%, -1.3pt) affected by reduced non-operating income. Net Income margin attributable to owners 8.9% (from 6.5%, +2.4pt) relies on one-off items. ROE 11.2% (estimated from ROA 6.6% × financial leverage 1.70x) exceeds prior-year ROE 7.0%, but sustainability is limited given one-off profit contribution.
Cash Quality: Operating Cash Flow (OCF) ¥187.6B (from ¥113.1B, +65.9%). OCF/Net Income ratio 0.75x (based on Net Income ¥250.8B including noncontrolling interests); compared to Net Income attributable to owners ¥174.0B, the ratio is 1.08x — favorable after stripping noncontrolling interests, deferred taxes, and special gains. OCF subtotal (before working capital changes) ¥225.2B (from ¥134.8B, +67.0%) robust. Accrual ratio ((Net Income − OCF)/Total Assets) ~ -0.2% indicates healthy cash conversion.
Investment Efficiency: Capital expenditure ¥44.0B is 0.91x of depreciation ¥48.2B — at maintenance level. Free Cash Flow ¥147.6B (OCF − investing CF) improved from ¥46.8B (+215%). Free Cash Flow coverage of dividends is 1.44x (based on dividends ¥102.5B) — sustainable.
Financial Soundness: Equity Ratio 83.9% (from 81.4%, +2.5pt). Interest-bearing debt ¥8.4B (short-term borrowings only, unchanged YoY) vs. cash and deposits ¥620.6B; Debt/EBITDA 0.05x — functionally debt-free. Current Ratio 592.8%, Quick Ratio 514.7% — extremely strong liquidity. Working capital: DSO 75 days (Accounts receivable ¥404.0B ÷ Revenue ¥1,953.7B × 365), DIO 101 days (Inventory ¥218.2B ÷ Cost of sales ¥1,608.4B × 365), DPO 34 days (Accounts payable ¥148.2B ÷ Cost of sales ¥1,608.4B × 365), CCC 142 days — long cash conversion cycle with room for efficiency gains.
OCF ¥187.6B (+65.9% YoY). Working capital changes contributed ¥72.5B (inventory decrease +¥28.5B, accounts receivable decrease +¥41.2B, accounts payable increase +¥2.8B), improving operating efficiency. After income taxes paid of -¥58.0B, OCF was ¥187.6B. Investing CF was -¥40.0B (improved from -¥67.4B), with capital expenditure -¥44.0B (down from -¥53.8B), and net disposals of short-term/investment securities +¥42.6B (purchases -¥23.8B, sales +¥42.6B, sale of subsidiary shares +¥100.0B) contributing. Financing CF was -¥164.1B (outflow expansion from -¥125.1B), driven by dividends -¥102.5B (from -¥71.5B; parent dividends -¥101.5B, noncontrolling dividends -¥7.8B), share buybacks -¥44.9B (from -¥0.1B), and change in ownership of subsidiaries -¥45.5B. Free Cash Flow ¥147.6B (from ¥46.8B, +215%) just covered dividends plus buybacks total ¥147.4B, leaving cash and cash equivalents at ¥497.9B (from ¥507.6B, -¥9.7B). Cash generation strengthened via OCF improvement, but Total Return Ratio around 85% is high and leaves limited cushion.
Of Net Income attributable to owners ¥174.0B, Operating Income ¥118.7B is earned from recurring operations. Non-operating income ¥60.1B (securities disposal gains ¥34.8B, dividend income ¥11.8B, interest income ¥7.3B, etc.) and special gains ¥20.1B (including ¥17.6B gain on sale of subsidiary shares) amount to approximately ¥80.2B of non-recurring income. Additionally, income tax of ¥10.5B (significantly reduced by reversal of deferred tax assets of -¥36.2B) raised Net Income by over ¥50B. Estimated recurring after-tax operating income is roughly ¥112B (assuming Operating Income ¥118.7B × assumed effective tax rate ~30%), implying about 64% of reported Net Income ¥174.0B is recurring and about 36% is dependent on one-off factors. OCF ¥187.6B is 0.75x of Net Income ¥250.8B (including noncontrolling interests) and 1.08x of Net Income attributable to owners ¥174.0B, indicating small accrual adjustments and healthy cash realization. Comprehensive income was ¥233.9B; the difference from Net Income ¥250.8B (‑¥16.9B) reflects OCI contributions: foreign currency translation adjustments +¥22.4B, valuation differences on securities +¥26.8B, retirement benefit adjustments +¥7.4B, equity-method affiliates’ OCI share -¥3.5B, net +¥53.1B, with differences arising from tax effects and consolidation adjustments. Cumulative OCI balance ¥342.5B (foreign currency ¥112.3B, securities ¥192.4B, etc.) entails future earnings realization risk.
Full-Year forecast is Revenue ¥1,960.0B (vs. current period +0.3%), Operating Income ¥103.0B (vs. -13.2%), Ordinary Income ¥119.0B (vs. -32.1%), and Net Income attributable to owners ¥100.0B (vs. -42.5%) — conservative. The large projected decline in final profit versus the current period reflects exclusion of one-off special gains such as sale of subsidiary shares, normalization of tax rate (current 5.5% → assumed ~30%+ next fiscal year), and reduced securities disposal gains. The decline in Operating Income reflects narrower steel sheet spreads and SG&A pressure. EPS forecast ¥69.81 (from current period ¥120.49, -42.1%). Forecast dividend ¥20.00 (after adjusting current-period ¥91 to split-adjusted ¥18.2, +9.9%), implying a payout ratio of 28.6% — restrained for next year. Progress rates at the end of the first half are near achievement: Revenue 99.7% (¥1,953.7B/¥1,960.0B), Operating Income 115.2% (¥118.7B/¥103.0B), Ordinary Income 147.2% (¥175.2B/¥119.0B), Net Income 174.0% (¥174.0B/¥100.0B). The outperformance is driven by one-off factors (special gains, low tax rate) and next year’s forecast assumes these will lapse.
Dividends: interim ¥20, year-end ¥71, annual ¥91 (from ¥100, -¥9; after share split adjustment, from ¥18.2 to ¥20.0, +9.9%). Payout ratio is 52.3% (dividend ¥91 / EPS ¥174.04 × back-solved using Net Income attributable to owners ¥174.0B / shares outstanding yields approx. 58.9%) — within sustainable range. Share buybacks amounted to ¥44.9B; total shareholder return was ¥147.4B (dividends ¥102.5B + buybacks ¥44.9B), Total Return Ratio about 84.7% (¥147.4B / Net Income attributable to owners ¥174.0B) — high. Free Cash Flow ¥147.6B only just covered total returns, so sustainability of dividends and buybacks depends on cash generation. Next-year forecast dividend ¥20 (split-adjusted) implies payout ratio 28.6% — conservative in light of expected earnings decline. A 1:5 share split was implemented in July 2025 to improve liquidity.
Concentration risk in steel sheet–related business: Steel sheet–related accounts for 94.5% of revenue and the majority of operating profit, making the company highly sensitive to market fluctuations, demand declines, and spread compression. This fiscal year saw shipments and price adjustments lead to Revenue -6.9% and Operating Income -14.0%. Prolonged deterioration in steel market conditions or weakness in construction/manufacturing demand would weaken the earnings base.
Structural increase in SG&A risk: SG&A ¥226.6B (YoY +11.8%) far outpaced revenue growth -6.3%, raising SG&A ratio to 11.6% (from 9.7%, +1.9pt). Labor and logistics cost inflation are primary drivers; delayed price pass-through and fixed-cost burden worsen operating leverage. Curbing SG&A growth is a precondition for recovering operating margin, but near-term continuation risk exists.
Dependence on one-off gains and tax rate fluctuation risk: Of Net Income ¥174.0B, securities and subsidiary share disposal gains ¥52.4B and tax relief from deferred taxes (~¥50B+, effective tax rate 5.5%) account for over ¥100B of one-off factors. Next fiscal year’s conservative forecast (Net Income ¥100.0B, -42.5%) assumes lapse of one-offs and tax normalization. If recovery of recurring operating earnings (Operating Income basis) is delayed, sustainability of shareholder returns could be impacted.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.1% | 7.8% (4.6%–12.3%) | -1.7pt |
| Net Profit Margin | 12.8% | 5.2% (2.3%–8.2%) | +7.6pt |
Operating Margin is 1.7pt below industry median, indicating relatively low profitability, while Net Profit Margin outperforms median by 7.6pt due to one-off items (securities disposal gains, low tax rate).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -6.3% | 3.7% (-0.4%–9.3%) | -10.0pt |
Revenue growth rate trails industry median by 10.0pt, reflecting weakness in the core steel sheet market.
※ Source: Company aggregation
Focus on next-year decline scenario assuming lapse of one-off gains and recovery of recurring earning power. Of current Net Income ¥174.0B, over ¥100B arises from securities disposal gains and tax relief; next year’s conservative Net Income forecast ¥100.0B (-42.5%) reflects this. Recovering Operating Margin from 6.1% toward the industry median 7.8% requires SG&A restraint (SG&A rose +11.8% this period) and improvement in steel sheet spreads.
Significant scope to improve working capital efficiency to generate additional cash. CCC 142 days (DSO 75 + DIO 101 − DPO 34) is long; inventory and receivables reduction could add to Free Cash Flow ¥147.6B. This period contributed via inventory −¥28.5B and receivables −¥41.2B, but further compression is possible.
Financial position is very strong (Debt/EBITDA 0.05x, cash ¥620.6B), providing resilience to downturns but growth investment is underutilized. CAPEX ¥44.0B is 0.91x depreciation ¥48.2B — conservative and focused on efficiency rather than expansion. Total Return Ratio 84.7% is high; under next-year decline assumptions, continuity of dividends and buybacks will depend on working capital improvements and cost control. Diversifying revenue away from steel sheets toward Roll and Real Estate businesses is key.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.