| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥511.0B | ¥510.5B | +0.1% |
| Operating Income / Operating Profit | ¥9.2B | ¥27.0B | -65.9% |
| Ordinary Income | ¥11.1B | ¥26.0B | -57.2% |
| Net Income / Net Profit | ¥8.9B | ¥13.9B | -35.9% |
| ROE | 1.2% | 1.8% | - |
For the fiscal year ended March 2026, Revenue was ¥511.0B (YoY +¥0.6B +0.1%) and essentially flat, while Operating Income was ¥9.2B (YoY -¥17.8B -65.9%), Ordinary Income was ¥11.1B (YoY -¥14.9B -57.2%), and Net Income attributable to owners of the parent was ¥8.9B (YoY -¥5.0B -35.9%), marking a substantial decline in profits. Cost of sales ratio deteriorated by 2.7pt to 88.7% (prior year 86.0%), lowering gross margin to 11.3%, and SG&A ratio rose by 0.8pt to 9.5% (prior year 8.7%), resulting in an Operating Margin decline of 3.5pt to 1.8% (prior year 5.3%). In the core steel-related business, rising raw material costs and a mismatch with selling prices compressed profitability, and segment profit margin shrank to 1.1% (prior year 4.8%). Non-operating items included dividend income ¥1.9B and interest income ¥1.4B totaling ¥4.4B, and extraordinary gains included gain on sale of investment securities ¥4.8B and insurance proceeds ¥2.2B totaling ¥7.3B, which supported the bottom-line.
[Revenue] Revenue totaled ¥511.0B (YoY +0.1%) and was nearly flat. By segment, the steel-related business recorded ¥483.6B (+0.9%), accounting for 94.6% of total. Engineering business was ¥22.1B (-7.6%), Rental business ¥8.0B (+5.2%), and Logistics business ¥8.0B (-0.1%), with the latter two small but steady. In steel-related activities, shipments of thick steel products from electric furnaces were almost flat with the prior year, but increases in raw material prices such as scrap steel were not fully passed through to selling prices, resulting in weak volume and price performance.
[Profitability] Cost of sales increased by ¥14.4B to ¥453.2B (prior year ¥438.8B), worsening the cost of sales ratio to 88.7% (prior year 86.0%) by 2.7pt and reducing gross profit by ¥13.9B to ¥57.8B (prior year ¥71.7B). SG&A rose by ¥4.0B to ¥48.6B (prior year ¥44.6B), lifting the SG&A ratio to 9.5% (prior year 8.7%) by 0.8pt. As a result, Operating Income fell sharply by ¥17.8B to ¥9.2B (prior year ¥27.0B), and Operating Margin plunged 3.5pt to 1.8% (prior year 5.3%). Non-operating income was ¥4.4B (prior year ¥3.5B) including dividend income ¥1.9B and interest income ¥1.4B, while non-operating expenses were ¥2.5B (prior year ¥4.6B), bringing Ordinary Income down ¥14.9B to ¥11.1B (prior year ¥26.0B). After extraordinary gains of ¥7.3B (gain on sale of investment securities ¥4.8B, insurance proceeds ¥2.2B, etc.) and extraordinary losses of ¥3.2B (disaster loss ¥3.2B), profit before tax was ¥18.4B. Income taxes of ¥5.4B (effective tax rate 29.2%) and Net Income attributable to non-controlling interests ¥0.3B were deducted, resulting in Net Income attributable to owners of the parent of ¥8.9B (prior year ¥13.9B). In conclusion, sales rose slightly but profits fell substantially; without the contribution from extraordinary gains, the final profit would have been worse.
The steel-related business recorded Revenue ¥483.6B (YoY +0.9%), Operating Income ¥5.5B (YoY -76.1%), and margin 1.1% (prior year 4.8%), reflecting a marked deterioration in profitability. The main cause was inability to pass through increases in manufacturing costs such as scrap steel and electricity, which compressed gross margin. The Rental business achieved Revenue ¥8.0B (+5.2%), Operating Income ¥1.2B (+50.6%), and margin 15.2% (prior year 10.6%), achieving high-margin growth. The Logistics business had Revenue ¥8.0B (-0.1%) and Operating Income ¥1.1B (-33.3%), with margin 14.2% (prior year 21.3%), a decline but still high. Engineering business posted Revenue ¥22.1B (-7.6%), Operating Income ¥0.7B (-35.3%), and margin 3.0% (prior year 4.3%), with declines in both sales and profits. Heavy dependence on the steel-related segment determined consolidated results; although Rental and Logistics contributed stably, their small scale could not offset the steel-related downturn.
[Profitability] Operating Margin 1.8% (prior year 5.3%) and Net Profit Margin 1.7% (prior year 2.7%) deteriorated significantly. ROE was low at 1.2% (prior year 1.8%), mainly due to the contraction in Net Profit Margin. EBITDA was ¥30.5B (Operating Income ¥9.2B + Depreciation ¥21.6B - SG&A depreciation ¥1.7B), yielding an EBITDA margin of only 6.0%. [Cash Quality] With Operating Cash Flow of -¥58.4B versus Net Income ¥8.9B, the OCF/Net Income ratio was -6.6x, extremely low, indicating weak cash generation due to a large increase in working capital. Free Cash Flow was negative ¥58.3B (Operating CF -¥58.4B + Investing CF ¥0.1B), and dividends ¥27.4B and capital expenditure ¥42.6B were not covered by internal funds. [Investment Efficiency] ROA was 1.1% (on Ordinary Income), and Total Assets Turnover was 0.60x (Revenue ¥511.0B ÷ Total Assets ¥845.8B), indicating low efficiency. Capex was ¥42.6B, 1.97x depreciation ¥21.6B, showing continued replacement and capacity-expansion investment, though short-term profit contribution is limited. [Financial Soundness] Equity Ratio was 89.5% (prior year 89.9%) and D/E ratio was 0.07x (short-term borrowings ¥55.7B ÷ equity ¥757.4B), maintaining a very strong financial structure. Current Ratio was 587% (current assets ¥460.2B ÷ current liabilities ¥78.4B) and Quick Ratio 543%, indicating ample liquidity; cash and deposits ¥96.6B plus short-term investment securities ¥90.8B give liquidity on hand of ¥187.4B, well above short-term borrowings ¥55.7B. Interest Coverage was 102.6x (Operating Income ¥9.2B ÷ interest expense ¥0.1B), showing extremely light interest burden.
Operating CF turned sharply negative to -¥58.4B (prior year +¥215.3B). Profit before tax ¥18.4B before income taxes plus non-cash expenses such as depreciation ¥21.6B produced an Operating CF subtotal (before working capital changes) of -¥63.5B, but increases in trade receivables of ¥57.7B (electronic recorded receivables +¥4.4B, accounts receivable +¥53.3B) and inventories of ¥50.8B (finished goods +¥19.8B, raw materials -¥4.7B, work in progress +¥35.7B) absorbed significant cash, and the increase in accounts payable of ¥23.4B was insufficient to offset. The sharp rise in accounts receivable suggests an extension of the collection period to DSO equivalent of 95 days, and the high work-in-progress ratio of 40.4% (WIP ¥43.2B ÷ inventories ¥107.1B) raises concern about production process backlog. Investing CF was ¥0.1B, where capex -¥42.6B was nearly offset by proceeds from sale of securities ¥86.0B, acquisition of securities -¥24.0B, purchase of investment securities -¥29.1B, and movements in time deposits. Free Cash Flow was negative ¥58.3B, and Financing CF was an outflow of -¥27.5B (dividend payments -¥27.4B, lease liability repayments -¥0.1B), resulting in cash and cash equivalents decreasing by -¥85.8B to ¥128.6B at fiscal year-end (opening ¥214.4B). Normalizing working capital and restoring operating profits are key to improving cash generation.
Of the Net Income ¥8.9B, net contribution from extraordinary items was +¥4.1B (extraordinary gains ¥7.3B - extraordinary losses ¥3.2B), equivalent to about 46% of Net Income, indicating high dependence on one-off items. Gain on sale of investment securities ¥4.8B and insurance proceeds ¥2.2B are non-recurring, and the disaster loss ¥3.2B is also temporary. Non-operating income ¥4.4B is small relative to Revenue at 0.9%, but dividend income ¥1.9B and interest income ¥1.4B have stable characteristics. The decline from Ordinary Income ¥11.1B to Net Income ¥8.9B underscores the significant impact of taxation at an effective rate of 29.2%, despite the positive contribution of extraordinary gains. Operating CF of -¥58.4B far below Net Income ¥8.9B indicates accrual buildup from sharp increases in receivables and inventories, deteriorating earnings quality. OCF/EBITDA of -1.91x demonstrates weak cash conversion efficiency and challenges in generating cash from recurring operating earnings.
For the fiscal year ending March 2027, management forecasts Revenue ¥696.0B (YoY +36.2%), Operating Income ¥12.0B (YoY +30.4%), Ordinary Income ¥15.0B (YoY +35.0%), Net Income attributable to owners of the parent ¥6.0B (YoY -32.6%), and EPS ¥33.22. Revenue is expected to increase materially, with Operating Margin assumed at 1.7% (prior year 1.8%) roughly flat and Ordinary Income margin projected to modestly improve to 2.2%. The decline in Net Income reflects the assumed absence of one-off extraordinary gains. Progress toward guidance based on year-to-date results is broadly on track: Revenue 73.4% (¥511.0B ÷ ¥696.0B) and Operating Income 76.7% (¥9.2B ÷ ¥12.0B). However, recovery in steel-related profitability (price pass-through and production efficiency) and normalization of working capital (compression of receivables and inventories) are preconditions for achieving the forecast. Order backlog and contract liability data are not disclosed, so short-term demand-supply and raw material price trends remain key variables to monitor.
Annual dividend was ¥104 per share (interim ¥50, year-end ¥54), totaling ¥27.4B. The payout ratio relative to Net Income attributable to owners of the parent ¥8.9B was 307.4%, extremely high, and with Operating CF -¥58.4B and Free CF -¥58.3B in deficit, dividends were funded by drawing down past retained earnings and proceeds from sale of investment securities. Dividend yield is approximately 3.8% (dividend ¥104 ÷ year-end BPS ¥2,767.08), but sustainability is a concern. The dividend forecast for FY2027 is annual ¥56, and the forecast payout ratio relative to EPS ¥33.22 is 168.6%, still high; without conversion to positive FCF and correction of working capital, a revision of dividend policy may be necessary in the future. No share buybacks have been confirmed; shareholder returns are focused on dividends.
Concentration risk in steel-related business: 94.6% of Revenue derives from the steel-related business, so fluctuations in raw material (scrap steel) prices, electricity costs, or weak steel market conditions directly affect profitability. This fiscal year, Operating Income fell 65.9% due to a 2.7pt deterioration in cost of sales ratio, exposing weak price pass-through. Continued volatility in steel market conditions may amplify earnings volatility.
Working capital expansion risk: Accounts receivable surged 66.8% YoY to ¥133.2B, and inventories rose 100.3% to ¥107.1B, tightening working capital. DSO of 95 days and WIP ratio of 40.4% suggest production bottlenecks and weak credit management, which pushed Operating CF to -¥58.4B. Inventory write-downs, bad debts, and prolonged weak cash generation could impair financial flexibility.
Sustainability of dividend policy risk: With payout ratios of 307.4% (actual) and 168.6% (forecast), dividends substantially exceed Net Income, relying on internal reserves and asset sales while FCF is negative. If Operating CF does not improve, dividend cuts or revision of shareholder return policy may be required, potentially impacting share price.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.8% | 7.8% (4.6%–12.3%) | -5.9pt |
| Net Profit Margin | 1.7% | 5.2% (2.3%–8.2%) | -3.4pt |
Profitability is well below the manufacturing sector median, with both Operating and Net Profit margins ranking in the lower end of the industry.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.1% | 3.7% (-0.4%–9.3%) | -3.6pt |
Revenue growth is below the median, indicating relative underperformance in top-line expansion.
※Source: Company compilation
Restoring profitability in the steel-related business is the highest priority. With Operating Margin at 1.8% (industry median 7.8%) and gross margin 11.3%, the company lags significantly in the industry. Passing through raw material cost increases, improving production efficiency, and optimizing fixed costs are key to short-term profit improvement. Rental and Logistics are high-margin contributors (margins 15.2% and 14.2%) but small in scale; without turnaround in the steel-related business, a full recovery in consolidated performance is difficult.
Normalizing working capital and improving cash generation are prerequisites for sustainable growth. Operating CF -¥58.4B and Free CF -¥58.3B deficits are mainly driven by receivables +¥53.3B and inventories +¥50.8B; DSO 95 days and WIP ratio 40.4% indicate collection delays and production backlogs. Strengthening credit control, optimizing inventory, and improving production processes to compress working capital and return Operating CF to positive are directly linked to dividend sustainability and investment capacity. The FY2027 Revenue plan (+36.2%) assumes improved utilization and price correction, and controlling the increase in working capital is a condition for achieving this target.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statement data. Investment decisions are your responsibility; please consult a specialist as necessary before making any investment decisions.