| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3311.1B | ¥2997.9B | +10.4% |
| Operating Income / Operating Profit | ¥72.7B | ¥48.3B | +50.4% |
| Ordinary Income | ¥56.2B | ¥37.5B | +49.9% |
| Net Income / Net Profit | ¥34.1B | ¥-7.3B | +50.5% |
| ROE | 4.4% | -1.0% | - |
For the fiscal year ended March 2026, Revenue was ¥3,311.1B (YoY +¥313.1B, +10.4%), Operating Income was ¥72.7B (YoY +¥24.4B, +50.4%), Ordinary Income was ¥56.2B (YoY +¥18.7B, +49.9%), and Net Income attributable to owners of the parent was ¥36.8B (YoY +¥44.1B, turned to profit), resulting in increased revenue and profit. Operating margin improved to 2.2% (up +0.6pt from 1.6% a year earlier) and gross margin improved to 4.9% (up +0.3pt from 4.6%), indicating better profitability. The core Aluminum Secondary Alloys segment led performance with Sales of ¥3,268.0B (+10.4%) and Operating Income of ¥67.0B (+50.8%), while Other segments maintained high profitability with Sales of ¥58.5B (+8.6%) and Operating Income of ¥5.7B (+45.9%). Impairment losses of ¥14.5B were recognized under extraordinary losses, but Profit Before Tax was ¥54.6B (from ¥24.3B in the prior year, +125.0%), marking a substantial increase.
[Revenue] Revenue reached ¥3,311.1B (+10.4%), achieving a second consecutive year of revenue growth. The core Aluminum Secondary Alloys segment was solid at ¥3,268.0B (+10.4%), supported by recovery in automotive demand and price revisions. Other segments (die-cast products, etc.) also expanded steadily to ¥58.5B (+8.6%), sustaining a company-wide revenue uptrend. Cost of sales rose to ¥3,149.0B (from ¥2,860.4B, +10.1%), largely in line with revenue growth, but gross margin improved to 4.9% (up +0.3pt from 4.6%) due to the revenue increase.
[Profitability] Gross profit was ¥162.1B (from ¥137.6B, +17.8%); subtracting Selling, General and Administrative Expenses of ¥89.4B (virtually flat from ¥89.2B) produced Operating Income of ¥72.7B (+50.4%), a significant increase. SG&A control was effective, raising the operating margin to 2.2% (up +0.6pt from 1.6%). Non-operating activities resulted in a loss of ¥16.4B (worsened from a loss of ¥10.8B), mainly due to interest expense of ¥19.0B (from ¥17.0B, +12.0%) and equity-method investment losses of ¥2.2B (from a loss of ¥1.6B). Consequently, Ordinary Income was ¥56.2B (+49.9%). Extraordinary items included impairment losses of ¥14.5B and gains on sales of investment securities of ¥2.3B, producing net extraordinary losses of ¥1.6B, but Profit Before Tax expanded substantially to ¥54.6B (from ¥24.3B, +125.0%). After deducting corporate taxes of ¥18.2B (effective tax rate 33.3%), Net Income attributable to owners of the parent was ¥36.8B (from ¥7.0B, +426.4%), turning to profit and closing the fiscal year with both revenue and profit growth.
The Aluminum Secondary Alloys segment remained robust as the core business with Sales of ¥3,268.0B (+10.4%), Operating Income of ¥67.0B (+50.8%), and an operating margin of 2.0%. Recovery in automotive aluminum demand and the pass-through of product price revisions drove revenue and profit growth. The Other segment (die-cast products, etc.) recorded Sales of ¥58.5B (+8.6%), Operating Income of ¥5.7B (+45.9%), and an operating margin of 9.7%, maintaining high profitability. There is a wide disparity in segment margins, with Other business showing high margins, while the Aluminum Secondary Alloys segment accounts for 98.2% of sales, defining the company’s business portfolio. Both segments showed margin improvements, supported by company-wide cost control and successful price pass-through.
[Profitability] Operating margin improved to 2.2% (from 1.6%, +0.6pt), and gross margin improved to 4.9% (from 4.6%, +0.3pt). ROE was 4.8% (from 1.0%, +3.8pt), consistent with the product of net profit margin 1.1% × total asset turnover 1.86x × financial leverage 2.31x. ROA (on an ordinary income basis) was 3.3% (from 2.5%, +0.8pt). [Cash Quality] Operating Cash Flow / Net Income ratio was 0.51x, a low level, indicating challenges in cash conversion of earnings. Operating CF / EBITDA ratio remained at 0.17x, reflecting strong working capital funding requirements. Cash Conversion Cycle (CCC) was 122 days, of which DSO was 82 days, DIO 24 days, and DPO -16 days; prolonged receivables collection is the main driver of working capital strain. [Investment Efficiency] Total asset turnover was 1.86x (virtually unchanged from 1.84x), with total assets increasing along with sales. Fixed asset turnover remained high at 12.57x. [Financial Health] Equity Ratio was 43.3% (from 44.7%, -1.4pt), a mid-range level, while interest-bearing debt ratio rose slightly to 41.7% (from 41.1%, +0.6pt). Debt/EBITDA multiple was 6.6x, indicating high leverage. Interest coverage (EBIT / interest expense) was 3.83x, showing near-term interest-paying ability but room for improvement. Short-term borrowings of ¥679.7B account for 91.7% of interest-bearing debt, and with Cash and Deposits of ¥90.8B, short-term borrowing dependence is high, warranting attention to refinancing and interest rate risk.
Operating Cash Flow was ¥18.7B (turned positive from ¥-100.4B in the prior year). Subtotal after adding depreciation of ¥39.6B to Profit Before Tax of ¥54.6B was ¥52.1B, but a large increase in trade receivables of ¥102.2B (delayed collections from external customers) drove significant cash outflow. This was partially offset by increases in trade payables of ¥40.9B and decreases in inventories of ¥6.7B, leaving Operating CF at a low level. Corporate tax payments of ¥17.7B and interest payments of ¥19.1B also pressured cash. Investing Cash Flow was ¥-51.8B (increased outflow from ¥-42.0B), with capital expenditures at ¥47.3B (from ¥39.1B, +21.0%). As a result, Free Cash Flow (Operating CF + Investing CF) was ¥-33.1B, indicating a cash shortfall. Financing Cash Flow was net inflow of ¥50.8B (down from ¥145.7B), driven by net increases in short-term borrowings of ¥83.2B and long-term borrowings of ¥32.0B, offset by long-term debt repayments of ¥41.9B and dividend payments of ¥21.8B. Cash and Deposits at the end of the period were ¥90.8B (up +23.7% from ¥73.4B at the beginning), but high short-term borrowing dependence necessitates caution on liquidity.
Operating Income of ¥72.7B reflects core operating profitability. Non-operating income was ¥8.6B (0.26% of sales), below the 5% threshold, indicating earnings are mainly from recurring operations. Conversely, non-operating expenses totaled ¥25.0B, primarily interest expense of ¥19.0B, foreign exchange losses of ¥2.4B, and equity-method investment losses of ¥2.2B, resulting in a net non-operating impact of -¥16.4B. Extraordinary items included impairment losses of ¥14.5B, gains on sales of investment securities of ¥2.3B, and gains on sales of fixed assets of ¥0.1B, resulting in net extraordinary losses of ¥1.6B. Against Ordinary Income of ¥56.2B, Net Income attributable to owners of the parent was ¥36.8B (a -34.5% gap), largely due to tax burden (effective tax rate 33.3%) and extraordinary losses. The fact that Operating CF significantly lags Net Income (Operating CF / Net Income 0.51x) points to accrual-quality issues, with increases in receivables preventing cash realization of profits. Comprehensive income was ¥55.8B (compared to Net Income of ¥34.1B, +63.6%), driven by valuation gains on other securities of ¥11.5B and foreign currency translation adjustments of ¥4.4B, indicating a substantial contribution from valuation items.
For the fiscal year ending March 2027, the company projects Revenue of ¥3,867.0B (+16.8%), Operating Income of ¥121.6B (+67.3%), Ordinary Income of ¥113.8B (+102.5%), and Net Income attributable to owners of the parent of ¥88.4B (+140.2%). The company plans to improve operating margin to 3.1% (from 2.2%, +0.9pt) based on continued price revisions, manufacturing yield and energy cost efficiencies, and logistics optimization. EPS is projected at 223.39円 (from 93.01円, +140.2%). Annual dividend is forecast at 35円 (from 55円, -20円 reduction). Progress toward the full-year forecast at the end of the current period is: Revenue 85.6%, Operating Income 59.8%, Ordinary Income 49.4%, Net Income 41.6%, reflecting an expectation of margin improvement in the second half.
Annual dividend for the year was 55円 (interim 25円, year-end 30円), a large increase of 30円 from the prior year interim 25円. Payout Ratio was 59.1% (based on Net Income attributable to owners of the parent), a high but within a tolerable range by profit standards. Free Cash Flow was ¥-33.1B and did not cover total dividends of ¥21.8B, resulting in an FCF coverage ratio of -1.52x. Dividend funding was supplemented by increased borrowings, raising questions about sustainability; improvement in Operating CF (normalization of receivables collection and shortening of CCC) is essential. The next-period dividend forecast is 35円 (a cut), signaling a priority on restoring cash generation. No share buybacks were conducted; shareholder returns consist solely of dividends.
Working capital efficiency deterioration risk: Trade receivables increased to ¥744.2B (from ¥640.9B, +16.1%), and DSO extended to 82 days. CCC is 122 days, and delayed receivables collection is causing funding constraints, contributing to the low Operating CF / Net Income ratio of 0.51x. Strengthening collection management and shortening payment terms are urgent; failure to improve will sustain borrowing dependence and interest burdens will erode profits.
Short-term borrowing dependence and liquidity risk: Of interest-bearing debt of ¥741.3B, short-term borrowings amount to ¥679.7B (91.7%). With Cash and Deposits of ¥90.8B, the cash/short-term borrowings ratio is 0.13x, making the company vulnerable to refinancing risk and rising interest rates. Converting part of short-term debt to long-term and building liquidity buffers are key to financial stability.
Impact of one-off items and Net Income volatility: One-off items such as impairment losses of ¥14.5B and gains on sales of investment securities of ¥2.3B affected approximately 40% of Net Income. Valuation gains on securities of ¥11.5B elevated comprehensive income, indicating large mark-to-market effects. Equity-method losses of ¥2.2B also constrained upside to Ordinary Income. Improving the quality of earnings through core profitability improvement is necessary.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.2% | 7.8% (4.6%–12.3%) | -5.6pt |
| Net Margin | 1.0% | 5.2% (2.3%–8.2%) | -4.2pt |
Both operating and net margins are well below industry medians, indicating substantial room for profitability improvement within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 10.4% | 3.7% (-0.4%–9.3%) | +6.7pt |
Revenue growth outpaces the industry median, placing the company favorably on top-line expansion among manufacturers.
※ Source: Company compilation
Sustainability of profitability improvement trend: Operating margin improved from 1.6% to 2.2% (+0.6pt), and management targets 3.1% next fiscal year, implying stepwise margin improvement. Price revisions and SG&A restraint have been effective; if raw material cost stability and manufacturing efficiency continue, convergence toward industry averages is expected. However, at 2.2% operating margin, the company remains -5.6pt below the industry median of 7.8%, indicating further margin improvement potential.
Working capital management and cash generation improvement are top priorities: Operating CF / Net Income is 0.51x, CCC is 122 days (DSO 82 days), indicating weak capital efficiency and urgent need to normalize receivables collection. If collection period shortening and CCC compression (target below 90 days) proceed, Operating CF / EBITDA could improve to above 0.7x, reducing borrowing dependence and enhancing dividend sustainability.
Progress on extending short-term debt and financial stabilization: Short-term borrowing dependence is 91.7% and Debt/EBITDA is 6.6x, indicating high leverage, but interest coverage at 3.83x provides near-term payment capacity. Extending some short-term debt to long-term and introducing interest-rate hedges to smooth interest expense and reduce refinancing risk would improve financial stability and the quality of Net Income. The dividend forecast of 35円 (cut) signals a policy prioritizing financial stabilization; optimization of the debt profile will be a focus going forward.
This report was automatically generated by AI analyzing XBRL earnings release data. It does not constitute 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; please consult a professional advisor as needed.