| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥905.6B | ¥924.2B | -2.0% |
| Operating Income | ¥37.6B | ¥45.0B | -16.5% |
| Ordinary Income | ¥41.2B | ¥52.0B | -20.7% |
| Net Income | ¥32.5B | ¥34.8B | -6.8% |
| ROE | 5.2% | 5.6% | - |
For the fiscal year ended March 2026, Revenue was ¥905.6B (YoY -¥18.6B -2.0%), Operating Income was ¥37.6B (YoY -¥7.5B -16.5%), Ordinary Income was ¥41.2B (YoY -¥10.8B -20.7%), and Net Income was ¥32.5B (YoY -¥2.4B -6.8%). Domestic Filling & Containers businesses remained resilient, while Overseas operations saw Operating Income plunge by 98.1%, causing the company-wide operating margin to fall to 4.1% (from 4.9%, -0.8pt). Non-operating items—dividend income received ¥3.3B and insurance income ¥5.6B—supported profits, and Special Gains of ¥5.8B (gain on sale of investment securities ¥5.8B) lifted bottom-line profit. Operating Cash Flow (OCF) ¥93.9B (-24.9%) remained a healthy 2.9x of Net Income, but heavy capital expenditure ¥124.7B pushed Free Cash Flow to -¥24.9B. Asset expansion from aggressive investments (+¥63.0B) and an increase in long-term borrowings to ¥287.0B (+¥32.2B) raised the Debt/EBITDA ratio to 4.1x. Despite the quadruple headwinds of lower revenue, operating decline, ordinary decline, and a slight fall in net profit, the resilience of domestic core business gross margins and one-off gains provided support to final profit.
[Revenue] Revenue ¥905.6B (-2.0%) was primarily driven by a decline in the Overseas segment. Containers business was ¥337.4B (+1.2%) with a slight increase, Filling business was ¥397.8B (+0.9%) and remained firm, whereas Overseas was ¥153.8B (-14.5%) with a significant decline and Other segments also shrank to ¥66.1B (-13.2%). The Overseas revenue decline appears to reflect weak local demand and FX impacts; the resilience of the two domestic businesses helped limit company-wide revenue decline to -2.0%. Gross margin slightly improved to 23.2% (prior 23.0%), indicating pricing policy traction, but SG&A ratio rose to 19.0% (prior 18.1%), reversing operating leverage.
[Profitability] Operating Income ¥37.6B (-16.5%) was most impacted by Overseas Operating Income of ¥0.3B (prior ¥13.6B, -98.1%). Containers improved significantly to ¥16.8B (+53.8%), Filling increased to ¥38.2B (+8.3%), and the two domestic businesses together generated ¥55.0B (+19.7%) of incremental profit, but Overseas collapse and higher SG&A (¥172.2B, +¥4.5B) offset gains. Non-operating income ¥11.9B (prior ¥13.3B) was mainly dividend income ¥3.3B and insurance income ¥5.6B; non-operating expenses ¥8.3B (prior ¥6.3B) were affected by higher interest expense ¥6.2B (prior ¥4.4B), widening the decline in Ordinary Income to ¥41.2B (-20.7%). Special gains ¥5.8B (gain on sale of investment securities ¥5.8B) exceeded special losses ¥2.1B (loss on disposal of fixed assets ¥1.1B, impairment on investment securities ¥0.9B), keeping Profit Before Tax at ¥45.0B (prior ¥45.5B) nearly flat. After income taxes ¥12.5B and non-controlling interest -¥0.3B adjustments, Net Income attributable to owners of parent was ¥32.5B (-6.8%). In conclusion, domestic core business gains were offset by Overseas weakness and higher financial costs, yielding revenue and profit declines, but one-off gains and tax effects limited the drop in final profit.
Containers business: Revenue ¥337.4B (+1.2%), Operating Income ¥16.8B (+53.8%), margin 5.0%. Margin improved substantially from 3.3% to 5.0% year-on-year, driven by raw material cost control and production efficiency. Filling business: Revenue ¥397.8B (+0.9%), Operating Income ¥38.2B (+8.3%), margin 9.6%—highly profitable and the largest contributor to company Operating Income. Overseas business: Revenue ¥153.8B (-14.5%), Operating Income ¥0.3B (-98.1%), margin 0.2%—effectively loss of profitability due to weaker local demand, price competition, and FX. Other segments: Revenue ¥66.1B (-13.2%), Operating Income ¥3.6B (-44.8%), margin 5.5%, reflecting continued weakness in machinery fabrication and contracting. Filling segment remains the dominant profit contributor; normalization of Overseas profitability is key to improving company margins.
[Profitability] Operating margin 4.1% (prior 4.9%, -0.8pt), Net margin 3.6% (prior 3.5%, +0.1pt). Gross margin 23.2% (prior 23.0%) rose slightly, but SG&A ratio rose to 19.0% (prior 18.1%), compressing operating-stage margins. ROE 5.2% (prior 5.7%), Equity Ratio 45.4% (prior 43.4%) — capital efficiency slightly declined. [Cash Quality] OCF ¥93.9B is 2.9x Net Income ¥32.5B, OCF/EBITDA ratio 0.93x—cash conversion remains strong. Accrual ratio (Net Income - OCF)/Total Assets is -4.4%, indicating high quality of earnings. [Investment Efficiency] Total asset turnover 0.65x (prior 0.70x), Tangible fixed asset turnover 1.36x (prior 1.56x) — asset efficiency deteriorated. CapEx ¥124.7B (1.97x depreciation ¥63.2B) shows continued aggressive investment; Construction in progress ¥75.6B (11.3% of tangible fixed assets) indicates capacity expansion. [Financial Soundness] Current ratio 139.5%, Quick ratio 127.3% — short-term liquidity secured. Cash ¥101.2B versus short-term borrowings ¥125.8B gives Cash/Short-term Debt ratio 0.80x; working capital management remains important. Debt/Equity 1.20x (prior 1.03x), Debt/EBITDA 4.10x (prior 3.32x) — financial leverage increased; Interest coverage 6.0x (EBIT/interest expense) indicates adequate interest-bearing capacity.
OCF ¥93.9B (prior ¥125.1B, -24.9%) started from Profit Before Tax ¥45.0B plus depreciation ¥63.2B and goodwill amortization ¥4.1B, yielding OCF subtotal ¥104.3B. In working capital, accounts receivable collections ¥6.7B contributed positively, while inventory increase -¥4.8B and decrease in accounts payable -¥2.7B absorbed cash. Income taxes paid -¥7.2B, interest & dividends received ¥3.8B, and interest paid -¥6.2B resulted in final OCF ¥93.9B. Investing CF was -¥118.8B, driven by CapEx -¥124.7B. Proceeds from sale of investment securities ¥8.5B and loan recoveries ¥0.5B partially offset but large CapEx dominated, producing Free Cash Flow (OCF + Investing CF) of -¥24.9B. Financing CF was -¥7.0B: proceeds included long-term borrowings ¥145.5B and net short-term borrowings ¥54.6B totaling ¥199.6B, while outflows included long-term borrowings repayment -¥103.7B, short-term borrowings repayment -¥51.9B, lease liabilities repayment -¥4.3B, dividends paid -¥12.7B, and non-controlling interest changes -¥34.5B, amounting to -¥207.2B, resulting in a net outflow. Cash decreased from ¥132.7B at the beginning of the period to ¥101.2B at the end (-¥31.6B), clarifying a financing strategy of funding large investments with leverage.
Of Net Income ¥32.5B this period, operating profit was ¥37.6B, with non-operating income ¥11.9B (dividend income ¥3.3B, insurance income ¥5.6B, etc.) and non-operating expense ¥8.3B (interest expense ¥6.2B), resulting in Ordinary Income ¥41.2B. Net special items were +¥3.8B (Special Gains ¥5.8B - Special Losses ¥2.1B), and gain on sale of investment securities ¥5.8B boosted final profit. Insurance income ¥5.6B and gain on sale of securities ¥5.8B are one-off items totaling ¥11.4B; excluding these, pro forma core Net Income is estimated around ¥21B. OCF ¥93.9B is 2.9x Net Income; the difference between OCF subtotal (before working capital) ¥104.3B and OCF is explained by working capital changes and taxes, with no major distortion. Comprehensive income ¥53.7B (Net Income ¥32.5B + Other Comprehensive Income ¥21.2B) was driven by FX translation adjustments ¥7.5B, valuation differences on securities ¥7.6B, and retirement benefit adjustments ¥5.7B. The ¥21.2B gap between Net Income and Comprehensive Income reflects expansion of unrealized gains in assets. Overall, one-off gains and valuation gains materially contributed; for evaluating sustainable earnings power, focus on operating metrics and OCF.
Full-year plan: Revenue ¥990.0B (FY YoY +9.3%), Operating Income ¥41.0B (+9.1%), Ordinary Income ¥39.0B (-5.3%), Net Income ¥35.0B. Actuals this period: Revenue ¥905.6B, Operating Income ¥37.6B, Ordinary Income ¥41.2B, Net Income ¥32.5B — Revenue is 91.5% of plan, Operating Income 91.7%, Ordinary Income 105.6%: slightly behind at operating stage but ahead at ordinary stage. The company’s plan assumes operating revenue and operating income growth while prudently modeling higher interest expense at the ordinary stage. Assumptions to achieve plan: increased production and yield improvements in the two domestic businesses, normalization of Overseas profit, early start-up of CapEx and higher utilization rates.
Dividends this period: interim ¥30, year-end ¥64, totaling ¥94 (prior ¥93), a slight increase. Payout Ratio 35.0% (total dividends ¥12.7B / Net Income ¥32.5B), at a sustainable level. However, Free Cash Flow is -¥24.9B, so dividends are not covered by FCF and are financed by OCF and borrowings. Next fiscal year interim dividend forecast is ¥30.0, which appears to assume only the interim; year-end dividend will be decided based on performance progress. No share buybacks were executed; shareholder returns are dividend-only. Payout Ratio 35.0% is reasonable, but given high CapEx (CapEx/Depreciation 1.97x), scope for further dividend increases depends on progress in investment recovery.
Overseas profitability deterioration risk: Overseas segment Operating Income ¥0.3B (prior ¥13.6B, -98.1%) has effectively lost profitability. With Revenue ¥153.8B and margin 0.2%, weak local demand, price competition, and FX have combined negatively. Delayed recovery in Overseas profitability could further depress company Operating Margin (currently 4.1%) and weaken capital efficiency (ROE 5.2%, ROIC 2.9%), creating a structural risk.
High CapEx and rising financial leverage risk: CapEx ¥124.7B (1.97x depreciation ¥63.2B) continued, with Free Cash Flow -¥24.9B. Financing has been provided by long-term borrowings ¥287.0B (+¥32.2B) and short-term borrowings ¥125.8B (+¥14.7B), pushing Debt/EBITDA to 4.10x (prior 3.32x). If investment recovery lags plan, higher interest burden (interest expense ¥6.2B, prior ¥4.4B) and tighter liquidity (Cash/Short-term Debt 0.80x) could materialize.
Working capital management and credit risk: Accounts receivable ¥214.2B, DSO 86 days, showing a lengthening tendency. Although AR decreased slightly from ¥221.6B prior, lengthened DSO in a declining revenue environment suggests collections risk. Inventories are ¥43.2B (finished goods ¥43.2B, raw materials ¥46.5B, work-in-progress ¥19.6B; total ¥109.3B) with buildup visible. Loosening credit management or rises in obsolete inventory could degrade OCF quality and expand working capital burden.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.1% | 7.8% (4.6%–12.3%) | -3.6pt |
| Net Margin | 3.6% | 5.2% (2.3%–8.2%) | -1.6pt |
Operating margin 4.1% is -3.6pt below the manufacturing median 7.8%, reflecting Overseas weakness and higher SG&A burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -2.0% | 3.7% (-0.4%–9.3%) | -5.7pt |
Revenue growth -2.0% lags the manufacturing median +3.7% by -5.7pt, characterized by Overseas decline and only modest domestic increases.
※Source: Company aggregation
Resilience of two domestic core businesses and support from one-off gains: Improvement in Containers margin (+1.7pt → 5.0%) and sustained high profitability in Filling (margin 9.6%) drove domestic Operating Income to ¥55.0B (+19.7%). Non-operating insurance income ¥5.6B and gain on sale of investment securities ¥5.8B together lifted Net Income by ¥11.4B, limiting the Net Income decline to -6.8%. Excluding these one-offs, core Net Income is estimated at ~¥21B, indicating limited recurring earnings power. OCF ¥93.9B (2.9x Net Income) shows strong cash generation and high earnings quality, but sustainable growth requires Overseas recovery and SG&A restraint.
Overseas profitability deterioration and weak capital efficiency: Overseas Operating Income ¥0.3B (margin 0.2%, down from ¥13.6B -98.1%) dragged down company Operating Margin to 4.1% (3.6pt below industry median 7.8%), with ROE 5.2% and ROIC 2.9% indicating low capital efficiency. Asset growth from CapEx ¥124.7B (1.97x depreciation) reduced total asset turnover to 0.65x, and leverage rose to Debt/EBITDA 4.10x (prior 3.32x). Delays in investment recovery would increase interest burden (interest expense ¥6.2B, prior ¥4.4B) and liquidity risk (Cash/Short-term Debt 0.80x); timing of Overseas profitability recovery and new investments’ ramp-up will determine future assessments.
Limited room for dividend increases and investment-first capital allocation: Payout Ratio 35.0% is sustainable, but Free Cash Flow is negative -¥24.9B and dividends are financed via leverage. Next fiscal plan (Revenue ¥990B, Operating Income ¥41B) assumes revenue and operating profit increases, while Ordinary Income is conservative at ¥39B (-5.3%) accounting for higher financial costs. Without early CapEx ramp-up and Overseas profitability normalization, FCF deficits may persist and limit dividend upside. Dividend policy likely to remain steady, with potential for increases only after investment recovery becomes visible.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. 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; please consult a professional advisor as necessary.