| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3575.3B | ¥3594.2B | -0.5% |
| Operating Income | ¥15.5B | ¥15.4B | +0.1% |
| Ordinary Income | ¥8.8B | ¥9.4B | -6.6% |
| Net Income / Net Profit | ¥-197.1B | ¥4.1B | -75.4% |
| ROE | -20.9% | 0.4% | - |
For the fiscal year ended May 2026, revenue was ¥3575.3B (YoY -¥18.9B, -0.5%), Operating Income was ¥15.5B (YoY +¥0.1B, +0.1%), Ordinary Income was ¥8.8B (YoY -¥0.6B, -6.6%), and a net loss of ¥197.1B was recorded (turning from a ¥4.1B net profit in the prior year), resulting in lower revenue and a large final loss. Gross profit was ¥705.1B (gross margin 19.7%, improvement of +0.7pp YoY), but SG&A was ¥689.7B (SG&A ratio 19.3%), leaving an extremely low operating margin of 0.4%. At the ordinary stage, interest expense of ¥20.0B (prior year ¥16.1B) was a heavy burden, with an interest coverage of 0.77x indicating weak interest resilience. Special income of ¥87.1B (gain on sale of fixed assets ¥73.2B, gain on sale of investment securities ¥13.9B) was recorded, but special losses of ¥207.0B—mainly impairment losses of ¥167.6B—resulted in a pre-tax loss of ¥111.1B and, after corporate taxes of ¥22.5B, a final loss of ¥197.1B. Core operating performance excluding non-recurring factors showed a slight profit increase, but the EBITDA margin remained low at 3.0% (Operating Income ¥15.5B + Depreciation ¥93.3B = EBITDA ¥108.8B), reflecting a capital-intensive and low-profit structure. By segment, the Materials Business led with Operating Income of ¥23.5B, International Business continued to record an operating loss of ¥24.3B, the Building Materials Business improved to a profit of ¥10.7B, and the Commercial Facilities Business halved to ¥7.2B.
[Revenue] Revenue was ¥3575.3B (YoY -0.5%), essentially flat with a slight decline. By segment, Materials Business recorded ¥1044.9B (+4.9%) and International Business ¥806.8B (+3.3%)—both increasing—while the core Building Materials Business was ¥1721.0B (-6.1%) and Commercial Facilities ¥426.6B (-4.4%), reflecting deceleration in domestic operations. The downturn in Building Materials was driven by weaker housing and commercial building material markets; Commercial Facilities declined due to reduced store investment. Materials, which handles aluminum casting and extrusion, achieved higher sales due to increased shipment volumes; International benefited from higher volumes in overseas aluminum extrusion and FX effects (foreign exchange gains of ¥2.3B recorded in non-operating income). Gross margin improved to 19.7% (prior year 19.0%, +0.7pp), indicating some progress in price adjustments and cost rationalization, but sales declines in Building Materials and Commercial Facilities dragged on overall results.
[Profitability] Cost of sales was ¥2870.2B (cost ratio 80.3%), securing gross profit of ¥705.1B. SG&A was ¥689.7B (SG&A ratio 19.3%), up 1.1% YoY, leaving Operating Income at ¥15.5B (operating margin 0.4%). SG&A contains high fixed-cost characteristics including goodwill amortization of ¥6.3B, so operating leverage does not work well in a sales-down environment. Non-operating items included interest and dividend income of ¥1.1B, dividend income of ¥3.0B, and equity-method investment income of ¥3.6B, but interest expense of ¥20.0B weighed heavily, producing a non-operating balance of -¥6.7B. Ordinary Income declined to ¥8.8B (YoY -6.6%). Special income of ¥87.1B (gain on sale of fixed assets ¥73.2B, gain on sale of investment securities ¥13.9B) was temporary and part of liquidity securing via asset replacement. Conversely, special losses of ¥207.0B—mainly impairment losses of ¥167.6B—pushed pre-tax profit to a loss of ¥111.1B. After corporate taxes of ¥22.5B (current tax ¥16.6B, deferred tax ¥5.8B) and non-controlling interests of ¥1.4B, the net loss was ¥197.1B. Although the impairment was a one-off tied to diminished profitability of tangible assets, structural low profitability and high interest burden underpin the shift to a loss. In sum, results show lower revenue and profit with a large final loss.
The Building Materials Business saw revenue of ¥1721.0B (YoY -6.1%), but Operating Income improved substantially to ¥10.7B (from ¥2.4B prior year, +353.0%). Although the margin is low at 0.6%, cost rationalization and price revisions were effective. The Materials Business posted revenue of ¥1044.9B (+4.9%) and Operating Income of ¥23.5B (-9.6%) with a margin of 2.3%; despite higher sales, increased raw material costs reduced profit. Commercial Facilities Business revenue was ¥426.6B (-4.4%) with Operating Income ¥7.2B (-50.8%), margin falling to 1.7% due to weaker store demand and higher SG&A. International Business increased revenue to ¥806.8B (+3.3%) but remained in an operating loss of ¥24.3B (improved +6.4% from -¥25.9B prior year). Challenges remain in overseas aluminum extrusion utilization and cost control, and FX effects were insufficient to offset losses. Other businesses had revenue of ¥4.5B and Operating Loss of ¥0.8B. While Building Materials turning profitable and Materials holding steady are positives, continued losses in International and halved profit in Commercial Facilities pressure consolidated profitability.
[Profitability] Operating margin was 0.4% (prior year 0.4%), remaining extremely low; EBITDA margin was 3.0% (EBITDA ¥108.8B / Revenue ¥3575.3B), reflecting an ongoing capital-intensive low-profit profile. Gross margin improved to 19.7% (prior year 19.0%, +0.7pp), but SG&A at 19.3% nearly offsets gross profit. ROE deteriorated sharply to -20.9% (prior year -2.5%) due to net loss, and ROA on an ordinary income basis was 0.3% (prior year 0.3%) unchanged. Interest coverage was 0.77x (Operating Income ¥15.5B / Interest Expense ¥20.0B), with interest burden exceeding EBIT and interest resilience extremely weak. [Cash Quality] Operating Cash Flow was ¥54.0B (YoY +68.0%) versus a net loss of ¥197.1B, giving an OCF/Net Income of -0.27x (opposite sign). The ratio of Operating CF to EBITDA was 0.50x, indicating weak cash conversion. Working capital contributions included Accounts Receivable decrease of ¥40.6B and Inventory decrease of ¥11.0B, offset by Accounts Payable decrease of -¥42.0B. Free Cash Flow was -¥6.4B (Operating CF ¥54.0B - CapEx ¥162.5B), with capital expenditure exceeding operating cash generation. [Investment Efficiency] CapEx of ¥162.5B was 1.74x Depreciation of ¥93.3B, indicating active capacity expansion/renewal investment. [Financial Soundness] Equity Ratio was 30.8% (prior year 30.4%) largely unchanged and low; D/E ratio was 2.25x (Interest-bearing debt ¥2116.5B / Equity ¥939.8B) reflecting high leverage. Debt/EBITDA was 19.4x (Interest-bearing debt ¥2116.5B / EBITDA ¥108.8B), showing weak debt repayment capacity. Current ratio was 133.2% and Quick ratio 115.9%, acceptable for short-term liquidity. Cash and deposits of ¥297.3B (prior year ¥215.1B) plus short-term securities of ¥0.5B gave liquidity of ¥297.8B, slightly exceeding short-term borrowings of ¥57.9B plus long-term borrowings due within one year of ¥233.7B (total ¥291.6B). Short-term resilience was secured via asset sale proceeds and long-term borrowing procurement of ¥334B.
Operating CF increased to ¥54.0B (prior year ¥32.2B, +68.0%), but against a net loss of ¥197.1B, non-cash charges (impairment ¥167.6B, depreciation ¥93.3B) adjusted the operating CF subtotal to only ¥92.4B. In working capital, reductions in receivables of ¥40.6B and inventory of ¥11.0B contributed to cash generation, while a decrease in payables of -¥42.0B was a cash outflow; other liabilities decreased -¥66.7B also pressured cash. Corporate tax payments -¥13.9B and interest payments -¥20.0B resulted in Operating CF of ¥54.0B. Investing CF was -¥60.4B (prior year -¥143.3B), mainly driven by CapEx of -¥162.5B, but proceeds from sale of tangible fixed assets ¥96.3B and sale of investment securities ¥18.8B offset outflows. Financing CF was +¥74.6B (prior year +¥74.7B) where long-term borrowings raised ¥334.0B against repayments of -¥221.2B, net short-term borrowings -¥22.1B, and dividends paid -¥7.9B. FCF was -¥6.4B (Operating CF ¥54.0B + Investing CF -¥60.4B), and cash increased by ¥77.2B to ¥297.3B at year-end after supplementing with asset sales and borrowings. Operating CF/EBITDA was 0.50x, indicating low cash conversion efficiency; OCF/Net Income was of opposite sign, leaving concerns about earnings quality. CapEx is 1.74x depreciation, suggesting proactive investment, but working capital movements and interest burden press on cash generation.
Recurring earnings center on Operating Income ¥15.5B and equity-method investment income ¥3.6B (prior year ¥2.5B), and non-operating income is small at 0.6% of revenue. Non-operating items—dividends received ¥3.0B, FX gains ¥2.3B, subsidies ¥2.1B—are diverse but not structural profit sources. Meanwhile, special income of ¥87.1B (gain on sale of fixed assets ¥73.2B, gain on sale of investment securities ¥13.9B) is temporary and part of liquidity securing via asset replacement. Special losses of ¥207.0B (impairment losses ¥167.6B, loss on retirement of fixed assets ¥4.1B, etc.) are also one-off, but the impairment reflects deteriorated asset profitability and raises concerns about asset health. Net special items of -¥119.9B equal -3.4% of revenue and are the main cause of the drop from Ordinary Income ¥8.8B to Pre-tax loss -¥111.1B and the swing in Net Income. In non-operating costs, interest expense ¥20.0B exceeds EBIT ¥15.5B, pressuring the ordinary stage. From an accrual perspective, Operating CF ¥54.0B versus Net Loss -¥197.1B yields OCF/Net Income -0.27x (opposite sign), showing that non-cash items (impairment/depreciation) depress earnings while cash generation is weak. Operating CF subtotal of ¥92.4B fell to ¥54.0B after working capital changes, indicating working capital efficiency issues. Excluding impairments, ordinary operations remain marginally profitable, but heavy interest burden and one-off items make earnings quality fragile.
Full-year guidance for FY ending May 2026 is Revenue ¥3900.0B (YoY +9.1%), Operating Income ¥40.0B (YoY +158.7%), Ordinary Income ¥15.0B (YoY +70.0%), Net Income ¥10.0B (turning to profit from prior year -¥197.1B), and DPS maintained at ¥12.5. Progress against current period results is 91.7% for Revenue, 38.7% for Operating Income, and 58.8% for Ordinary Income, with a large shortfall in Operating Income. The profit improvement assumptions are: (1) the ¥167.6B impairment recorded this period is non-recurring; (2) reduction of losses in International Business; (3) price and cost improvements in Building Materials and Materials businesses; and (4) absorption of interest burden. Revenue increases assume recovery in Building Materials demand and volume growth in International Business, but achieving Operating Income ¥40.0B requires improving operating margin to over 1.0%, i.e., a 2.5x improvement from this period’s 0.4%—a significant uplift. Ordinary Income ¥15.0B implies an interest coverage around 2.0x given interest expense near ¥20.0B, making the magnitude of operating profit increases critical. Net Income ¥10.0B assumes normalization of special items; considering tax rates and non-controlling interests, this implies pre-tax profit around ¥15.0B. The forecast depends on impairment exhaustion and operating improvement; confirming Operating Income achievement rate above 50% by Q2 would be a useful progress checkpoint.
Annual dividend is planned at ¥25.0 (interim ¥12.5, year-end ¥12.5). Despite the net loss of ¥197.1B, total dividends of ¥7.86B are planned, raising concerns about payout sustainability given an arithmetic negative payout ratio. The prior year also paid ¥25.0 total (¥12.5×2), indicating a stance to maintain stable dividends. With FCF of -¥6.4B and dividends paid ¥7.86B, FCF coverage is -0.81x (negative), so dividend funding depends on financing activities and asset sales. Given cash & deposits of ¥297.3B and Equity Ratio of 30.8%, capacity to sustain dividends is limited, and next-year profitability and Operating CF improvements are prerequisites for maintaining dividends. There is no data for Total Return Ratio and share buybacks are effectively zero (-¥0.0B). While dividend yield/DPS disclosures are not provided, DPS ¥25 versus BPS ¥2888.11 gives a dividend yield of about 0.9%, low. Under high leverage (Debt/EBITDA 19.4x) and weak interest coverage (0.77x), priority should be on rebuilding retained earnings and reducing debt, although management shows intent to maintain shareholder returns.
Interest burden risk: Interest expense ¥20.0B exceeds Operating Income ¥15.5B, giving interest coverage of 0.77x—extremely low. Total of long-term borrowings ¥681.8B and long-term borrowings due within one year ¥233.7B equals ¥915.5B; interest rate increases or worse refinancing conditions would immediately hit Ordinary Income. High leverage (D/E 2.25x, Debt/EBITDA 19.4x) makes interest resilience extremely fragile.
Continued loss risk in International Business: Operating loss ¥24.3B (prior year -¥25.9B) remains in the red with a margin of -3.0% on revenue ¥806.8B. Overseas aluminum extrusion is vulnerable to supply-demand swings, raw material costs, and FX risk; delays in returning to profitability will pressure consolidated earnings. Reducing losses in International is essential to achieve Operating Income ¥40.0B in the forecast.
Low-profit structure and asset health risk: Operating margin 0.4% and EBITDA margin 3.0% are extremely low, and the impairment loss of ¥167.6B points to declining asset profitability. Fixed assets of ¥1547.4B (50.6% of total assets) indicate a capital-intensive business where lower utilization or demand could prompt further impairments. ROE -20.9% and ROA 0.3% show poor capital efficiency; delayed structural reforms would further weaken the financial base.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.4% | 7.8% (4.6%–12.3%) | -7.3pp |
| Net Profit Margin | -5.5% | 5.2% (2.3%–8.2%) | -10.7pp |
The company’s operating margin of 0.4% is -7.3pp below the industry median of 7.8%, and net profit margin -5.5% is -10.7pp below the median 5.2%. Within the manufacturing sector, profitability ranks at the bottom, with low EBIT margin and high interest burden as structural issues.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -0.5% | 3.7% (-0.4%–9.3%) | -4.2pp |
Company revenue growth of -0.5% lags the sector median of +3.7% by -4.2pp, driven by weaker domestic demand in Building Materials and Commercial Facilities.
※Source: Company compilation
Monitoring progress of structural reforms is paramount—key is timing and pace of International Business turning from an operating loss of ¥24.3B to profit, and recovery of EBIT margin above 1% through price and cost improvements in Building Materials and Commercial Facilities. Post the one-off impairment of ¥167.6B, verify whether core operating profitability sustainably improves; confirming Operating Income achievement rate above 50% at Q2 would be a practical progress metric.
Correcting high leverage and weak interest resilience is a financial priority—D/E 2.25x, Debt/EBITDA 19.4x, and interest coverage 0.77x highlight material financial risk. With interest expense ¥20.0B exceeding EBIT ¥15.5B, interest rate rises or tougher refinancing would directly hit Ordinary Income. Monitor progress toward self-funded debt reduction via higher Operating CF and FCF positivity, and pace of improvement toward interest coverage above 2.0x. Continuing dividends of ¥25.0 under negative FCF depends on financing activities and asset sales; next-year profitability and Operating CF improvement are preconditions for sustaining dividends.
While asset sales and borrowings increased cash to ¥297.3B and secured short-term liquidity, FCF -¥6.4B and Operating CF/EBITDA 0.50x show weak cash generation. Improvement in working capital efficiency (Accounts Receivable -¥40.6B, Accounts Payable -¥42.0B) and selectivity in CapEx (CapEx ¥162.5B, CapEx/Depreciation 1.74x) are needed to improve capital efficiency. The next-year forecast depends on impairment exhaustion and operational improvement, and sensitivity to raw material/energy costs and FX is high—continuous monitoring of price pass-through and maintenance of gross margin above 20% is required.
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 based on publicly disclosed financial data. Investment decisions are your own responsibility; consult a professional advisor as needed.