| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2629.7B | ¥2673.0B | -1.6% |
| Operating Income / Operating Profit | ¥0.9B | ¥20.4B | -95.3% |
| Ordinary Income | ¥-3.4B | ¥14.9B | -47.1% |
| Net Income / Net Profit | ¥-20.2B | ¥-3.5B | -476.6% |
| ROE | -2.0% | -0.4% | - |
For the cumulative Q3 (9 months) of FY2026, Revenue was ¥2629.7B (YoY -¥43.3B, -1.6%), Operating Income was ¥0.9B (YoY -¥19.5B, -95.3%), Ordinary loss was ¥3.4B (YoY -¥18.3B; prior period Ordinary Income ¥14.9B), and Net loss attributable to owners of the parent was ¥-20.2B (YoY -¥16.7B, -476.6%). Revenue remained roughly flat, but a low gross margin of 19.5% and rigid SG&A ratio of 19.5% compressed operating profit to near zero. Interest expense of ¥14.2B turned ordinary profit into a loss. Special items netted to ¥-7.1B (Special gains ¥9.6B, Special losses ¥16.8B); although there were gains on disposal of fixed assets, one-off losses outweighed them, resulting in a pre-tax loss of ¥10.5B and income taxes of ¥9.7B, expanding the final loss. The International Business operating loss of ¥21.7B materially depressed consolidated profit, leaving only the Materials Business operating profit of ¥17.1B to support earnings.
Revenue was ¥2629.7B, a slight decline of -1.6% YoY. By segment, Building Materials Business ¥1302.5B (-6.0%) and Commercial Facilities Business ¥309.2B (-3.7%) saw revenue declines, while Materials Business ¥777.2B (+5.0%) and International Business ¥574.7B (+0.3%) posted increases, partially offsetting declines. Building materials weakness likely reflects domestic demand stagnation; commercial facilities weakness likely reflects a softer order environment. Materials growth appears driven by passing through raw material price increases and robust demand.
Cost of sales was ¥2116.9B, producing a gross margin of 19.5% (down -0.4pt from 19.9% prior year). SG&A was ¥511.9B, an SG&A ratio of 19.5% (worsened +0.3pt from 19.2%), nearly equal to gross profit, pushing Operating Income down to ¥0.9B (Operating margin 0.0%), effectively zero. Non-operating income included dividend income ¥2.7B and equity-method investment income ¥3.1B, totaling non-operating income ¥14.1B, but non-operating expenses of ¥18.4B (interest expense ¥14.2B, foreign exchange losses ¥2.9B, etc.) outweighed them, producing Ordinary loss ¥3.4B. Special items included gains on sale of fixed assets ¥7.2B and gains on sale of investment securities ¥2.4B (special gains ¥9.6B) versus special losses totaling ¥16.8B (including fixed asset retirement/disposal losses ¥3.5B and environmental-related costs ¥4.1B), yielding a net special item drag of ¥-7.1B. After income taxes of ¥9.7B, Net loss attributable to owners of the parent was ¥-20.2B. By segment, the International Business operating loss ¥21.7B heavily impaired consolidated profit, while Building Materials, Commercial Facilities, and Materials generated slim operating margins of 0.2%, 1.3%, and 2.2% respectively. Heavy interest burden (Interest Coverage 0.07x) combined with structural losses in International Business and depressed gross margin caused deterioration from revenue growth with profit decline to revenue decline with losses.
Overall, losses in the International Business overwhelm Materials’ profits, pushing consolidated Operating Income to near zero.
Profitability: Operating margin 0.0% (down -0.7pt from 0.8% prior year), Net margin -0.8% (down -0.6pt from -0.1%), indicating significant deterioration. ROE -2.0% (no prior-period comparable), ROA -0.7% (down -0.5pt from -0.1%), both showing weak capital and asset efficiency under loss conditions. ROIC 0.1% (no prior-period comparable) well below cost of capital. Gross margin 19.5% remained low and nearly matched by SG&A ratio 19.5%, leaving negligible operating profit generation. Interest Coverage 0.07x (Operating Income ¥0.9B ÷ Interest Expense ¥14.2B) shows interest burden far exceeds operating profit, highlighting heavy financial expense.
Efficiency: Total asset turnover 0.85x (down from 0.89x prior year). Inventory turnover days 106 days (slightly better than industry median 112 days, but room for improvement). Accounts receivable turnover days 60 days (shorter than industry median 85 days — relatively good collection). Accounts payable turnover days 77 days. Working capital turnover days 89 days (more efficient than industry median 112 days). However, inventory balance rose to ¥210.5B (from ¥200.7B, +4.9%), indicating potential for cash generation through inventory reduction.
Financial Health: Equity Ratio 31.2% (improved +0.8pt from 30.4%) but well below industry median 63.8%, indicating high leverage dependence. D/E ratio 2.09x (improved from 2.25x but still high) with interest-bearing debt ¥716.6B (short-term borrowings ¥76.7B, long-term borrowings ¥639.9B). Current ratio 121% (below industry median 287% but short-term liquidity maintained), Quick ratio 103% — minimum short-term ability preserved. Financial leverage 3.09x (about twice industry median 1.53x), posing significant risk in a rising-rate environment.
Shareholder Returns: Interim dividend maintained at ¥12.5 per share, and full-year dividend forecast also ¥12.5. Due to the net loss, Payout Ratio is not computable (in deficit). Retained earnings ¥200.2B (down -11.8% from ¥227.1B), indicating declining dividend capacity. Under D/E 2.09x and Interest Coverage 0.07x, dividend sustainability depends on achieving full-year profitability (Net Income ¥20B target). Cash and deposits ¥218.2B support short-term dividend payment capacity, but without improvements in free cash flow generation and earnings recovery, medium-to-long-term dividend continuity may be constrained.
Because cash flow statement data is not disclosed, funding trends are analyzed from balance sheet changes. Cash and deposits were ¥218.2B (¥215.1B prior year, +¥3.1B, +1.4%), remaining virtually flat and maintaining short-term liquidity. From a working-capital perspective, Accounts receivable decreased to ¥433.9B (from ¥492.6B, -11.9%), indicating improved collections, while Inventory increased to ¥210.5B (from ¥200.7B, +4.9%), signaling inventory stagnation. Increase in Accounts payable to ¥451.1B (from ¥402.7B, +12.0%) suggests use of trade payables to secure short-term funds. Tangible fixed assets increased to ¥1199.6B (from ¥1137.6B, +5.5%), indicating continued capital expenditure. Investment securities rose significantly to ¥216.2B (from ¥154.5B, +39.9%), and accumulated valuation differences on securities boosted net assets via other comprehensive income. Long-term borrowings increased to ¥639.9B (from ¥596.97B, +7.2%), reflecting continued financing for capex and working capital. As indicated by Interest Coverage 0.07x, operating cash generation is extremely vulnerable to interest burden; improving profits and inventory compression to enhance cash conversion are urgent.
Recurring earning power is extremely fragile: Operating Income ¥0.9B equals 0.0% of Revenue, showing a material decline in core earnings capacity. Of non-operating income ¥14.1B, dividend income ¥2.7B, equity-method investment income ¥3.1B, and foreign exchange gains ¥2.0B are included, but FX gains are volatile and lack persistence. Non-operating expenses ¥18.4B include interest expense ¥14.2B; interest-bearing debt ¥716.6B structurally suppresses profit. Net special items were ¥-7.1B: despite one-off gains such as fixed asset disposals ¥7.2B and investment securities disposals ¥2.4B, special losses including fixed asset retirement/disposal losses ¥3.5B and environmental costs ¥4.1B outweighed gains. The gap from Ordinary loss ¥-3.4B to Net loss ¥-20.2B reflects the major impact of special items and tax expenses, underscoring weak ongoing earnings base. Comprehensive income was positive ¥58.5B, driven primarily by valuation gains (unrealized gains on available-for-sale securities ¥37.7B, foreign currency translation adjustments ¥34.5B), which diverge from core operating profitability. Accrual quality has deteriorated, and rising inventories and ongoing fixed asset investment may constrain short-term cash generation.
Full Year guidance remains Revenue ¥3550B (YoY -1.2%), Operating Income ¥10B (YoY -35.3%), Ordinary Income ¥1B (YoY -89.4%), Net Income attributable to owners of the parent ¥20B, and dividend per share ¥12.5 unchanged. Progress rates against cumulative Q3 results are: Revenue 74.1% (roughly aligned with typical 75%), Operating Income 9.5% (substantially short of typical 75% pace), Ordinary Income cannot be calculated due to loss, and Net Income likewise. The very low operating profit progress reflects depressed gross margin, widening International Business losses, and rigid SG&A; substantial profit recovery in Q4 is a precondition to achieve full-year guidance. Specifically, Q4 standalone must record Operating Income ¥9.1B, Ordinary Income ¥4.4B, and Net Income ¥40.2B — requiring simultaneous realization of price corrections, cost reductions, inventory compression, and International Business profitability improvements; achievement appears difficult. Guidance was revised during Q3, reflecting a cautious outlook.
Interim dividend of ¥12.5 per share is maintained, and the full-year dividend forecast remains ¥12.5. Dividend payout total for the Q3 cumulative Net loss attributable to owners of the parent ¥-20.2B is approximately ¥3.9B (issued shares 31,337 thousand × ¥12.5), and the Payout Ratio is not computable under a net loss. Equity was ¥1001.2B (from ¥948.0B prior year, +5.6%) boosted by accumulation of comprehensive income, but retained earnings declined to ¥200.2B (from ¥227.1B, -11.8%), and accumulated losses are eroding dividend capacity. Under D/E 2.09x and Interest Coverage 0.07x, dividend sustainability depends on achieving full-year profitability (Net Income ¥20B forecast). Cash and deposits ¥218.2B support short-term dividend payments, but absent improvements in free cash flow and earnings recovery, medium-to-long-term dividend continuity may be constrained. No share buyback was disclosed; shareholder returns are limited to dividends.
Industry positioning (reference — company analysis) Compared with manufacturing peers (n=105 companies, Q3 2025), the Company's Operating margin 0.0% is far below the industry median 8.9% (IQR 5.4%–12.7%), showing inferior profitability. Net margin -0.8% is markedly below industry median 6.5% (IQR 3.3%–9.4%), with interest burden and International Business losses compressing margins. ROE -2.0% underperforms industry median 5.8% (IQR 3.1%–8.4%), highlighting poor capital efficiency. Equity Ratio 31.2% is roughly half the industry median 63.8% (IQR 49.1%–74.8%), indicating high leverage dependence. Financial leverage 3.09x is about twice the industry median 1.53x (IQR 1.31–1.86), reflecting a highly leveraged capital structure. Inventory turnover days 106 days slightly under industry median 112 days (IQR 50–163 days), an average level, but Revenue growth -1.6% lags industry median +2.8% (IQR -1.5%–+8.8%). Total asset turnover 0.85x exceeds industry median 0.56x (IQR 0.41–0.65), so asset efficiency is relatively good, but combined with low profitability, this yields poor returns on capital. Overall, the Company ranks lower on profitability, capital efficiency, and financial health within the industry; high leverage, International Business losses, and heavy interest burden are structural issues.
First, the feasibility of realizing substantial profit improvement in Q4 to meet full-year guidance is a key focus. Operating profit progress of 9.5% requires Q4 standalone Operating Income ¥9.1B, making simultaneous improvement in gross margin, inventory compression, and International Business performance essential. Second, measures to address the structural losses in International Business (Operating loss ¥21.7B, margin -3.8%) and the timing of realized benefits are critical — overseas restructuring, withdrawal, or cost-structure reforms are prerequisites for earnings recovery. Third, a path to deleveraging to reduce high leverage (D/E 2.09x) and interest burden (Interest Coverage 0.07x) is needed. Recovery in Operating Cash Flow and reduction of interest-bearing debt are keys to improving financial health and lowering interest expense. Note that Comprehensive Income ¥58.5B is largely due to valuation differences (Unrealized gains on securities ¥37.7B, Foreign currency translation adjustments ¥34.5B), which diverge from core operating earnings. Continuation of the ¥12.5 dividend depends on full-year profitability, and the decline in retained earnings (¥200.2B, -11.8% YoY) suggests diminishing dividend capacity.
This report was auto-generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by our firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.