| Metrics | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥156.3B | ¥149.8B | +4.3% |
| Operating Income | ¥8.3B | ¥8.6B | -3.9% |
| Ordinary Income | ¥7.8B | ¥8.1B | -3.5% |
| Net Income | ¥5.0B | ¥5.3B | -5.5% |
| ROE | 5.1% | 5.6% | - |
In FY2026 Q3, Toyo Shutter Co., Ltd. recorded revenue of ¥156.3B (YoY +¥6.5B +4.3%), delivering top-line growth, while operating income was ¥8.3B (YoY -¥0.3B -3.9%), ordinary income was ¥7.8B (YoY -¥0.3B -3.5%), and net income was ¥5.0B (YoY -¥0.3B -5.5%), all declining. Despite higher revenue, operating leverage did not materialize and increased SG&A expenses compressed profitability. The gross margin remained solid at 26.5%, but the operating margin fell to 5.3% (from 5.7% a year earlier), and a high effective tax rate of about 35.6% also weighed on net income.
[Profitability] Operating margin 5.3% (down 0.4pt from 5.7% a year earlier), ordinary income margin 5.0% (down 0.4pt from 5.4%), and net margin 3.2% (down 0.3pt from 3.5%)—margins declined at each profit stage. ROE is 5.1% (modest improvement YoY) but below the industry median. Return on assets is 2.6%, below the industry median of 3.3%. The gross margin of 26.5% is stable, but SG&A burden is heavy and operating leverage is weak. Interest coverage is 10.59x, indicating ample capacity to service interest. [Cash Quality] Cash and deposits of ¥40.4B; cash coverage of short-term liabilities at 4.04x indicates sound liquidity. Working capital is ¥59.9B, including accounts receivable of ¥38.98B and total inventories of ¥25.75B (raw materials ¥12.68B, work in process ¥13.07B). [Investment Efficiency] Total asset turnover is 0.822x. Investment securities decreased by -38.5% from ¥1.69B to ¥1.04B YoY, suggesting a reassessment or disposal of holdings. [Financial Soundness] Equity ratio 51.4% (improved from 50.7% a year earlier, but below the industry median of 63.9%), current ratio 197.3% (below the industry median of 267% but adequate in absolute terms), liabilities-to-equity ratio 0.94x, and Debt/Capital ratio 24.0%, reflecting a conservative capital structure. Interest-bearing debt is ¥30.96B versus shareholders’ equity of ¥97.79B, resulting in a D/E ratio of about 0.32x, a low level.
Cash and deposits increased from ¥37.30B to ¥40.35B, up +¥3.05B, presumably supported by cash generation from operating activities. Although net income decreased against revenue growth (+4.3%), the rise in cash balances suggests improved working capital efficiency or restrained investment. Investment securities decreased by -¥0.65B from ¥1.69B to ¥1.04B YoY, indicating potential monetization via sales. Accounts payable were ¥15.53B (¥15.33B a year earlier) and electronically recorded monetary liabilities were ¥16.87B (¥16.76B a year earlier), both largely flat, indicating stable payables management. Cash coverage of short-term borrowings of ¥10.00B is 4.04x, implying ample capacity to repay short-term debt. In working capital, the company holds operating receivables totaling ¥49.94B (accounts receivable ¥38.98B, electronically recorded monetary claims ¥10.96B) and inventories of ¥25.75B, indicating some capital tie-up; however, liquidity risk appears limited. Against the full-year dividend forecast of 40 yen (on a quarterly basis, year-end 38 yen, interim 0 yen), cash on hand is sufficient to cover payments.
Ordinary income of ¥7.8B versus operating income of ¥8.3B indicates a non-operating net loss of about ¥0.5B. While details of non-operating income of ¥0.6B and non-operating expenses of ¥1.1B are not disclosed, with interest coverage at 10.59x, financing costs appear limited. Non-operating income is roughly 0.4% of revenue, indicating a high reliance on core operating profit. The decline in operating margin is primarily due to higher SG&A (SG&A ¥33.16B, SG&A ratio 21.2%), which failed to be absorbed by revenue growth—this is the essential driver of profitability deterioration. The increase in cash and deposits suggests cash generation from operating activities; however, given the decline in net income, the impact of accruals warrants closer examination. The elevated effective tax rate of about 35.6% pressured net income for the period, and a tax burden coefficient of 0.642 affects earnings quality.
SG&A control risk: SG&A of ¥33.16B accounts for 21.2% of revenue; if the increase outpaces revenue growth of +4.3%, operating margin could decline further. Quantitatively, if SG&A rises by +5% or more YoY, operating income would be pressured. Construction industry demand volatility risk: The shutter and building materials market is linked to the construction investment cycle; in downturns, order declines and capacity underutilization increase the fixed-cost burden. Trends in public investment and private capex directly impact performance. Investment securities valuation risk: Investment securities fell sharply by -38.5% from ¥1.69B to ¥1.04B, suggesting potential valuation losses or disposal losses on equity holdings, etc. Future realization of latent gains/losses or additional write-downs could drive volatility in non-operating gains/losses.
[Position within Industry] (Reference Information; In-house Research) Profitability: Operating margin of 5.3% is 1.0pt below the industry median of 7.3% (IQR 4.6%–12.0%), placing the company in the lower tier within the industry. Net margin of 3.2% is also 2.2pt below the industry median of 5.4% (IQR 3.5%–8.9%). ROE of 5.1% slightly exceeds the industry median of 4.9%, but falls short of the IQR upper bound of 8.2%, positioning it mid-range. Revenue growth of +4.3% exceeds the industry median of +2.8% (IQR -0.9%–+7.9%), indicating a relatively favorable position in top-line growth. Soundness: Equity ratio of 51.4% is 12.5pt below the industry median of 63.9% (IQR 51.5%–72.3%), placing the company in the lower-to-mid tier within the industry. The current ratio of 197.3% is below the industry median of 267%, but provides sufficient liquidity in absolute terms. Efficiency: Return on assets of 2.6% is below the industry median of 3.3% (IQR 1.8%–5.1%), indicating room for improvement in asset efficiency. *Industry: Manufacturing (manufacturing) (N=65 companies), Comparison: FY2025 Q3, Source: In-house aggregation
Continuity of revenue growth with earnings decline: Revenue grew +4.3% YoY, but operating income continued to decline at -3.9%. While the gross margin of 26.5% is stable, rising SG&A ratio has muted operating leverage. To achieve the full-year plan (operating income ¥13.2B), Q4 will require SG&A restraint or an upside in revenue; monitoring quarterly progress is important. Significant decrease in investment securities: Down -38.5% from ¥1.69B to ¥1.04B, suggesting disposal or impairment of holdings. This change could affect non-operating gains/losses; upcoming disclosures should be checked for details of gains/losses on sales and policies regarding strategic shareholdings. Sustainability of dividend policy: With a payout ratio of 48.4% (based on full-year forecast) and cash and deposits of ¥40.4B, the current dividend level (full-year 40 yen) appears supportable; however, absent disclosure of operating cash flow, medium- to long-term dividend sustainability hinges on capex trends and cash generation capacity.
This report is an automatically generated earnings analysis produced by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information aggregated by our firm based on publicly available financial statements. Investment decisions are your sole responsibility; consult a qualified professional as necessary before making any investment.