| Metric | This Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥399.1B | ¥384.8B | +3.7% |
| Operating Income | ¥18.0B | ¥35.7B | -49.7% |
| Ordinary Income | ¥22.7B | ¥39.4B | -42.4% |
| Net Income | ¥12.1B | ¥26.9B | -55.0% |
| ROE | 1.7% | 4.0% | - |
2026 FY Q2 results: Revenue ¥399.1B (YoY +¥14.3B +3.7%), Operating Income ¥18.0B (YoY -¥17.7B -49.7%), Ordinary Income ¥22.7B (YoY -¥16.7B -42.4%), Net Income ¥12.1B (YoY -¥14.8B -55.0%). Results show revenue growth with a significant profit decline. Revenue was driven by the Powder-Related Business (+7.2%), delivering the third consecutive period of revenue growth, but gross margin fell to 33.2% (from 35.0% last year, -1.8pt) and SG&A ratio rose to 28.7% (from 25.7% last year, +3.0pt), driving Operating Margin down to 4.5% (from 9.3% last year, -4.8pt). The recognition of special losses ¥4.1B (including business structure reform costs ¥3.8B) and an effective tax rate of 34.5% compressed Net Margin to 3.0% (from 7.0% last year, -4.0pt). Operating Cash Flow (OCF) turned negative to -¥16.8B (from +¥42.3B last year), with working capital deterioration—Accounts Receivable increase -¥7.3B, Inventories increase -¥4.8B, Accounts Payable decrease -¥11.2B—absorbing cash. Free Cash Flow was -¥34.1B, leaving dividend payments ¥8.8B unaffordable from internal funds. Meanwhile, Comprehensive Income expanded to ¥43.7B (from ¥37.0B last year, +18.0%), with Currency Translation Adjustments +¥28.6B boosting net assets.
[Revenue] Revenue ¥399.1B (+3.7%) was led by solid performance in the Powder-Related Business (+7.2%), offset in part by a -6.2% decline in the Plastic Thin-Film Related Business, resulting in modest overall growth. Segment revenue composition: Powder-Related ¥305.8B (76.6% of total), Plastic Thin-Film Related ¥93.7B (23.5%). Powder-Related benefited from stronger overseas demand and FX effects, while Plastic Thin-Film saw weaker demand. Contract liabilities stood at ¥100.7B (equivalent to 25.2% of revenue), indicating a certain backlog and a revenue base for H2. Gross profit was ¥132.4B (gross margin 33.2%), down ¥2.0B from prior year. Gross margin deterioration of -1.8pt suggests a rise in low-margin projects and delayed cost pass-through.
[Profitability] Operating Income ¥18.0B (-49.7%) was pressured by a decline in gross profit and a large increase in SG&A (¥114.5B, +15.9%). SG&A ratio rose to 28.7% (+3.0pt), reversing operating leverage. By segment, Powder-Related Operating Income was ¥25.0B (-15.1%, margin 8.2%), down year-over-year, while Plastic Thin-Film Related was ¥0.8B (-94.3%, margin 0.8%), plunging; corporate expenses increased to ¥7.8B (from ¥7.0B), also weighing on results. Ordinary Income ¥22.7B (-42.4%) was partially supported by non-operating income ¥5.2B (interest income ¥2.8B, dividend income ¥0.8B, equity-method investment income ¥0.8B, etc.), mitigating operating income decline. Pre-tax income ¥18.5B (-50.4%) was depressed by special losses ¥4.1B (business structure reform costs ¥3.8B, loss on disposal of fixed assets ¥0.1B). After corporate taxes ¥6.4B (effective tax rate 34.5%), Net Income was ¥12.1B (-55.0%). The ¥10.6B gap between Ordinary Income and Net Income was primarily due to one-off special losses. Conclusion: revenue up but profits sharply down.
Powder-Related Business: Revenue ¥305.8B (+7.2%), Operating Income ¥25.0B (-15.1%, margin 8.2%). Revenue solid but margin deterioration highlights worsening profitability. Overseas demand growth and FX effects supported revenue, while rising costs and higher low-margin project mix pressured profits. Plastic Thin-Film Related Business: Revenue ¥93.7B (-6.2%), Operating Income ¥0.8B (-94.3%, margin 0.8%). Both revenue and profitability plunged below 1% margin, affected by demand decline and fixed cost burden. Corporate expenses ¥7.8B (¥7.0B prior year, +11.4%) increased, and general & administrative costs not allocated to reporting segments depressed consolidated profit.
[Profitability] Operating Margin 4.5% (from 9.3% last year, -4.8pt), Ordinary Income Margin 5.7% (from 10.2% last year, -4.5pt), Net Margin 3.0% (from 7.0% last year, -4.0pt) — all materially down. Gross margin 33.2% (-1.8pt) and SG&A ratio 28.7% (+3.0pt) both compressed margins, reversing operating leverage. ROE 1.7% (from 4.0% last year, -2.3pt); DuPont decomposition indicates Net Margin decline as main driver. [Cash Quality] OCF/Net Income at -1.39x is deeply negative, with working capital deterioration (Accounts Receivable +¥17.0B, Inventories +¥9.3B, Accounts Payable -¥11.7B) pulling OCF to -¥16.8B. Against EBITDA ¥31.1B, OCF/EBITDA is -0.54x, showing weak cash conversion. Accrual ratio (Net Income - OCF)/Total Assets = +2.7% is high, raising concerns on earnings quality. [Investment Efficiency] CapEx ¥14.8B exceeded Depreciation ¥13.2B (CapEx/Depreciation = 1.13x), indicating ongoing growth investment. Total Asset Turnover 0.380x (from 0.375x) shows marginal improvement in asset efficiency. [Financial Soundness] Equity Ratio 67.3% (from 65.4% last year, +1.9pt), Current Ratio 244.8%, Debt/EBITDA 0.31x — leverage is very low and solvency is strong. Cash and Deposits held ¥291.4B, indicating ample short-term liquidity.
OCF was -¥16.8B (from +¥42.3B last year), turning negative. Operating CF subtotal -¥6.9B reflected operating loss and corporate tax payments ¥14.1B, compounded by working capital deterioration. Accounts receivable increase -¥7.3B (DSO equivalent 186 days), inventories increase -¥4.8B (DIO 196 days), accounts payable decrease -¥11.2B (DPO 87 days), and contract liabilities decrease -¥3.0B together drove cash outflows and extended CCC to 283 days. Delays in delivery/acceptance in project-type business and production bottlenecks appear to be underlying causes. Investing CF was -¥17.3B, with CapEx -¥14.8B exceeding depreciation ¥13.2B, sustaining growth investment. Acquisition of short-term investment securities -¥10.0B net of disposals ¥6.6B pressured other investing activities. Financing CF was -¥9.6B, driven by dividend payments -¥8.8B and repayment of long-term borrowings -¥1.4B. Free Cash Flow was -¥34.1B and could not cover dividends, leading to cash and deposits declining by -¥28.1B to ¥291.4B. FX movements +¥14.3B partially offset the cash decline.
Most of Ordinary Income ¥22.7B comprised Operating Income ¥18.0B and non-operating income ¥5.2B; non-operating income is 1.3% of revenue, under 5%, indicating a healthy composition. Key items: interest income ¥2.8B, dividend income ¥0.8B, equity-method investment income ¥0.8B, with FX gains ¥0.2B also contributing. Conversely, special losses ¥4.1B (including business structure reform costs ¥3.8B) were one-off and are the main cause of the ¥10.6B (46.6%) gap between Ordinary Income and Net Income. Accrual quality is weak: OCF -¥16.8B is far below Net Income ¥12.1B, producing a high accrual ratio +2.7%. Working capital increases did not generate cash to back profits, leaving concerns over earnings quality. Comprehensive Income ¥43.7B far exceeded Net Income, with Other Comprehensive Income +¥31.6B (Currency Translation Adjustments +¥28.6B, Valuation difference on available-for-sale securities +¥3.4B) boosting net assets, but these are non-cash valuation gains and should be evaluated separately from underlying cash-generating earnings power.
Full Year forecast: Revenue ¥785.0B (+0.6%), Operating Income ¥70.0B (-0.7%), Ordinary Income ¥74.0B (-4.1%), Net Income ¥52.0B. As of Q2, progress rates are Revenue 50.9%, Operating Income 25.7%, Ordinary Income 30.6%, Net Income 23.3% — revenue on a standard trajectory, but profit metrics materially behind. Operating Income is behind by -24.3pt and Net Income by -26.7pt, assuming recognition of high-margin projects in H2, SG&A cuts, and elimination of restructuring costs. Contract liabilities ¥100.7B (25.2% of revenue) indicate backlog, but working capital compression and project margin improvements are key to achieving the full-year targets. Dividend forecast is ¥75 per share (including ¥10 commemorative dividend for the 110th anniversary), with ¥60 already paid through Q2 (progress rate 80.0%). Dividends are not H2-weighted, but given profit shortfall, H2 profit recovery is a prerequisite to maintaining dividends.
Interim dividend was ¥60 (paid), giving a payout ratio on Net Income basis of 82.3% (total dividend payments ¥8.8B / Net Income ¥12.1B), a high level. Full-year dividend forecast ¥75 (including ¥10 commemorative dividend) implies a payout ratio of 31.1% against full-year Net Income forecast ¥52.0B, which is standard. However, with OCF at -¥16.8B and Free Cash Flow at -¥34.1B, dividend payments ¥8.8B could not be covered by internal funds, yielding FCF coverage -3.88x and raising sustainability concerns. Equity ¥70.77B? [Note: Original Japanese reported "自己資本707.7億円" — retained as per numerical rule: Equity ¥707.7B], Cash and Deposits ¥291.4B indicate substantial financial capacity and no short-term liquidity issues, but sustaining dividend policy requires H2 profit recovery and OCF conversion via working capital improvements. No share buybacks were confirmed; shareholder returns comprise dividends only.
Working Capital Risk: Accounts Receivable ¥203.2B (+9.1%), Inventories ¥147.5B (+6.7%) rose, while Accounts Payable ¥72.1B (-13.9%) declined, extending CCC to 283 days (DSO 186 days, DIO 196 days, DPO 87 days). OCF -¥16.8B is mainly due to this working capital deterioration, likely tied to project delivery/acceptance delays and production bottlenecks. Working Capital/Revenue ratio is 36.9%, up +6.9pt year-on-year, highlighting reduced cash conversion power. Compressing working capital is the top priority to improve liquidity and earnings quality.
Segment Profitability Risk: Plastic Thin-Film Related Operating Income plunged to ¥0.8B (-94.3%, margin 0.8%), and Powder-Related Operating Margin fell to 8.2% (from 10.3%, -2.1pt). Since Powder-Related accounts for 76.6% of revenue, its margin deterioration directly impacts consolidated profitability. Higher share of low-margin projects and unpassed cost increases remain issues. Rising SG&A ratio 28.7% (+3.0pt) also reverses operating leverage. Urgent need for segment-level margin management and cost correction.
Forecast Achievement Risk: Operating Income progress at 25.7% and Net Income progress at 23.3% versus full-year forecasts are materially behind, requiring substantial H2 profit accumulation. H2 assumptions include concentrated recognition of high-margin projects, SG&A cuts, and elimination of restructuring costs, but progress depends on working capital improvement pace and demand conditions. Contract liabilities ¥100.7B indicate some backlog, but project profitability and delivery timing uncertainty remain. Failure to meet guidance could affect dividend policy.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.5% | 8.8% (3.0%–11.0%) | -4.3pt |
| Net Margin | 3.0% | 5.4% (1.1%–8.2%) | -2.4pt |
Both Operating Margin and Net Margin are below industry medians, indicating relatively low profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.7% | 11.7% (-5.4%–28.3%) | -8.0pt |
Revenue growth is -8.0pt below the median, showing a modest growth pace relative to peers.
※ Source: Internal compilation
Revenue up but profits sharply down with margin compression from both sides: gross margin -1.8pt and SG&A ratio +3.0pt, driving Operating Margin to 4.5% (-4.8pt). By segment, Plastic Thin-Film Related Operating Margin plunged to 0.8% (-94.3%), Powder-Related fell to 8.2% (-2.1pt), highlighting rising low-margin project mix and insufficient cost pass-through. Operating Income progress vs. full year at 25.7% is -24.3pt behind a standard pace; H2 recognition of high-margin projects and SG&A cuts are prerequisites. Contract liabilities ¥100.7B (25.2% of revenue) indicate backlog, but project margin improvement is key.
Working capital deterioration pushed OCF to -¥16.8B, with OCF/Net Income -1.39x and OCF/EBITDA -0.54x, signaling weaker quality. Accounts Receivable +¥17.0B, Inventories +¥9.3B, Accounts Payable -¥11.7B all contributed, extending CCC to 283 days. Free Cash Flow -¥34.1B could not cover dividends ¥8.8B, FCF coverage -3.88x raising short-term sustainability concerns. Leverage is very low (Equity Ratio 67.3%, Cash ¥291.4B), so liquidity is adequate, but H2 working capital compression and cash conversion recovery will determine earnings quality and dividend policy sustainability.
This report is an earnings analysis automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.