| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1776.5B | ¥1632.7B | +8.8% |
| Operating Income / Operating Profit | ¥376.5B | ¥311.2B | +21.0% |
| Ordinary Income | ¥381.3B | ¥316.4B | +20.5% |
| Net Income / Net Profit | ¥225.0B | ¥207.0B | +8.7% |
| ROE | 15.7% | 17.1% | - |
For the fiscal year ended March 2026, Organo achieved revenue of ¥1776.5B (YoY +¥143.9B +8.8%), Operating Income of ¥376.5B (YoY +¥65.3B +21.0%), Ordinary Income of ¥381.3B (YoY +¥64.9B +20.5%), and Net Income attributable to owners of the parent of ¥225.0B (YoY +¥18.0B +8.7%), recording both revenue and profit growth. The Water Treatment Engineering business, driven mainly by the semiconductor industry, led growth. Gross margin improved to 36.6% (prior year 33.8%) up +2.8pt, and operating margin expanded to 21.2% (prior year 19.1%) up +2.1pt. By region, sales to Taiwan rose sharply to ¥442.2B (prior year ¥278.5B +58.8%), and sales to TSMC reached ¥448.2B, approximately 25% of total revenue. Sales to the U.S. increased to ¥97.1B (prior year ¥23.2B). Operating Cash Flow (OCF) decreased to ¥131.0B (YoY -37.9%), primarily due to deterioration in working capital from a decrease in accounts payable, but Free Cash Flow (FCF) remained at ¥103.6B. Annual dividend was ¥200 (payout ratio 30.5%). For FY2027 (year ending March 2027), management forecasts revenue ¥2,000B (+12.6%) and Operating Income ¥400B (+6.2%), expecting continued revenue and profit growth.
Revenue: Revenue was ¥1776.5B (YoY +8.8%). By segment, the Water Treatment Engineering business accounted for ¥1519.6B (+10.0%), 85.5% of total, led by large projects for ultrapure water and wastewater treatment equipment for the semiconductor industry. Taiwan sales expanded sharply to ¥442.2B (+58.8%), and TSMC-related sales reached ¥448.2B (25.2% of total revenue). U.S. sales also grew to ¥97.1B (prior year ¥23.2B), more than fourfold. The Functional Products business recorded ¥260.9B (+2.3%), a modest increase. Regional revenue composition was Japan 62.5%, Taiwan 24.9%, U.S. 5.5%, China 3.5%, Southeast Asia 3.2%, with Taiwan’s weight rising significantly from 17.1% a year earlier. Domestic sales were steady at ¥1111.3B (+10.9%), supported by increased capital expenditures in the semiconductor and electronic materials industries.
Profitability: Cost of sales was ¥1125.7B (prior year ¥1080.9B +4.1%), restrained below revenue growth, expanding Gross Profit to ¥650.8B (+17.9%). Gross margin improved to 36.6% (prior year 33.8%, +2.8pt) aided by a higher mix of high-value-added projects and stabilizing raw material prices. SG&A increased to ¥274.4B (+14.0%) reflecting upfront investments for staffing increases and service capability strengthening. SG&A ratio rose slightly to 15.4% (prior year 14.7%, +0.7pt) but gross margin improvement absorbed this, resulting in Operating Income of ¥376.5B (+21.0%) and Operating Margin of 21.2% (prior year 19.1%, +2.1pt). Non-operating income included Interest Income ¥2.6B, Foreign Exchange Gains ¥2.7B, Equity-method investment income ¥1.6B, totaling ¥8.1B, while non-operating expenses were limited to ¥3.3B including Interest Expense ¥3.0B. Ordinary Income expanded to ¥381.3B (+20.5%), maintaining a high Ordinary Income margin of 21.5%. Extraordinary gains included ¥1.5B gain on sale of investment securities within total extraordinary gains of ¥1.9B, less extraordinary losses ¥0.1B, resulting in Profit Before Tax of ¥383.1B. After Provision for Income Taxes of ¥99.1B (effective tax rate 25.9%) and Non-controlling Interests ¥0.4B, Net Income attributable to owners of the parent was ¥225.0B (+8.7%), Net Margin 12.7%. In summary, revenue and profit growth were achieved primarily through gross margin improvement from high-value-added projects.
The Water Treatment Engineering business posted Revenue ¥1519.6B (YoY +10.0%), Operating Income ¥343.4B (+25.4%), and Operating Margin 22.6% (prior year 19.8%, +2.8pt), with substantial improvement in profitability. Large projects for ultrapure water production equipment and wastewater treatment systems for semiconductors and electronic components contributed, particularly progress at Taiwan and domestic semiconductor plants which boosted profits. Both Plant and Solutions businesses operated synergistically, and the higher mix of high-margin projects was the main driver of margin improvement. The Functional Products business had Revenue ¥260.9B (+2.3%) but Operating Income decreased to ¥33.1B (-11.5%), with Operating Margin down to 12.7% (prior year 14.7%, -2.0pt). It was impacted by intensified price competition for water treatment chemicals and standard equipment and rising raw material costs. The Water Treatment Engineering business accounted for 91.2% of consolidated Operating Income, indicating high dependency on this segment.
Profitability: Operating Margin 21.2% (prior year 19.1%, +2.1pt), Ordinary Income Margin 21.5% (prior year 19.4%, +2.1pt), Net Margin 12.7% (prior year 12.7%, flat), indicating improved core profitability. Gross margin improvement to 36.6% (prior year 33.8%, +2.8pt) drove operating margin expansion. ROE remained high at 15.7%; decomposition (Net Margin × Total Asset Turnover × Financial Leverage) indicates high Net Margin as the primary driver. ROA (on Ordinary Income basis) improved to 18.2% (prior year 16.8%).
Cash Quality: OCF/Net Income ratio was 0.58x (OCF ¥131.0B ÷ Net Income ¥225.0B), low and indicating challenges in converting profits to cash. The main cause was deterioration in working capital from a decrease in Accounts Payable (-¥55.0B) and an increase in Accounts Receivable and Contract Assets (-¥6.9B). Accrual ratio was negative at -6.0% (=(OCF ¥131.0B - Net Income ¥225.0B) ÷ Total Assets 224,867百万円 ×100), indicating cash generation lagging earnings.
Investment Efficiency: Total Asset Turnover was 0.79x (Revenue ¥1776.5B ÷ Total Assets 224,867百万円 ×1/2) with Contract Assets for large projects (¥332.0B) and Inventories (¥85.5B) expanding assets. Capital Expenditure was ¥20.7B (Depreciation ¥19.8B), at maintenance/replacement level, delivering high returns from limited investment.
Financial Soundness: Equity Ratio was 63.6% (prior year 62.2%, +1.4pt), maintaining a solid capital base. Current Ratio 270.7% and Quick Ratio 258.6% indicate ample liquidity. Interest-bearing debt was ¥344.0B (Short-term borrowings ¥284.0B, Long-term borrowings ¥60.0B), but Debt/EBITDA was low at 0.87x (Interest-bearing debt ¥344B ÷ EBITDA approx. ¥396B), and Interest Coverage was extremely high at 126x (Operating Income ¥376.5B ÷ Interest Expense ¥3.0B). Cash and deposits of ¥310.6B cover short-term borrowings 1.09x, indicating plentiful liquidity.
Operating Cash Flow was ¥131.0B (prior year ¥211.0B, -37.9%). Profit before tax ¥383.1B plus Depreciation ¥19.8B produced subtotal OCF ¥222.5B, but deterioration in working capital significantly drained cash. Inventory decrease generated cash inflow ¥40.2B, while increases in Accounts Receivable and Contract Assets resulted in -¥6.9B and decrease in Accounts Payable generated -¥55.0B, worsening working capital by about -¥21.7B. Corporate tax payments of ¥91.5B further compressed OCF. Investing Cash Flow was -¥27.4B, mainly Capital Expenditure -¥20.7B and acquisition of Intangible Assets -¥8.0B. The increase in tangible and intangible assets totalled ¥35.2B (per notes), which differs from investing CF due to inclusion of long-term prepaid expenses. Free Cash Flow was ¥103.6B (OCF ¥131.0B + Investing CF -¥27.4B), exceeding dividend payments of ¥84.7B. Financing Cash Flow saw inflow of ¥31.2B, driven by net increase in short-term borrowings ¥81.2B and proceeds from long-term borrowings ¥69.0B, offset by long-term borrowings repayment -¥32.0B and dividends -¥84.7B. Share repurchases were -¥0.1B, negligible. Cash and cash equivalents rose to ¥310.6B at year-end (opening ¥167.5B, net increase ¥143.0B), indicating healthy liquidity. The OCF decline is due to temporary working capital fluctuations; on an FCF basis, the company maintains capacity to cover dividends and capex.
Of Ordinary Income ¥381.3B, non-operating income was ¥8.1B (2.1% of Ordinary Income), so most profit was generated from core operations. Non-operating income comprised mainly recurring items: Interest Income ¥2.6B, Foreign Exchange Gains ¥2.7B, Equity-method investment income ¥1.6B, Dividend Income ¥0.2B, with limited one-off factors. Extraordinary items were small at net ¥1.8B (Extraordinary Gains ¥1.9B - Extraordinary Losses ¥0.1B), mainly gain on sale of investment securities ¥1.5B. The impact of extraordinary items on Profit Before Tax ¥383.1B was under 0.5%, indicating high quality of earnings. However, OCF ¥131.0B is substantially below Net Income ¥225.0B, with OCF/Net Income 0.58x and significant accruals. Main causes were decrease in Accounts Payable -¥55.0B and increase in Accounts Receivable and Contract Assets -¥6.9B, linked to project progress timing and payment terms. Comprehensive Income was ¥303.8B (Net Income ¥225.0B + Other Comprehensive Income ¥19.8B); Other Comprehensive Income comprised Foreign Currency Translation Adjustment ¥12.3B, Remeasurements of Defined Benefit Plans ¥6.8B, and Net Unrealized Gains on Available-for-sale Securities ¥0.6B. Foreign Currency Translation Adjustment reflects translation effects of overseas subsidiaries (not realized gains/losses), and pension remeasurement adjustments are actuarial. The difference between Comprehensive Income and Net Income is about 7.8%, limited, indicating that high-quality recurring earnings are central.
For FY2027 (year ending March 2027), company guidance is Revenue ¥2,000B (YoY +12.6%), Operating Income ¥400B (+6.2%), Ordinary Income ¥400B (+4.9%), Net Income attributable to owners of the parent ¥300B (+33.3%), EPS ¥130.48, and dividend ¥110. Operating Margin is expected to decline slightly to 20.0% (prior year 21.2%, -1.2pt) reflecting normalization after a cycle of large projects and a conservative assumption on project mix. Progress at the nine-month point is high with revenue 88.8%, Operating Income 94.1%, and Ordinary Income 95.3% of full-year targets, suggesting the full-year outlook is achievable. Revenue is expected to continue to be driven by semiconductor and electronics industries, and profitability recovery in the Functional Products business is anticipated. The dividend guidance of ¥110 (year-end, post-split basis) corresponds to ¥220 on a pre-split basis, representing a +10% increase from the prior year’s ¥200. The company intends to maintain payout ratio in the low-30% range.
Annual dividend was ¥200 (interim ¥95, year-end ¥105), with payout ratio 30.5% (Total dividends ¥84.7B ÷ Net Income attributable to owners of the parent ¥225.0B), maintaining a conservative level. With Total Dividends ¥84.7B and FCF ¥103.6B, FCF coverage of dividends is 1.22x, indicating dividends are fully covered by internal cash. Share buybacks were ¥0.1B, negligible; Total Shareholder Returns amounted to ¥84.8B and Total Return Ratio was 37.7% (Total Returns ÷ Net Income attributable to owners of the parent). The company plans a 5-for-1 stock split effective October 1, 2026; the year-end dividend forecast for FY2027 is ¥110 on a post-split basis (¥220 pre-split, +10% YoY). Annual dividend on a pre-split basis would be ¥220, a ¥20 increase YoY. The target payout ratio remains in the low-30% range, balancing stable dividends and performance linkage. With cash and deposits ¥310.6B and FCF ¥103.6B, liquidity is ample and dividend sustainability is not a concern.
Customer/Regional Concentration Risk: Sales to TSMC were ¥448.2B (25.2% of total) and sales to Taiwan were ¥442.2B (24.9%), indicating high concentration to specific customers and regions. Changes in the semiconductor industry investment cycle or geopolitical risks (Taiwan situation) could affect order timing and project scale. Taiwan sales surged +58.8% from ¥278.5B the prior year; continued concentration increases revenue volatility risk. Backlog (Contract Assets ¥332.0B, Contract Liabilities ¥35.2B) is high, but changes in customer investment plans could lead to project delays or downsizing.
Working Capital Management Risk: With OCF ¥131.0B vs Net Income ¥225.0B, OCF/Net Income ratio is 0.58x, low. The main causes are decrease in Accounts Payable -¥55.0B and increase in Accounts Receivable and Contract Assets -¥6.9B, as large project progress lengthens the cash conversion cycle and pressures cash flows. Days Sales Outstanding (DSO) is about 98 days (Accounts Receivable ¥477.9B ÷ Revenue ¥1776.5B ×365), showing a lengthening trend. Unless collection terms are tightened or Contract Liabilities (advance receipts) increase, working capital may continue to tie up cash. As project sizes expand, funding needs increase, making working capital management a key operational challenge.
Short-Term Debt Concentration Risk: Short-term borrowings rose significantly to ¥284.0B (prior year ¥188.8B, +50.5%), accounting for 82.6% of Interest-bearing debt ¥344.0B. Although Current Ratio 270.7% and Cash/Short-term Borrowings ratio 1.09x indicate sufficient liquidity, maturity concentration of short-term borrowings could create refinancing risk at fiscal or quarterly year-ends. Long-term borrowings increased to ¥60.0B (+63.0%) but maturity dispersion remains limited. Large project responses have raised short-term funding demands, and rising interest rates would increase financing costs. While Debt/EBITDA 0.87x and Interest Coverage 126x are safe, the short-term debt bias increases the burden of cash management.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 21.2% | 7.8% (4.6%–12.3%) | +13.4pt |
| Net Margin | 12.7% | 5.2% (2.3%–8.2%) | +7.5pt |
Profitability is extremely high within manufacturing; Operating Margin exceeds median by +13.4pt and Net Margin by +7.5pt, underscoring the advantage of high-value-added engineering business.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.8% | 3.7% (-0.4%–9.3%) | +5.1pt |
Revenue growth exceeds industry median by +5.1pt, driven by expansion of large orders for the semiconductor sector.
※ Source: Company aggregation
Gross margin +2.8pt and improvement to Operating Margin 21.2% result from higher mix of high-value-added projects and stabilizing raw material prices, indicating structural profitability improvement. The Water Treatment Engineering business Operating Margin 22.6% (prior year 19.8%, +2.8pt) is a source of competitive advantage, and high margins are sustainable while semiconductor capital expenditures continue. However, SG&A growth +14.0% exceeded revenue growth +8.8%, and upfront investments for staffing and maintenance capability may become fixed costs. In a semiconductor investment slowdown, operating leverage could reverse and pressure margins.
TSMC-related sales ratio 25.2% and Taiwan ratio 24.9% indicate rising customer/region concentration. Taiwan sales surged from ¥278.5B to ¥442.2B (+58.8%); high sensitivity to geopolitical risk and customer investment plan changes remains. Backlog is substantial with Contract Assets ¥332.0B and Contract Liabilities ¥35.2B, but timing shifts or postponements could materially affect results. U.S. sales also rose to ¥97.1B (prior year ¥23.2B, +318%), improving regional diversification but Taiwan dependence requires ongoing monitoring.
OCF ¥131.0B (OCF/Net Income 0.58x) indicates weaker cash generation, mainly due to Accounts Payable -¥55.0B and Accounts Receivable/Contract Assets increase -¥6.9B. Large project progress lengthened the cash cycle and constrained working capital; FCF ¥103.6B covers dividends ¥84.7B but OCF-based cash conversion remains a challenge. Short-term borrowings ¥284.0B (+50.5%) increased, heightening the importance of securing funding flexibility. Contract Liabilities (advance receipts) are limited at ¥35.2B; increasing advance receipts through tighter customer terms is key to improving working capital. Management expects Operating Margin to decline to 20.0% (-1.2pt) in FY2027 but plans to secure profit growth via Revenue +12.6%. Normalization of project mix and improvement in working capital management are key items to watch next fiscal year.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility and, if necessary, in consultation with a professional advisor.