| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue | ¥118.4B | ¥109.0B | +8.6% |
| Operating Income | ¥47.2B | ¥45.3B | +4.2% |
| Ordinary Income | ¥46.5B | ¥44.5B | +4.5% |
| Net Income | ¥17.1B | ¥29.2B | -41.3% |
| ROE | 9.5% | 18.9% | - |
For the fiscal year ending March 2026, Revenue was ¥118.4B (YoY +¥9.4B +8.6%), Operating Income was ¥47.2B (YoY +¥1.9B +4.2%), Ordinary Income was ¥46.5B (YoY +¥2.0B +4.5%), and Net Income attributable to owners of the parent was ¥17.1B (YoY -¥12.1B -41.3%). While the company achieved revenue and operating profit growth, Net Income declined sharply due to the reversal of extraordinary gains recorded in the prior year. The core Waste Disposal Business accounted for 81.1% of revenue, and a +12.1% increase in that segment drove overall growth. The Operating Margin remained high at 39.9% (down 1.7pt from 41.6% a year ago), but margin pressure came from higher goodwill amortization related to M&A (¥0.36B, YoY +¥0.096B) and increases in SG&A (¥26.8B, YoY +¥3.9B +16.9%). Capital expenditures of ¥78.4B (9.7x depreciation) and a large M&A (goodwill +¥22.0B) expanded Total Assets sharply to ¥394.1B (YoY +¥109.2B +38.3%), substantially accelerating growth investment during the year.
【Revenue】 Revenue of ¥118.4B (YoY +¥9.4B +8.6%) was driven by the core Waste Disposal Business. By segment, Waste Disposal was ¥99.8B (+12.1%), Collection & Transport was ¥20.4B (+0.9%), and Intermediation & Management was ¥1.8B (+15.9%), raising Waste Disposal’s revenue mix to 81.1% (from 78.4% a year ago). The Waste Disposal increase reflected full-year contributions from subsidiaries acquired during the year, higher utilization of existing facilities, and maintained processing unit prices. Collection & Transport showed only slight growth, while Intermediation & Management, although small, continued high growth. Construction in progress stood at ¥55.6B (14.1% of Total Assets), and the start-up of these projects in subsequent periods will be key to expanding processing capacity and driving revenue growth.
【Profitability】 Operating Income of ¥47.2B (YoY +¥1.9B +4.2%) grew more modestly than revenue, resulting in an Operating Margin of 39.9% (down 1.7pt from 41.6%). Gross Margin remained virtually unchanged at 62.5% (from 62.6%), but SG&A ratio deteriorated to 22.6% (up 1.6pt from 21.0%). The main drivers of higher SG&A were increased goodwill amortization of ¥0.36B (from ¥0.27B) and growth investments including corporate functions and systems. Non-operating interest expense increased to ¥0.15B (from ¥0.11B), partially offset by ¥0.06B gain on sale of fixed assets, supporting Ordinary Income of ¥46.5B (+4.5%). Meanwhile, Net Income of ¥17.1B (-41.3%) declined substantially due to the reversal of prior-year extraordinary gains (¥0.76B release of provision for retirement benefits for directors) and higher corporate taxes and other tax burdens (¥17.6B, effective tax rate 37.9%). Comprehensive Income was ¥28.9B (from ¥28.6B), aided by an unrealized gain improvement on securities of ¥0.3B. In conclusion, while the company achieved revenue and operating income growth, Net Income declined due to increased SG&A from growth investments and the absence of prior-year extraordinary gains.
The Waste Disposal Business recorded Revenue of ¥99.8B (YoY +12.1%), Operating Income of ¥53.2B (+7.5%), and a margin of 53.3% (down 2.3pt from 55.6%). As the core segment, it accounted for the bulk of consolidated operating profit; scale expansion from mid-year M&A and high utilization of existing facilities drove revenue growth. The margin decline was mainly due to increased goodwill amortization burden (¥0.34B, from ¥0.24B). The Collection & Transport Business posted Revenue of ¥20.4B (+0.9%), Operating Income of ¥5.6B (+6.1%), and a margin of 27.5% (up 1.3pt from 26.2%), where efficiency improvements lifted margin despite modest revenue growth. The Intermediation & Management Business delivered Revenue of ¥1.8B (+15.9%), Operating Income of ¥1.1B (+22.4%), and a margin of 60.5% (up 3.2pt from 57.3%), maintaining high growth and high profitability despite its small scale. An increase in corporate expenses of ¥12.3B (from ¥11.3B) adjusted segment total Operating Income of ¥60.0B down to consolidated Operating Income of ¥47.2B.
【Profitability】 Operating Margin was 39.9% (down 1.7pt from 41.6%), and Net Margin was 14.5% (down 12.3pt from 26.8%). Gross Margin was 62.5% (from 62.6%), supported by maintained processing unit prices and efficient mix management. SG&A ratio worsened to 22.6% (up 1.6pt from 21.0%) due to higher goodwill amortization and upfront corporate investments. ROE was 9.5% (down markedly from 20.3% a year ago), mainly due to the disappearance of prior-year extraordinary gains. 【Cash Quality】 Operating Cash Flow was ¥32.6B, exceeding Net Income of ¥17.1B, yielding an OCF/NI ratio of 1.91x and indicating strong cash generation. Cash conversion (OCF/EBITDA) was 58.1%, and the buildup of Construction in Progress of ¥55.6B reduced short-term cash conversion efficiency. The accrual ratio was -47.8%, negative, suggesting healthy earnings quality. 【Investment Efficiency】 Capital expenditures of ¥78.4B were aggressive at 9.7x depreciation of ¥8.1B, representing notable front-loaded investment to expand future processing capacity. Total Asset Turnover declined to 0.30x (from 0.38x), reflecting asset expansion from sizable investments. 【Financial Soundness】 Equity Ratio was 45.7% (down 8.5pt from 54.2%) due to debt-financed investment funding. Current Ratio was 138.4% and Quick Ratio 136.8%, indicating solid short-term liquidity. Interest-bearing debt (short-term borrowings + long-term borrowings + bonds) rose to ¥127.7B (from ¥89.2B, +¥38.5B), with Debt/EBITDA at 2.28x and Interest Coverage at 30.6x, keeping leverage within investment-grade tolerance.
Operating Cash Flow was ¥32.6B (YoY -21.9%), which is the result after deducting corporate taxes and other tax payments of ¥14.6B from subtotal OCF before working capital changes of ¥48.7B. Relative to Net Income of ¥17.1B, the OCF/NI ratio of 1.91x indicates healthy cash generation, supported by non-cash items: depreciation ¥8.1B, goodwill amortization ¥3.6B, and share-based compensation ¥0.5B. Working capital movements included an increase in trade receivables of ¥1.7B (outflow), increase in inventories ¥0.1B (outflow), increase in accounts payable ¥0.3B (inflow), and increase in other current liabilities ¥3.2B (inflow), resulting in a modest net cash inflow overall. Investing Cash Flow was -¥80.4B, driven mainly by capital expenditures of ¥78.4B and acquisition of subsidiary shares ¥2.1B. Proceeds from sale of fixed assets of ¥1.2B partially offset outflows, but Free Cash Flow was significantly negative at -¥47.8B. Financing Cash Flow recorded net inflow of ¥33.3B, with long-term borrowings of ¥36.0B exceeding long-term borrowings repayments of ¥10.6B and dividends of ¥3.9B, funding investment needs. Short-term borrowings increased by a net ¥12.1B to meet working capital requirements. Cash and deposits stood at ¥65.0B (down ¥16.2B from ¥81.2B), temporarily reduced by growth investment funding, but remained 16.5% of Total Assets, indicating sufficient liquidity on hand.
Earnings quality is generally sound. Operating Income of ¥47.2B and Ordinary Income of ¥46.5B are roughly at the same level, indicating limited distortion from non-operating items. Non-operating income of ¥1.1B (interest income ¥0.2B, subsidy income ¥0.1B, etc.) and non-operating expenses of ¥1.8B (interest expense ¥1.5B, etc.) are within the normal scope of business activities. There were no significant extraordinary items in the current period; the decline in Net Income was mainly due to the absence of the prior-year one-off gain of ¥0.76B (reversal of provision for retirement benefits for directors). Comprehensive Income of ¥28.9B exceeded Net Income of ¥17.1B, aided by an unrealized gain improvement on securities of ¥0.3B. The fact that Operating Cash Flow of ¥32.6B exceeds Net Income (OCF/NI = 1.91x) reflects additions for non-cash expenses (depreciation ¥8.1B, goodwill amortization ¥3.6B) and working capital improvements, indicating strong cash backing for earnings. The accrual ratio of -47.8% is negative, suggesting conservative recognition of accruals. However, the accumulation of Construction in Progress of ¥55.6B delays the commencement of depreciation until start-up, contributing to the divergence between EBITDA and OCF (OCF/EBITDA = 58.1%). Overall, recurring earnings dominate with limited one-off items, cash generation is solid, and earnings quality is high.
Full-year guidance projects Revenue of ¥134.9B (YoY +13.9%), Operating Income of ¥54.9B (+16.2%), Ordinary Income of ¥52.7B (+13.3%), Net Income attributable to owners of the parent of ¥33.4B (+95.3%), and EPS of ¥120.70. Compared with the current period results, Revenue shortfall is 13.9% and Operating Income shortfall is 16.3%, implying a bullish scenario that assumes a significant acceleration in growth in H2. The forecasted large increase in Net Income likely assumes no recurrence of the prior-year extraordinary gains’ effect, full-year contributions from mid-year M&A, and partial start-up of Construction in Progress of ¥55.6B leading to increased processing capacity. The projected Operating Margin is 40.7% (improving 0.8pt from 39.9%), driven by absorption of fixed costs through scale expansion and improved efficiency once new facilities ramp up. However, given the current trend of SG&A growth (+16.9%) versus Operating Income growth (+4.2%), achieving substantial profit improvement in H2 requires on-schedule commissioning of new facilities and early realization of M&A synergies. Dividend guidance is listed as ¥0, but the company paid an ¥18 year-end dividend in the current period, so data consistency should be noted.
This period’s dividend was ¥18 at year-end (Payout Ratio 17.3%, dividend/Net Income basis; Net Income was depressed by the absence of prior-year extraordinary gains), the same amount as the prior year. Total dividends were ¥3.9B versus Operating Cash Flow of ¥32.6B and Free Cash Flow of -¥47.8B, indicating that dividends were effectively financed by external funds on a Free Cash Flow basis. Dividend Payout Ratio of 13.5% (dividends/Net Income attributable to owners of the parent ¥17.1B) is conservative, and Retained Earnings increased to ¥130.1B (from ¥105.0B, +¥25.0B), bolstering internal reserves. Cash and deposits of ¥65.0B represent 16.7x the total dividend amount, so payment capacity is not an issue. During the growth investment phase, the policy is to maintain dividends while prioritizing internal reserves; once Construction in Progress becomes operational and Free Cash Flow recovers, capacity for shareholder returns is expected to expand. No share buybacks were disclosed, and Total Return Ratio equals the Payout Ratio.
Deterioration in cash conversion efficiency: Construction in Progress of ¥55.6B (14.1% of Total Assets) has accumulated and will not be converted to cash until commissioning, leading to OCF/EBITDA of 58.1% and weaker short-term cash conversion efficiency. Delays in start-up or shortfalls versus assumptions could extend payback periods and increase financial leverage risk.
Goodwill and intangible asset impairment risk: Goodwill of ¥31.5B (17.5% of equity, EBITDA multiple 0.56x) and intangible fixed assets of ¥34.5B constitute 16.8% of Total Assets and grew substantially from mid-year M&A. Under JGAAP, goodwill amortization of ¥0.36B per year (6.4% of EBITDA) is a recurring burden, and failure to realize acquisition synergies could trigger impairment risk and profit pressure.
Increased leverage and interest burden: Interest-bearing debt rose to ¥127.7B (from ¥89.2B, +43.2%), and Debt/EBITDA of 2.28x indicates higher leverage. Interest expense increased to ¥0.15B (from ¥0.11B, +34.1%). In a rising interest rate environment, funding costs could increase and the cushion implied by Interest Coverage of 30.6x could shrink.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 39.9% | 8.1% (3.6%–16.0%) | +31.8pt |
| Net Margin | 14.5% | 5.8% (1.2%–11.6%) | +8.6pt |
The high-value-added model of the Waste Disposal Business yields profitability substantially above industry medians.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.6% | 10.1% (1.7%–20.2%) | -1.5pt |
Growth is slightly below the industry median, but the company is in a scale-expansion phase driven by high margins and front-loaded capital investment, leaving room for acceleration from the next fiscal year onward.
※Source: Company aggregation
Commissioning of growth investments is key to medium-term earnings: Capital expenditures of ¥78.4B (9.7x depreciation) and Construction in Progress of ¥55.6B are the sources for future processing capacity expansion and EBITDA uplift. If commissioning timing and ramp-up follow plan, Operating Margin improvement and normalization of OCF/EBITDA can be expected. Delays or lower-than-assumed utilization would delay cash conversion and prolong leverage, so monitoring project progress and start-up KPIs is critical.
Balancing M&A synergies with goodwill amortization burden: Rapid increase of Goodwill to ¥31.5B (YoY +¥22.0B) creates an annual amortization burden of ¥0.36B (6.4% of EBITDA), compressing short-term margins. If acquisition synergies (maintaining Waste Disposal gross margin at 53.3%, improving Collection & Transport margins, etc.) are realized as planned, goodwill amortization can be absorbed and support mid-term profit growth. Quantitative monitoring of synergy progress (segment-level utilization rates, price trends) is a focal point for results.
Dividend sustainability and recovery of shareholder return capacity: With a Payout Ratio of 17.3% and cash and deposits of ¥65.0B (16.7x the total dividend), payment capacity is sufficient, but Free Cash Flow of -¥47.8B means dividends were essentially funded externally. After the investment cycle completes and CIP commissioning restores Free Cash Flow, accumulated retained earnings of ¥130.1B provide scope for dividend increases. In the short term the priority is investment while maintaining dividends; in the mid term, shareholder return enhancement is possible as Free Cash Flow normalizes.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.