| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥845.3B | ¥718.8B | +17.6% |
| Operating Income | ¥124.8B | ¥117.5B | +6.2% |
| Ordinary Income | ¥127.3B | ¥116.3B | +9.5% |
| Net Income | ¥86.6B | ¥81.2B | +6.7% |
| ROE | 2.5% | 2.3% | - |
FY2026 Q1 results: Revenue ¥845.3B (YoY +¥126.5B +17.6%), Operating Income ¥124.8B (YoY +¥7.3B +6.2%), Ordinary Income ¥127.3B (YoY +¥11.0B +9.5%), Quarterly Net Income attributable to owners of the parent ¥86.6B (YoY +¥5.4B +6.7%). Revenue continued a third consecutive period of growth, driven by two pillars: Advanced Materials & Semiconductor segment (+18.8%) and Energy & Environment segment (+18.0%), delivering >17% growth. Operating income benefited from higher revenue, but gross margin fell from 43.8% in the prior year period and SG&A rose to ¥245.7B (YoY +¥25.4B), resulting in an operating margin of 14.8%, down approximately 1.6pt YoY. Despite revenue and profit growth, profit expansion was limited as rising costs and mix shifts compressed margins. Progress against the full-year plan stands at 22.7% for revenue and 18.4% for operating income, lagging on profit metrics and reflecting a strong back-half weighting assumption.
Revenue of ¥845.3B (YoY +¥126.5B +17.6%) achieved double-digit growth. By segment, Advanced Materials & Semiconductor recorded ¥441.6B (share 52.2%, YoY +18.8%), accounting for over half of revenue, driven by expansion in semiconductor manufacturing equipment and advanced materials analysis demand. Energy & Environment was ¥305.0B (36.1%, +18.0%), with both faster growth and higher share, indicating progressing portfolio diversification. Bio & Healthcare grew to ¥98.7B (11.7%, +11.5%) but remained loss-making and did not contribute to profitability. At the consolidated level without segment detail, improvement in external conditions and diversification effects underpinned growth.
Profitability: Cost of sales was ¥474.7B, gross profit ¥370.6B, and gross margin 43.8%, down ~3.2pt YoY, suggesting higher raw material costs and adverse product mix. SG&A was ¥245.7B (29.1% of sales), up ¥25.4B YoY and rising +11.5%, outpacing sales growth (+17.6%) and indicating difficulties in cost control. Consequently, operating margin was 14.8%, down ~1.6pt YoY, showing limited operating leverage. Non-operating items included interest income ¥5.5B exceeding interest expense ¥2.1B, contributing +¥3.4B to profit from financing. Foreign exchange losses of ¥1.2B were limited. Ordinary income ¥127.3B (+9.5%) grew faster than operating income, complemented by financial income. Extraordinary items totaled +¥0.2B (gain on sale of fixed assets ¥0.4B, loss on disposal ¥0.2B). Pre-tax income ¥127.5B and corporate taxes ¥40.9B (effective tax rate 32.1%) resulted in net income ¥86.6B, up +6.7% YoY. In conclusion, while revenue and profit increased, margin compression limited profit growth and SG&A increases weighed on profitability.
Advanced Materials & Semiconductor expanded solidly with revenue ¥441.6B (YoY +18.8%), but Operating Income declined to ¥114.3B (YoY -2.6%). The margin was 25.9%, down YoY, as adverse project mix and upfront investments pressured margins. As the primary segment producing 91.6% of consolidated operating income, a deterioration in this segment’s profitability constrains overall margins. Energy & Environment posted revenue ¥305.0B (+18.0%) and Operating Income ¥17.1B (+127.3%), a substantial increase, with a margin of 5.6% (+2.7pt YoY). The turn from loss to profit and establishment of a revenue base contributes to portfolio diversification. Bio & Healthcare grew revenue to ¥98.7B (+11.5%) but continued to report an operating loss of ¥6.7B. However, the loss narrowed YoY (¥7.3B → ¥6.7B, improvement +9.1%), indicating signs of bottoming. Large dispersion in segment margins means that without a rebound in Advanced Materials & Semiconductor, improving consolidated margins will be difficult.
Profitability: Operating margin 14.8% (down ~1.6pt YoY). Gross margin 43.8% (down ~3.2pt YoY); SG&A ratio 29.1% rose YoY, compressing operating-stage margins. ROE (quarterly annualized contribution) 2.5%, with combined effects of gross margin decline and low asset turnover keeping returns low.
Cash quality: DSO 344 days, DIO 740 days, CCC 919 days — extremely prolonged, indicating issues in working capital efficiency. Inventory valuation loss risk and receivables stagnation are widening the gap between profit and cash. Provision for product warranties ¥35.8B equals 4.2% of sales, high and pressuring profitability.
Investment efficiency: Total asset turnover 0.165x (quarterly annualized) is low, and cash holdings account for 29.5% of total assets, diluting asset utilization. ROIC (NOPAT / Invested Capital) is ~3.7%, indicating low capital efficiency and suggesting extended payback periods on invested capital.
Financial soundness: Equity ratio 67.3%, current ratio 294%, quick ratio 267% — extremely healthy. D/E 0.49x, Debt/Capital 8.7% indicate low leverage and limited financial risk. Interest coverage ~59x (Operating Income / Interest Expense), showing high resilience to interest burden. Short-term borrowings decreased YoY -26.3%, reflecting debt reduction. Cash and deposits ¥1,508.6B far exceed short-term liabilities ¥1,155.0B, eliminating liquidity risk.
No detailed cash flow statement for operating activities was disclosed; funding trends are analyzed from balance sheet movements. Cash and deposits decreased to ¥1,508.6B (YoY -¥116.8B), seemingly used for working capital deployment and debt repayment. Short-term borrowings fell YoY by ¥32.1B (-26.3%), reflecting substantial reduction in interest-bearing debt funded internally. Accounts receivable decreased YoY by ¥26.0B, indicating progress in collections, while inventories were nearly flat (+¥0.3B), so inventory reduction has not been achieved. Tangible fixed assets increased YoY by ¥49.6B; construction in progress decreased ¥85.6B while buildings, etc. increased ¥126.1B, suggesting capital projects are moving into operation. Contract liabilities ¥242.7B (advance-receipts equivalent) increased ¥6.9B YoY, building backlog that underpins future revenue and contributing to pre-funded working capital. Overall, although CCC prolongation constrains near-term cash generation, abundant cash balances and low leverage fully absorb liquidity risk.
Operating Income ¥124.8B is the primary profit source; non-operating income was limited at ¥7.4B (0.9% of sales), so earnings are mainly from core operations. Interest income ¥5.5B exceeded interest expense ¥2.1B, contributing +¥3.4B to net finance income, partially offset by foreign exchange losses ¥1.2B, leaving net non-operating income +¥2.5B. Extraordinary items were minor at +¥0.2B (gain on sale of fixed assets ¥0.4B, loss on disposal ¥0.2B). The main driver from ordinary income to net income is tax burden at an effective rate of 32.1%. Comprehensive income ¥115.7B exceeded net income ¥86.6B; the ¥29.1B difference comprised foreign currency translation adjustments +¥22.1B, valuation difference on available-for-sale securities +¥7.4B, actuarial gains/losses -¥0.3B, and equity-method affiliates’ OCI share -¥0.4B — reflecting FX gains and market valuation gains on securities. These are balance-sheet valuation gains and do not guarantee future realization. Declining gross margin and persistently high product warranty provisions (4.2% of sales) somewhat impair the quality of operating-stage earnings, leaving room for improvement in recurring earnings power. Overall, ordinary income is core and one-off items are limited, but the gross margin decline combined with accrual increases is depressing operating-stage quality.
Full-year plan: Revenue ¥3,730.0B (YoY +12.0%), Operating Income ¥680.0B (YoY +28.2%), Ordinary Income ¥685.0B (YoY +26.3%), Net Income ¥485.0B. Progress at end of Q1: Revenue 22.7%, Operating Income 18.4%, Ordinary Income 18.6%, Net Income 17.8%. Versus a standard evenly distributed quarterly progress of 25%, this represents shortfalls of -2.3pt for revenue, -6.6pt for operating income, -6.4pt for ordinary income, and -7.2pt for net income, highlighting a notable lag in profit progress. The background likely includes margin decline in Advanced Materials & Semiconductor and upfront costs in the first half, embedding a back-half weighting into the full-year plan. Accumulation of contract liabilities ¥242.7B underpins future revenue and suggests potential acceleration of recognition in the second half as backlog converts. The company has revised forecasts during Q1; the latest guidance reflects upward revisions considering market conditions and progress. If inventory normalization and mix improvement in Advanced Materials & Semiconductor materialize in H2, the likelihood of achieving the full-year targets increases, but significant deal concentration will be required to recover the H1 shortfall.
Q1 dividend paid: ¥80 per share (¥80 in the prior-year period as well). Quarterly EPS 206.13 yen yields a payout ratio of 38.8%. Full-year forecast dividend ¥150, which against forecast full-year EPS 1,154.88 yen yields a payout ratio of ~13.0%, sufficiently conservative. Cash and deposits ¥1,508.6B, low leverage (Debt/Capital 8.7%), and an operating margin of 14.8% support dividend sustainability. Retained earnings ¥2,605.9B indicate ample capacity for total shareholder returns. No revision to the dividend forecast; policy stability is maintained. Although short-term profit progress lags, assuming H2 recovery and achievement of full-year net income, dividend continuity is highly probable. No share buybacks were disclosed; shareholder return is composed solely of dividends.
Segment concentration risk: Advanced Materials & Semiconductor accounts for 52.2% of revenue and 91.6% of operating income, creating a structure where market fluctuations in this segment directly affect consolidated performance. This quarter the segment’s operating income fell -2.6% YoY, and margin decline is pressuring consolidated profitability. If semiconductor equipment demand volatility or prolonged adverse project mix persist, downside risk to the full-year plan may materialize.
Deterioration in working capital efficiency: DSO 344 days, DIO 740 days, CCC 919 days — extreme prolongation — with inventory and receivables stagnation impeding capital efficiency. Risk of inventory valuation losses and delayed receivable collections could widen the gap between earnings and cash flow. Inventories ¥31.92B (6.2% of total assets) and accumulation of finished goods/work-in-process/raw materials point to obsolescence risk that could pressure profitability.
Upside in product warranty costs: Provision for product warranties ¥35.8B (4.2% of sales) is high; quality issues or exceeding anticipated aftermarket response costs could depress margins. Concurrent gross margin decline and persistent warranty costs, if structural, could delay medium-term recovery in operating profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.8% | 6.8% (2.9%–9.0%) | +7.9pt |
| Net Margin | 10.2% | 5.9% (3.3%–7.7%) | +4.3pt |
Profitability materially exceeds the industry median, ranking in the upper tier within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 17.6% | 13.2% (2.5%–28.5%) | +4.5pt |
Growth rate exceeds the industry median, maintaining a solid expansion trend within manufacturing.
※ Source: Company compilation
While revenue growth is maintained, gross margin decline (~3.2pt YoY) and increased SG&A have reduced the operating margin to 14.8% (down ~1.6pt YoY), preventing revenue growth from fully translating into profit. Margin decline in Advanced Materials & Semiconductor (Operating Income -2.6%) is constraining consolidated profitability; mix improvement and recovery in project profitability in this segment will be the focus in H2. The substantial profit increase in Energy & Environment (+127.3%) indicates progressing portfolio diversification and contributes to stabilizing the revenue base medium-term.
Q1 progress against the full-year plan shows revenue 22.7% and operating income 18.4%, lagging on profits and reflecting a back-half weighted assumption. Accumulation of contract liabilities ¥242.7B underpins backlog and suggests room for accelerated recognition of revenue in H2. If inventory normalization (shortening DIO 740 days) and working capital efficiency improvements proceed, cash generation recovery and margin improvement are expected. The financial base is extremely strong (Equity Ratio 67.3%, Cash ¥1,508.6B, Debt/Capital 8.7%), providing high resilience to short-term performance fluctuations and ensuring dividend policy stability.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It is not a recommendation to invest in any particular security. The industry benchmark is reference information compiled by the company from public financial statements. Investment decisions are your own responsibility; consult a professional if necessary.