| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥839.5B | ¥791.8B | +6.0% |
| Operating Income / Operating Profit | ¥46.4B | ¥44.6B | +4.0% |
| Equity-method Investment Income (Loss) | - | - | - |
| Ordinary Income | ¥48.5B | ¥46.8B | +3.7% |
| Net Income / Net Profit | ¥33.1B | ¥32.8B | +1.1% |
| ROE | 8.2% | 8.5% | - |
For the fiscal year ended March 2026, consolidated results achieved both revenue and profit growth: Revenue ¥839.5B (YoY +¥47.7B +6.0%), Operating Income ¥46.4B (YoY +¥1.8B +4.0%), Ordinary Income ¥48.5B (YoY +¥1.7B +3.7%), and Net Income attributable to owners of the parent ¥33.0B (YoY +¥0.3B +1.1%). Revenue was driven by solid performance in the core Industrial Materials and the high-growth Electrical Materials segments, marking a third consecutive period of revenue increase. Improvement in gross margin to 22.4% (YoY +0.2pt) contributed to operating profit growth, but the rise in SG&A ratio to 16.8% (YoY +0.3pt) and profit declines in some segments limited the increase in Operating Income. Ordinary Income rose slightly due to stable non-operating items. Net Income was temporarily boosted by Special Gains of ¥1.8B (Investment securities sale gains ¥1.9B; negative goodwill ¥1.6B), but a slight increase in the effective tax rate to 33.4% from 33.0% kept the final net profit increase to +1.1%.
Revenue: The overall +6.0% revenue growth was led by core Industrial Materials (¥399.5B +5.8%) and high-growth Electrical Materials (¥134.3B +16.0%). Industrial Materials delivered stable growth supported by steady civil engineering and construction demand and maintained pricing; Electrical Materials achieved double-digit growth driven by expanding electrical work demand for houses and buildings. Structural Steel Materials (¥216.9B +2.2%) and Scaffolding Construction (¥100.0B +5.3%) recorded tepid increases; although all four segments posted revenue gains, growth momentum varied by segment. Gross margin improved to 22.4% from 22.2% a year earlier (+0.2pt), reflecting price revisions and a shift to higher value-added products.
Profitability: Operating Income of ¥46.4B (+4.0%) increased in absolute terms with revenue growth, but SG&A increased to ¥141.2B (+¥10.7B +8.2%), outpacing revenue growth (+6.0%), resulting in an Operating Margin of 5.5% versus 5.6% a year earlier (-0.1pt). The rise in SG&A ratio to 16.8% (prior year 16.5%) was mainly due to sustained personnel and logistics costs, limiting operating leverage. By segment, Industrial Materials generated Operating Income of ¥27.3B (+11.1%), contributing about 59% of consolidated operating profit and reinforcing its leading position; Electrical Materials continued high growth with ¥5.6B (+35.6%). Conversely, Structural Steel Materials ¥12.5B (-10.0%) and Scaffolding Construction ¥1.3B (-46.8%) posted declines, and negative mix effects constrained company-wide margin improvement. Ordinary Income of ¥48.5B (+3.7%) rose modestly with stable non-operating items (interest and dividend income ¥0.2B, interest expense ¥0.5B). Net Income of ¥33.0B (+1.1%) reflects the temporary uplift from Special Gains ¥1.8B (investment securities sale gains ¥1.9B; negative goodwill ¥1.6B) offset by Special Losses ¥0.5B (impairment of fixed assets), and landed at an effective tax rate of 33.4%.
Industrial Materials: Revenue ¥399.5B (+5.8%), Operating Income ¥27.3B (+11.1%), Margin 6.8%. This core segment accounts for roughly 59% of consolidated Operating Income and achieved high profit growth due to steady demand for civil engineering and construction materials and maintained pricing.
Electrical Materials: Revenue ¥134.3B (+16.0%), Operating Income ¥5.6B (+35.6%), Margin 4.2%. Continued double-digit revenue growth and strong profit expansion driven by expanding electrical installation demand in housing and buildings, serving as a key growth driver for the company.
Structural Steel Materials: Revenue ¥216.9B (+2.2%) with low growth, Operating Income ¥12.5B (-10.0%), Margin 5.8%. Profit decline due to weak market conditions for steel fabricators and deteriorating profitability.
Scaffolding Construction: Revenue ¥100.0B (+5.3%) maintained growth, but Operating Income ¥1.3B (-46.8%), Margin 1.3%, showing a marked profit decline caused by adverse project mix and higher costs. Segment profitability ranking: Industrial Materials (6.8%) > Structural Steel Materials (5.8%) > Electrical Materials (4.2%) > Scaffolding Construction (1.3%), with low-margin Scaffolding Construction constraining overall margin improvements.
Profitability: ROE was 8.2%, down from 9.3% a year earlier (-1.1pt). The components: Net Profit Margin 3.9% (prior year 4.1%), Total Asset Turnover 1.21x, Financial Leverage 1.71x; the decline in net profit margin was the main driver. Operating Margin 5.5% versus 5.6% prior year (-0.1pt), and the SG&A ratio increase to 16.8% offset an improvement in Gross Margin to 22.4%. EBITDA was ¥61.2B (Operating Income ¥46.4B + Depreciation & Amortization ¥14.8B), with an EBITDA margin of 7.3%, unchanged from the prior year. Pre-goodwill-amortization EBITDA was ¥65.0B (EBITDA + goodwill amortization ¥3.8B), supplementing the JGAAP-specific impact of goodwill amortization. Interest coverage was strong at 91x (Operating Income ¥46.4B / Interest Expense ¥0.5B), indicating negligible interest burden.
Cash Quality: Operating Cash Flow (OCF) was ¥27.9B, representing 0.85x of Net Income ¥33.0B; working capital movements (Accounts receivable increase -¥7.3B, Accounts payable decrease -¥19.0B) dampened cash conversion. OCF/EBITDA ratio was 0.46x, indicating scope for working capital improvement. Free Cash Flow was -¥0.1B (OCF ¥27.9B - Investing CF ¥28.0B), with CapEx of ¥25.5B (1.72x Depreciation ¥14.8B) absorbing cash.
Investment Efficiency: ROA on an Ordinary Income basis was 7.2%, down from 7.4% (-0.2pt). Total Asset Turnover remained stable at 1.21x, indicating steady asset efficiency while margin contraction suppressed profitability.
Financial Soundness: Equity Ratio was 58.6%, slightly down from 58.8% but still high. Current Ratio 175.2% and Quick Ratio 147.6% indicate ample liquidity. Interest-bearing debt was ¥63.5B (Short-term borrowings ¥45.6B + Long-term borrowings ¥17.9B) versus cash ¥156.5B, creating a net cash position. Debt/EBITDA was 1.04x and Debt/Capital 13.5%, reflecting conservative leverage. Short-term borrowings comprised 72% of interest-bearing debt, indicating a short maturity profile, but a Cash/Short-term Borrowings ratio of 3.43x provides a cushion and limits refinancing risk.
Operating Cash Flow was ¥27.9B, a significant decline of -52.1% from ¥58.4B in the prior year, and low at 0.85x of Net Income ¥33.0B. Cash conversion from Pre-tax Income before tax adjustments ¥49.7B was slowed materially by working capital deterioration (Accounts receivable increase -¥7.3B, Accounts payable decrease -¥19.0B, Inventories slight increase +¥0.3B) and corporate tax payments of ¥14.7B. Operating Cash Flow before working capital changes was ¥42.9B versus ¥77.3B a year earlier, and included non-cash items (Depreciation ¥14.8B, Goodwill amortization ¥3.8B) and accrual adjustments (goodwill gain adjustment -¥1.6B, allowance for doubtful accounts adjustments -¥0.3B, etc.).
Investing Cash Flow was -¥28.0B, driven by Capital Expenditure ¥25.5B (mainly production equipment upgrades in Industrial Materials and redevelopment of corporate offices) and acquisition of subsidiary shares ¥2.1B; proceeds from sale of investment securities ¥2.7B partially offset outflows. Financing Cash Flow was -¥0.4B, nearly balanced, with net increases in short-term borrowings ¥9.6B and long-term borrowings raised ¥11.7B funding dividend payments ¥12.5B and long-term borrowings repayment ¥6.4B. Free Cash Flow was slightly negative at -¥0.1B, indicating temporary funding needs amid active CapEx. Cash and cash equivalents at period-end were ¥154.8B, unchanged from beginning balance ¥154.8B; low FCF was absorbed by ample liquidity. The low OCF/EBITDA of 0.46x suggests recovery potential in subsequent periods if working capital normalizes; the one-off reduction in accounts payable (YoY -¥19.0B) is a monitoring point.
Of Ordinary Income ¥48.5B, Operating Income ¥46.4B is the main driver and non-operating items contributed +¥2.1B (interest income ¥0.1B, dividend income ¥0.1B, interest expense -¥0.5B, etc.), indicating stability. Non-operating income is small at 0.33% of sales, so the revenue structure is operating-led. Special Gains of ¥1.8B (investment securities sale gains ¥1.9B, negative goodwill ¥1.6B, fixed asset sale gains ¥0.1B) are one-off and have low repeatability; negative goodwill associated with consolidation of two newly consolidated subsidiaries and investment securities rebalancing pushed pre-tax profit up. Special Losses of ¥0.5B (fixed asset retirement loss) were minor and within normal range. The gap between Ordinary Income ¥48.5B and Net Income ¥33.0B (-31.9%) is due to an effective tax rate of 33.4% (corporate taxes ¥16.6B) and non-controlling interests deduction ¥0.1B; tax burden is standard.
Accrual quality measured by Operating Cash Flow ¥27.9B / Net Income ¥33.0B = 0.85x is somewhat low, primarily due to temporary working capital movements (Accounts payable decrease -¥19.0B, Accounts receivable increase -¥7.3B), so sustainability of cash generation depends on normalization of working capital. Comprehensive Income ¥34.0B exceeded Net Income ¥33.0B by +¥0.9B, driven by Foreign Currency Translation Adjustments +¥0.5B, Net changes in valuation of available-for-sale securities +¥0.5B, Deferred hedge gains/losses +¥0.2B, and Remeasurements of defined benefit plans -¥0.4B, indicating minor divergence and limited impact from other comprehensive income.
Full-year guidance projects Revenue ¥910.0B (YoY +8.4%), Operating Income ¥49.5B (+6.6%), Ordinary Income ¥51.5B (+6.2%), and Net Income attributable to owners of the parent ¥34.0B (+3.0%), indicating a plan for stable revenue and profit growth. Year-to-date progress rates are high: Revenue progress 92.2%, Operating Income progress 93.7%, Ordinary Income progress 94.2%, so achieving full-year targets is within reach. Forecast EPS ¥132.63 and projected dividend ¥29.0 per share include an interim dividend actual of ¥26 as a mid-period policy figure; the Payout Ratio is 21.9%, conservatively set and leaving room for intra-year adjustments relative to the actual annual dividend of ¥52. Forecast Operating Margin of 5.4% assumes a slight decline from actual 5.5% (-0.1pt), predicated on continued strength in Industrial Materials and Electrical Materials, while recovery in Structural Steel Materials and Scaffolding Construction could be an upside. The one-off Special Gains recognized this year (negative goodwill ¥1.6B, investment securities sale gains ¥1.9B) are unlikely to recur, and the projected full-year Net Income growth of +3.0% is planned to be achieved through stable effective tax rate and core revenue growth.
Annual dividend is ¥52 (interim ¥26 + year-end ¥26), unchanged from the prior year. Payout Ratio based on average shares during the period of 25,613 thousand shares is 40.3%, and based on shares outstanding at period-end (excluding treasury shares 25,635 thousand shares) is 41.5%, within a sustainable range. Total dividends amounted to ¥12.5B and were funded from cash on hand despite Free Cash Flow of -¥0.1B; with cash of ¥156.5B and low leverage (Debt/Capital 13.5%), dividend funding is well secured for the near term. The dividend policy emphasizes stable dividends, and the forecast dividend ¥29.0 (mid-period policy) is conservative relative to actual ¥52, leaving scope for revision based on full-year results. No share repurchase disclosure was made; shareholder returns are dividend-centric and Total Return Ratio aligns with the dividend payout ratio. Going forward, stabilization of Free Cash Flow (recovery of OCF and smoothing of investments) should support dividend stability and potential gradual increases.
Segment mix deterioration risk: Scaffolding Construction’s Operating Margin of 1.3% (prior year 2.5%) and a substantial Operating Income decline of -46.8% illustrate that adverse project mix and rising costs are pressuring profitability. Structural Steel Materials also saw Operating Income decline of -10.0%; if weak market conditions for steel fabricators persist, maintaining a consolidated Operating Margin of 5.5% may become difficult.
Working capital management risk: Operating Cash Flow ¥27.9B is only 0.85x of Net Income ¥33.0B, driven by Accounts payable decrease -¥19.0B and Accounts receivable increase -¥7.3B. The low OCF/EBITDA of 0.46x indicates cash generation vulnerability to working capital fluctuations, and delayed collections or changes in supplier terms could increase FCF volatility going forward.
Short-term debt concentration risk: Of interest-bearing debt ¥63.5B, Short-term borrowings ¥45.6B account for 72%, concentrating maturities in the short term. Cash ¥156.5B covers short-term borrowings 3.43x, providing near-term liquidity, but changes in refinancing markets or rising interest rates could increase funding costs. Long-term borrowings increased YoY +57.7%, indicating efforts to lengthen financing, but the high short-term dependence warrants continued monitoring.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.5% | 3.4% (1.4%–5.0%) | +2.2pt |
| Net Profit Margin | 3.9% | 2.3% (1.0%–4.6%) | +1.7pt |
Both Operating Margin and Net Profit Margin exceed the industry median by around 2 percentage points, indicating above-median profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.0% | 5.9% (0.4%–10.7%) | +0.1pt |
Revenue growth is roughly in line with the industry median, maintaining a standard growth pace.
※Source: Company aggregation
Stability of core businesses and pull from growth segments: Industrial Materials accounts for roughly 60% of Operating Income and strengthened its leading position with high profit growth (+11.1%). Electrical Materials sustained high growth (Revenue +16.0%, Operating Income +35.6%) supporting consolidated revenue and profit expansion. Conversely, profit declines in Structural Steel Materials and Scaffolding Construction (-10.0% and -46.8%, respectively) worsened mix and led to a roughly flat Operating Margin of 5.5%. Full-year guidance assumes continued strength in core segments and Electrical Materials, but recovery in the two low-margin segments will be the key upside/downside factor.
Strong financial soundness and investment capacity: Equity Ratio 58.6%, Debt/EBITDA 1.04x, Debt/Capital 13.5% reflect conservative leverage, with Cash ¥156.5B far exceeding interest-bearing debt ¥63.5B, yielding a net cash position. CapEx ¥25.5B (1.72x Depreciation) led to FCF of -¥0.1B during an active investment phase, but liquidity supports investment capacity and dividend funding at current payout levels. Short-term borrowings concentration at 72% raises maturity profile concerns, but Cash/Short-term Borrowings 3.43x cushions refinancing risk.
Room to improve cash conversion efficiency: Operating Cash Flow ¥27.9B is 0.85x of Net Income and OCF/EBITDA 0.46x, driven by working capital movements (Accounts payable decrease -¥19.0B, Accounts receivable increase -¥7.3B). The Accounts payable reduction may be temporary, and normalization could allow OCF recovery. One-off Special Gains recognized this period (negative goodwill ¥1.6B, investment securities sale gains ¥1.9B) are unlikely to recur, but core revenue growth can cover performance targets; ongoing working capital management and cost control are critical to sustainable margin and cash generation improvements.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute an investment recommendation for any particular security. Industry benchmarks are reference information compiled by the Company from publicly disclosed financial statements. Investment decisions are your responsibility; consult professionals as necessary before making investment choices.