| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1241.9B | ¥1159.2B | +7.1% |
| Operating Income / Operating Profit | ¥48.6B | ¥45.3B | +7.4% |
| Equity-Method Investment Income (Loss) | - | - | - |
| Ordinary Income | ¥52.4B | ¥48.4B | +8.2% |
| Net Income | ¥34.4B | ¥31.6B | +8.8% |
| ROE | 8.1% | 7.9% | - |
For the fiscal year ended March 2026, the company achieved revenue of ¥1,241.9B (YoY +¥82.7B +7.1%), Operating Income of ¥48.6B (YoY +¥3.3B +7.4%), Ordinary Income of ¥52.4B (YoY +¥4.0B +8.2%), and Net Income attributable to parent company shareholders of ¥34.4B (YoY +¥2.8B +8.8%), recording growth across all stages. Operating in a single segment (manufacture and sale of packaging materials, etc.), gross margin of 19.9% and operating margin of 3.9% remained roughly flat despite revenue expansion, indicating quantity-led growth continuation. Non-operating income of ¥4.8B supported the increase at the ordinary income level; extraordinary gains/losses were minor, and earnings quality is generally sound. Meanwhile, Operating Cash Flow (OCF) of ¥25.3B amounted to only 67.4% of Net Income, as working capital was a headwind due to a large decrease in accounts payable and increases in inventory and accounts receivable. Capital expenditures of ¥43.7B expanded to 4.1x depreciation of ¥10.7B, reflecting proactive growth investments including land acquisition ¥26.1B and construction-in-progress increase ¥5.5B. Consequently, Free Cash Flow turned negative at -¥17.2B and cash & deposits decreased ¥35.0B during the period. Dividends were high at annual ¥116.0 (payout ratio 60.2%) including a 60th-anniversary commemorative dividend, but next fiscal year’s forecast normalizes to ¥60.0 (ordinary dividend), improving sustainability.
[Revenue] Revenue ¥1,241.9B (YoY +¥82.7B +7.1%) showed solid growth. The company operates a single segment (Manufacture and Sale of Packaging Materials, etc.); segment-level breakdown is not disclosed, but company-wide volume growth and steady demand drove the top line. Cost of sales rose to ¥994.4B (YoY +¥119.9B +13.7%), outpacing revenue growth, but Gross Profit was ¥247.5B (YoY +¥17.1B +7.4%), keeping gross margin at 19.9%—the same level as the prior year. The company absorbed raw material price increases and higher logistics costs through price revisions and production efficiency, successfully defending margins.
[Profitability] Selling, General & Administrative Expenses were ¥198.8B (YoY +¥13.7B +7.4%), in line with revenue growth, resulting in Operating Income ¥48.6B (YoY +¥3.3B +7.4%) and an operating margin of 3.9%, maintained at approximately prior-year levels. SG&A composition includes employee compensation ¥67.7B, depreciation ¥7.2B, rent ¥7.3B, etc., and SG&A ratio of 16.0% was unchanged YoY, absorbing fixed cost increases through scale. Non-operating items contributed net +¥3.7B (income ¥4.8B, expenses ¥1.1B), including rental income ¥1.5B, interest income ¥0.6B, and dividend income ¥0.5B. Ordinary Income was ¥52.4B (YoY +¥4.0B +8.2%), outperforming the operating-level increase. Extraordinary items were net neutral (extraordinary gains ¥0.2B from sale of investment securities; extraordinary losses ¥0.2B from disposal of fixed assets). Pre-tax income ¥52.4B less income taxes ¥14.8B (effective tax rate 28.2%) resulted in Net Income attributable to parent company shareholders ¥34.4B (YoY +¥2.8B +8.8%), securing final-stage profit growth. In conclusion, results reflect revenue and profit growth with stable margins and generally high earnings quality.
[Profitability] Operating margin 3.9%, Gross Margin 19.9%, Operating-to-Ordinary Income ratio 4.2% (Ordinary Income / Revenue), Net Income margin 2.8%. Operating margin and gross margin remained at prior-year levels. SG&A ratio 16.0% also unchanged, indicating stable fixed-cost management. ROE 8.1% (prior year 9.0%) slightly decreased; ROA improved to 8.4% (prior year 7.9%). ROE decline reflects slower numerator growth vs. equity growth—profit growth 8.8% vs. equity increase 6.9%. [Cash Quality] Operating Cash Flow / Net Income is 0.67x, indicating weak cash conversion; the primary cause is working capital deterioration (accounts payable -¥20.2B, inventory +¥5.0B, accounts receivable +¥4.1B). EBITDA was ¥59.3B (EBIT ¥48.6B + D&A ¥10.7B) and OCF/EBITDA ratio was 0.43x, a low level, suggesting shortened payment terms and increased purchases at period-end. [Investment Efficiency] Capital expenditures ¥43.7B expanded to 4.1x depreciation ¥10.7B, reflecting active growth investment. Breakdown: acquisition of tangible fixed assets ¥43.7B, land acquisition ¥26.1B, construction-in-progress +¥5.5B—aimed at future capacity expansion and efficiency gains. Recovery of invested capital is in a ramp-up phase; monitor utilization rates and incremental depreciation-related margin contributions. [Financial Soundness] Equity ratio 67.3% (prior year 64.9%) remains high; interest-bearing debt effectively nil aside from lease liabilities around ¥5.1B. Current ratio 163.8%, quick ratio 126.9%, interest coverage approximately 1,943x (EBIT / interest expense)—financial flexibility is extremely strong. Cash & deposits ¥46.8B decreased ¥35.0B from ¥81.8B prior-year, but liquidity remains adequate and short-term funding risk is limited.
Operating Cash Flow ¥25.3B (YoY +161.2%) began from pre-tax income ¥52.4B, added back depreciation ¥10.7B, yielding OCF before working capital changes of ¥39.6B. Working capital changes—accounts receivable +¥4.1B, inventory +¥5.0B, accounts payable -¥20.2B—resulted in net outflow ¥29.3B, significantly pressuring OCF generation. After income tax payments ¥15.5B, final OCF was ¥25.3B, equaling 67.4% of Net Income ¥34.4B. Investing Cash Flow was -¥42.5B, including capital expenditures -¥43.7B, purchase of securities -¥0.3B, and sale of securities +¥0.3B. Capex focused on growth (land, buildings, machinery) and was large at 4.1x depreciation. As a result, Free Cash Flow was negative at -¥17.2B, making it difficult to fully fund both dividends and investments from internal funds. Financing Cash Flow was -¥17.8B, driven mainly by dividend payments -¥16.6B and lease liability repayments -¥1.2B. Net cash decreased by -¥35.0B to ¥46.8B at fiscal year-end. The working capital deterioration appears due to year-end payment term adjustments and inventory build; however, it is assumed temporary, and OCF recovery should be monitored as accounts payable are rebuilt and inventory compressed in the next fiscal year.
Earnings quality is generally good, driven by recurring operating activities. Extraordinary items were net neutral at ¥0.0B, and there is limited mixing of one-off factors in the transition from Ordinary Income ¥52.4B to pre-tax income. Non-operating income ¥4.8B is 0.4% of revenue and comprises rental income ¥1.5B, interest income ¥0.6B, dividend income ¥0.5B, etc. While non-operating income supplements profit, dependency is not high and ordinary income remains central. Conversely, OCF / Net Income at 0.67x indicates weak cash conversion, with a delayed conversion of accruals to cash. The main cause is a significant decrease in accounts payable -¥20.2B and increases in inventory +¥5.0B and receivables +¥4.1B, suggesting a temporary disruption in working capital management. Comprehensive Income ¥41.6B exceeded Net Income ¥34.4B, driven by unrealized gains on securities ¥4.0B and retirement benefit adjustments -¥0.1B, raising equity outside the P&L. The divergence between Ordinary Income and Net Income is mainly due to income tax burden (effective tax rate 28.2%) and does not indicate structural issues.
The company’s plan for FY ending March 2027 forecasts Revenue ¥1,350.0B (YoY +8.7%), Operating Income ¥51.0B (YoY +4.8%), Ordinary Income ¥54.5B (YoY +4.0%), and Net Income attributable to parent company shareholders ¥40.0B (YoY +16.3%), expecting revenue and profit growth. Operating margin is projected at approximately 3.8%, remaining flat, assuming volume expansion and higher utilization will offset cost increases through pricing and efficiency. The significant increase in Net Income assumes growth in pre-tax income and stabilization of the effective tax rate. EPS forecast ¥204.18, dividend forecast ¥60.0 (payout ratio about 29.4%) normalizes to ordinary dividend level after the commemorative dividend lapse. Full-year progress rate (at Q1 end) is estimated at revenue ¥82.7B / ¥1,350.0B ≈ 6.1%, but Q1 figures are not disclosed and confirmation is deferred to the next period. The guidance reflects entry into a recovery phase for investment returns; normalization of working capital and contribution from new equipment utilization are key to achieving the plan.
For FY2026 the dividend was annual ¥116.0 (interim ¥58.0, year-end ¥58.0), comprising ordinary dividend ¥56.0 + commemorative dividend ¥60.0 (60th anniversary). Total dividends ~¥20.5B, payout ratio 60.2%, dividend yield 2.7%—high levels. However, with Free Cash Flow -¥17.2B and dividend payments ¥16.6B, the dividends were not covered by internal funds this fiscal year, resulting in a drawdown of cash balances; the high dividend including the commemorative portion is one-off and sustainability is questionable. Share buybacks were effectively zero (CF -¥0.0B), so total shareholder returns were dividend-centric. For FY2027 the dividend forecast is annual ¥60.0, reverting to ordinary dividend level after the commemorative payout lapse. Forecast payout ratio about 29.4%, and dividend total ~¥11.8B based on forecast Net Income ¥40.0B, which is expected to be sustainably covered by internal funds assuming OCF improvement and FCF normalization. In the medium term, dividends are expected to be managed flexibly balancing profit levels and cash generation, taking into account normalization of investment burden and higher depreciation.
Low-margin structure and pricing competition risk: Operating margin 3.9% and gross margin 19.9% remain low, making the company sensitive to raw material price increases and wage inflation. Under competitive conditions in the packaging materials industry, limited room for price pass-through and a growth model dependent on volume expansion imply margin-compression risk if demand weakens. With an SG&A ratio of 16.0% and a certain fixed-cost burden, absorption capacity declines if utilization falls.
Working capital management and cash-generation vulnerability: OCF / Net Income 0.67x and OCF / EBITDA 0.43x indicate weak cash conversion; accounts payable decreased -¥20.2B while inventory increased +¥5.0B, causing substantial working capital outflow. Although this fiscal year’s deterioration appears driven by year-end payment term adjustments and may be temporary, continued structural working capital weakness would impair cash generation and financial flexibility. If working capital normalization (rebuilding accounts payable, compressing inventory) does not proceed into the next fiscal year, continued FCF deficits and declining cash balances are a concern.
Risk of delayed recovery from aggressive investments: Capital expenditures ¥43.7B are large at 4.1x depreciation, and land acquisition ¥26.1B plus construction-in-progress +¥5.5B increases tangible fixed assets. If new equipment commissioning is delayed or demand deviates downward, revenue and profit contributions may fall short of plan, leading to higher depreciation burdens and longer payback periods, reducing profitability and ROIC. The next fiscal year’s guidance assumes smooth ramp-up of new equipment; however, macro deterioration could result in low utilization and inventory valuation loss risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.9% | 3.4% (1.4%–5.0%) | +0.6pt |
| Net Income Margin | 2.8% | 2.3% (1.0%–4.6%) | +0.5pt |
Company outperforms industry median, maintaining relatively favorable profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.1% | 5.9% (0.4%–10.7%) | +1.2pt |
Revenue growth exceeds industry median, driven by volume expansion at a pace above the industry average.
※ Source: Company compilation
Trajectory of proactive investment and monetization: Capital expenditures ¥43.7B (4.1x depreciation), land acquisition ¥26.1B, construction-in-progress +¥5.5B reflect large-scale growth investments to bolster future production capacity and efficiency. Next fiscal year focus will be commissioning of new equipment and revenue contribution; operating margin projection assumes increased volumes will offset higher depreciation. Key medium-term assessment points include progress on recovering invested capital (ROIC, OCF generation), utilization rates, and gross margin trends.
Working capital normalization and FCF recovery potential: This fiscal year working capital outflow driven by accounts payable -¥20.2B led to weak OCF/Net Income 0.67x and FCF -¥17.2B. This appears to be a temporary year-end adjustment, and OCF improvement is expected from rebuilding accounts payable and inventory compression next fiscal year. Dividend normalizes to ¥60.0 after the commemorative payout lapse, with total dividends ¥11.8B representing about 30% of forecast Net Income ¥40.0B and at a sustainable level. Improvements in working capital and FCF normalization should enable dividends to be covered from internal funds and restore financial flexibility—monitoring cash-flow recovery is a key focus of this result.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial disclosures. Investment decisions should be made at your own discretion; consult a professional advisor as appropriate.