| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue | ¥558.3B | ¥547.3B | +2.0% |
| Operating Income | ¥35.4B | ¥38.8B | -8.9% |
| Equity-method Investment Income (Loss) | ¥0.4B | ¥0.3B | +33.3% |
| Ordinary Income | ¥39.0B | ¥42.0B | -7.2% |
| Net Income | ¥30.6B | ¥24.3B | +25.9% |
| ROE | 10.5% | 9.3% | - |
For the fiscal year ended March 2026, Revenue was ¥558.3B (YoY +¥11.0B +2.0%), Operating Income was ¥35.4B (YoY -¥3.4B -8.9%), Ordinary Income was ¥39.0B (YoY -¥3.0B -7.2%), and Net Income attributable to owners of the parent was ¥30.6B (YoY +¥6.3B +25.9%). Revenue increased for the second consecutive year, but Operating Income turned down. Gross margin improved to 26.4% (YoY +1.6pt), however SG&A ratio worsened to 20.1% (YoY +2.3pt), and Operating Margin declined to 6.3% (YoY -0.7pt). Meanwhile, recognition of Special Gains of ¥8.5B, including ¥8.2B gains on sale of fixed assets, drove a significant increase in Net Income. By segment, Steel, Automotive, Electronics & Semiconductors, and Machine Tools led with higher revenue and profit, while Rubber & Tires and Environment saw declines, accelerating performance polarization within the portfolio. Operating Cash Flow was ¥13.4B (YoY -57.1%), a large decrease, as deterioration in working capital—higher receivables and inventories and lower payables—offset operating profitability.
[Revenue] Revenue of ¥558.3B (YoY +2.0%) marked a second consecutive year of growth. By segment, Machine Tools (¥26.3B, +13.5%) showed the highest growth rate, Electronics & Semiconductors (¥78.6B, +6.1%) and Automotive (¥121.8B, +3.9%) were also solid. Other segments (¥76.8B, +5.6%) also recorded revenue increases. Conversely, Environment (¥27.4B, -10.0%), High-performance Materials (¥22.5B, -11.3%), Rubber & Tires (¥37.6B, -2.7%), and Pulp & Paper (¥8.9B, -2.8%) declined. Core Steel business remained stable at ¥158.2B (+1.2%). By region, domestic revenue of ¥490.5B (87.8% of total) increased by ¥1.4B YoY, while overseas saw weakness in Asia offset by growth in North America. Gross margin was 26.4% (YoY +1.6pt), confirming product-mix improvement effects.
[Profitability] Operating Income was ¥35.4B (YoY -8.9%), a decline. Gross profit increased to ¥147.5B (YoY +¥1.5B), but SG&A rose sharply to ¥112.1B (YoY +¥15.0B +15.4%), compressing operating profit. SG&A ratio deteriorated to 20.1% (YoY +2.3pt), likely due to upfront personnel costs, promotion expenses, and system investment-related costs. By segment, Machine Tools (¥6.4B, +26.6%, margin 24.2%) showed the highest profitability, Automotive (¥13.7B, +5.1%), and Electronics & Semiconductors (¥9.6B, +7.8%) also posted profit increases. Conversely, Rubber & Tires (¥3.4B, -18.3%) and Environment (¥2.3B, -21.4%) recorded double-digit profit declines. Ordinary Income was ¥39.0B (YoY -7.2%), supported by non-operating income of ¥3.8B (including dividend income ¥1.1B and foreign exchange gains ¥0.5B). In extraordinary items, Special Gains of ¥8.5B, mainly due to gains on sale of fixed assets of ¥8.2B, were recognized, increasing Profit Before Tax to ¥45.9B (YoY +10.5%). After income taxes of ¥15.0B and non-controlling interests of -¥1.0B, Net Income attributable to owners of the parent was ¥30.6B (YoY +25.9%), achieving a final profit increase despite revenue growth coupled with operating decline.
The Steel segment recorded Revenue of ¥158.2B (YoY +1.2%) and Operating Income of ¥20.3B (YoY +1.0%), maintaining a margin of 12.8% and contributing 57.3% of consolidated Operating Income as a core business. Automotive posted Revenue ¥121.8B (+3.9%) and Operating Income ¥13.7B (+5.1%, margin 11.2%), becoming the second revenue pillar. Electronics & Semiconductors achieved Revenue ¥78.6B (+6.1%) and Operating Income ¥9.6B (+7.8%, margin 12.2%), combining high growth and profitability. Machine Tools showed the highest growth at Revenue ¥26.3B (+13.5%), Operating Income ¥6.4B (+26.6%), and margin 24.2%, the best profitability among segments. Other segments (foods, shipbuilding, etc.) recorded Revenue ¥76.8B (+5.6%) and Operating Income ¥11.2B (+16.1%, margin 14.6%) and performed well. Conversely, Rubber & Tires declined with Revenue ¥37.6B (-2.7%) and Operating Income ¥3.4B (-18.3%, margin 9.0%). Environment saw Revenue ¥27.4B (-10.0%) and Operating Income ¥2.3B (-21.4%, margin 8.5%), a sharp profit decline suggesting structural demand weakness. High-performance Materials recorded Revenue ¥22.5B (-11.3%) and Operating Income ¥2.5B (-8.1%, margin 10.9%), declining in both revenue and profit. Pulp & Paper posted Revenue ¥8.9B (-2.8%) and Operating Income ¥1.1B (+1.1%, margin 12.0%), small but maintained profitability. Portfolio-wide, polarization is clear—growth in high-margin Machine Tools and Electronics & Semiconductors versus stagnation in Rubber & Environment.
[Profitability] Operating Margin was 6.3% (YoY -0.7pt) but remained +3.0pt above the industry median of 3.4%. Net Margin improved to 5.5% (prior year 5.2%, +0.3pt) and is +3.2pt above the industry median of 2.3%. ROE was 10.5%, down from 11.6% last year, but still delivering returns above 10%. ROA (on an Ordinary Income basis) was 6.4%, down from 9.9% last year, indicating room to improve asset efficiency. [Cash Quality] Operating Cash Flow to Net Income ratio declined markedly to 0.42x, raising a warning on earnings quality. Working capital deterioration (Receivables +¥6.1B, Inventories +¥3.0B, Payables -¥19.0B) and tax payments of ¥15.2B weighed on OCF generation. EBITDA was ¥43.5B (Operating Income ¥35.4B + Depreciation ¥8.2B), and Operating Cash Flow/EBITDA ratio was 0.31x, a low level showing weakened cash conversion efficiency. [Investment Efficiency] Capital expenditures of ¥10.4B were 1.27x depreciation (¥8.2B), maintaining moderate growth investment. Total asset turnover was 1.18x (prior 1.25x), slightly lower and indicating room to improve asset efficiency. DSO (days sales outstanding) was 106 days, lengthening YoY and suggesting a need to strengthen credit control. [Financial Soundness] Equity Ratio rose to 61.4% (prior 59.5%), maintaining high financial safety. Interest-bearing debt was ¥18.1B versus cash and deposits of ¥84.1B, close to net cash management; Debt/Equity ratio was 0.06x and Debt/EBITDA 0.42x, indicating extremely conservative leverage. Current ratio was 208% and quick ratio 192%, showing ample short-term liquidity. Interest coverage was 256x, so interest burden is minimal and financial risk is limited.
Operating Cash Flow was ¥13.4B (YoY -57.1%), a large decrease, representing 0.42x of Net Income ¥30.6B and remaining low. Major adjustments from Profit Before Tax ¥45.9B to subtotal Operating Cash Flow ¥27.2B included Depreciation ¥8.2B, Gain on sale of fixed assets -¥8.2B, Loss on valuation of investment securities ¥0.5B, and Equity-method investment income -¥0.4B. Working capital changes deteriorated overall: Inventory increase -¥3.0B, Receivables increase -¥6.1B, Payables decrease -¥19.0B, with the reverse rotation of working capital significantly pressuring OCF generation. Income tax payments -¥15.2B were also a burden. Investing Cash Flow was -¥3.8B: Capex -¥10.4B and intangible asset acquisitions -¥1.9B were partially offset by proceeds from sale of tangible fixed assets +¥9.2B, limiting net investment outflow. Free Cash Flow was ¥9.6B, providing 0.78x coverage of dividend payments ¥12.3B, which is tight. Financing Cash Flow was -¥11.9B, mainly due to net repayment of short-term borrowings -¥22.8B and dividend payments -¥12.3B. Cash and cash equivalents were ¥67.5B, up ¥1.9B YoY, maintaining effectively debt-free operations. Operating Cash Flow/EBITDA ratio of 0.31x indicates reduced cash conversion efficiency; improving working capital management and shortening DSO are urgent priorities.
Earnings quality is heavily influenced by one-off items and warrants caution. Against Operating Income of ¥35.4B, recurring non-operating income ¥3.8B and Special Gains ¥8.5B (one-off) less Special Losses ¥1.6B resulted in Profit Before Tax of ¥45.9B. The primary source of Special Gains was gain on sale of fixed assets ¥8.2B, accounting for 17.9% of Profit Before Tax. Special Losses were small, including valuation loss on investment securities ¥0.5B and loss on disposal of fixed assets ¥0.1B. On an Ordinary Income basis, profits were ¥39.0B (YoY -7.2%), a decrease; without the Special Gains, Profit Before Tax would also have declined. Comprehensive income was ¥41.5B, exceeding Net Income ¥30.6B; other comprehensive income ¥10.9B consisted of valuation difference on available-for-sale securities ¥7.2B, actuarial gains/losses adjustments ¥2.3B, and foreign currency translation adjustments ¥1.1B. From an accruals quality perspective, Operating Cash Flow ¥13.4B is substantially below Net Income ¥30.6B; OCF/Net Income ratio 0.42x signals a warning on earnings quality. Deterioration in working capital—higher receivables and inventories and lower payables—expanded the timing gap between profit recognition and cash collection. Sustainable earning power should be assessed on an Ordinary Income basis, and high dependency on Special Gains poses a reversal risk for the next fiscal year.
Full Year guidance is Revenue ¥580.0B (YoY +3.9%), Operating Income ¥42.2B (YoY +19.3%), Ordinary Income ¥43.6B (YoY +11.9%), and Net Income ¥30.0B (YoY -2.0%). Progress against initial forecasts: Revenue 96.3%, Operating Income 83.9%, Ordinary Income 89.4%, Net Income 102.0%. Net Income exceeded initial expectations due to the contribution of Special Gains ¥8.5B, but Operating and Ordinary Income lagged. The shortfall in Operating Income appears mainly driven by higher-than-expected SG&A, and achieving the full-year forecast assumes substantial profit recovery in H2. Ordinary Income progress of 89.4% is relatively favorable, but the gap with Operating Income progress of 83.9% reflects volatility in non-operating items. Full-year forecast EPS is ¥369.80, below actual EPS ¥392.47, reflecting a conservative view that factors in a reversal of Special Gains. Dividend forecast is annual ¥79 (interim ¥64, year-end forecast ¥15), implying a payout ratio of 21.4% (based on full-year forecast EPS), which is somewhat low. To achieve the full-year targets, stronger SG&A control, recovery in working capital efficiency, and expansion of high-margin segments (Machine Tools, Electronics & Semiconductors) are key.
Dividends were interim ¥64 and year-end ¥93, totaling annual ¥157. Payout ratio was 40.2%, maintained at the prior year level and sustainable on a Net Income basis. Total dividends amounted to ¥12.3B; given Free Cash Flow ¥9.6B, FCF coverage was 0.78x and somewhat insufficient. However, with cash and deposits of ¥84.1B and an Equity Ratio of 61.4%, financial soundness is high and dividend funding is adequate. Share buybacks were effectively zero (-¥0.0B), so Total Return Ratio equals the payout ratio at 40.2%. DOE was 4.7%, maintained at the prior year level. Full-year dividend forecast ¥79 is substantially below actual ¥157, likely due to timing disclosure differences in recognizing the year-end dividend ¥93. The dividend policy emphasizes stable dividends, and improvements in working capital efficiency and OCF generation should strengthen dividend capacity on a FCF basis.
Risk of deterioration in working capital management: DSO at 106 days has lengthened, and increases in receivables and inventories alongside decreases in payables caused a large decline in Operating Cash Flow (¥13.4B, YoY -57.1%). OCF/Net Income ratio 0.42x and OCF/EBITDA ratio 0.31x indicate reduced cash conversion efficiency, making credit control strengthening and supply-chain financing optimization urgent. Continued reverse rotation in working capital could lead to cash-flow strain or reduced dividend capacity.
Risk of widening profit dispersion across segments: While Machine Tools (margin 24.2%) and Electronics & Semiconductors (margin 12.2%) maintain high profitability, Rubber & Tires (margin 9.0%, YoY -18.3%) and Environment (margin 8.5%, YoY -21.4%) are stagnant. Continued polarization of demand could, if structural reforms or portfolio reallocation for low-margin segments are delayed, depress consolidated profitability. Revenue concentration to a major customer, Nippon Steel (approx. ¥6.3B in the Steel segment), could also materialize as customer concentration risk. [Note: numeric preserved as originally stated: 約63億円]
Risk of permanent SG&A growth trend: SG&A of ¥112.1B (YoY +15.4%) significantly outpaced Revenue growth +2.0%, worsening SG&A ratio to 20.1% (YoY +2.3pt). Upfront personnel, promotion, and system investment costs are drivers; if these become fixed costs, operating leverage will deteriorate and profit sensitivity to revenue fluctuations will increase. Dependence on Special Gains (17.9% of Profit Before Tax) also highlights fragility in earnings structure; delayed recovery of core profitability could result in a sustained decline in ROE.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.3% | 3.4% (1.4%–5.0%) | +3.0pt |
| Net Margin | 5.5% | 2.3% (1.0%–4.6%) | +3.2pt |
Profitability substantially exceeds industry median, supported by a portfolio skewed toward high-margin segments (Machine Tools, Electronics & Semiconductors).
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.0% | 5.9% (0.4%–10.7%) | -3.9pt |
Revenue growth trails the industry median, with weakness in declining segments (Environment, High-performance Materials) restraining corporate growth.
※Source: Company compilation
Recovery of OCF generation is the highest priority. Shortening DSO from 106 days and stabilizing payables to improve working capital efficiency and restore OCF/Net Income to above 0.7x will be key to maintaining dividend capacity and ROE. SG&A ratio suppression (target in the 19% range) must be pursued in parallel.
Selective concentration of the portfolio is the inflection point for improving profitability. Accelerating expansion of Machine Tools (margin 24.2%) and Electronics & Semiconductors (margin 12.2%) while clarifying structural reforms or exit decisions for Rubber & Tires (margin 9.0%) and Environment (margin 8.5%) is required. Customer concentration risk to Nippon Steel (approx. ¥6.3B) should be hedged by diversifying customers into Automotive, Electronics & Semiconductors, etc.
Reducing dependence on Special Gains and switching to profit growth on an Ordinary Income basis are prerequisites for sustaining ROE above 10%. Absorbing the reversal of the ¥8.2B gain on sale of fixed assets and achieving the full-year Ordinary Income forecast (¥43.6B) will require recovery in operating margin in H2 (target in the 7% range).
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement disclosure data. It does not constitute investment advice for any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Investment decisions should be made at your own responsibility and, where appropriate, in consultation with a professional advisor.