| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥982.0B | ¥999.8B | -1.8% |
| Operating Income | ¥21.3B | ¥23.3B | -8.4% |
| Ordinary Income | ¥27.3B | ¥27.5B | -0.7% |
| Net Income | ¥41.0B | ¥45.0B | -8.7% |
| ROE | 6.3% | 7.1% | - |
The fiscal year ending March 2026 recorded Revenue of ¥982.0B (YoY -¥17.8B, -1.8%), Operating Income of ¥21.3B (YoY -¥2.0B, -8.4%), Ordinary Income of ¥27.3B (YoY -¥0.2B, -0.7%), and Net Income of ¥41.0B (YoY -¥4.0B, -8.7%). Revenue declined due to structural decreases in print media demand and weakness in the Information & Communication Business; Operating Income fell due to higher SG&A. Ordinary Income was only slightly down, supported by non-operating income (dividends received ¥4.0B, etc.). Net Income, however, was ultimately a YoY -8.7% decline after recognizing Extraordinary Gains of ¥34.4B centered on investment securities disposal gains of ¥34.0B; core profit excluding one-offs showed a contractionary trend. Gross margin improved to 21.3% (up +1.2pt from 20.1%) reflecting price revisions, but SG&A ratio worsened to 19.1% (up +1.3pt from 17.8%), compressing the operating margin to 2.2%. Operating Cash Flow was ¥65.9B, 1.61x Net Income, indicating preserved quality, but FCF of ¥54.7B and DSO of 75 days suggest room to improve receivables collection.
[Revenue] Revenue of ¥982.0B (YoY -1.8%) was down. By segment, Life & Industrial Materials was ¥334.9B (+2.4%) and held up, aided by increased demand for container and packaging materials and price pass-through. Information Security was ¥310.8B (-1.0%) slightly down, impacted by reduced demand for business forms and securities printing. Information & Communication was ¥333.5B (-6.3%) significantly down, affected by structural declines in periodicals and commercial printing and client budget cuts. Other segments were ¥76.8B (+3.4%), driven by logistics and real estate management. Revenue composition: Life & Industrial Materials 34.1%, Information & Communication 34.0%, Information Security 31.6%, Other 7.8%. Gross margin improved to 21.3% (prior 20.1%) reflecting price revisions and improved product mix.
[Profitability] Operating Income ¥21.3B (YoY -8.4%) decreased. Despite gross profit growth (gross profit amount itself increased by ¥7.6B to ¥208.9B), SG&A rose to ¥187.6B (prior ¥178.0B, +¥9.6B, +5.4%). Breakdown: salaries and allowances ¥74.8B (prior ¥71.4B, +¥3.4B, +4.8%), retirement benefit expense ¥4.9B (prior ¥5.6B), depreciation ¥10.5B (prior ¥10.3B), with higher personnel costs the main factor. Operating margin fell to 2.2% (prior 2.3%, -0.1pt). Ordinary Income ¥27.3B (YoY -0.7%) benefited from non-operating income ¥9.4B (dividends received ¥4.0B, insurance dividends ¥1.8B, etc.) exceeding non-operating expenses ¥3.5B (interest paid ¥1.7B, etc.), partially offsetting operating weakness. Extraordinary gains totaled ¥34.4B (investment securities disposal gains ¥34.0B, fixed asset disposal gains ¥0.3B) less extraordinary losses ¥3.5B (impairment losses ¥1.3B, valuation losses on investment securities ¥0.5B) produced profit before tax ¥58.1B. After deducting corporate taxes of ¥18.5B, Net Income was ¥41.0B, with extraordinary gains accounting for about 83% of Net Income and indicating reliance on one-offs. Segment operating profit: Life & Industrial Materials ¥15.2B (+25.6%), Information Security ¥11.3B (-42.3%), Information & Communication -¥2.2B (deficit, -26.1% in deficit amount), Other ¥2.7B (+67.7%). In sum, the company experienced both revenue and profit decline rather than a revenue increase/decreased profit scenario, and core profit ex-special items is weakening.
Life & Industrial Materials: Revenue ¥334.9B (+2.4%), Operating Income ¥15.2B (+25.6%), margin 4.5%. Handles paperboard, flexible packaging, tubes, blow bottles, metal printing, building materials, etc.; strong container/packaging demand, price pass-through, and utilization optimization were effective. Operating margin improved +0.8pt from 3.7% to 4.5%, emerging as the company’s profit driver.
Information Security: Revenue ¥310.8B (-1.0%), Operating Income ¥11.3B (-42.3%), margin 3.6%. Significant profit decline due to worse project mix in business forms, securities printing, cards and intensified price competition. Margin deteriorated -2.6pt from 6.2% prior year.
Information & Communication: Revenue ¥333.5B (-6.3%), Operating Income -¥2.2B (loss), margin -0.7%. Continued structural demand declines in periodicals, books, and commercial printing led to ongoing losses. Prior year was also in loss (-¥1.8B), showing no improvement and highlighting delayed structural reforms.
Other: Revenue ¥76.8B (+3.4%), Operating Income ¥2.7B (+67.7%), margin 3.5%. Logistics, insurance brokerage, and real estate management drove revenue and profit growth. Contribution to consolidated operating income: Life & Industrial Materials 71.3%, Information Security 53.0%, Information & Communication -10.4%, Other 12.7%; the Communication segment’s deficit is depressing overall efficiency.
[Profitability] Operating margin 2.2% (prior 2.3%, -0.1pt) — improvement in gross margin +1.2pt was offset by deterioration in SG&A ratio +1.3pt. Net margin 4.2% (prior 4.5%) slightly down including one-offs. ROE 6.3% (prior 5.3%) improved due to extraordinary gains boosting Net Income, but excluding one-offs core ROE is estimated in the 5% range, indicating recurring capital efficiency issues. ROA (on Ordinary Income basis) 2.2% (prior 2.1%) slightly up but low.
[Cash Quality] Operating Cash Flow / Net Income 1.61x indicates good quality. FCF ¥54.7B (Operating CF ¥65.9B - Investing CF ¥11.2B) is 3.16x the total dividends paid ¥17.3B, and 2.03x the combined dividends + share buybacks ¥26.9B, leaving ample capacity for returns. OCF/EBITDA (EBITDA = Operating Income ¥21.3B + Depreciation ¥58.0B = ¥79.3B) is 0.83x, somewhat weak, suggesting room to improve working capital efficiency. DSO (Receivables ÷ daily sales) about 75 days; shortening collection terms is key to further cash generation.
[Investment Efficiency] Total asset turnover 0.79x (prior 0.79x) unchanged and low. ROIC (NOPAT ÷ Invested Capital, approximate NOPAT = Operating Income ¥21.3B × (1 - tax rate 31.8%) ≒ ¥14.5B; Invested Capital ≒ Equity ¥652.6B + Interest-bearing debt ¥65.6B ≒ ¥718.2B) is about 2.0%, low, with losses in the Information & Communication segment dragging consolidated ROIC.
[Financial Soundness] Equity Ratio 52.7% (prior 49.8%, +2.9pt) improved. Long-term debt was substantially repaid (¥43.1B → ¥12.1B), reducing interest-bearing debt to ¥14.6B. Debt/EBITDA 0.18x and Interest Coverage (Operating Income ¥21.3B ÷ interest paid ¥1.7B) 12.5x indicate extremely healthy leverage. Current ratio 158.8% (Current Assets ¥471.1B ÷ Current Liabilities ¥296.7B) and Quick ratio 146.7% signal ample liquidity. Cash ¥124.4B vs. interest-bearing debt ¥14.6B indicates an effectively net cash position.
Operating CF was ¥65.9B (prior ¥67.4B, -¥2.3B) and remained solid. Operating CF subtotal (before working capital changes) ¥80.8B; working capital changes included receivables decrease +¥12.6B (collection progress), inventory increase -¥3.9B (stock buildup), and accounts payable decrease -¥12.9B (timing of payments). After corporate tax payments -¥17.2B, operating CF resulted. Including depreciation ¥58.0B, operating CF generated about 3.1x the Operating Income of ¥21.3B. Investing CF was -¥11.2B, with tangible/intangible fixed asset acquisitions -¥49.3B (capex/renewals) and asset sales +¥4.1B (the accounting gain on investment securities disposal is recognized in P/L as ¥34.0B; the difference reflects carrying value). Financing CF was -¥53.6B, including long-term debt repayments -¥25.9B (deleveraging), dividend payments -¥17.3B, and share buybacks -¥9.6B. FCF ¥54.7B covers dividends and buybacks totaling ¥26.9B 2.03x, indicating ample return capacity. Working capital efficiency shows DSO ≈75 days (Receivables ¥202.0B ÷ daily sales ¥2.69B), slightly long and a target for collection-term review. Operating CF is 1.61x Net Income ¥41.0B; cash profit excluding depreciation and working capital changes (approx. Operating CF - working capital changes ≒ ¥80.8B) is 3.79x Operating Income ¥21.3B, indicating high profit quality.
Of Net Income ¥41.0B, Extraordinary Gains ¥34.4B (mainly investment securities disposal gains ¥34.0B) account for about 84%, indicating high dependence on one-offs. Excluding special items, recurring earning power based on Ordinary Income ¥27.3B equates to Operating Income ¥21.3B + net non-operating income ¥5.9B, representing about 66% of Net Income. Non-operating income ¥9.4B (0.96% of sales) comprises dividends received ¥4.0B, insurance dividends ¥1.8B, FX gains ¥0.1B, etc.; dividend income has some repeatability as returns on investment securities ¥176.5B. Accrual (Net Income - Operating CF) is ¥41.0B - ¥65.9B = -¥24.9B (negative), meaning cash generation exceeds accounting profit and quality is good. Comprehensive Income ¥50.0B equals Net Income ¥41.0B plus FX translation adjustment -¥1.4B, valuation gains on securities +¥5.9B, and retirement benefit adjustments +¥5.8B, yielding OCI contribution +¥10.3B. Securities valuation gains +¥5.9B indicate an increase in unrealized gains on investment securities ¥176.5B and suggest further potential for realized gains, but reliance on disposal gains reduces profit sustainability. The divergence between Ordinary Income and Net Income is due to extraordinary gains; for next year assume a reversal of extraordinary gains (investment securities disposals were one-off), so strengthening core earnings is a priority.
Full Year plan: Revenue ¥1,010.0B (vs. actual ¥982.0B +2.8%), Operating Income ¥25.0B (vs. actual ¥21.3B +17.1%), Ordinary Income ¥29.5B (vs. actual ¥27.3B +8.2%), Net Income ¥42.0B (EPS forecast ¥151.92, dividend forecast ¥40). Actuals underperformed the plan by -2.8% in Revenue and -14.8% in Operating Income. Revenue shortfall was mainly due to larger-than-expected declines in the Information & Communication segment and project slowdowns in Information Security. Operating Income shortfall resulted from higher-than-assumed SG&A (notably personnel expenses) and the entrenchment of losses in Information & Communication. Ordinary Income was supported by non-operating income and missed the plan by -7.5%, while Net Income approached the plan due to extraordinary gains, with actual Net Income ¥39.6B (parent company attributable) near the planned ¥42.0B. Progress rates: Revenue 97.2%, Operating Income 85.4%, Ordinary Income 92.4%, Net Income 94.3%. While extraordinary gains supported performance, core operating income lagged the plan; next year focus will be on structural reforms in Information & Communication and margin improvement in Information Security. Dividend forecast is annual ¥40 vs. actuals ¥78 (interim ¥38 + year-end ¥40); calculations impacted by 1:4 stock split effective April 1, 2025, but dividend policy is expected to be maintained.
Annual dividend ¥78 (interim ¥38 + year-end ¥40, based on post 1:4 stock split as of April 1, 2025). Payout Ratio 30.4% (total dividends ¥17.3B ÷ Net Income ¥41.0B on an actuals basis; if calculated versus EPS ¥141.15 and dividend ¥78, it equates to about 55%). FCF coverage: FCF ¥54.7B covers dividends ¥17.3B by 3.16x, indicating ample capacity. Share buybacks executed ¥9.6B (CF basis), bringing total returns (dividends + buybacks) to ¥26.9B and Total Return Ratio 65.6% (total returns ¥26.9B ÷ Net Income ¥41.0B). FCF is 2.03x total returns, supporting sustainability. Treasury stock acquisitions during the period amounted to ¥9.58B, reducing book-value treasury stock to ¥22.9B (prior ¥42.5B), contributing to per-share value. Dividend policy targets stable dividends; even accounting for a reversal of extraordinary gains, the stability of Operating CF suggests a high probability of maintaining dividends. The company can flexibly adjust total returns through opportunistic share buybacks according to earnings levels.
Structural demand decline and continued loss risk in Information & Communication segment: Revenue ¥333.5B (-6.3%), operating loss -¥2.2B for the second consecutive period. Structural declines in periodicals, books, and commercial printing and accelerated client digital shift are drivers. The segment’s -¥2.2B loss equals about -10% of consolidated Operating Income ¥21.3B; if left unaddressed it will further depress ROIC. Delays in structural reforms (site consolidation, workforce optimization) will make margin improvement difficult and could result in continued losses beyond three periods.
Receivables collection delays and working capital efficiency deterioration risk: DSO about 75 days exceeds peer averages; Receivables ¥202.0B equal roughly 82 days of sales. Although receivables improved YoY with collection progress of +¥12.6B, the absolute level remains high, and lax credit management or long collection terms pressure capital efficiency. Accounts payable decreased -¥12.9B, compounding working capital pressure. Failure to shorten DSO will keep Operating CF/EBITDA coverage at a low 0.83x and constrain FCF growth.
Dependence on extraordinary gains and market risk of investment securities: Of Net Income ¥41.0B, Extraordinary Gains ¥34.4B (investment securities disposal gains ¥34.0B) account for about 84%, indicating dependence on one-offs. Investment securities ¥176.5B (14.3% of total assets) are exposed to market price volatility. The realized gains reflect strategic portfolio optimization, but similar-scale gains are unlikely to recur, and a reversal could cause a sharp decline in Net Income next year. With core Operating Income ¥21.3B (Operating Margin 2.2%), ROE is constrained to the 5-6% range and limits shareholder return capacity. Although there is an unrealized gain reserve of +¥5.9B, market deterioration could produce valuation losses.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.2% | 7.8% (4.6%–12.3%) | -5.6pt |
| Net Margin | 4.2% | 5.2% (2.3%–8.2%) | -1.0pt |
Profitability is well below the industry median; Operating Margin is -5.6pt below the median 7.8%. The Information & Communication segment loss and high consolidated SG&A ratio are the main causes, and improving operational efficiency within the manufacturing sector is the top priority.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.8% | 3.7% (-0.4%–9.3%) | -5.5pt |
Growth lags the industry median of +3.7% by -5.5pt, reflecting structural declines in print media demand. The Life & Industrial Materials segment’s +2.4% growth could not offset the overall decline; portfolio transformation is ongoing.
※ Source: Company compilation
Progress in portfolio transformation: Life & Industrial Materials has emerged as a core profit driver with Operating Income ¥15.2B (+25.6%), supported by steady demand and price pass-through in container and packaging materials. Conversely, the continued loss in Information & Communication highlights delays in structural reform; execution of business restructuring (site consolidation, workforce optimization) will be key to improving consolidated margins. The margin gap between segments (Life & Industrial Materials 4.5% vs Information & Communication -0.7%) suggests scope to reallocate resources.
Strong financial safety and return capacity: Effectively net cash (Cash ¥124.4B, interest-bearing debt ¥14.6B), Debt/EBITDA 0.18x, Interest Coverage 12.5x — very healthy. FCF ¥54.7B covers dividends + buybacks ¥26.9B by 2.03x, supporting dividend sustainability. Long-term debt was reduced from ¥43.1B to ¥12.1B, further strengthening financial resilience. There is scope to allocate surplus funds to growth investment (capacity expansion/M&A in Life & Industrial Materials) or additional returns (increased dividends/share repurchases).
Mid-term task: exit one-off dependence: Approximately 84% of Net Income ¥41.0B was from Extraordinary Gains (investment securities disposal ¥34.0B), exposing the low core Operating Income margin of 2.2%. Next year, a reversal of extraordinary gains is expected to reduce Net Income, so lifting Operating Margin into the 3–4% range and improving working capital efficiency (shortening DSO from 75 days to below 60 days) are prerequisites to enhancing shareholder value. ROE 6.3% includes special items; core ROE in the 5% range leaves ample room to improve capital efficiency. If Information & Communication is returned to profitability and Information Security’s margins recover, returning to Operating Income in the ¥30B range and ROE in the 8–10% range becomes plausible.
This report is an automated financial analysis generated by AI analyzing 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 publicly disclosed financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional.