| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1585.3B | ¥1507.3B | +5.2% |
| Operating Income / Operating Profit | ¥110.5B | ¥101.2B | +9.3% |
| Ordinary Income | ¥123.0B | ¥103.7B | +18.7% |
| Net Income / Net Profit | ¥48.0B | ¥50.4B | -4.9% |
| ROE | 4.6% | 5.0% | - |
For the fiscal year ended March 2026, Revenue was ¥1585.3B (YoY +¥78.0B +5.2%), Operating Income was ¥110.5B (YoY +¥9.4B +9.3%), Ordinary Income was ¥123.0B (YoY +¥19.3B +18.7%), and Net Income attributable to owners of the parent was ¥77.1B (YoY +¥11.8B +18.0%), representing topline and bottom-line growth. Operating margin improved to 7.0% (up +0.3pt from 6.7% prior year), and net margin rose to 4.9% (up +0.6pt from 4.3%). High-margin segments Industrial Infrastructure (Operating Income ¥50.3B, +22.9%) and Information & Electronics (Operating Income ¥47.7B, +13.4%) drove profit growth. Wellness fell into an operating loss of ¥2.0B (previously an operating profit of ¥5.2B) and recorded impairment losses of ¥10.3B. Gross margin was 23.2% (up +0.2pt from 23.0%), SG&A ratio was 16.2% (down -0.1pt from 16.3%), improving profitability. Non-operating income such as foreign exchange gains of ¥3.8B and subsidies of ¥1.5B contributed to Ordinary Income expanding beyond Operating Income. Extraordinary losses of ¥15.6B (including impairment losses of ¥14.1B) were recorded, but were absorbed by operating profit growth and improved financial results, resulting in double-digit growth in Net Income. Operating Cash Flow (OCF) was solid at ¥117.8B, but active capital expenditures of ¥213.4B resulted in Free Cash Flow (FCF) of -¥82.9B; the Company covered funding needs via increased short- and long-term borrowings and share repurchases of ¥25.8B.
[Revenue] Revenue was ¥1585.3B (YoY +¥78.0B +5.2%). By segment, Industrial Infrastructure achieved ¥429.5B (+10.8%) marking double-digit growth, supported by increased demand for construction materials and civil engineering materials. Information & Electronics recorded ¥583.1B (+6.2%) with continued solid demand in display-related and electronic components. Wellness was ¥281.9B (+2.6%) with modest growth, and Environmental Solutions was ¥340.2B (-0.2%) with a slight decline. At the consolidated level, core business demand expansion and favorable FX effects supported topline growth.
[Profitability] Operating Income was ¥110.5B (YoY +¥9.4B +9.3%), outpacing revenue growth. Gross margin improved to 23.2% (up +0.2pt), and SG&A ratio decreased to 16.2% (down -0.1pt), lifting operating margin to 7.0% (prior year 6.7%). By segment, Industrial Infrastructure delivered ¥50.3B (+22.9%, margin 11.7%) maintaining the highest profitability across segments; Information & Electronics delivered ¥47.7B (+13.4%, margin 8.2%) continuing profit growth. Conversely, Wellness swung to an operating loss of ¥2.0B (prior year ¥5.2B operating profit) and recorded impairment losses of ¥10.3B. Ordinary Income was ¥123.0B (+18.7%), aided by ¥15.9B of non-operating income (including foreign exchange gains ¥3.8B and dividend income ¥0.7B), while non-operating expenses were limited to ¥3.4B (including interest expense ¥2.3B). Extraordinary gains were ¥6.9B (gain on sale of investment securities ¥6.9B) and extraordinary losses were ¥15.6B (impairment losses ¥14.1B, loss on retirement of fixed assets ¥1.0B, etc.), resulting in profit before income taxes of ¥114.4B (+19.0%). After income taxes of ¥27.1B and net income attributable to non-controlling interests of ¥10.3B, Net Income attributable to owners of the parent was ¥77.1B (+18.0%). Impairments occurred mainly in Wellness (¥10.3B) and Information & Electronics (¥3.7B), recorded as one-time costs for structural reforms. In conclusion, revenue and profit growth were driven by high-margin businesses in Industrial Infrastructure and Information & Electronics.
Industrial Infrastructure recorded Revenue ¥429.5B (+10.8%) and Operating Income ¥50.3B (+22.9%), achieving the highest margin at 11.7%, supported by demand expansion in construction and civil engineering materials and improved profitability. Information & Electronics achieved Revenue ¥583.1B (+6.2%) and Operating Income ¥47.7B (+13.4%) with a margin of 8.2%, supported by sustained demand in display-related and electronic components and improved product mix. Environmental Solutions saw Revenue ¥340.2B (-0.2%) with Operating Income increasing to ¥14.6B (+12.5%), margin improving to 4.3% as cost-reduction effects materialized. Wellness delivered Revenue ¥281.9B (+2.6%) but fell into an operating loss of ¥2.0B (prior year operating profit ¥5.2B), margin deteriorated to -0.7%, and impairment losses of ¥10.3B were recorded. Progress on business restructuring will be key to revenue recovery.
[Profitability] Operating margin 7.0% (prior year 6.7%), net margin 4.9% (prior year 4.3%), gross margin 23.2% (prior year 23.0%), all on an improving trend. ROE is 4.6%; under a conservative capital structure with Equity Ratio of 66.5%, this is a standard level. [Cash Quality] OCF of ¥117.8B is 2.5x Net Income of ¥48.0B, indicating strong cash generation; however OCF/EBITDA (OCF / (Operating Income + Depreciation)) is approximately 0.7x, temporarily reduced by working capital absorption (inventory increase ¥16.8B, decrease in trade payables ¥11.8B, etc.). Days Sales Outstanding (DSO) is about 78 days, in line with prior year; inventory turnover days about 57 days, inventory levels are standard. [Investment Efficiency] Capital expenditures of ¥213.4B are 3.1x depreciation of ¥69.8B, indicating an active investment phase; Construction in Progress balance of ¥175.6B (25.1% of tangible fixed assets) is high, signaling build-out of future growth capacity. [Financial Soundness] Equity Ratio 66.5% (prior year 65.4%), current ratio 211.4% (prior year 203.9%), indicating high financial safety. Interest-bearing debt totaled ¥104.8B (short-term borrowings ¥32.7B, long-term borrowings ¥72.1B), while cash and cash equivalents were ¥148.4B and short-term securities ¥74.9B, yielding a net cash position. Debt/EBITDA is approximately 0.6x, low, and interest coverage (Operating Income / Interest Expense) is approximately 47.7x, indicating minimal interest burden.
OCF was ¥117.8B (YoY +78.8%), a significant increase, covering Net Income of ¥48.0B by 2.5x, indicating high quality. From OCF subtotal of ¥134.4B, working capital changes absorbed ¥16.6B (inventory increase ¥16.8B, decrease in trade payables ¥11.8B, decrease in other payables ¥21.7B, etc.), partially offset by a decrease in trade receivables of ¥1.8B. After payment of corporate taxes of ¥17.3B, OCF remained robust. Investing Cash Flow was -¥200.7B, primarily due to capital expenditures of ¥213.4B (up +20.3% from prior year ¥177.3B), reflecting continued funding into Construction in Progress. Subsidy receipts of ¥14.7B and proceeds from sale of investment securities of ¥9.7B partially offset investments. FCF was -¥82.9B (prior year -¥110.0B); although still negative, the deficit narrowed. Financing Cash Flow was ¥1.9B: proceeds from long-term borrowings ¥34.9B and net increase in short-term borrowings ¥25.5B provided ¥60.4B funding, while long-term borrowings repayments ¥2.5B, dividend payments ¥25.5B, and share repurchases ¥25.8B totaled ¥53.8B outflows, roughly balancing. Cash and cash equivalents decreased from ¥224.8B at the beginning of the period to ¥142.9B at year-end due to FX impact -¥0.9B and net decrease -¥81.8B, but liquidity including short-term securities of ¥74.9B remains ample. Working capital absorption appears temporary; focus going forward is on cash generation as investment projects begin operations.
The core of current recurring earnings is Operating Income of ¥110.5B, indicating a solid earnings base generated from business operations. Of non-operating income ¥15.9B, foreign exchange gains ¥3.8B and subsidy income ¥1.5B are largely one-off in nature and have limited reproducibility next year. Interest income ¥2.3B and dividend income ¥0.7B are considered recurring non-operating income. Non-operating expenses of ¥3.4B (interest expense ¥2.3B, etc.) are minor and interest burden does not materially affect profitability. Extraordinary items include extraordinary gains ¥6.9B (gain on sale of investment securities ¥6.9B) and extraordinary losses ¥15.6B (impairment losses ¥14.1B, loss on retirement of fixed assets ¥1.0B, etc.), resulting in a net extraordinary loss of ¥8.6B. Impairments occurred mainly in the Wellness business (¥10.3B) and Information & Electronics (¥3.7B) and are one-time costs related to structural adjustments. The accrual ratio ((Net Income - OCF) / Total Assets) is approximately -4.5%, negative, indicating cash generation exceeds accounting profit and demonstrating good earnings quality; however OCF/EBITDA is about 0.7x, temporarily reduced by working capital absorption. The gap between Ordinary Income of ¥123.0B and Net Income of ¥48.0B (approximately 61% difference) is mainly explained by income taxes of ¥27.1B (effective tax rate ~23.7%), net extraordinary loss ¥8.6B, and net income attributable to non-controlling interests ¥10.3B. Core earnings quality is high and, excluding one-off factors, a sustainable earnings base is being established.
Full-year guidance for the fiscal year ending March 2026 is Revenue ¥1760.0B (YoY +11.0%), Operating Income ¥112.0B (+1.3%), Ordinary Income ¥115.0B (-6.5%), Net Income attributable to owners of the parent ¥65.0B (-15.7%), and EPS ¥90.75. As of Q2, revenue progress ratio was 90.1%, Operating Income 98.7%, and Ordinary Income 107.0%, indicating high progress toward full-year targets. The plan’s Operating Income growth rate being much lower than revenue growth suggests assumptions of increased depreciation and fixed costs associated with ramp-up of investment projects. The projected decline in Ordinary Income YoY likely incorporates the reversal of one-off factors this period, such as foreign exchange gains ¥3.8B and subsidies ¥1.5B. The larger decline in Net Income forecast reflects the assumption that this period’s impairment losses of ¥14.1B are one-time and will not recur, but also anticipates the loss of extraordinary gains next year. Dividend forecast is annual ¥18.00 (post-split), implying a payout ratio of approximately 19.8% against forecast EPS, maintaining a conservative stance. Key assumptions for the forecast include revenue and EBITDA generation from the transition of Construction in Progress to operating assets, earnings improvement in the Wellness business, and continued price adjustments.
Dividends comprise an interim dividend of ¥72 and a year-end forecast of ¥18 (post stock-split), totaling an annual dividend; the year-end ¥18 is the amount after the stock split (1 share → 4 shares, effective October 1, 2025). Pre-split annual dividend is equivalent to ¥144 (interim ¥72 + year-end ¥72 equivalent). Dividend payouts totaling ¥25.5B (cash flow statement basis) against Net Income attributable to owners of the parent ¥77.1B imply a payout ratio of approximately 33.1%, which is sustainable. Share repurchases of ¥25.8B were executed, and combined with dividends ¥25.5B, total shareholder returns were ¥51.3B, yielding a Total Return Ratio of approximately 66.5%, indicating an aggressive shareholder return policy. However, FCF is negative at -¥82.9B, and returns were financed by OCF and increased borrowings (short-term +¥26.7B, long-term +¥31.4B). While dividend continuity is supported by solid OCF during the investment phase, sustaining total returns depends on monetization of investment projects and improved cash generation. Forecast payout ratio for next year is approximately 19.8%, reflecting a conservative stance and flexibility against performance variability.
Deterioration in Wellness profitability and structural improvement risk: Wellness swung to an operating loss of ¥2.0B and recorded impairment losses ¥10.3B. If progress on business restructuring is delayed, additional impairments or continued losses could pressure consolidated earnings. A high Construction in Progress balance of ¥175.6B (11.2% of total assets, 25.1% of tangible fixed assets) embeds execution risk—delays in project start-up or lower-than-expected yield could delay cash generation and constrain financial flexibility.
Working capital management and deterioration of cash conversion efficiency risk: OCF/EBITDA is approximately 0.7x and temporarily declined due to working capital absorption (inventory increase ¥16.8B, decrease in trade payables ¥11.8B, etc.). DSO of about 78 days is steady, but if collection delays or ongoing inventory increases occur amid revenue expansion, liquidity pressure and additional borrowing needs could rise. Continued negative FCF combined with weaker working capital control could impact shareholder returns and investment plans.
Earnings pressure from FX volatility and raw material price increases: This period’s foreign exchange gains of ¥3.8B supported Ordinary Income, but yen appreciation could produce FX losses and compress earnings. Rising raw material costs (resins, films, etc.) could lower gross margin if price pass-through is delayed. Combined with fixed cost increases as Construction in Progress starts operations, margin pressure could intensify.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.0% | 7.8% (4.6%–12.3%) | -0.8pt |
| Net Margin | 3.0% | 5.2% (2.3%–8.2%) | -2.2pt |
The Company’s operating margin of 7.0% is -0.8pt below the industry median of 7.8%, and net margin of 3.0% is -2.2pt below the median of 5.2%. Compared with manufacturing peers, profitability is somewhat below average but within the IQR range, potentially reflecting fixed-cost burden in an investment phase.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 5.2% | 3.7% (-0.4%–9.3%) | +1.5pt |
Revenue growth of 5.2% outperforms the industry median 3.7% by +1.5pt and sits within the IQR, indicating above-average growth. Expansion in Industrial Infrastructure and Information & Electronics contributed.
※Source: Company aggregation
Progress on monetization during the active investment phase: With capital expenditures of ¥213.4B (3.1x depreciation) and Construction in Progress ¥175.6B (11.2% of total assets), the Company is continuing large-scale investments. Revenue and EBITDA generation upon project start-up will be critical to sustaining growth. Timing of project ramp-up and contribution to earnings will be levers to improve ROE and FCF. Disclosures on Construction in Progress progress and commissioning schedules warrant attention.
Polarization of business portfolio and progress on structural improvement: High-margin segments Industrial Infrastructure (margin 11.7%) and Information & Electronics (margin 8.2%) account for the majority of consolidated profits, while Wellness recorded an operating loss of ¥2.0B and impairment losses of ¥10.3B. Progress on Wellness turnaround measures (restructuring, cost reductions, product mix changes) and timing of return to profitability will be the inflection point for consolidated profitability improvement. Quarterly segment profit trends and concretization of Wellness structural reforms are key monitoring items.
Room for improvement in cash conversion efficiency and working capital management: While OCF is solid, OCF/EBITDA is about 0.7x and has been temporarily reduced by working capital absorption (inventory increase ¥16.8B, decrease in trade payables ¥11.8B, etc.). Maintaining/improving DSO (~78 days) and enhancing inventory turnover will be critical to turn FCF positive and sustain shareholder returns. Quarterly tracking of DSO, inventory turnover days, and OCF/EBITDA will be important gauges of cash generation health.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as appropriate.