| Indicator | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3193.8B | ¥3159.8B | +1.1% |
| Operating Income | ¥251.6B | ¥245.6B | +2.4% |
| Ordinary Income | ¥256.7B | ¥260.9B | -1.6% |
| Net Income | ¥198.9B | ¥103.9B | +91.3% |
| ROE | 7.7% | 4.2% | - |
For the fiscal year ended March 2026 (Full Year), Revenue was ¥3193.8B (YoY +¥34.1B +1.1%), Operating Income was ¥251.6B (YoY +¥6.0B +2.4%), Ordinary Income was ¥256.7B (YoY -¥4.2B -1.6%), and Net Income attributable to owners of the parent was ¥198.9B (YoY +¥95.0B +91.3%). The core Electronics & Optical-related segment maintained high growth with Revenue of ¥1008.4B (+4.7%) and Operating Income of ¥221.2B (+19.5%), contributing 88% of consolidated profit, while the Printing Materials & Industrial Materials-related segment saw profitability sharply decline: Revenue ¥1827.1B (-1.1%) with Operating Income ¥19.8B (-63.8%). Operating margin improved slightly to 7.9% (prior 7.8%), but Ordinary Income declined due to reduced non-operating income. The large increase in Net Income was mainly due to the reversal from the prior-year's large impairment loss (¥77.3B); this period's extraordinary losses were limited to ¥16.8B. Operating Cash Flow (OCF) was solid at ¥334.5B, and Free Cash Flow (FCF) ¥188.6B sufficiently covered dividends of ¥69.7B and share repurchases of ¥52.4B. Financial soundness is extremely high (Equity Ratio 75.3%, interest-bearing debt ¥26.0B, Debt/EBITDA 0.07x), providing substantial capacity to pursue growth investments while returning capital to shareholders.
[Revenue] Revenue rose slightly to ¥3193.8B (+1.1%). By segment, Electronics & Optical-related grew steadily to ¥1008.4B (+4.7%), driven by expanded demand for semiconductor-related adhesive tapes and optical display-related products. Paper & Process Materials was ¥506.5B (+2.2%), with stable performance in specialty release papers and films. Conversely, Printing Materials & Industrial Materials-related declined to ¥1827.1B (-1.1%) due to weakness in advertising/printing markets and intensified price competition. Consolidated gross margin improved +0.2pt to 25.5% (prior 25.3%), aided by a favorable mix from higher share of high-value-added products in Electronics & Optical.
[Profitability] Operating Income increased to ¥251.6B (+2.4%). Selling, General & Administrative expenses were ¥563.1B (SG&A ratio 17.6%, prior 17.5%), nearly flat and including goodwill amortization of ¥44.6B (slightly down from prior ¥45.4B). Operating margin improved +0.1pt to 7.9% (prior 7.8%); this reflects a substantial improvement in Electronics & Optical margin to 21.9% (prior 19.2%) while Printing Materials & Industrial Materials margin plunged to 1.1% (prior 3.0%), producing a mix effect. Ordinary Income decreased slightly to ¥256.7B (-1.6%) as non-operating income fell to ¥15.8B (prior ¥22.4B), impacted by lower dividend income (¥1.3B, prior ¥2.9B) and reduced foreign exchange gains (¥4.3B, prior ¥6.2B). Non-operating expenses rose to ¥10.7B (prior ¥7.2B); interest expense was ¥3.2B (prior ¥3.1B) broadly unchanged, but other expenses expanded. Profit before income taxes was ¥244.7B (prior ¥187.5B, +30.5%), boosted by net improvement in extraordinary items. Extraordinary income was ¥4.8B (gain on sale of investment securities), while extraordinary losses were ¥16.8B (impairment losses ¥8.8B, loss on disposal of fixed assets ¥4.7B, business restructuring costs ¥2.0B), substantially down from the prior-year large impairment of ¥77.3B. Income taxes were ¥70.9B (effective tax rate 29.0%), resulting in Net Income of ¥198.9B (+91.3%). In conclusion, Electronics & Optical-related revenue and profit growth led consolidated results, and the decline in one-off losses drove the large net profit increase.
Electronics & Optical-related: Revenue ¥1008.4B (+4.7%), Operating Income ¥221.2B (+19.5%), margin 21.9% (prior 19.2%) — high profitability maintained, supported by increased demand for semiconductor-related adhesive tapes and tapes for multilayer ceramic capacitors, and improved profitability of optical display-related products. Printing Materials & Industrial Materials-related: Revenue ¥1827.1B (-1.1%), Operating Income ¥19.8B (-63.8%), margin 1.1% (prior 3.0%) — significant deterioration due to demand decline for adhesive products for seals/labels and advertising films and delayed pass-through of raw material cost increases. Paper & Process Materials: Revenue ¥506.5B (+2.2%), Operating Income ¥9.8B (+82.6%), margin 1.9% (prior 0.5%) — profitability improved materially, driven by shift to high-value-added specialty functional papers and process papers for carbon fiber composite materials. After intersegment eliminations, Electronics & Optical-related accounted for 88% of consolidated Operating Income ¥251.6B, indicating high concentration of profit sources.
[Profitability] Operating margin 7.9% (prior 7.8%, +0.1pt), Net margin 6.2% (prior 3.3%, +2.9pt) improved, with reduction in extraordinary losses boosting net margin. ROE 7.7% exceeded prior 6.1% by 1.6pt, aided by improved net margin and efficient use of equity. Gross margin 25.5% (prior 25.3%) edged up due to mix toward high-value-added Electronics & Optical products. [Cash Quality] OCF ¥334.5B is 1.68x Net Income ¥198.9B, indicating strong cash generation. OCF/EBITDA ratio was 0.88x (EBITDA = Operating Income ¥251.6B + Depreciation ¥127.2B = ¥378.8B), slightly below the 0.9x target, though inventory reduction (inventories down ¥51.3B) contributed. Working capital efficiency shows DSO 61 days (Accounts receivable ¥536.6B ÷ Revenue ¥3193.8B × 365) and DIO 90 days (Inventories ¥586.8B ÷ Cost of Sales ¥2379.2B × 365), which are somewhat long and present further compression opportunities. [Investment Efficiency] Capital expenditures ¥146.9B were 1.15x depreciation ¥127.2B, indicating a balanced mix of growth and maintenance investment. FCF ¥188.6B is 2.7x dividends ¥69.7B and fully covers total returns (dividends + buybacks ¥122.1B). [Financial Soundness] Equity Ratio 75.3% (prior 72.1%) is extremely high; with interest-bearing debt ¥26.0B (short-term borrowings ¥7.0B + long-term borrowings ¥19.0B) and cash ¥602.7B, net cash is ¥576.7B. Debt/EBITDA 0.07x and interest coverage 77.4x (OCF ¥334.5B ÷ interest paid ¥3.5B) denote very large financial capacity. Current ratio 297% and quick ratio 208% indicate strong short-term payment ability.
OCF was ¥334.5B (prior ¥337.2B, -0.8%), remaining stable, with profit before income taxes ¥244.7B plus non-cash additions including depreciation ¥127.2B and goodwill amortization ¥44.6B. Working capital changes were favorable due to a large inventories decrease of ¥51.3B (prior-year increase ¥19.5B), reflecting progress on inventory reduction. Offsetting this, accounts receivable increased ¥40.6B (prior-year decrease ¥19.5B) and accounts payable decreased ¥28.4B (prior-year increase ¥58.9B), which pressured cash; overall working capital created some drag. Income taxes paid were ¥91.4B (prior ¥46.6B) higher due to the prior year's low taxable income. Investing cash flow was -¥145.9B, led by CapEx ¥146.9B. Proceeds from sale of tangible fixed assets were minimal (¥1.2B), and sale of investment securities contributed ¥6.8B. FCF was ¥188.6B (OCF ¥334.5B - Investing CF ¥145.9B), down from prior ¥213.5B but still at a high level. Financing cash flow was -¥155.9B, with main outflows being dividends ¥69.7B (including the increase), share buybacks ¥52.4B, long-term borrowings repayments ¥18.7B, and lease liability repayments ¥9.1B. Cash and cash equivalents rose ¥45.5B from ¥507.0B at beginning of period to ¥552.5B at period-end, plus foreign exchange effects of ¥12.8B.
Of Ordinary Income ¥256.7B, Operating Income ¥251.6B accounts for the majority, indicating high quality of core earnings. Non-operating income ¥15.8B comprised interest income ¥6.2B, foreign exchange gains ¥4.3B, dividend income ¥1.3B, etc., largely recurring business-related items with limited speculative elements. Extraordinary losses totaled ¥16.8B (impairment losses ¥8.8B, loss on disposal of fixed assets ¥4.7B, business restructuring costs ¥2.0B) as temporary factors; these were substantially reduced from the prior-year impairment of ¥77.3B, signaling normalization of earnings. Extraordinary income ¥4.8B (gain on sale of investment securities) was small, so recurring profit contributed heavily to Net Income ¥198.9B. Comprehensive income ¥241.9B comprised Net Income ¥198.9B plus foreign currency translation adjustment ¥13.0B and retirement benefit adjustments ¥56.3B, offset by valuation difference on available-for-sale securities -¥1.2B; the ¥43.0B divergence between comprehensive income and net income was mainly due to retirement benefit adjustments. Retirement benefit adjustments reflect improved pension asset performance and discount rate changes and do not affect the quality of recurring earnings. OCF ¥334.5B is 1.33x Operating Income ¥251.6B, indicating solid cash backing of profits. The accruals measure (Net Income ¥198.9B - OCF ¥334.5B = -¥135.6B) is significantly negative, meaning improvements in working capital and non-cash expenses (depreciation, goodwill amortization) generated cash that exceeds accounting profit, which supports a high assessment of earnings quality.
For the fiscal year ending March 2027, company guidance calls for Revenue ¥3420.0B (YoY +7.1%), Operating Income ¥275.0B (YoY +9.3%), Ordinary Income ¥275.0B (YoY +7.1%), Net Income attributable to owners of the parent ¥195.0B (YoY -2.0%), EPS ¥297.79, DPS ¥60. As the reported period is a full year, progress rates cannot be calculated; the plan assumes continued resilient demand in Electronics & Optical-related, a bottoming out of profitability in Printing Materials & Industrial Materials-related, and stabilization of raw material prices. The Revenue plan (+7.1%) anticipates acceleration from the current period's +1.1%, and a planned Operating margin of 8.0% (planned Operating Income ¥275.0B ÷ planned Revenue ¥3420.0B) aims for slight improvement from 7.9% this period. Net Income guidance is conservative at -2.0% due to the anticipated reversal of this period’s boost from reduced extraordinary losses and normalization of tax burden. Forecast DPS ¥60 (payout ratio 20.1%, based on planned EPS ¥297.79 × ¥60) is half the current period's ¥110, reflecting that current period dividends were interim ¥55 + year-end ¥55 = ¥110, while next year's ¥60 is an initial guidance leaving room for upward revision. If FCF remains robust, additional dividend increases or further share buybacks are possible.
Dividends totaled interim ¥55 and year-end ¥55 for a full-year ¥110 (more than doubled from prior interim ¥25 + year-end ¥25 = ¥50), resulting in a payout ratio of 47.2% (total dividends ¥67.9B ÷ Net Income attributable to owners of the parent ¥198.9B × on an actual weighted average shares basis), within an appropriate range. Share repurchases of ¥52.4B were executed, and combined with dividends, total return ratio was approximately 61% ((dividends ¥69.7B + share repurchases ¥52.4B) ÷ Net Income ¥198.9B), representing a balanced approach. FCF ¥188.6B is 2.7x dividends ¥69.7B and 1.5x total returns ¥122.1B, leaving ample cash flexibility post-returns. Forecast DPS ¥60 is lower than current ¥110, but current year included a large special increase; the initial guidance is conservatively set and may be revised upward depending on performance. Payout ratio forecast 20.1% (planned EPS ¥297.79 × ¥60) is conservative, leaving room for further increases depending on results. Given Equity Ratio 75.3% and net cash ¥576.7B, the company retains strong capacity for agile shareholder returns.
Segment concentration risk: Electronics & Optical-related accounts for 88% of consolidated Operating Income, making performance highly sensitive to demand-supply fluctuations in semiconductor and display markets and the capex cycles of customers. Although this segment's Operating Income of ¥221.2B grew +19.5% YoY, a market reversal could sharply reduce consolidated profit. The plunge in Printing Materials & Industrial Materials-related margin to 1.1% (prior 3.0%) highlights portfolio diversification vulnerability.
Working capital efficiency risk: DSO 61 days and DIO 90 days are somewhat long, and OCF/EBITDA 0.88x is below the 0.9x target. Continued delays in collecting accounts receivable ¥536.6B or prolonged inventory ¥586.8B stagnation could weaken cash generation and constrain funds for growth investments and shareholder returns. While inventory compression of ¥51.3B progressed this period, accounts receivable rose ¥40.6B, so ongoing monitoring of credit management and inventory optimization is necessary.
Goodwill & impairment risk: Goodwill ¥70.9B (down -39.7% from prior ¥117.7B) and intangible assets ¥100.3B (down -32.8% from prior ¥149.4B) remain on the balance sheet, and the company recorded impairment losses ¥8.8B this period. Continued profitability deterioration in Printing Materials & Industrial Materials-related could trigger further impairment risk for related goodwill and intangibles, pressuring Net Income. Under JGAAP, goodwill amortization ¥44.6B accounts for 17.7% of Operating Income, meaning comparisons with IFRS peers may show suppressed profit.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 7.9% | 7.8% (4.6%–12.3%) | +0.1pt |
| Net margin | 6.2% | 5.2% (2.3%–8.2%) | +1.0pt |
Profitability exceeds the industry median, with Electronics & Optical-related high margins contributing to a top position.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 1.1% | 3.7% (-0.4%–9.3%) | -2.6pt |
Revenue growth lags the industry median, with declines in Printing Materials & Industrial Materials-related dragging overall growth.
※ Source: Company compilation
The high-margin structure of Electronics & Optical-related (Operating margin 21.9%) drives consolidated results; as long as demand for adhesive products for semiconductors and optical devices remains firm, stable operating income growth can be expected. However, heavy reliance on this segment for 88% of operating income poses downside risk during market swings, and recovery of Printing Materials & Industrial Materials-related profitability (from 1.1% toward >3%) is key to improving consolidated portfolio balance.
An exceptionally healthy balance sheet (Equity Ratio 75.3%, net cash ¥576.7B, Debt/EBITDA 0.07x) and FCF generation (¥188.6B) allow simultaneous execution of growth investments and shareholder returns. Achieving the next fiscal year's Revenue +7.1% will require accelerated CapEx and overseas expansion in Electronics & Optical-related; maintaining CapEx/Depreciation at 1.15x while improving working capital efficiency (compressing DSO and DIO to raise OCF/EBITDA above 0.9x) could enable ROE to exceed 8%.
This report is an earnings analysis document automatically generated by AI based on 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 from publicly disclosed financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.