| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2992.9B | ¥3115.5B | -3.9% |
| Operating Income / Operating Profit | ¥130.6B | ¥144.9B | -9.9% |
| Equity-method Investment Income (Loss) | ¥2.7B | ¥2.8B | -4.7% |
| Ordinary Income | ¥141.9B | ¥162.0B | -12.4% |
| Net Income | ¥112.5B | ¥85.0B | +32.3% |
| ROE | 11.0% | 9.2% | - |
For the fiscal year ended March 2026, Revenue was ¥2,992.9B (YoY -¥122.5B, -3.9%), Operating Income was ¥130.6B (YoY -¥14.3B, -9.9%), Ordinary Income was ¥141.9B (YoY -¥20.1B, -12.4%), and Net Income was ¥112.5B (YoY +¥27.5B, +32.3%). Top-line declined as both the Chemicals and Textile businesses contracted. At the operating level, gross margin improved to 13.7% (prior 13.0%, +0.7pt) but an increase in SG&A ratio to 9.4% (prior 8.4%, +1.0pt) compressed operating margin to 4.4% (prior 4.7%, -0.3pt). Non-operating items — interest income ¥5.3B, foreign exchange gains ¥1.9B, etc. — contributed to financial income of ¥16.4B, and a low effective tax rate of 15.1% (Income taxes ¥21.5B / Income before income taxes ¥141.9B) supported a substantial increase in Net Income. Operating Cash Flow was robust at ¥115.4B (YoY +61.6%), with an Operating CF / Net Income ratio of 1.03x and Free Cash Flow of ¥97.2B.
Revenue ¥2,992.9B (YoY -3.9%). By segment, Chemicals ¥1,526.7B (YoY -3.3%, share 51.0%) remained the largest business but declined; Textiles ¥1,457.8B (YoY -4.6%, 48.7%) also contracted; Machinery ¥7.7B (YoY -10.1%, 0.3%) declined — all segments below prior-year levels. By geography, Japan ¥1,873.5B, China ¥475.3B, Other ¥644.2B — declines both domestically and internationally. Gross margin improved to 13.7% (prior 13.0%, +0.7pt), suggesting unit price/mix improvements and pass-through of costs.
Profitability: Cost of goods sold ¥2,581.7B, Gross Profit ¥411.2B (YoY +1.5%). SG&A increased to ¥280.7B (YoY +7.9%), resulting in Operating Income ¥130.6B (YoY -9.9%) and Operating Margin 4.4% (prior 4.7%). Non-operating income ¥16.4B (Interest income ¥5.3B, Dividend income ¥3.6B, FX gains ¥1.9B, Equity-method investment income ¥2.7B, etc.), non-operating expenses ¥5.0B (Interest expense ¥0.9B, etc.), yielding Ordinary Income ¥141.9B (YoY -12.4%). Extraordinary items were minor (Extraordinary gains ¥0.99B, Extraordinary losses ¥1.05B). Income taxes ¥21.5B and deferred -¥4.4B produced an effective tax rate of 15.1%, and Net Income attributable to owners of the parent was ¥120.1B (YoY +3.0%). Comprehensive income ¥141.6B (YoY +8.9%) included foreign currency translation adjustments ¥5.5B and net unrealized losses (gains) on securities ¥10.9B, with Other Comprehensive Income totaling ¥21.2B. In conclusion: revenue and operating/ordinary income declined, but Net Income increased thanks to non-operating income and tax effects.
The Textile Business reported Revenue ¥1,457.8B (YoY -4.6%), Segment Profit ¥70.5B, implying a margin of approximately 4.8%. The Chemicals Business reported Revenue ¥1,526.7B (YoY -3.3%), Segment Profit ¥79.5B, margin about 5.2%, the largest contributor. The Machinery Business reported Revenue ¥7.7B (YoY -10.1%), Segment Profit ¥3.5B, margin about 44.8% — small scale but high margin. After corporate adjustments of -¥11.8B, Income before income taxes was ¥141.9B. Chemicals is the core contributor to both sales and profit, but volume contraction in both main segments is a challenge. Textiles need to strengthen cost absorption; Chemicals must manage market volatility.
Profitability: Operating Margin 4.4% (prior 4.7%, -0.3pt), Ordinary Margin 4.7% (prior 5.2%, -0.5pt), Net Margin 4.0% (prior 3.0%, +1.0pt). Gross Margin 13.7% (prior 13.0%, +0.7pt) improved, but SG&A ratio rose to 9.4% (prior 8.4%, +1.0pt) compressing operating results. ROE 11.0% declined from 13.4% the prior year; ROA (on Ordinary Income basis) 9.5% (prior 11.2%) also slowed. Cash quality: Operating CF ¥115.4B, Operating CF/Net Income 1.03x — healthy. Free Cash Flow ¥97.2B, FCF/Net Income 0.86x — cash generation is solid. Capital efficiency: Total Asset Turnover 1.95x (prior 2.13x) decelerated. CapEx / Depreciation 0.32x suggests maintenance-level investment. Financial soundness: Equity Ratio 66.8% (prior 63.0%) improved; Current Ratio 270.2%, Quick Ratio 233.5% — high. Interest-bearing debt ¥4.7B (only short-term borrowings ¥4.7B), Net Cash ¥290.7B (Cash ¥295.4B - Interest-bearing debt ¥4.7B) — effectively debt-free.
Operating CF was ¥115.4B (YoY +61.6%). From operating subtotal ¥154.3B, working capital provided collections of accounts receivable +¥22.1B, while payments of trade payables -¥21.9B and income taxes paid -¥47.5B were deducted. Investing CF was -¥18.2B, with capital expenditures -¥5.5B and intangible asset acquisitions -¥4.8B, indicating restrained growth investment. Total tangible + intangible investment ¥10.3B vs. Depreciation ¥17.5B yields CapEx/Depreciation 0.59x (0.32x for tangible only) consistent with maintenance-level investment. Proceeds from sales of investment securities +¥0.65B and proceeds from sale of shares of affiliates +¥0.67B were small disposals. Financing CF was -¥50.1B, mainly dividends paid -¥37.9B (including non-controlling interests -¥0.03B) and net decrease in short-term borrowings -¥9.1B. Free Cash Flow ¥97.2B covers dividends ¥37.9B by 2.6x, supporting sustainability of returns. Ending cash balance was ¥295.4B (YoY +¥67.3B, +29.5%) — ample.
Core recurring earnings are Operating Income ¥130.6B. Non-operating income ¥16.4B comprises Interest income ¥5.3B, Dividend income ¥3.6B, FX gains ¥1.9B, Equity-method investment income ¥2.7B, etc., representing 0.5% of Revenue — a moderate scale. Extraordinary items were small: Extraordinary gains ¥0.99B (proceeds on sale of affiliates’ shares ¥0.56B, proceeds on sale of investment securities ¥0.31B, etc.), Extraordinary losses ¥1.05B (impairment on investment securities ¥0.65B, impairment losses ¥3.6B, etc.) — limited distortion to Net Income from one-off items. Effective tax rate 15.1% was low, aided by reversal of deferred tax assets -¥4.4B. Operating CF ¥115.4B is 1.03x Net Income ¥112.5B, suggesting accruals are generally appropriate. Comprehensive income ¥141.6B comprises Net Income ¥112.5B plus foreign currency translation adjustments ¥5.5B and net unrealized gains/losses on securities ¥10.9B (OCI total ¥29.1B), making the distinction between recurring and one-off items clear.
For FY ending March 2027, the full-year plan is Revenue ¥3,200.0B (YoY +6.9%), Operating Income ¥145.0B (YoY +11.1%), Ordinary Income ¥150.0B (YoY +5.7%), EPS ¥426.04. Progress against the plan for the current year stands at Revenue 93.5%, Operating Income 90.0%, Ordinary Income 94.6%; Net Income outperformed plan (Plan ¥105.0B vs. Actual ¥120.1B) at 114.4%, achieved ahead of schedule. The bottom line was buoyed by non-operating income and low tax rate, while operating-level performance missed plan due to higher SG&A and challenges sustaining gross margin. Achieving next fiscal year’s Operating Income increase of +11.1% will require cost control and margin improvement in Chemicals and Textiles.
Annual dividend ¥147 (Interim ¥72, Year-end ¥75). Issued shares 25,303 thousand, treasury shares 658 thousand, leaving shares outstanding at year-end 24,645 thousand; total dividends ¥3.62B (Dividend payments recorded ¥3.79B include ¥0.3B attributable to non-controlling interests). Payout Ratio is ¥147 / EPS ¥487.36 = 30.2% — conservative. Operating CF ¥115.4B and Free CF ¥97.2B both comfortably cover dividend payments ¥37.9B, FCF coverage 2.6x. Net Cash ¥290.7B gives substantial financial flexibility and low risk of dividend cuts. Share buybacks effectively zero (CF impact -¥0.0B), so Total Return Ratio equals the payout ratio at 30.2%.
Revenue concentration in the Chemicals business (51.0%): The core segment is sensitive to product market conditions and customer performance; price declines or demand weakness could pressure consolidated profits. Chemicals segment profit ¥79.5B represents more than half of total segment profit ¥153.5B.
Rising SG&A ratio (9.4%, YoY +1.0pt): Continued increases in fixed costs such as logistics and labor could reverse operating leverage in a revenue contraction. Operating margin has fallen to 4.4% (prior 4.7%); if cost control proves difficult, profitability could deteriorate further.
Declining working capital efficiency: Accounts receivable ¥702.0B and Inventories ¥172.6B against Revenue ¥2,992.9B imply DSO approximately 86 days (702.0 ÷ 2992.9 × 365). Decrease in Accounts Payable to ¥384.8B (YoY -¥21.9B) may reflect changes in payment terms or reduced procurement, indicating substantial room to improve working capital management.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.4% | 3.4% (1.4%–5.0%) | +1.0pt |
| Net Margin | 3.8% | 2.3% (1.0%–4.6%) | +1.5pt |
Profitability is above the industry median and positions the company in the upper tier.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.9% | 5.9% (0.4%–10.7%) | -9.8pt |
Growth lags the industry median substantially, with pronounced volume contraction.
※ Source: Company compilation
Improved gross margin and non-operating income supported the bottom line, but the decline in Operating Margin to 4.4% and the rise in SG&A ratio to 9.4% (YoY +1.0pt) raise concerns about reverse operating leverage. With both Chemicals and Textiles continuing to decline, achieving next fiscal year’s Operating Income target (+11.1%) will depend on cost control and margin recovery.
Net Cash ¥290.7B, Equity Ratio 66.8%, Current Ratio 270.2% indicate very strong financial health. Payout Ratio 30.2% and FCF coverage 2.6x support sustainable returns. However, CapEx/Depreciation 0.32x suggests investment at maintenance levels and limited growth investment momentum. Improving working capital efficiency (DSO ~86 days, decrease in accounts payable) could enhance medium-term cash generation.
This report is an earnings analysis document automatically generated by AI that analyzed XBRL financial statement data. It does not constitute a recommendation to buy or sell 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 necessary.