TOKYO SANGYO CO.,LTD. FY2026 FY Earnings Report

クイックビュー

Executive Summary

The fiscal year ending March 2026 results showed Revenue ¥632.4B (YoY -¥74.8B -10.6%), Operating Income ¥34.3B (YoY +¥11.6B +51.2%), Ordinary Income ¥40.5B (YoY +¥13.5B +50.0%), and Net Income attributable to owners of the parent ¥22.0B (YoY +¥3.9B +21.7%), representing a decline in sales but a significant increase in profits. Revenue declined double-digits due to fewer projects in the Environmental/Chemical/Mechanical Business, but recognition of several large projects in the Power Business and a substantial improvement in gross margin (17.9%, YoY +4.8pt) drove Operating Income up by roughly 50%. Operating margin improved to 5.4% (YoY +2.2pt) under a SG&A ratio managed at 12.4%, improving the profit structure. At the ordinary level, dividend income ¥4.7B and foreign exchange gains ¥1.5B contributed, raising ordinary margin to 6.4% (YoY +2.6pt). Net Income was constrained by large swings in non-recurring items (Special Gains ¥25.0B, Special Losses ¥35.3B), but a lower effective tax rate and reversal of deferred tax assets secured year-over-year profit growth. Operating Cash Flow (OCF) was ¥47.9B, about 2.2x Net Income, and a shift to positive Investing Cash Flow (proceeds from fixed asset sales, etc.) produced Free Cash Flow of ¥98.7B, generating abundant cash.

業績変動要因

[Revenue] Revenue ¥632.4B (-10.6%) was pulled down by a large decline in the Environmental/Chemical/Mechanical Business ¥334.2B (-33.0%). That segment experienced inspection timing shifts for chemical and petroleum refining plant projects and a lull between large projects, producing a swing from large prior-year project recognition. Conversely, the Power Business ¥238.7B (+51.6%) recognized multiple large-scale orders for thermal power plant-related equipment, nearly doubling year-over-year. The Consumer Industry Business ¥59.4B (+16.1%) remained solid due to increased demand for water-saving automatic faucets and eco-friendly packaging bags. Segment composition was Power 37.7%, Environmental/Chemical/Mechanical 52.9%, Consumer Industry 9.4%, with the Environmental/Chemical/Mechanical share falling significantly from 70.5% the prior year and the Power Business gaining prominence. Revenue by recognition type comprised Point-in-Time ¥522.1B and Over-Time ¥106.1B, with the Over-Time ratio declining from 27.1% to 16.8%, confirming a reduction in project-based work.

[Profit & Loss] Cost of sales ¥519.4B (cost of sales ratio 82.1%) decreased significantly from ¥614.5B the prior year; cost compression and improved project mix outpaced the revenue decline, lifting gross margin to 17.9% (from 13.1%, +4.8pt). SG&A ¥78.7B (prior year ¥70.0B, +12.4%) rose in absolute terms despite lower sales, pushing the SG&A ratio to 12.4% (from 9.9%, +2.5pt), likely due to higher personnel and outsourcing costs and fixed site operating expenses. Operating Income ¥34.3B (operating margin 5.4%) increased +51.2% YoY, as gross margin improvements more than offset SG&A increases. Segment operating income: Power ¥21.8B (margin 9.1%), Environmental/Chemical/Mechanical ¥9.7B (margin 2.9%), Consumer Industry ¥2.7B (margin 4.6%); the Power Business accounted for about 64% of consolidated operating profits. Despite lower sales, the Environmental/Chemical/Mechanical segment achieved operating income +72.5% with substantial margin improvement, driven by completion of unprofitable projects and selection of higher value-added work. Non-operating income ¥9.7B (prior year ¥8.6B) was supported by dividend income ¥4.7B and FX gains ¥1.5B; after deducting non-operating expenses ¥3.5B (including interest expense ¥2.3B), Ordinary Income was ¥40.5B (+50.0%). Net special items totaled a net loss of ¥-10.3B, with Special Gains ¥25.0B (fixed asset sale gains ¥24.4B) and Special Losses ¥35.3B (impairment losses ¥3.8B, valuation losses on investment securities ¥0.4B, etc.), dragging Pre-tax Income to ¥30.1B (prior year ¥32.5B, -7.3%). Income taxes ¥5.0B (effective tax rate 16.6%) fell sharply from ¥10.9B the prior year, with reversal of deferred tax assets (¥-10.0B) easing tax burden. Net Income attributable to owners of the parent was ¥22.0B (+21.7%), resulting in a combination of revenue decline but significant profit increase.

セグメント別分析

Power Business (Revenue ¥238.7B, Operating Income ¥21.8B, margin 9.1%) maintained high growth and high profitability with Revenue +51.6% and Operating Income +46.5% YoY. Multiple large orders for thermal power plant equipment and nuclear-related equipment were concentrated and inspected, boosting revenue. The 9.1% operating margin was the highest among segments, aided by high value-added technical services and maintenance/upgrade projects. Environmental/Chemical/Mechanical Business (Revenue ¥334.2B, Operating Income ¥9.7B, margin 2.9%) recorded Revenue -33.0% but Operating Income +72.5%, improving margin from 0.9% to 2.9%. While large plant projects were in a trough, completion of loss-making projects and selective awarding of high-margin projects dramatically improved profitability. The Over-Time revenue composition ratio fell from 38.4% to 31.6%, reflecting fewer project-type orders. Consumer Industry Business (Revenue ¥59.4B, Operating Income ¥2.7B, margin 4.6%) was stable with Revenue +16.1% and Operating Income +27.8%, supported by public facility demand for water-saving automatic faucets and increased demand for eco-friendly packaging materials, serving as a stable cash cow. Depreciation was ¥5.4B (down from ¥6.3B), allocated as Power ¥0.1B, Environmental/Chemical/Mechanical ¥2.5B, Consumer Industry ¥2.7B, confirming relatively higher fixed asset utilization in Consumer Industry.

主要財務指標

[Profitability] Operating margin 5.4% improved +2.2pt from 3.2%, driven by a substantial gross margin improvement to 17.9% (from 13.1%, +4.8pt). ROE 9.9% (Net Income ¥22.0B ÷ Average Equity ¥222.2B) improved from 8.6%, primarily due to higher net margin 3.5% (prior year 2.6%). ROA 4.3% (Ordinary Income ¥40.5B ÷ Average Total Assets ¥933.1B) improved from 3.3% (+1.0pt). [Cash Quality] OCF ¥47.9B is 2.2x Net Income ¥22.0B; increases in contract liabilities ¥103.3B and accounts payable ¥94.7B supported cash generation. The accrual ratio (Net Income - OCF) / Total Assets is -2.5%, negative and indicating cash generation in excess of reported profits, but dependent on temporary working capital factors. OCF/Revenue ratio 7.6% was flat YoY at 7.6%. [Investment Efficiency] Total asset turnover 0.62x declined from 0.84x due to increases in contract assets, accounts receivable, and inventories, weakening asset efficiency. DSO (Accounts Receivable ÷ Daily Sales) is 192 days, +30 days from 162 days, indicating longer collection cycles. CCC (cash conversion cycle) is 129 days, composed of Inventory 11 days + DSO 192 days - DPO (days payable outstanding) 74 days, showing significant room to improve working capital efficiency. Capital expenditures ¥4.9B / Depreciation ¥5.4B = 0.91x indicates an appropriate maintenance and renewal pace. [Financial Health] Equity ratio 24.7% (prior year 24.8%) remained flat, indicating a thin capital base. D/E ratio 3.04x (interest-bearing debt ¥100.5B ÷ Equity ¥252.7B) reflects high leverage, composed of short-term borrowings ¥80.4B, long-term borrowings ¥20.2B, and corporate bonds ¥30.0B (¥30.0B maturing within one year), with short-term debt dependence at 80.0%. Current ratio 112.5%, quick ratio 109.4% provide minimal short-term payment ability, while Cash ¥193.7B / Short-term borrowings ¥80.4B = 2.41x indicates a strong near-term liquidity cushion. Interest coverage (OCF ¥47.9B ÷ Interest Paid ¥2.3B) is 20.8x, indicating ample ability to service interest. Debt/EBITDA (interest-bearing debt ¥100.5B ÷ EBITDA ¥39.6B) is 2.54x, at the upper end of investment-grade range.

キャッシュフロー分析

OCF ¥47.9B declined -10.5% from ¥53.5B the prior year but maintained high cash conversion at 2.2x Net Income ¥22.0B. Pre-tax income before tax adjustments ¥30.1B plus depreciation ¥5.4B, adjusted for non-cash items (impairment losses ¥3.8B, equity-method investment loss ¥0.2B, changes in allowances ¥0.6B) produced an OCF subtotal of ¥47.0B. Working capital changes included an increase in trade receivables -¥66.8B (DSO extension) and an increase in advance payments -¥97.7B (prepayments for projects) as cash outflows, while increases in accounts payable +¥94.7B and contract liabilities +¥103.3B (receipt of advances) provided large cash inflows, resulting in a net positive contribution. Inventories increased -¥11.0B, indicating project inventory buildup. Interest and dividend received ¥5.6B, interest paid -¥2.3B, and corporate taxes paid -¥2.5B led to final OCF of ¥47.9B. Investing Cash Flow was +¥50.8B, significantly positive due to proceeds from fixed asset sales (corresponding to the Special Gain on fixed asset sales ¥24.4B). The breakdown included CapEx -¥4.9B, intangible asset acquisitions -¥0.02B, no purchases of investment securities, proceeds from sales/redemptions ¥0.2B, and recoveries of long-term loans ¥2.3B, indicating notable cash generation from asset liquidation. Free Cash Flow (OCF + Investing CF) was ¥98.7B, up significantly from ¥57.1B the prior year, driven by asset sale effects. Financing Cash Flow was -¥13.8B, composed of net short-term borrowings -¥1.4B, long-term debt repayments -¥1.9B, share buybacks -¥1.7B, and dividend payments -¥9.8B, resulting in a slight reduction in net interest-bearing debt. Ending cash balance was ¥193.7B (up ¥87.1B from ¥106.6B), substantially increasing liquidity.

収益の質

Recurring income comprises Operating Income ¥34.3B and Non-operating income ¥9.7B (dividend income ¥4.7B, FX gains ¥1.5B, other ¥1.0B), with non-operating income as a percent of Revenue at 1.5%, a healthy level. Special items swung to a net -¥10.3B, with Special Gains ¥25.0B (fixed asset sale gains ¥24.4B, gains on sale of investment securities ¥0.1B, insurance proceeds etc. ¥0.4B) offset by Special Losses ¥35.3B (impairment losses ¥3.8B, losses on disposal of fixed assets ¥0.4B, valuation losses on investment securities ¥0.4B, other ¥0.5B). Fixed asset sale gains stem from asset liquidation of land/buildings and are non-recurring; impairment losses are also one-off. The gap between Ordinary Income ¥40.5B and Pre-tax Income ¥30.1B (-25.7%) reflects the impact of special items, so recurring earning power should be evaluated at the ordinary income level. Comprehensive Income ¥52.0B significantly exceeded Net Income ¥22.0B, aided by Other Comprehensive Income ¥29.8B (valuation differences on available-for-sale securities ¥22.6B, actuarial adjustments related to retirement benefits ¥3.2B, foreign currency translation adjustments ¥0.7B, deferred hedge gains/losses ¥0.2B). The ¥22.6B valuation gain on securities reflects market valuation of investment securities ¥101.1B, showing increased unrealized gains with market improvement. OCF ¥47.9B / EBITDA ¥39.6B = 1.21x indicates solid cash backing for profits, supported by increases in contract liabilities and accounts payable, but attention is required for potential cash outflows when timing reversals occur. The accrual ratio -2.5% is negative, showing cash generation beyond profits, but reliant on temporary working capital factors and thus sustainability should be monitored.

業績予想・ガイダンス

Full Year guidance is Revenue ¥630.0B (YoY -0.4%), Operating Income ¥25.0B (YoY -27.0%), Ordinary Income ¥25.0B (YoY -38.2%), and Net Income attributable to owners of the parent ¥17.0B (YoY -22.7%), indicating an expected profit decline. H1 results Revenue ¥632.4B already represent 100.4% of the full-year Revenue guidance, suggesting near achievement, with the company planning flat revenue and a significant operating profit decline in H2. The -27.0% operating income forecast likely incorporates the drop-off of large Power Business projects concentrated in H1 and the non-repeatability of one-off gains such as fixed asset sale profits, reflecting conservative assumptions. The -38.2% Ordinary Income decline likely factors in reduced non-operating income. EPS is forecast at ¥65.08, well below H1 realized ¥96.34, assuming large H2 profit decline. Dividend guidance is Annual ¥20 (H1 paid ¥38), a substantial cut reflecting conservative assumptions for H2. Since H1 already exceeded full-year guidance, there is upside potential for upward revision, but the company appears cautious about H2 project troughs and one-off gain evaporation. Progress rates are Revenue 100.4%, Operating Income 137.0%, Ordinary Income 162.0%, suggesting upside risk to guidance, but H2 order intake and project progress will be key.

株主還元

Annual dividend paid was Interim ¥19 + Year-end ¥19 = ¥38 (same as prior year ¥18? — original states previous year 18 yen; retain figures as presented) with a payout ratio of 43.3%, maintaining a stable level. Total dividends amounted to ¥9.8B (prior year ¥9.5B), and dividend payments relative to Free Cash Flow were 9.9%, indicating room. Share buybacks totaled ¥1.7B, making total shareholder returns ¥11.5B and a Total Return Ratio of 52.2%. Dividend + buyback FCF coverage was 8.6x, indicating ample return capacity. Cash and deposits ¥193.7B are roughly 17x dividends + buybacks, so liquidity does not pose concerns for dividend sustainability. The full-year dividend guidance ¥20 is a substantial cut from H1 paid ¥38, reflecting the assumed H2 profit decline. However, given H1 results significantly exceed full-year guidance, an upward revision could lead to dividend upside. DOE (dividend on equity) is 3.9%, with a dividend policy of stable dividends while incorporating performance linkage. Treasury stock held at period-end was 2,558 thousand shares (8.9% of outstanding shares), leaving scope to use buybacks for capital efficiency and flexible returns.

リスク要因

1. Project execution and cost management risk: Large plant projects, mainly in the Environmental/Chemical/Mechanical Business, have long lead times and are exposed to risks from material price volatility, schedule delays, and foreign exchange movements, which can erode profitability. Accumulation of contract liabilities ¥185.98B and advances indicates strong order intake but future cost variability could pressure margins. Although gross margin improved to 17.9% in H1, deterioration of project mix or realization of unprofitable projects in H2 could lower margins.

2. Short-term debt concentration and refinancing risk: Of interest-bearing debt ¥100.5B, short-term borrowings ¥80.4B (80.0%) and corporate bonds maturing within one year ¥30.0B together bring short-term liabilities to ¥110.4B, raising refinancing risk. Cash ¥193.7B secures short-term liquidity now, but with rising interest rates financing costs could increase, and OCF ¥47.9B may be insufficient to fully repay short-term debt, making ongoing refinancing a premise. High D/E ratio 3.04x raises concern over tightened financial constraints if performance deteriorates.

3. Working capital efficiency and collection risk: DSO 192 days indicates prolonged receivable collection cycles; stricter contract or inspection conditions are delaying collections. Trade receivables ¥332.8B represent 52.6% of Revenue; collection delays, discount negotiations, or bad debts could substantially pressure OCF. CCC 129 days shows lengthy working capital tie-up; project extensions or inspection delays could strain liquidity. Increases in advance payments and contract liabilities provide temporary cash inflows but could reverse and concentrate cash outflows if timing shifts.

業種ベンチマーク（参考・当社調べ）

収益性・リターン

Both operating margin and net margin exceed the industry median, placing profitability in the upper range.

成長性・資本効率

Revenue growth rate is well below the industry median, placing growth in the lower tier due to project troughs.

※Source: Company compilation

決算上の注目ポイント

1. Profitability improvement despite revenue decline: Despite Revenue -10.6%, Operating Income +51.2% was achieved, with gross margin improving to 17.9% (YoY +4.8pt) and operating margin to 5.4% (YoY +2.2pt). Concentration of high-margin projects in the Power Business and completion of loss-making projects in Environmental/Chemical/Mechanical greatly improved project mix. ROE 9.9% exceeds historical levels, evidencing qualitative improvement in profit structure. However, while operating margin 5.4% exceeds the industry median 3.4%, H2 project troughs and the fall-off of fixed asset sale gains underpin the next fiscal year guidance of Operating Income -27%. The sustainability of profitability improvements depends on continuation of high-margin Power Business projects and disciplined order quality management in Environmental/Chemical/Mechanical.

2. Cash generation and return capacity: OCF ¥47.9B is 2.2x Net Income and Free Cash Flow ¥98.7B demonstrates abundant cash generation. While proceeds from fixed asset sales contributed significantly, operating cash conversion is also healthy. Dividends ¥38 and buybacks ¥1.7B resulting in Total Return Ratio 52.2% are sustainable, with FCF coverage 8.6x showing high return capacity. Cash balance ¥193.7B rose +81.7% YoY, providing a large liquidity cushion. H2 guidance is conservative, but H1 results already exceed full-year guidance, leaving upside potential for upward revisions and dividend increases.

3. Financial leverage and short-term debt concentration risk: D/E ratio 3.04x and short-term debt dependence 80% create a structure with high refinancing risk. Cash ¥193.7B secures near-term liquidity, but OCF ¥47.9B is insufficient to fully repay short-term liabilities ¥110.4B, making continual refinancing a premise. Debt/EBITDA 2.54x and interest coverage 20.8x indicate good debt service capacity, but rising interest rates or earnings deterioration could tighten financing conditions. Equity ratio 24.7% signals a thin capital base; capital enhancement or reduction of interest-bearing debt to improve financial profile is a mid-term priority.

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This report is an AI-generated financial analysis document automatically produced from XBRL earnings release data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are compiled by the firm from public financial statements for reference. Investment decisions are your own responsibility; consult a professional advisor as needed.