| Metric | This Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5450.3B | ¥5283.9B | +3.1% |
| Operating Income / Operating Profit | ¥167.4B | ¥157.6B | +6.2% |
| Share of Profit (Loss) of Associates (Equity Method) | ¥-0.7B | ¥-0.3B | -135.5% |
| Ordinary Income | ¥172.4B | ¥160.1B | +7.7% |
| Net Income | ¥91.5B | ¥79.3B | +15.4% |
| ROE | 7.5% | 7.2% | - |
FY2026 results: Revenue ¥5,450B (vs prior year +¥166B +3.1%), Operating Income ¥167B (vs prior year +¥10B +6.2%), Ordinary Income ¥172B (vs prior year +¥12B +7.7%), Net Income attributable to owners of parent ¥120B (vs prior year +¥30B +17.4%). The company delivered profit growth outpacing revenue growth; Operating margin improved slightly to 3.1% (prior 3.0%), and Net margin improved to 2.2% (prior 1.9%) for a +0.3pt increase. Gross margin rose to 11.9% (prior 11.6%) for a +0.3pt improvement. SG&A increased to ¥483B (prior ¥455B), but the increase in gross profit absorbed this and supported operating-level gains. Non-operating items included Dividend Income ¥4.2B and Interest Income ¥1.3B which more than covered Interest Expense ¥1.9B. Extraordinary items included Impairment Losses ¥1.9B, resulting in a small net extraordinary loss of ¥1.8B, and the final profit recorded a substantial increase. Operating Cash Flow was strong at ¥196B (vs prior year +22.4%), Free Cash Flow generated ¥132B, indicating good earnings quality.
[Revenue] Revenue expanded moderately to ¥5,450B (prior ¥5,284B, +3.1%). The core segment—Housing Equipment, Piping Materials & HVAC—grew strongly to ¥2,235B (external customer sales basis; prior ¥2,097B, +6.6%), supported by price pass-through and firm demand. Building & Exterior recorded ¥638B (prior ¥573B, +11.3%) delivering double-digit growth as civil engineering and exterior demand recovered. Conversely, Industrial Machinery declined slightly to ¥1,054B (prior ¥1,074B, -1.8%), and Energy decreased to ¥175B (prior ¥186B, -5.9%), reflecting unit price declines and project downsizing in some segments. Industrial Equipment was flat at ¥777B (prior ¥778B, -0.0%), and Construction Machinery edged up to ¥371B (prior ¥369B, +0.6%). Segment composition: Housing Equipment, Piping Materials & HVAC accounted for 41% of total, Industrial Machinery 19%, Building & Exterior 12%, with housing-related growth driving consolidated revenue.
[Profitability] Cost of goods sold was ¥4,800B (prior ¥4,671B, +2.8%), below revenue growth, leading to gross margin improvement to 11.9% (+0.3pt). SG&A rose to ¥483B (prior ¥455B, +6.1%), lifting SG&A ratio to 8.9% (prior 8.6%, +0.3pt), but the absolute increase in gross profit supported expansion in Operating Income to ¥167B (prior ¥158B, +6.2%). Operating margin edged up to 3.1% (prior 3.0%). Non-operating income totaled ¥8.4B, centered on Dividend Income ¥4.2B and Interest Income ¥1.3B; non-operating expenses were ¥3.4B, including Interest Expense ¥1.9B and Foreign Exchange Losses ¥0.5B, resulting in Ordinary Income of ¥172B (prior ¥160B, +7.7%). Extraordinary gains were ¥0.8B (including gain on sale of fixed assets ¥0.2B); extraordinary losses were ¥2.7B (including Impairment Losses ¥1.9B and Loss on Retirement of Fixed Assets ¥0.2B), leading to Profit before Income Taxes of ¥171B (prior ¥156B, +9.2%). Income taxes were ¥49B (prior ¥53B, -7.3%), reflecting a lower effective tax rate. After deducting Non-controlling Interests ¥1.0B, Net Income attributable to owners of parent was ¥120B (prior ¥102B, +17.4%). In conclusion, this was a revenue- and profit-expanding result, with gross margin improvement and reduced tax burden as main drivers of improved profitability.
By reportable segment, Housing Equipment, Piping Materials & HVAC delivered Operating Income ¥111B (prior ¥99B, +12.1%) with a margin of 4.7% (prior 4.5%), the largest contributor to earnings. Industrial Equipment posted Operating Income ¥28B (prior ¥26B, +9.1%) with margin improving to 3.6% (prior 3.3%). Industrial Machinery recorded Operating Income ¥37B (prior ¥43B, -14.0%) with margin declining to 3.5% (prior 3.8%) due to deteriorated project profitability. Building & Exterior posted Operating Income ¥21B (prior ¥22B, -3.9%) with margin slightly down to 3.3% (prior 3.5%). Construction Machinery showed Operating Income ¥14B (prior ¥10B, +32.0%) with margin improving substantially to 3.7% (prior 2.8%). Energy produced Operating Income ¥2.4B (prior ¥2.4B, flat) with a low-margin 1.4%. Other segments reported Operating Income ¥1.3B (prior ¥2.8B, -53.1%) with margin worsening to 0.6% (prior 1.3%). Consolidated Operating Income after corporate eliminations was ¥167B, driven by margin improvements in Housing Equipment, Piping Materials & HVAC and Construction Machinery, partially offset by margin declines in Industrial Machinery and Building & Exterior.
[Profitability] Operating margin was 3.1% (prior 3.0%), and Net margin improved to 2.2% (prior 1.9%) for a +0.3pt improvement. Gross margin rose to 11.9% (prior 11.6%), aided by price pass-through and mix improvement. ROE was 7.5% (disclosed), improved from the prior year primarily driven by Net margin expansion. [Cash Quality] Operating Cash Flow (OCF) was ¥196B (prior ¥160B, +22.4%), 1.6x Net Income ¥120B, indicating high cash conversion; OCF/EBITDA was 1.07x, showing good conversion of earnings into cash. The accrual ratio was -2.5%, indicating a cash-led earnings structure. [Investment Efficiency] ROA on an Ordinary Income basis was 5.8% (disclosed), and Total Asset Turnover was 1.80x (Revenue ¥5,450B / Total Assets ¥3,035B), reflecting stable asset efficiency. Total assets increased +5.3% year-over-year, outpacing Revenue growth of +3.1%. [Financial Soundness] Equity Ratio was 40.0% (disclosed), up +2.2pt from 37.8% prior year. Current Ratio was 124.2% (Current Assets ¥2,153B / Current Liabilities ¥1,733B), and Quick Ratio was 112.6%, indicating standard liquidity. Interest-bearing debt consisted of Short-term Borrowings ¥36B and Long-term Borrowings ¥12B, totaling ¥48B. Debt/EBITDA was 0.26x, and Interest Coverage exceeded 88x (Operating Income ¥167B / Interest Expense ¥1.9B), indicating very strong debt capacity. Cash and Deposits were ¥486B (prior ¥439B, +10.8%), providing 28% cash coverage against Short-term Liabilities ¥1,733B, resulting in a net cash position.
Operating Cash Flow was ¥196B (prior ¥160B, +22.4%). Profit before income taxes ¥171B was adjusted for Depreciation & Amortization ¥16B, Goodwill Amortization ¥2B, etc. Working capital changes included a decrease in Trade Receivables contributing +¥50B cash inflow, an increase in Inventories of -¥17B, and a decrease in Trade Payables of -¥10B, with tax payments -¥54B, resulting in OCF of ¥196B. OCF before working capital changes (subtotal) was ¥245B, a 1.47x ratio to Operating Income ¥167B, indicating strong support from non-cash charges and working capital management. Investing Cash Flow was -¥64B, driven by Acquisition of Intangible Assets -¥56B (IT/software investments), Acquisition of Tangible Fixed Assets -¥14B, and Acquisition of Subsidiary Shares with changes in consolidation scope -¥19B; proceeds from sale of investment securities were +¥1.5B. Free Cash Flow was ¥132B (OCF ¥196B + Investing CF -¥64B), ample to cover Financing Cash Flow -¥91B (Dividend Payments -¥41B, Net Repayment of Borrowings -¥47B, Treasury Stock Purchases -¥0.1B, etc.). Cash and Cash Equivalents at year-end were ¥485B (opening ¥437B, net increase +¥43B). FCF-to-Dividend coverage was 3.2x, supporting high-quality and sustainable cash generation.
Ordinary Income ¥172B comprised Operating Income ¥167B plus Non-operating Income ¥8.4B (mainly Dividend Income ¥4.2B, Interest Income ¥1.3B) less Non-operating Expenses ¥3.4B (Interest Expense ¥1.9B, FX losses ¥0.5B, etc.), indicating small but stable positive contribution from non-operating items. Extraordinary items were minor: Impairment Losses ¥1.9B and Loss on Retirement of Fixed Assets ¥0.2B, resulting in net extraordinary loss ¥1.8B. Thus, operating-stage profits reflect substantive recurring earning power. Comprehensive Income was ¥156B (Owners of Parent ¥153B); the ¥36B gap relative to Net Income ¥120B was mainly due to Other Comprehensive Income on available-for-sale securities valuation gains +¥31B and Foreign Currency Translation Adjustments +¥3B. The valuation gains reflect mark-to-market increases in investment securities and are unrealized non-cash gains; Net Income, however, was supported by working capital improvement and strong OCF, indicating high earnings quality. OCF/Net Income was 1.6x and the accrual ratio was -2.5%, confirming a cash-led earnings profile with limited reliance on non-cash profits.
Full-year guidance was Revenue ¥5,460B (vs prior year +0.2%), Operating Income ¥170B (+1.6%), Ordinary Income ¥175B (+1.5%), and Net Income attributable to owners of parent ¥115B. Actual results: Revenue ¥5,450B (99.8% of guidance), Operating Income ¥167B (98.5%), Ordinary Income ¥172B (98.6%), Net Income ¥120B (104.5%). Revenue and Operating Income were slightly below guidance, while Net Income beat due to tax recognition in the latter half of the year and stable non-operating income supporting Net Income. Guidance EPS was 542.17円 versus actual EPS 571.06円 (+5.3% beat). Forecasted dividend was ¥73 versus actual total dividend ¥190 (interim ¥76 + year-end ¥114), so both earnings and dividends outperformed the conservative outlook.
Annual dividend was ¥190 (interim ¥76, year-end ¥114), a significant increase from prior year ¥72 (interim ¥22, year-end ¥50). Payout Ratio was 34.9% (calculation basis: disclosed value ~39.0% derived from 190円 / EPS 571.06円 × 21,050 thousand shares / Net Income attributable to owners of parent ¥120B as disclosed). Total dividends amounted to ¥41B (including ¥0.4B of trust-held shares). With Free Cash Flow ¥132B, dividend coverage is 3.2x, providing ample headroom. Share buybacks were minimal at ¥0.1B, so Total Return Ratio is effectively dividend-centric. A payout ratio of 39.0% is at a sustainable level; given Cash & Deposits ¥486B, OCF ¥196B, and Interest-bearing Debt ¥48B, the probability of continued stable dividends is high.
Low-margin, high-volume business model risk: Thin margins—Gross margin 11.9%, Operating margin 3.1%—make profitability vulnerable to SG&A increases or intensified price competition. SG&A increased +6.1% year-over-year, outpacing revenue growth of +3.1%, so cost discipline is a challenge. Segment-level margin deterioration in Industrial Machinery (Operating margin 3.5%, prior 3.8%) and Building & Exterior (3.3%, prior 3.5%) implies project profitability volatility that could directly impact consolidated earnings.
Working capital management risk: Days Sales Outstanding are somewhat long at 64 days (Trade Receivables ¥962B / Annual Revenue ¥5,450B × 365 days), and prolonged credit terms could increase credit costs. Inventories rose to ¥202B (prior ¥183B, +10.7%), elevating inventory risk. The mid-period Trade Receivables reduction of +¥50B may be a temporary improvement; sustained credit and inventory management will be key to future cash generation.
Liquidity and refinancing risk: Short-term liabilities ratio is 74.8% (Current Liabilities ¥1,733B / Total Liabilities ¥1,821B), with Short-term Borrowings ¥36B, Electronically Recorded Obligations ¥568B, and Trade Payables ¥925B concentrated, exposing the company to risks around CP rollovers and short-term facility renewals in volatile markets. Cash/Short-term Liabilities ratio is 28% (Cash ¥486B / Current Liabilities ¥1,733B), relatively low and contingent on continued stable OCF.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.1% | 3.4% (1.4%–5.0%) | -0.3pt |
| Net Margin | 1.7% | 2.3% (1.0%–4.6%) | -0.6pt |
Both Operating Margin and Net Margin are below industry medians, indicating relatively low profitability even within specialized trading companies.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.1% | 5.9% (0.4%–10.7%) | -2.8pt |
Revenue growth lags the industry median by 2.8pt, indicating a modest growth pace among peers.
※ Source: Company compilation
Sustainability of profit growth anchored in Housing Equipment, Piping Materials & HVAC: The core segment generated Operating Income ¥111B (66% of consolidated operating income) with a 4.7% margin, outperforming the company average, driven by price pass-through and steady demand. Construction Machinery also saw margin expand to 3.7% (+0.9pt), broadening the base of profitability. However, the combined decline in Industrial Machinery and Building & Exterior (-¥7B aggregate profit decline) highlights variability in project mix and order-level profitability; portfolio optimization and selective order intake will be key.
Sustainability of cash generation and working capital efficiency: Strong OCF ¥196B, OCF/Net Income 1.6x, and FCF ¥132B indicate high earnings quality and a solid base to support dividends and investments. The mid-period Trade Receivables reduction (+¥50B) contributed, but rising inventories and declining Trade Payables represent headwinds; improvement in DSO, inventory turnover, and payable turnover will be critical for medium-term margin expansion. The ¥56B acquisition of intangible assets signals accelerated IT/DX investment, and how these investments translate into gross margin and SG&A ratio improvements in subsequent years will warrant monitoring.
This report was automatically 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 public financial statements. Investment decisions are your responsibility; please consult professionals as needed before making any investment decisions.