| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6081.4B | ¥6171.8B | -1.5% |
| Operating Income / Operating Profit | ¥115.8B | ¥132.2B | -12.4% |
| Equity-method Investment Income (Loss) | ¥5.8B | ¥16.0B | -63.4% |
| Ordinary Income | ¥110.2B | ¥117.6B | -6.3% |
| Net Income / Net Profit | ¥83.4B | ¥84.5B | -1.2% |
| ROE | 8.3% | 9.1% | - |
For the fiscal year ended March 2026, Revenue was ¥6,081B (YoY -¥90B, -1.5%), Operating Income was ¥115.8B (YoY -¥16B, -12.4%), Ordinary Income was ¥110.2B (YoY -¥7B, -6.3%), and Net Income was ¥83B (YoY -¥1B, -1.2%), resulting in lower revenue and earnings. Cost of goods sold ratio rose to 93.5%, compressing gross margin to 6.5%. Selling, general and administrative expenses (SG&A) increased to ¥278.9B (+2.6%), and Operating Margin fell to 1.9% (from 2.1%, -0.2pt). In non-operating items, dividend income of ¥18.4B and interest income of ¥3.0B were recorded, offset by interest expense of ¥15.9B and foreign exchange losses of ¥2.3B, producing a net non-operating loss of ¥5.5B. Extraordinary items included ¥21.9B of special gains, including ¥20.9B gains on sale of investment securities, and after an effective tax rate of 36.2% the company secured final Net Income of ¥83B.
[Revenue] Top-line was ¥6,081B, a slight decline of -1.5% YoY. By segment, Metals reported ¥5,156.9B (-2.1%) leading the contraction: Steel ¥2,500.9B (-3.0%), Aluminum & Copper ¥1,879.5B (-0.1%), Raw Materials ¥776.5B (-3.7%). Conversely, Machinery & Welding grew to ¥922.5B (+2.1%) with Machinery ¥637.3B (+4.2%) and Welding ¥285.2B (-2.3%). Sales mix: Metals 84.8%, Machinery & Welding 15.2%, indicating expansion of non-metallic businesses.
[Profitability] Cost of goods sold was ¥5,686.8B, raising the cost ratio to 93.5% and yielding Gross Profit of ¥394.6B (prior ¥404B, -2.3%) — Gross Margin 6.5% (flat YoY). SG&A rose to ¥278.9B (+2.6%), outpacing sales growth and increasing SG&A ratio to 4.6% (from 4.4%, +0.2pt). Operating Income was ¥115.8B (-12.4%), Operating Margin 1.9% (from 2.1%, -0.2pt). In non-operating items, dividend income ¥18.4B and interest income ¥3.0B were offset by interest expense ¥15.9B and FX losses ¥2.3B, producing non-operating loss of ¥5.5B and Ordinary Income ¥110.2B (-6.3%). Special gains totaled ¥21.9B (including ¥20.9B gains on sale of investment securities) and special losses were ¥1.5B (including impairment losses ¥1.1B), resulting in Profit Before Tax of ¥130.7B. After income taxes of ¥47.3B and non-controlling interests ¥0.5B, Net Income landed at ¥83.4B (-1.2%). Conclusion: decline in both revenue and profit.
Metals segment Operating Profit was ¥7,513 million (prior ¥8,871 million, -15.3%). Steel ¥4,738 million (prior ¥5,602 million), Aluminum & Copper ¥2,836 million (prior ¥3,094 million), Raw Materials -¥61 million (prior +¥173 million) — Raw Materials turned to a loss. Machinery & Welding segment Operating Profit was ¥3,685 million (prior ¥2,989 million, +23.3%), driven by Machinery ¥3,046 million (prior ¥2,285 million); Welding ¥638 million (prior ¥703 million) saw a slight decline. Segment profit margins: Metals 1.5%, Machinery & Welding 4.0% — Machinery & Welding is higher-margin. The shift in revenue mix and margin compression in Metals pressured consolidated profits.
[Profitability] Operating Margin 1.9% (from 2.1%, -0.2pt), Gross Margin 6.5% (flat YoY), SG&A Ratio 4.6% (from 4.4%, +0.2pt) indicating increased SG&A burden. ROE 8.3% (prior 9.7%), ROA 2.2% — profitability declined. [Cash Quality] Operating Cash Flow (OCF)/Net Income 1.01x, providing minimal cash backing. OCF/EBITDA 0.65x (EBITDA = Operating Income ¥115.8B + Depreciation ¥14.9B = ¥130.7B) indicates weakened cash conversion. [Investment Efficiency] Total Asset Turnover 1.59x, affected by inventory and receivables retention. Capex/Depreciation 0.72x, suggesting restrained growth investment. [Financial Soundness] Equity Ratio 26.3% (from 24.0%, +2.3pt) improved via equity strengthening. Current Ratio 128.3%, Quick Ratio 97.7% — short-term liquidity is limited. Debt-to-equity ratio 2.80x (from 3.16x) remains high but declining. Net Interest-bearing Debt (Interest-bearing Debt ¥533.96B - Cash ¥174.28B = ¥359.68B) to equity ratio 0.36x, indicating manageable financial burden in practice.
OCF improved to ¥84.5B (prior ¥69.9B, +20.9%). Operating cash subtotal ¥119.3B (prior ¥110.7B); working capital movements included inventory increase -¥26.6B (prior inventory reduction +¥31.7B) which reversed cash flow, accounts receivable decrease +¥16.5B (prior AR increase -¥103.9B) reflecting improved collections, and accounts payable decrease -¥15.3B (prior AP decrease +¥129.2B) causing cash outflow. After corporate tax payments -¥41.2B, interest received +¥22.4B, interest paid -¥16.0B, OCF was ¥84.5B. Investing Cash Flow was -¥15.8B: Capex -¥10.8B, intangible asset purchases -¥10.2B, proceeds from sale of securities +¥2.0B, acquisitions -¥8.7B. Financing Cash Flow was -¥109.1B: net repayment of short-term borrowings -¥69.2B, repayment of long-term borrowings -¥71.5B with borrowings +¥59.0B giving net -¥12.5B, and dividend payments -¥27.4B. Free Cash Flow (FCF = OCF + Investing CF) ¥68.7B covered dividend payments of ¥27.4B by 2.5x, indicating high sustainability of shareholder returns from internal funds. Ending cash was ¥174.3B (prior ¥213.8B), a decrease of -¥39.5B.
Ordinary Income ¥110.2B largely reflects operating performance, but non-operating expenses ¥38.4B (interest expense ¥15.9B, FX losses ¥2.3B) eroded Operating Income ¥115.8B to produce a non-operating net loss of -¥5.5B. Special gains ¥21.9B (including gains on sale of investment securities ¥20.9B, negative goodwill ¥1.0B) are transitory and not recurring; they account for about 17% of Profit Before Tax ¥130.7B. Equity-method investment income ¥5.8B (prior ¥16.0B) is included in non-operating income but is closely related to core operations and has a higher degree of recurrence. Dividend income ¥18.4B is also recurring. Comprehensive Income ¥109.0B exceeds Net Income ¥83.4B, with Other Comprehensive Income +¥25.6B (currency translation adjustments ¥9.7B, valuation differences on securities ¥12.7B, etc.) contributing positively. OCF/Net Income = 1.01x indicates minimal cash backing, while OCF/EBITDA 0.65x points to weak working capital management. Rising reliance on one-off special gains has lowered earnings quality; improving recurring earnings at the ordinary income level is a key issue.
Full-year guidance projects Revenue ¥6,860B (YoY +12.8%), Operating Income ¥121B (+4.5%), Ordinary Income ¥115B (+4.3%), Net Income ¥90B (+7.9%) — targeting higher revenue and earnings. Operating Margin guidance 1.76% (from FY actual 1.9%, -0.1pt) is conservative, premised on cost and SG&A control. Full-year EPS forecast ¥340, Dividend guidance ¥65 (Payout Ratio 19.1%; note the impact of the April 2025 1→3 stock split must be considered). With H1 Operating Income already ¥115.8B, the full-year ¥121B implies only +¥5.2B in H2, contingent on market conditions and normalization of working capital management. Deterioration in FX or interest rate environment poses downside risk; if inventory turns and DSO reduction are achieved, upside is possible.
Annual dividend ¥106 (interim ¥53 + year-end ¥53), Payout Ratio 30.8% (Dividend payments ¥27.4B / Net Income ¥83.4B × weighted average shares outstanding 264.2 million). With FCF ¥68.7B and dividends ¥27.4B, internal funding coverage is 2.5x, indicating sufficient payout capacity. No share buybacks were executed. Full-year forecasted dividend ¥65 reflects the 1→3 stock split effective April 1, 2025 (note) and includes a commemorative dividend of ¥13; comparable on a pre-split basis is effectively ¥52 × 3 shares. Financial capacity to sustain dividends is supported by cash ¥174B and Net Interest-bearing Debt ¥360B; improvements in working capital efficiency would create room for dividend increases.
Volatility in metal markets and margin compression risk: With Gross Margin at a low 6.5%, spreads between raw material costs and selling prices directly impact profits. A downturn in steel and non-ferrous markets can trigger inventory valuation losses and higher COGS ratio, rapidly compressing Operating Income. The recent loss in the Raw Materials segment (-¥61 million) demonstrates high sensitivity to market movements.
Deterioration in working capital management and declining cash conversion efficiency: Inventory ¥78,760 million (prior ¥74,840 million) increased by +¥3,920 million, and Accounts Receivable ¥183,700 million (prior ¥189,460 million) remains high despite a decrease. Inventory increase was a cash outflow of -¥2,660 million and OCF/EBITDA 0.65x is low relative to peers. Prolonged DSO increases credit risk and worsens liquidity.
Dependence on short-term debt and liquidity risk: Current liabilities ¥2,573.7B (including short-term borrowings ¥349.0B) account for 91% of total liabilities; cash ¥174.3B covers only 50% of short-term debt. Quick Ratio 97.7% below 100% indicates high refinancing sensitivity in adverse market conditions. Interest expense ¥15.9B would increase in a rising rate environment, further pressuring recurring earnings.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.9% | 3.4% (1.4%–5.0%) | -1.4pt |
| Net Margin | 1.4% | 2.3% (1.0%–4.6%) | -0.9pt |
Both Operating and Net margins are below industry medians, reflecting the constraints of a low-margin business model.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.5% | 5.9% (0.4%–10.7%) | -7.4pt |
Revenue growth lags the industry median of +5.9% substantially, reflecting market headwinds and the transition toward Machinery & Welding.
※ Source: Company compilation
Reliance on special gains and vulnerability of recurring profitability: Special gains ¥21.9B (gains on sale of investment securities ¥20.9B) account for ~17% of Profit Before Tax ¥130.7B, inflating pre-tax profit temporarily. At the operating level, Operating Margin 1.9% and Ordinary Income Margin 1.8% reveal a low-profit structure; SG&A ratio increase +0.2pt and flat gross margin limit operating leverage. Sustainable profit growth requires gross margin improvement and SG&A containment to strengthen operating-level profitability.
Room to improve working capital management and cash conversion: Inventory increase +¥3.92B and accounts payable decrease have depressed cash flow by ¥4.19B, and OCF/EBITDA 0.65x is low versus peers. Improvements in inventory turnover days and DSO reduction would bolster OCF and expand FCF, supporting dividend capacity and financial flexibility. Achieving full-year guidance depends on normalization of working capital management.
Shift of revenue mix toward non-metallic businesses: Machinery & Welding segment margin 4.0% significantly exceeds Metals 1.5%, and Machinery’s +33.3% profit growth partially offset consolidated declines. If non-metallic revenue share expands from 15.2% toward >20%, margin mix improvement and reduced market sensitivity are expected. Allocation of investment by segment and progress of growth strategy are key.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in specific securities. Industry benchmarks are compiled by the company from public financial statements for reference. Investment decisions are your responsibility; consult advisors as needed before acting.
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