| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6605.4 B | ¥6445.9 B | +2.5% |
| Operating Income / Operating Profit | ¥376.2 B | ¥266.0 B | +41.5% |
| Ordinary Income | ¥197.2 B | ¥108.2 B | +82.3% |
| Net Income / Net Profit | ¥134.7 B | ¥188.4 B | -28.5% |
| ROE | 4.0% | 6.0% | - |
For the fiscal year ended March 2026, revenue was ¥6,605 B (YoY +¥159 B +2.5%), Operating Income was ¥376 B (YoY +¥110 B +41.5%), Ordinary Income was ¥197 B (YoY +¥89 B +82.3%), and Net Income attributable to owners of the parent was ¥135 B (YoY -¥54 B -28.5%). The operating phase showed a large increase in profit, with gross margin of 31.5% (prior year 29.6%, +1.9pt) and operating margin of 5.7% (prior year 4.1%, +1.6pt), indicating improved profitability. The Medical-Related segment (80.4% of sales) led with Operating Income of ¥523 B (+12.2%), and the Pharmaceutical-Related segment was steady at ¥121 B (+13.8%). Conversely, at the ordinary-income stage, interest expense of ¥97.7 B, foreign exchange losses of ¥41.9 B, and equity-method losses of ¥35.0 B weighed on results. Extraordinary items comprised Extraordinary Gains of ¥194 B (step-acquisition gains ¥51 B, gains on sales of fixed assets ¥45 B, subsidies ¥63 B) and Extraordinary Losses of ¥96 B (impairment ¥10 B, etc.), resulting in a net +¥98 B that boosted the bottom line; excluding these one-time items, Net Income declined YoY. The Pharma Packaging segment posted an Operating Loss of ¥16 B (widening deficit), remaining a challenge.
Revenue: Revenue was ¥6,605 B (+2.5%). By segment, Medical-Related was ¥5,309 B (+3.7%, constituent ratio 80.4%) led by steady demand for injection/infusion-related and artificial organ-related products domestically and abroad. Pharmaceutical-Related was ¥1,417 B (-0.9%, constituent ratio 21.4%) and remained flat, with sluggish contract manufacturing for kit formulation containers. Pharma Packaging was ¥621 B (-6.2%, constituent ratio 9.4%) and declined due to slowdown in domestic and international pharmaceutical glass/container markets.
Profitability: Operating Income was ¥376 B (+41.5%). Cost of sales ratio improved to 68.5% (prior year 70.4%, improvement 1.9pt), securing Gross Profit of ¥2,083 B (Gross Margin 31.5%, prior year 29.6%). SG&A was ¥1,707 B (SG&A ratio 25.8%, prior year 25.5% +0.3pt), kept to a modest increase, aided by head-office cost restraint (adjustment amount prior year ▲¥306 B → this period ▲¥262 B). By segment, Medical-Related Operating Income was ¥523 B (margin 9.9%), Pharmaceutical-Related ¥121 B (margin 8.5%) were solid, while Pharma Packaging recorded an Operating Loss of ▲¥16 B (margin ▲2.6%, from prior year ▲¥3 B, deficit widened) pressuring consolidated profit. Ordinary Income was ¥197 B (+82.3%), helped by higher operating profit, but non-operating expenses of ¥232 B (interest expense ¥97.7 B, forex loss ¥41.9 B, equity-method loss ¥35.0 B, etc.) suppressed margins and could not be fully offset by non-operating income of ¥53 B (interest income ¥22.1 B, etc.). Extraordinary items were Extraordinary Gains ¥194 B (step-acquisition gains ¥51 B, fixed asset sale gains ¥45 B, subsidies ¥63 B, etc.) and Extraordinary Losses ¥96 B (impairment ¥10 B, fixed asset retirements, etc.), net +¥98 B. Profit before income taxes of ¥295 B less income taxes of ¥137 B (effective tax rate 46.6%) and non-controlling interests of ¥22 B resulted in Net Income attributable to owners of the parent of ¥135 B (-28.5%). Excluding one-time items, pre-tax profit was lower YoY; conclusion: revenue and operating profit increased, but at the ordinary and net levels, interest, FX, tax burden and one-time items raise concerns over profit quality.
The Medical-Related segment recorded Revenue of ¥5,309 B (+3.7%) and Operating Income of ¥523 B (+12.2%, margin 9.9%), accounting for approximately 83% of Operating Income and serving as the core business. Volume and mix improvements in injection/infusion, artificial organ, and diabetes-related products domestically and internationally contributed. The Pharmaceutical-Related segment posted Revenue ¥1,417 B (-0.9%) and Operating Income ¥121 B (+13.8%, margin 8.5%); contract sales were flat but margin improvement delivered higher profit. The Pharma Packaging segment reported Revenue ¥621 B (-6.2%) and Operating Loss ¥16 B (margin ▲2.6%), worsening from ▲¥3 B the prior year; slowdown in pharmaceutical glass/container markets and heavy fixed-cost burden are causes. Other segments (real estate leasing, etc.) posted Revenue ¥71 B (-2.7%) and Operating Income ¥9 B (+283.7%, margin 13.2%), improving. Consolidated Operating Income of ¥376 B is dominated by the Medical-Related segment; correcting Pharma Packaging losses is key to improving consolidated margin.
Profitability: Operating margin 5.7% (prior year 4.1% +1.6pt) and Gross Margin 31.5% (prior year 29.6% +1.9pt) improved. ROE 4.0% decomposes to Net Profit Margin 2.0% × Total Asset Turnover 0.54 × Financial Leverage 3.62x, with net profit margin improvement contributing. Cash Quality: Operating Cash Flow (OCF) ¥546.7 B is 4.05x Net Income ¥135 B, indicating high quality, but OCF/EBITDA is 0.55x; expansion of working capital (Accounts Receivable ▲¥38 B, Inventory ▲¥97 B, Accounts Payable ▲¥20 B) and interest/tax payments (interest ▲¥92.8 B, corporate tax ▲¥103.7 B) reduced cash conversion. Investment Efficiency: ROA (on Ordinary Income basis) 1.7%, estimated ROIC 2.9% (NOPAT ¥268 B ÷ Invested Capital ¥9,250 B) remain low. Adjusted FCF after deducting interest and tax from OCF is about ¥350 B; investment returns at this level lag industry peers. Financial Health: Equity Ratio 27.6% (prior year 26.6% +1.0pt), D/E 2.62x (prior year 2.86x improved) indicates high leverage, though Debt/EBITDA 4.69x (prior year 5.85x) improved YoY. Interest Coverage (EBIT ¥376 B ÷ Interest Expense ¥97.7 B) is 3.85x — interest burden is tolerable but resilience to rate increases is limited. Current Ratio 138.8%, Quick Ratio 96.3% show tight short-term liquidity. Cash and deposits ¥978 B vs. short-term interest-bearing debt (short-term borrowings ¥1,860 B + CP ¥100 B + bonds maturing within 1 year ¥10 B + current lease liabilities ¥50 B) total ¥2,020 B, giving Cash/Short-term Debt 0.48x and indicating strained liquidity. Total interest-bearing debt ¥4,654 B (short-term ¥2,020 B + long-term ¥2,634 B) includes bonds ¥1,033 B (including CB) and lease liabilities ¥286 B.
Operating Cash Flow was ¥546.7 B (prior year ¥684.6 B, -20.2%). From operating cash subtotal ¥727.7 B, deterioration in working capital (Accounts Receivable ▲¥38 B, Inventory ▲¥97 B, Accounts Payable ▲¥20 B net outflow), interest paid ▲¥92.8 B, and corporate tax paid ▲¥103.7 B were deducted. Depreciation of ¥616.8 B yields estimated EBITDA of ¥993 B, and OCF/EBITDA of 0.55x indicates a low cash conversion rate. Working capital deterioration was driven by Accounts Receivable ¥1,757 B (+¥88 B) and Inventories ¥1,820 B (+¥149 B), lengthening DIO and DSO and raising CCC. Investing Cash Flow was ▲¥553.4 B, led by capital expenditures of ▲¥622.9 B (prior year ▲¥765.9 B). Capex focused on increasing production capacity in Medical-Related and establishing overseas bases. Resulting FCF was ▲¥6.8 B (slightly negative). Financing Cash Flow was ▲¥81.2 B, composed of long-term loan repayments ▲¥751.3 B, bond redemptions ▲¥510 B, net increase in short-term borrowings ¥268.9 B, net increase in CP ¥100 B, bond issuance +¥495.8 B, dividend payments ▲¥37.6 B, share buybacks ▲¥0.2 B, etc. Net interest-bearing debt increased and Debt/EBITDA remained high. Cash and deposits were ¥978 B (prior year ¥1,067 B, ▲¥89 B), so short-term liquidity requires continued management.
Against Ordinary Income of ¥197 B, Non-operating Income was ¥53 B (interest income ¥22 B, dividends ¥3.8 B, other ¥27 B) and Non-operating Expense was ¥232 B (interest expense ¥97.7 B, forex loss ¥41.9 B, equity-method loss ¥35.0 B, other ¥54.7 B), resulting in net non-operating balance of ▲¥179 B — a substantial negative. Interest burden is equivalent to about 26% of Operating Income, compressing ordinary-stage profitability. Extraordinary items were Extraordinary Gains ¥194 B (step-acquisition gains ¥51 B, gains on sale of fixed assets ¥45 B, subsidies ¥63 B, etc.) and Extraordinary Losses ¥96 B (impairment ¥10 B, etc.), net +¥98 B which boosted pre-tax profit. Excluding these temporary items, adjusted pre-tax profit is about ¥197 B, roughly the same as the prior year. On accrual metrics, OCF is 4.05x Net Income indicating high quality, but working capital buildup (AR and inventory increases) has reduced cash conversion (OCF/EBITDA 0.55x). Comprehensive income was ¥273 B, exceeding Net Income ¥135 B by ¥138 B, mainly due to foreign currency translation adjustments ¥103 B, unrealized gains on securities ¥26 B, and retirement benefit adjustments ¥14 B in Other Comprehensive Income (OCI). Equity-method investees’ share of OCI of ▲¥25 B partially offset these. Recurring earnings center on Operating Income ¥376 B; dependence on one-time items (net extraordinary +¥98 B) indicates scope for improving earnings quality.
Full-year guidance calls for Revenue ¥7,000 B (YoY +6.0%), Operating Income ¥400 B (+6.3%), Ordinary Income ¥274 B (+38.9%), Net Income attributable to owners of the parent ¥150 B (+11.4%), and DPS ¥12. Progress vs. plan: Revenue 94.4%, Operating Income 94.1%, Ordinary Income 72.0%, Net Income 89.8%. Operating Income is roughly on track, but Ordinary Income lags at 72.0%, likely due to interest, FX, and equity-method losses performing worse than assumed. Against the company plan of DPS ¥12, actual dividends were ¥29 (interim ¥10 + year-end ¥19), significantly higher, suggesting an in-period dividend policy revision (increase).
Annual dividend was ¥29 (interim ¥10 + year-end ¥19), and the company-calculated Payout Ratio is 79.7% (total dividends ¥41 B ÷ Net Income ¥135 B). This far exceeded the full-year guidance DPS ¥12, implying an extra year-end dividend was implemented. Share buybacks were minor at ¥0.2 B, and Total Return Ratio is about 79.8%. With FCF at ▲¥6.8 B and dividends ¥37.6 B, FCF coverage is ▲0.18x (negative), indicating dividends were financed from Operating Cash Flow or cash on hand. Given ¥4,654 B interest-bearing debt and D/E 2.62x, a payout ratio near 80% is high, but the excess over the forecast (actual ¥29 vs guidance ¥12) is likely a return of one-time items (extraordinary gains). Sustaining dividends in subsequent years will require stabilization of Operating Cash Flow and reduction in dependence on one-time gains.
High leverage and interest burden: D/E 2.62x, Debt/EBITDA 4.69x, interest-bearing debt ¥4,654 B with interest expense ¥97.7 B (equivalent to ~26% of Operating Income). In a rising-rate environment, ordinary income could be materially pressured; Interest Coverage 3.85x is within a safe zone but provides limited cushion. Short-term debt ratio 43.4% raises refinancing risk and makes liquidity management critical.
Deterioration in working capital efficiency: Accounts Receivable +¥176 B, Inventory +¥149 B increased working capital, reducing OCF/EBITDA to 0.55x and lowering cash conversion. If inventory and receivables compression is delayed, Operating Cash Flow may lag Net Income, constraining investment capacity and dividend funding.
Continued losses in Pharma Packaging: Operating Loss ¥16 B (margin ▲2.6%), widening from ▲¥3 B prior year. Heavy fixed costs and market slowdown mean delayed margin recovery could impede consolidated operating margin (5.7%) improvement and constrain capital efficiency (ROIC 2.9%).
Revenue & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.7% | 7.8% (4.6%–12.3%) | -2.1pt |
| Net Profit Margin | 2.0% | 5.2% (2.3%–8.2%) | -3.2pt |
Both operating and net margins are below industry medians; profitability is below industry average. Interest burden, FX impact, and Pharma Packaging losses are primary causes.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.5% | 3.7% (-0.4%–9.3%) | -1.2pt |
Revenue growth is slightly below industry median; growth is mid-to-lower. While Medical-Related shows solid growth, Pharma Packaging decline and Pharmaceutical-Related stagnation pull overall growth down.
※ Source: Company compilation
Improvement at the operating stage is confirmed, with notable YoY improvements in gross margin and operating margin centered on the Medical-Related segment. However, at ordinary and net stages, interest expense (¥97.7 B), forex loss (¥41.9 B), and equity-method loss (¥35.0 B) compress profits, and a high effective tax rate of 46.6% further contributes to a Net Profit Margin of 2.0%, well below the industry median of 5.2%. Monitoring priorities include improvement in non-operating balance (interest/FX hedging, performance of equity-method investees), normalization of tax burden, and the pace of decline in one-time items (net extraordinary +¥98 B).
Importance of working capital management is evident. Increases in receivables and inventory reduced OCF/EBITDA to 0.55x and resulted in FCF of ▲¥6.8 B, constraining investment capacity. Improving DIO and DSO will directly improve Operating Cash Flow quality and raise capital efficiency (ROIC 2.9%). Progress on deleveraging (Debt/EBITDA 4.69x) depends on achieving FCF positivity and reducing interest-bearing debt.
Correcting Pharma Packaging losses is a watershed for consolidated margin improvement. Operating Loss of ¥16 B (margin ▲2.6%) widened from ▲¥3 B prior year; actions such as fixed-cost reductions, market recovery, or exits deserve attention. Payout Ratio of 79.7% reflects high returns that include one-time gains, and given FCF coverage of ▲0.18x, sustaining dividends will require stable Operating Cash Flow and normalization of one-time items.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor as needed.