| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥8327.5B | ¥8378.4B | -0.6% |
| Operating Income / Operating Profit | ¥261.6B | ¥258.2B | +1.3% |
| Equity-method Investment Income (Loss) | ¥4.6B | ¥3.1B | +48.2% |
| Ordinary Income | ¥277.5B | ¥261.3B | +6.2% |
| Net Income / Net Profit | ¥216.2B | ¥209.4B | +3.2% |
| ROE | 8.8% | 9.7% | - |
For the fiscal year ended March 2026, the company recorded Revenue of ¥8327B (YoY -¥51B, -0.6%), a slight decline, while securing increases in Operating Income of ¥262B (YoY +¥3B, +1.3%), Ordinary Income of ¥277B (YoY +¥16B, +6.2%), and Net Income of ¥216B (YoY +¥7B, +3.2%). Despite the marginal revenue decline, gross margin improved to 10.1% from 9.4% a year earlier (+0.7pt), and the operating margin was maintained at 3.1% at the prior-year level. Non-operating activities, including improved derivative and FX-related income, boosted Ordinary Income, and a Special Gain of ¥27B from the sale of investment securities was recorded. By segment, Synthetic Resins continued to be the largest contributor with Operating Income of ¥132B, Living & Industry saw a sharp increase in Operating Income (+88.5% YoY), and Chemicals grew solidly (+20.4% YoY), while Information & Electronics remained in an adjustment phase with Revenue -9.4% and Operating Income -16.9%.
[Revenue] Revenue totaled ¥8327B (YoY -0.6%), a slight decline. By segment, Information & Electronics fell sharply to ¥2393B (-9.4%) as demand adjustments in semiconductor/LCD materials and electronics-related markets impacted results. Conversely, Living & Industry grew double digits to ¥601B (+11.8%), driven by increased demand for pharmaceutical intermediates and food-related products. Chemicals increased to ¥1251B (+5.8%) and Synthetic Resins to ¥4080B (+1.6%), with the diversified portfolio offsetting the Information & Electronics shortfall. Segment composition was Synthetic Resins 49.0%, Information & Electronics 28.7%, Chemicals 15.0%, Living & Industry 7.2%, indicating the largest dependence on Synthetic Resins.
[Profitability] Operating Income was ¥262B (+1.3%). Gross profit was ¥838B, improving gross margin to 10.1% (prior year 9.4%), while SG&A increased to ¥576B (SG&A ratio 6.9%) from ¥531B the prior year, but the gross margin improvement absorbed the rise. By segment, Living & Industry Operating Income surged to ¥22B (+88.5%), Chemicals ¥35B (+20.4%), and Synthetic Resins ¥132B (+1.0%) remained solid, whereas Information & Electronics continued to decline to ¥70B (-16.9%). Ordinary Income was ¥277B (+6.2%); non-operating income of ¥39B (dividends received ¥10B, interest received ¥10B, equity-method income ¥5B) exceeded non-operating expenses of ¥23B (interest paid ¥16B), contributing a net +¥16B uplift. Special gains totaled ¥27B including ¥27B gain on sale of investment securities, and special losses totaled ¥12B including ¥11B impairment losses on investment securities, netting +¥15B. Income before income taxes was ¥292B, income tax expense ¥76B (effective tax rate 26.0%), resulting in Net Income of ¥216B. In conclusion, weak Information & Electronics was offset by strength in other segments and gross margin improvement, resulting in a year of increased revenue and profit rather than decline.
Information & Electronics: Revenue ¥2393B (-9.4%), Operating Income ¥70B (-16.9%), margin 2.9%. Market adjustments in semiconductor/LCD materials and weak demand in electronics were primary drivers of lower revenue and profit. Chemicals: Revenue ¥1251B (+5.8%), Operating Income ¥35B (+20.4%), margin 2.8%. Strong demand for automotive parts raw materials and coatings/inks, together with gross margin improvement, supported profit growth. Living & Industry: Revenue ¥601B (+11.8%), Operating Income ¥22B (+88.5%), margin 3.7%. Expanded demand for pharmaceutical intermediates, fine chemicals, and processed foods, plus higher-margin projects, drove significant profit growth. Synthetic Resins: Revenue ¥4080B (+1.6%), Operating Income ¥132B (+1.0%), margin 3.2%. Sales of commodity resins and engineering plastics remained firm, maintaining the highest margin among segments at 3.2%. Other (real estate leasing) recorded Revenue ¥2B and Operating Income ¥1B, immaterial. By segment margin, Living & Industry (3.7%) was highest and Information & Electronics (2.9%) lowest, highlighting marked differences in profitability.
[Profitability] Operating margin was 3.1%, roughly unchanged from the prior year, and Net Profit Margin improved to 2.6% from 2.5% (+0.1pt). ROE was 8.8% (prior year 9.7% → Net Income ¥216B ÷ average shareholders’ equity during the period ¥2459B), down from the prior year; the improvement in net profit margin could not fully offset a decline in total asset turnover (1.67x vs. prior-year 1.90x). ROA was 4.4% (Ordinary Income ¥277B ÷ Total Assets ¥4981B), down from 5.9% the prior year, raising efficiency of asset expansion as an issue. [Cash Quality] Operating Cash Flow (OCF) to Net Income ratio was 0.98x (OCF ¥211B ÷ Net Income ¥216B), favorable, but OCF to EBITDA (EBITDA = Operating Income ¥262B + Depreciation ¥42B = ¥304B) was 0.69x, relatively low; increases in inventories (-¥44B) and trade receivables (+¥79B) pressured cash conversion. [Investment Efficiency] Total asset turnover was 1.67x (Revenue ¥8328B ÷ Total Assets ¥4981B), down from 1.90x, showing asset growth diluted by sluggish revenue. Fixed asset turnover was 29.3x (Revenue ¥8328B ÷ Tangible Fixed Assets ¥284B), maintaining high efficiency, reflecting the trading company business model with modest capital expenditure. [Financial Soundness] Equity Ratio was 49.4% (prior year 49.0%) slightly up; current ratio 213.6% and quick ratio 165.3% indicate strong liquidity. Interest-bearing debt totaled ¥648B (short-term borrowings ¥371B + long-term borrowings ¥277B + corporate bonds ¥250B), below cash and deposits of ¥768B, approaching net cash. Debt/E was 0.28x (interest-bearing debt ¥648B ÷ shareholders’ equity ¥2357B), low; Debt/EBITDA 2.13x; interest coverage 19.5x (EBITDA ¥304B ÷ interest paid ¥16B), indicating strong financial safety.
OCF was ¥211B (YoY +¥12B, +5.9%). Starting from income before income taxes of ¥292B, non-cash charges (depreciation ¥42B, goodwill amortization ¥3B) were added back; changes in working capital produced net outflow of -¥71B from inventory increase -¥44B, trade receivables change +¥79B, and trade payables decrease -¥25B; corporate tax payments -¥77B and interest/dividend received +¥21B resulted in OCF of ¥211B. OCF to Net Income ratio was 0.98x, generally sound, but OCF to EBITDA was 0.69x, low, with inventory build-up (YoY +¥93B) and persistently high trade receivables (YoY +¥57B) weighing on cash conversion. Investing Cash Flow was -¥130B, with capital expenditures -¥92B, intangible asset investments -¥55B, and acquisitions of subsidiaries/other investments -¥44B as main outflows, indicating stepped-up growth investment. Financing Cash Flow was +¥39B: financing proceeds included long-term borrowings +¥100B and bond issuance +¥174B; outflows included long-term borrowings repayment -¥11B, dividend payments -¥69B, and share buybacks -¥32B. Free Cash Flow was ¥81B (OCF ¥211B - Investing CF ¥130B), with coverage of dividend payments ¥69B at 1.16x, a sustainable level, but total shareholder returns including share buybacks ¥101B exceeded FCF and were funded by financing and cash on hand. Cash and deposits increased by ¥170B from ¥598B to ¥768B, strengthening liquidity.
Of Ordinary Income ¥277B, Operating Income ¥262B is from core operations, and non-operating items were net +¥16B (non-operating income ¥39B - non-operating expense ¥23B), indicating earnings sustainability is generally maintained. Non-operating income mainly comprised dividends received ¥10B, interest received ¥10B, and equity-method investment income ¥5B, representing stable returns from financial assets. One-off items included Special Gains ¥27B (gain on sale of investment securities ¥27B) and Special Losses ¥12B (impairment on investment securities ¥11B), net +¥15B, which raised Net Income by about 7%. Special gains/losses related to investment securities stemmed from reorganization of policy-holdings and valuation fluctuations and have limited dependence on recurring earnings. On accruals, OCF to Net Income ratio 0.98x shows cash backing is solid, but OCF to EBITDA ratio 0.69x is low, with inventory increase (-¥44B) and other current asset increase (-¥48B) impeding cash realization. Comprehensive income was ¥390B, ¥174B above Net Income ¥216B; other comprehensive income comprised foreign currency translation adjustments +¥124B, valuation difference on available-for-sale securities +¥37B, and actuarial gains/losses adjustment +¥11B, reflecting improved asset valuations. The gap between Ordinary Income and Net Income is explained by income tax expense ¥76B and net special gains +¥15B, and overall earnings quality is broadly preserved.
Full-year guidance forecasts Revenue ¥8900B (YoY +6.9%), Operating Income ¥275B (YoY +5.1%), Ordinary Income ¥275B (YoY -0.9%), and Net Income ¥210B (YoY -2.9%). Versus this period’s results, the plan assumes Revenue +¥573B and Operating Income +¥13B, premised on a market recovery in Information & Electronics, growth in Chemicals and Living & Industry, and stable earnings from Synthetic Resins. Operating margin is assumed to remain at 3.1% in line with this period, suggesting limited scope for further gross margin improvement. Ordinary Income is planned slightly lower (-0.9% YoY) despite operating income growth, implying conservative assumptions on non-operating items under FX and interest rate scenarios. Net Income is likewise planned down -2.9%, reflecting normalization excluding one-off special gains. EPS forecast is ¥393.39, an improvement of ¥8.55 from this period’s ¥384.84, with ROE expected to remain in the high 8% area.
Annual dividend is ¥128 (interim ¥63 + year-end ¥65), total dividend payout ¥69B, and payout ratio 34.4% (total dividends ¥69B ÷ Net Income ¥216B × adjusted number of issued shares), maintaining a healthy level. This represents an increase from the prior year’s annual dividend of ¥60 to ¥128, with dividend increase rate +113%, reflecting a revision to dividend policy based on prior-year performance. Coverage of dividend payments ¥69B by Free Cash Flow ¥81B is 1.16x, a sustainable level, and shareholder returns were implemented within cash-generating capacity. Share buybacks totaled ¥32B (Cash Flow statement -¥32B), making total shareholder returns ¥101B and total return ratio 46.7% (total returns ¥101B ÷ Net Income ¥216B). Total returns exceeded FCF, supplemented by bond issuance ¥174B and long-term borrowings ¥100B, while cash on hand was strengthened. Next fiscal year dividend forecast is ¥70, a reduction from ¥128 this period, reflecting normalization of the special one-off increase this period. Forecasted payout ratio is 34.4%, maintained at this period’s level, indicating a continued policy of balancing stable dividends and growth investment.
Low-margin structure and sensitivity to market conditions: With an operating margin of 3.1% and gross margin of 10.1%, profitability is low and fluctuations in raw material prices or supply-demand balance can easily pressure profits. In particular, Information & Electronics is in adjustment (Revenue -9.4%, Operating Income -16.9%), and delayed recovery in semiconductor/LCD-related demand could downside next fiscal year’s targets.
Working capital efficiency and cash conversion risk: OCF to EBITDA ratio 0.69x, inventory increase -¥44B, and trade receivables increase +¥79B show working capital expansion that has pressured cash generation. DSO (days sales outstanding) is 79 days, and inventory days remain high; in the event of demand swings or market deterioration, inventory writedowns and increased credit costs could materialize.
Short-term debt reliance and interest/refinancing risk: Short-term borrowings of ¥371B and current liabilities of ¥1845B mean 57.2% of debt is short-term, exposing the company to refinancing condition deterioration or higher costs if interest rates rise or credit conditions worsen. Cash and deposits of ¥768B provide a liquidity buffer, but the high dependence on short-term debt potentially constrains financial flexibility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.1% | 3.4% (1.4%–5.0%) | -0.2pt |
| Net Profit Margin | 2.6% | 2.3% (1.0%–4.6%) | +0.3pt |
Operating margin is 0.2pt below the industry median, while net profit margin is 0.3pt above, indicating relatively good management of non-operating and special items.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.6% | 5.9% (0.4%–10.7%) | -6.5pt |
Revenue growth is 6.5pt below the industry median, impacted by the adjustment in Information & Electronics. Achieving next fiscal year’s plan of +6.9% is key to returning to industry-par levels.
※ Source: Company compilation
Diversified portfolio supports earnings: While Information & Electronics declined -9.4%, increases of +88.5% in Living & Industry and +20.4% in Chemicals supported consolidated profit. Segment margin dispersion is large, but diversification across four businesses enhances resilience to economic fluctuations. Next fiscal year’s earnings plan assumes recovery in Information & Electronics and stable earnings from Synthetic Resins, so quarterly progress by segment will be closely watched.
Room to improve cash conversion efficiency: OCF to EBITDA ratio 0.69x and inventory increase -¥44B indicate working capital expansion has pressured cash generation. Shortening inventory days and DSO and improving accounts payable terms could increase FCF and expand shareholder return capacity. Reducing the 57% short-term debt dependence is also part of balance-sheet efficiency measures that could drive mid-term valuation improvement.
Financial soundness and capacity for growth investment: Equity Ratio 49.4%, near-net-cash interest-bearing debt levels, and Debt/EBITDA 2.13x point to solid financial capacity. The company stepped up growth investments this period with capital expenditures ¥92B, intangible investments ¥55B, and M&A ¥44B. If investment payback and revenue contributions materialize in subsequent periods, ROE/ROA and cash generation should improve.
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 specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility and, where appropriate, after consulting a professional advisor.