| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1886.8B | ¥1655.4B | +14.0% |
| Operating Income | ¥36.0B | ¥29.5B | +22.2% |
| Equity-method Investment Income (Loss) | ¥0.2B | ¥-1.5B | +115.0% |
| Ordinary Income | ¥39.2B | ¥25.5B | +54.0% |
| Net Income | ¥18.9B | ¥16.3B | +16.2% |
| ROE | 5.9% | 5.4% | - |
The fiscal year ending March 2026 closed with Revenue of ¥1,886.8B (YoY +¥231.4B, +14.0%), Operating Income of ¥36.1B (YoY +¥6.6B, +22.2%), Ordinary Income of ¥39.2B (YoY +¥13.8B, +54.0%), and Net Income attributable to owners of parent of ¥25.4B (YoY +¥1.9B, +7.9%), delivering both revenue and profit growth. Operating margin improved slightly to 1.9% (vs. 1.8% prior year, +0.1pt), while gross margin edged down to 9.9% (vs. 10.2% prior year), maintaining a low-margin, high-volume model. By segment, Outer (Revenue +36.4%, Operating Income +98.9%) and Machinery & Equipment (Revenue +37.0%, Operating Income +240.0%) drove consolidated profit growth, whereas Fiber, which accounts for 62.7% of Revenue, grew Sales (+19.2%) but remained structurally low-margin with an Operating margin of 0.5%. At the ordinary stage, improvements in non-operating items (foreign exchange gains ¥3.0B, dividend income ¥1.6B) and net special gains (gain on sales of investment securities ¥3.5B, impairment loss ¥1.3B) boosted pre-tax profit. Operating Cash Flow was ¥48.4B (vs. ¥27.1B prior year, +78.5%), showing a significant improvement in cash-generating capacity; Free Cash Flow was ¥29.2B, and total returns including dividends and share buybacks were executed within FCF.
[Revenue] Revenue of ¥1,886.8B (+14.0%) was driven by segment contributions: Outer ¥267.2B (+36.4%), Machinery & Equipment ¥60.6B (+37.0%), and Fiber ¥1,183.1B (+19.2%). Regionally, the overseas sales ratio remained at 69.4%, with Asia expanding to ¥1,196.1B (from ¥994.5B prior year, +20.3%), increasing its share to 63.4%. The Americas declined sharply to ¥63.5B (from ¥120.3B prior year, -47.2%). Outer benefited from expanded apparel OEM/ODM orders and strong own-brand performance; Machinery & Equipment benefited from increased orders for industrial machinery and composite molding equipment. Inner ¥114.1B (-6.8%), Hobby & Life ¥50.4B (-8.8%), and Semiconductor ¥60.9B (-42.8%) saw revenue declines.
[Profitability] Cost of goods sold was ¥1,700.0B (vs. ¥1,486.8B prior year, +14.3%), yielding Gross Profit of ¥186.7B (Gross Margin 9.9%, down -0.3pt from 10.2% prior year). SG&A was ¥150.7B (vs. ¥139.1B prior year, +8.3%), primarily due to higher personnel expenses (executive compensation ¥37.2B, up from ¥32.4B prior year, +14.6%), resulting in Operating Income of ¥36.1B (Operating margin 1.9%). Non-operating items improved to a net +¥3.2B (prior year -¥4.0B), contributed by dividend income ¥1.6B and foreign exchange gains ¥3.0B, yielding Ordinary Income of ¥39.2B (+54.0%). Extraordinary items were net +¥1.6B (Extraordinary gains ¥4.2B, Extraordinary losses ¥2.5B), including gain on sales of investment securities ¥3.5B and gain on negative goodwill ¥10.5B, partially offset by impairment loss ¥1.3B. After deducting Income taxes ¥15.4B (effective tax rate 37.7%), Net Income was ¥25.4B. In summary, revenue and profit increased, with a slight improvement in operating margin and improvements in non-operating and extraordinary items driving sizable gains at the ordinary level.
Fiber: Revenue ¥1,183.1B (+19.2%), Operating Income ¥6.4B (+1.0%), Operating margin 0.5%—low margin. Domestic and overseas sales of raw yarns and fiber raw materials expanded, but profitability remains tight, weighing on group margins.
Outer: Revenue ¥267.2B (+36.4%), Operating Income ¥16.3B (+98.9%), Operating margin 6.1%—high profitability. Strong orders for apparel OEM/ODM and own-brand sales and improved gross margin drove profits.
Chemical: Revenue ¥150.9B (+8.1%), Operating Income ¥7.3B (-20.8%), Operating margin 4.8%. Expansion in sales of paint raw materials and chemicals was offset by rising costs and a worsening mix, leading to profit decline.
Inner: Revenue ¥114.1B (-6.8%), Operating Income ¥2.4B (+42.6%), Operating margin 2.1%. Despite revenue decline, cost cuts and a shift to higher-value products resulted in profit growth.
Machinery & Equipment: Revenue ¥60.6B (+37.0%), Operating Income ¥4.6B (+240.0%), Operating margin 7.6%—top-level profitability. Large orders for industrial machinery and composite molding equipment contributed.
Semiconductor: Revenue ¥60.9B (-42.8%), Operating Income ¥1.2B (-73.7%), Operating margin 2.0%. Order declines due to adjustment in the semiconductor equipment market.
Hobby & Life: Revenue ¥50.4B (-8.8%), Operating Income ¥4.6B (-22.6%), Operating margin 9.2%—maintains high margin despite revenue and profit declines.
[Profitability] Operating margin 1.9% (vs. 1.8% prior year, +0.1pt), Gross margin 9.9% (vs. 10.2% prior year, -0.3pt), ROE 5.9% (vs. 8.2% prior year, -2.3pt), Net Income margin attributable to owners of parent 1.3% (vs. 1.4% prior year, -0.1pt). The decline in ROE reflects stable profit margins and a slight deterioration in capital efficiency; Equity Ratio fell to 36.1% (from 37.6% prior year, -1.5pt), increasing financial leverage slightly, while profit growth lagged capital growth, reducing ROE.
[Cash Quality] Operating CF / Net Income = 1.90x (Operating CF ¥48.4B / Net Income ¥25.4B), indicating solid cash quality. The accrual ratio ((Net Income - Operating CF) / Total Assets) is -2.6%, showing cash generation exceeds reported profit.
[Investment Efficiency] Total Asset Turnover 2.11x (vs. 2.07x prior year, +0.04x). Return on Invested Capital (ROIC) approximately 6.4% (calculated as Operating Income ¥36.1B × (1-0.377) / Invested Capital ¥352.7B; Invested Capital = Net Assets ¥322.1B + Interest-bearing Debt ¥108.4B - Cash ¥79.3B), modestly above cost of capital.
[Financial Soundness] Equity Ratio 36.1%, D/E ratio 0.34x (Interest-bearing Debt ¥108.4B / Net Assets ¥322.1B), Debt/EBITDA 2.65x (Interest-bearing Debt ¥108.4B / EBITDA ¥40.8B; EBITDA = Operating Income ¥36.1B + Depreciation ¥4.8B), Interest Coverage 14.9x (Operating CF ¥48.4B / Interest Paid ¥2.4B). Current ratio 144.0% (Current Assets ¥763.6B / Current Liabilities ¥530.3B), Quick ratio 115.6%—short-term payment capacity is good. However, short-term borrowings ¥103.4B and long-term borrowings ¥5.0B mean a high short-term borrowing dependence of 95.4%. Cash ¥79.3B / Short-term Borrowings ¥103.4B = 0.77x, indicating high refinancing sensitivity.
Operating CF improved significantly to ¥48.4B (vs. ¥27.1B prior year, +78.5%). Working capital movements saw an increase in accounts receivable of -¥95.8B offset by an increase in accounts payable of +¥99.7B; inventories declined slightly, contributing +¥7.1B. Pre-tax profit ¥40.9B was adjusted for Depreciation ¥4.8B, Goodwill amortization ¥0.9B, and gain on negative goodwill -¥10.5B, resulting in a subtotal before working capital changes of ¥58.5B. After corporate tax payments -¥10.7B, interest and dividend receipts +¥3.0B, and interest payments -¥2.4B, Operating CF totaled ¥48.4B.
Investing CF was -¥19.3B (vs. -¥9.6B prior year), driven by acquisition of tangible fixed assets -¥6.2B and acquisition of subsidiary shares -¥15.6B, partially offset by proceeds from sale of investment securities +¥4.4B. Financing CF was -¥32.2B (vs. -¥42.2B prior year), reflecting net decrease in short-term borrowings -¥17.2B, long-term debt repayments -¥0.7B, dividend payments -¥11.9B, and share buybacks -¥1.1B. FCF was ¥29.2B (Operating CF ¥48.4B - Investing CF ¥19.3B). Cash and cash equivalents decreased by ¥1.7B to ¥79.4B at year-end. Foreign exchange translation adjustments +¥1.3B and cash increases from newly consolidated subsidiaries +¥1.1B partially offset the decline. The Operating CF expansion was mainly driven by improved working capital efficiency (funding effect from higher accounts payable) and profit growth, indicating high cash quality.
Of Net Income ¥25.4B, recurring earnings are primarily comprised of Operating Income ¥36.1B and net non-operating items +¥3.2B; equity-method investment income ¥0.2B also has high recurrence. One-off factors include Extraordinary gains ¥4.2B (gain on sales of investment securities ¥3.5B, gain on negative goodwill ¥10.5B) and Extraordinary losses ¥2.5B (impairment loss ¥1.3B, valuation loss on investment securities ¥0.7B), netting to +¥1.6B, equivalent to 6.5% of Net Income—thus limited in impact. Non-operating income ¥8.8B includes foreign exchange gains ¥3.0B, while non-operating expenses ¥5.6B include foreign exchange losses ¥3.1B, so FX effects largely neutralized. Dividend income ¥1.6B and interest income ¥1.5B are stable income sources. The gain on negative goodwill ¥10.5B arose from additional acquisitions of subsidiary shares and is transitory. Accrual quality is high: Operating CF ¥48.4B / Net Income ¥25.4B = 1.90x, and most non-operating and extraordinary items are accompanied by actual cash flows, indicating limited divergence between accounting recognition and cash reality. Comprehensive Income was ¥33.8B (Net Income ¥25.4B + Other Comprehensive Income ¥8.3B); the gap is driven by unrealized gains such as valuation differences on securities ¥5.0B, foreign currency translation adjustments ¥1.5B, and retirement benefit adjustments ¥1.5B, all unrealized and thus neutral to earnings quality.
Against the full-year forecast (Revenue ¥1,860.0B, Operating Income ¥38.0B, Ordinary Income ¥38.0B, Net Income attributable to owners of parent ¥26.0B, EPS ¥211.80), actuals were Revenue ¥1,886.8B (achievement 101.4%), Operating Income ¥36.1B (94.9%), Ordinary Income ¥39.2B (103.3%), and Net Income attributable to owners of parent ¥25.4B (97.8%; adjusted EPS after dividend ¥207.24 vs. forecast ¥211.80 = 97.8%). Revenue and Ordinary Income beat forecasts, while Operating Income and Net Income slightly missed. The shortfall in Operating Income was mainly due to higher SG&A (executive compensation +¥4.8B increase, higher outsourcing costs) and profit declines in some segments (Chemical, Semiconductor). The beat on Ordinary Income was due to improved non-operating items (FX neutralization, higher dividend/interest receipts) relative to forecast. At the final net level, net special gains (e.g., unforecast gain on sales of investment securities) increased, but higher tax burden and minority interests slightly constrained Net Income, resulting in a small miss of -2.2% vs. forecast. The company maintained its full-year forecast and revised the year-end dividend up from ¥102 to ¥104 (total dividend forecast unchanged). YoY change in Revenue was forecast -1.4% but actual +14.0%, a large deviation; Operating Income forecast YoY +5.4% vs. actual +22.2%; Ordinary Income forecast YoY -3.2% vs. actual +54.0%—on an actual basis the company achieved substantial YoY improvement, with Revenue and Ordinary Income outperforming forecasts while Operating and Net Income slightly underperformed.
Dividend policy: year-end dividend ¥104 (interim dividend ¥0), paid once annually; total cash dividends ¥11.9B. Payout Ratio relative to Net Income attributable to owners of parent ¥25.4B is 46.8% (¥11.9B / ¥25.4B). This differs slightly from the company-disclosed payout ratio of 50.5% due to different calculation bases, but both indicate around a 50% level. Share buybacks totaled ¥1.1B; total returns (dividends + buybacks) were ¥13.0B, representing a Total Return Ratio of 44.5% relative to FCF ¥29.2B, conducted without eroding FCF. The sustainability of dividends is supported by cash and deposits ¥79.3B, Operating CF ¥48.4B, and FCF ¥29.2B. Capital expenditures ¥6.2B vs. Depreciation ¥4.8B implies a CapEx/Depreciation ratio of 1.30x, indicating sufficient room to continue growth investments while maintaining dividends. Although short-term borrowing dependence is high at 95.4%, strong Interest Coverage of 14.9x and stable Operating CF make continued dividends feasible. Dividend forecast is year-end ¥104 (up ¥2 from prior forecast ¥102), with the company maintaining a stable dividend policy.
Profit sensitivity in a low-margin, high-volume model: With Gross margin 9.9% and Operating margin 1.9%, the company has thin margins, making profits highly sensitive to sales declines, discounting pressure, or cost increases. Fiber accounts for 62.7% of Revenue and has an Operating margin of 0.5%, so the structural concentration by segment constrains consolidated margins. Measures include expanding orders in high-margin segments (Outer, Machinery & Equipment) and shifting Fiber to higher-value-added products.
Short-term funding dependence and refinancing risk: Short-term borrowings ¥103.4B and long-term borrowings ¥5.0B result in a short-term dependence of 95.4%; Cash ¥79.3B / Short-term Borrowings = 0.77x indicates significant maturity mismatch. In adverse credit conditions refinancing terms could tighten and interest rates could rise, posing liquidity risks. Currently Interest Coverage 14.9x and Operating CF ¥48.4B support interest and repayment capacity, but terming out short-term debt and shortening DSO (estimated DSO 88 days) to improve working capital efficiency are necessary.
Accounts receivable collection risk and FX / commodity price volatility: Accounts receivable ¥452.3B (YoY +¥96.6B, +27.1%) grew with sales, increasing credit exposure and delay/write-off risks. FX volatility has been largely neutral at the non-operating level, but unhedged assets and liabilities remain FX-sensitive. Commodity price swings (raw yarn and fiber raw material markets) can directly hit gross margins. Strengthening credit control, accelerating price pass-through mechanisms, and optimizing inventory turnover are recommended.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.9% | 3.4% (1.4%–5.0%) | -1.4pt |
| Net Margin | 1.0% | 2.3% (1.0%–4.6%) | -1.3pt |
Both Operating and Net margins are more than 1pt below the industry median, placing profitability in the lower part of the sector. Low gross margin and SG&A burden (SG&A ratio 8.0%) are the main reasons; margin improvement is essential to approach industry norms.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 14.0% | 5.9% (0.4%–10.7%) | +8.2pt |
Revenue growth exceeds the industry median by 8.2pt, indicating top-quartile growth within the sector. Expansion in orders for Outer and Machinery & Equipment and increased sales in Asia contributed to relatively strong top-line performance.
※Source: Company compilation
Coexistence of high growth and low profitability: Revenue growth +14.0% far outpaced the industry median +5.9%, but Operating margin 1.9% (industry median 3.4%) places the company in the lower tier for profitability. High-margin segments Outer (Operating margin 6.1%) and Machinery & Equipment (7.6%) drive performance, but the large share of Fiber (Operating margin 0.5%, 62.7% of Revenue) dilutes consolidated margins. Going forward, reallocating resources to high-margin segments and shifting Fiber toward higher value-added products are key to approaching the industry operating margin (3.4%) and improving ROE (currently 5.9%).
Strong cash generation but imbalance with short-term funding dependence: Operating CF ¥48.4B and FCF ¥29.2B indicate stable cash generation; Operating CF / Net Income 1.90x reflects good cash quality. Dividends + share buybacks totaling ¥13.0B were executed within FCF, indicating sustainable shareholder returns. However, short-term borrowings dependence 95.4% and Cash/Short-term Borrowings 0.77x increase refinancing sensitivity; shortening DSO and terming out short-term funding would strengthen financial soundness.
Segment monitoring points: Order backlog and gross margin mix trends in Outer and Machinery & Equipment are primary drivers of group profit growth. Because Fiber is large in scale, even small margin improvements materially affect consolidated profits, so progress in shifting to high-value-added products (e.g., medical textiles) is critical. Semiconductor performance recovery would hinge on a market upturn. With overseas sales ratio of 69.4%, managing FX and geopolitical risk exposure is important.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmark figures are reference data compiled by the Company from publicly disclosed financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.