| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2987.5B | ¥3171.2B | -5.8% |
| Operating Income / Operating Profit | ¥44.0B | ¥40.1B | +9.8% |
| Equity-Method Investment Income (Loss) | ¥0.2B | ¥0.8B | -70.4% |
| Ordinary Income | ¥53.8B | ¥44.8B | +20.1% |
| Net Income / Net Profit | ¥20.2B | ¥-12.0B | +268.3% |
| ROE | 3.4% | -2.2% | - |
For the fiscal year ended March 2026, revenue was ¥2,987.5B (YoY -¥183.7B -5.8%), operating income was ¥44.0B (YoY +¥3.9B +9.8%), ordinary income was ¥53.8B (YoY +¥9.0B +20.1%), and net income was ¥20.2B (YoY +¥32.2B +268.3%), resulting in lower sales but higher profits. Normalization of energy prices led to revenue decline, but gross margin improved to 13.1% (up +0.7pt from 12.4% a year earlier), and operating margin rose to 1.5% (up +0.2pt from 1.3%). Operating income in non-energy businesses increased by +56.9% and BtoC businesses by +31.2%, demonstrating the effect of portfolio diversification. Extraordinary gains included ¥15.39B from sale of subsidiary shares, turning net income from a loss to a profit. Operating Cash Flow was ¥65.9B, 3.3x net income, and Free Cash Flow was ¥67.8B, indicating ample liquidity. Equity Ratio improved to 55.6% (up +3.5pt from 52.1%), strengthening the financial base.
[Revenue] Revenue was ¥2,987.5B (YoY -5.8%). By segment, Energy Solutions (BtoB) accounted for ¥2,171.3B (-6.9%), representing 72.7% of revenue, with lower energy prices and reduced demand as main drivers. Energy wholesale/retail adjacent (BtoC) was ¥713.7B (-5.4%), affected by lower unit prices for LP gas and household electricity. Non-energy businesses grew to ¥235.2B (+7.9%), driven by expansion in building maintenance, bicycles, and shared-cycle businesses. By product, petroleum was ¥1,725.1B (-6.2%), gas ¥628.0B (-9.0%), and electricity ¥305.3B (-3.8%), all declining, while living-related was ¥113.2B (±0.0%) steady, showing resilience.
[Profitability] Cost of sales decreased to ¥2,596.2B (from ¥2,779.4B, -¥183.2B) in line with lower sales. Gross margin improved to 13.1% (up +0.7pt from 12.4%), aided by optimized energy procurement costs and mix improvement. SG&A was ¥347.3B (from ¥351.7B, -¥4.4B) slightly lower, but SG&A ratio rose to 11.6% (from 11.1%, +0.5pt). Operating income improved to ¥44.0B (+9.8%), with operating margin at 1.5%. Non-operating resulted in net income of +¥9.8B, with dividend income ¥3.7B, foreign exchange gains ¥0.3B, and other non-operating income such as subsidiary liquidation gains contributing. Ordinary income rose to ¥53.8B (+20.1%). Extraordinary items netted +¥3.0B, including ¥15.39B gain on sale of subsidiary shares, offset by impairment losses ¥0.7B and loss on retirement of fixed assets ¥1.3B. Income taxes were ¥12.4B (from ¥3.7B, +¥8.7B), yielding a pre-tax profit of ¥56.8B and an effective tax rate of 21.9%. Net income turned to ¥20.2B from a prior-year loss of ¥-12.0B, producing a lower-revenue yet higher-profit outcome.
Energy wholesale/retail adjacent (BtoC) reported revenue ¥713.7B (-5.4%) and operating income ¥13.4B (+31.2%), a margin of 1.9%. Household LP gas and sales to retail customers declined due to price decreases, but profit improved through efficiency in safety & delivery operations and fixed cost reductions. Energy Solutions (BtoB) had revenue ¥2,171.3B (-6.9%) and operating income ¥15.7B (-24.4%), a margin of 0.7%. Sales of petroleum products and corporate electricity declined in volume and price, and solar power generation and maintenance businesses underperformed. Non-energy business recorded revenue ¥235.2B (+7.9%) and operating income ¥10.6B (+56.9%), a margin of 4.5%, supported by expansion in comprehensive building maintenance, bicycles, and shared-cycle services. After corporate cost allocations, profitability ranks Non-Energy > BtoC > BtoB, highlighting clear portfolio margin disparities.
[Profitability] Operating margin was 1.5% (up +0.2pt from 1.3%), and net profit margin improved to 0.7% (from -0.4%, +1.1pt). ROE was 3.4%, higher YoY but low relative to historical and industry norms. ROA was 1.9% (ordinary income basis 5.0%), with total asset turnover 2.76x maintaining asset efficiency. Gross margin 13.1% and SG&A ratio 11.6% indicate limited but improving operating profit generation capability.
[Cash Quality] Operating Cash Flow (OCF) was ¥65.9B versus net income ¥20.2B, yielding OCF/NI = 3.26x, high, and EBITDA (operating income ¥44.0B + D&A ¥30.1B = ¥74.1B) had OCF coverage of 88.9%, indicating soundness. Working capital saw AR collection +¥38.5B offsetting AP payments -¥39.7B, and inventory decline +¥6.8B released cash. Accrual (Net Income - OCF) was -¥45.7B, reflecting earnings backed by cash.
[Investment Efficiency] Capex was ¥19.8B versus D&A ¥30.1B, Capex/D&A = 0.66x, indicating a maintenance-level investment posture. FCF was ¥67.8B, ample, and ROIC (NOPAT / Invested Capital) is roughly estimated at 2.5%, suggesting capital efficiency below cost of capital.
[Financial Soundness] Equity Ratio improved to 55.6% (up +3.5pt). Interest-bearing debt was ¥36.6B (short-term borrowings ¥23.3B + long-term borrowings ¥13.3B), with Debt/EBITDA = 0.49x and Net Debt/EBITDA = -1.78x, effectively net cash. Current ratio 154.3% and quick ratio 139.1% indicate adequate short-term liquidity. Inventory turnover days 8.6 days, AR days 42.9 days, AP days 37.3 days yield a CCC of about 14 days, showing good working capital efficiency.
Operating Cash Flow was ¥65.9B (from ¥105.3B prior year, -37.5%), with pre-tax profit ¥56.8B plus non-cash charges including depreciation ¥30.1B and goodwill amortization ¥2.3B, producing a subtotal OCF ¥73.6B. Working capital contributed net +¥5.6B (AR decrease +¥38.5B inflow, inventory decrease +¥6.8B inflow, AP decrease -¥39.7B outflow). Corporate taxes paid -¥11.1B, interest & dividends received +¥4.0B, interest paid -¥0.6B, resulting in final OCF ¥65.9B. The YoY decline was mainly driven by lower gross profit from reduced sales and increased AP payments. Investing Cash Flow was +¥2.0B, as proceeds from sale of subsidiary shares ¥18.6B (out-of-scope company) were offset by fixed asset acquisitions -¥19.8B and investments in marketable securities -¥29.6B, yielding a small positive. Financing Cash Flow was -¥18.1B, driven by short-term borrowing repayments -¥59.2B, dividends paid -¥9.8B, and share buybacks -¥1.6B. FCF (OCF + Investing CF) was ¥67.9B and covered dividends + share buybacks totaling ¥11.4B by 5.9x. Cash and deposits increased from ¥119.2B at the beginning of the period to ¥168.7B at the end (+¥49.5B), strengthening liquidity.
Operating income ¥44.0B was generated from recurring business activities. Of non-operating income ¥11.4B, dividend income was ¥3.7B, FX gains ¥0.3B, and other ¥5.2B (including subsidiary liquidation gains), representing moderate scale. Non-operating expenses ¥1.6B comprised interest expense ¥0.6B and FX losses ¥1.1B, resulting in net non-operating income +¥9.8B. Extraordinary gains ¥18.6B were largely comprised of ¥15.39B from sale of subsidiary shares and are one-off, but OCF is 3.3x net income and accrual ratio is -226%, indicating conservative cash backing of earnings. The gap from ordinary income ¥53.8B to net income ¥20.2B is explained by net extraordinary items +¥3.0B, income taxes ¥12.4B, and minor non-controlling interests, and there is no evidence of structural deterioration in earnings quality. Comprehensive income was ¥59.8B, well above net income ¥20.2B, mainly due to other securities valuation gains ¥15.1B. Market valuation gains on investment securities boosted comprehensive income; attention to future market volatility is warranted, but core OCF generation remains healthy.
For FY2027 (year ending March 2027), management guides revenue ¥3,345.0B (YoY +12.0%), operating income ¥64.0B (+45.3%), ordinary income ¥66.0B (+22.6%), EPS ¥480.02 (from ¥407.79, +17.7%), and dividend ¥120 (unchanged). Revenue is expected to increase ¥357.5B on recovery in energy demand and expansion in non-energy businesses. Operating income is expected to rise ¥20.0B, with an operating margin improvement to 1.9% (from 1.5%, +0.4pt). Drivers are normalization of BtoB profitability (price pass-through and efficiency) and growth in non-energy businesses. Progress rates are Revenue 89.3%, Operating Income 68.8%, Ordinary Income 81.5%, indicating generally steady progress with second-half accumulation being key. The unchanged dividend implies a payout ratio of 25.0% on forecast EPS ¥480, and cash dividend and FCF coverage are sustainable. Achieving guidance requires BtoB margin improvement of over +0.5pt and continued double-digit growth in non-energy; strong OCF and financial base support increases in investment and working capital.
Dividend is a year-end lump-sum ¥120, with total annual dividend payout approximately ¥1.31B (based on average shares outstanding 10,877 thousand). Against net income ¥20.2B, payout ratio is roughly 65%, somewhat high, but cash payout ratio versus OCF is about 20%, and FCF coverage of dividends is 5.1x, indicating strong sustainability. Share buybacks were ¥1.6B (reported in financing CF), making total returns (dividend + buybacks) about ¥1.47B and total return ratio about 73%. Dividend was increased from ¥90 to ¥120 (+33%), strengthening shareholder returns. Cash and deposits ¥168.7B versus interest-bearing debt ¥36.6B yield net cash ¥132.1B, providing ample capacity to sustain dividends. DOE is about 2.2%, and relative to ROE 3.4%, dividend level is moderate. FY2027 forecast dividend ¥120 maintained corresponds to a 25% payout on forecast EPS ¥480, leaving room for further increases with profit growth.
Energy market volatility risk: BtoB (72.7% of revenue) mainly sells petroleum products and power, causing procurement costs and selling prices to be linked to crude oil, LNG, and power market prices. This period saw revenue decline due to price decreases, but gross margin improved. In future price upturns, timing of cost pass-through could compress margins; given operating margin of 1.5% is low, a few percent price swing can materially affect profits. Working capital CCC ~14 days limits inventory risk, but limited disclosure on long-term contract ratios and pass-through clauses makes quantitative price sensitivity assessment difficult.
Low profitability and fixed-cost structure risk: Operating margin 1.5% and net margin 0.7% are below industry medians, and SG&A ratio 11.6% approaches gross margin 13.1%, indicating a high-cost structure. In revenue decline scenarios, SG&A only modestly declines, suggesting a high fixed-cost base. Capex/D&A 0.66x implies restrained replacement investment, but raising growth investment requires improved profitability. With ROE 3.4% and ROIC estimated ~2.5% potentially below cost of capital, shareholder value creation depends on margin improvement (FY2027 guidance 1.9%).
Portfolio concentration and dependency on non-energy: Non-energy business margin 4.5% is high but revenue share is only 7.9%, contributing roughly 24% of company operating income. BtoB accounts for 35.6% of operating income, and its profit decline (-24.4%) can offset company-wide gains. Achieving FY2027 guidance requires BtoB margin improvement (0.7% → >1%) and continued double-digit growth in non-energy; failure to re-balance the portfolio risks entrenching low profitability. Investment securities ¥125.7B (11.6% of total assets) carry valuation risk affecting comprehensive income and equity, testing resilience to market volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.5% | 3.4% (1.4%–5.0%) | -1.9pt |
| Net Profit Margin | 0.7% | 2.3% (1.0%–4.6%) | -1.6pt |
Both operating and net margins are below industry median, placing profitability in lower ranks. High-cost structure—gross margin 13.1% vs SG&A 11.6%—is a key factor, making fixed-cost reductions and stronger price pass-through capabilities priorities.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -5.8% | 5.9% (0.4%–10.7%) | -11.6pt |
Revenue declined -5.8% versus industry median growth +5.9%, mainly due to normalization of energy prices. Expansion of non-energy businesses and the FY2027 target +12% aim to return to industry levels.
※ Source: Company aggregation
Margin improvement under declining revenue and portfolio diversification through non-energy expansion: Revenue fell -5.8%, but gross margin improved +0.7pt and non-energy operating income +56.9% boosted operating income +9.8%. Non-energy margin 4.5% significantly exceeds company average 1.5%, and with only 7.9% revenue share there is substantial room for future expansion. BtoC margin improved to 1.9% (+0.5pt), and if BtoB profitability improves (from 0.7% to >1% as guided for 2027), a sustained increase in company margins is expected. OCF ¥65.9B and FCF ¥67.8B provide strong cash resources for growth investments.
Strengthened financial base and active shareholder returns: Equity Ratio 55.6% (+3.5pt) and net cash ¥132.1B make the company effectively debt-free with high financial resilience. Dividend ¥120 (from ¥90, +33%) implies a payout ratio 25% on forecast EPS ¥480 and FCF coverage 5.1x, indicating sustainability. Combined with ¥1.6B share buybacks, total return ratio 73% shows pro-shareholder stance. ROE 3.4% is low but reflects low leverage (financial leverage 1.8x), suggesting scope for improving capital efficiency. Cash deposits ¥168.7B are 7.2x short-term borrowings ¥23.3B, minimizing refinancing risk.
Achievability of FY2027 guidance and progress of BtoB structural reforms: Ambitious guidance (Revenue +12%, Operating Income +45%) assumes BtoB margin improvement (0.7% → estimated 1.2%) and double-digit growth in non-energy. Raising operating margin from 1.5% to 1.9% depends critically on restoring BtoB profitability, making progress on price pass-through and efficiency key monitoring items for investment decisions. Capex/D&A 0.66x indicates maintenance-level investment, but financial strength and FCF underpin capacity to scale growth investments. Extraordinary gains (¥15.39B from subsidiary share sales) are one-off; FY2027 will test ability to build recurring profits. In energy price upturns, timing lags in passing through procurement cost increases could compress margins; monitor quarterly BtoB margin trends and changes in non-energy revenue composition.
This report was autogenerated by AI analyzing XBRL financial disclosure data. It does not constitute an investment recommendation for any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.
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