| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥666.9B | ¥651.5B | +2.4% |
| Operating Income | ¥24.8B | ¥21.1B | +17.6% |
| Equity Method Investment Gain / Loss | - | - | - |
| Ordinary Income | ¥29.3B | ¥24.8B | +18.4% |
| Net Income | ¥24.6B | ¥22.9B | +7.4% |
| ROE | 7.3% | 7.8% | - |
For the fiscal year ended March 2026, Revenue was ¥666.9B (YoY +¥15.5B +2.4%), Operating Income was ¥24.8B (YoY +¥3.7B +17.6%), Ordinary Income was ¥29.3B (YoY +¥4.6B +18.4%), and Net Income attributable to owners of the parent was ¥23.6B (YoY +¥1.7B +7.4%). The company achieved both top-line and bottom-line growth, with Operating Margin improving from 3.2% to 3.7% (+0.5pt). Operating leverage was effective as Operating Income grew +17.6% versus Revenue growth of +2.4%. Gross margin expanded from 13.9% to 14.4% (+0.5pt) while SG&A ratio remained flat at 10.7%, driving profitability improvement and profit growth. A special gain on sale of investment securities of ¥6.4B was recorded, and Comprehensive Income rose substantially to ¥51.7B (prior year ¥9.0B). An increase in valuation differences on securities of ¥27.5B bolstered net assets, improving Equity Ratio from 40.3% to 43.4% (+3.1pt). Dividends were ¥44 per share annually (interim ¥20 + year-end ¥24), with a Payout Ratio of 41.4%, maintaining stable shareholder returns.
[Revenue] Revenue was ¥666.9B (YoY +2.4%), a slight increase. By segment, the Chemical Products Business recorded ¥444.2B (66.6% of total, YoY +2.1%) and the Functional Materials Business recorded ¥155.8B (23.4%, +5.0%), both achieving revenue growth. Chemical Products saw modest growth supported by steady demand and price pass-through, while Functional Materials outpaced with contributions from expanded sales of new products. Other businesses declined slightly to ¥78.8B (11.8%, -1.8%). Gross margin improved to 14.4% (prior year 13.9%, +0.5pt) and gross profit rose to ¥96.2B (prior year ¥90.7B, +6.0%), outpacing revenue growth. Gross profit improvement was driven by a favorable product mix and strengthened margin management.
[Profitability] From gross profit of ¥96.2B, SG&A was ¥71.3B (prior year ¥69.6B, +2.5%), resulting in Operating Income of ¥24.8B (prior year ¥21.1B, +17.6%). SG&A ratio remained at 10.7% year-on-year; in absolute terms, salaries and allowances decreased slightly to ¥23.4B (prior year ¥23.6B), and rents were flat at ¥4.7B (prior year ¥4.7B), helping to contain overall increases. Operating margin improved to 3.7% (prior year 3.2%, +0.5pt), demonstrating operating leverage. Non-operating income was ¥5.4B (prior year ¥4.8B), mainly dividend income received of ¥4.9B (prior year ¥4.4B). Non-operating expenses were ¥0.9B (prior year ¥1.2B), with interest expense of ¥0.6B (prior year ¥0.5B). Ordinary Income was ¥29.3B (prior year ¥24.8B, +18.4%). Extraordinary gains totaled ¥6.5B, largely from gain on sale of investment securities of ¥6.4B, while extraordinary losses were minor at ¥0.7B from loss on disposal of fixed assets. Profit before tax was ¥35.2B (prior year ¥33.1B, +6.2%); after deducting income taxes of ¥11.6B (effective tax rate 32.9%, prior year 33.8%), Net Income attributable to owners of the parent was ¥23.6B (prior year ¥22.9B, +7.4%). Conclusion: revenue and profit growth achieved.
The Chemical Products Business delivered Operating Income of ¥39.4B (prior year ¥37.5B, +5.1%), with a margin of 8.9%, serving as the company’s profit driver. With Revenue of ¥444.2B (+2.1%), the segment maintained high profitability supported by a portfolio skewed to higher-margin products. The Functional Materials Business posted Operating Income of ¥8.3B (prior year ¥8.1B, +3.0%), margin 5.3%. Although Revenue grew to ¥155.8B (+5.0%) with higher top-line growth, its margin remains lower than Chemical Products, and mix improvement between segments contributed to the companywide operating margin increase. Other businesses recorded Operating Income of ¥2.4B (prior year ¥1.6B, +52.4%), showing profitability improvement albeit on a small base. Corporate expenses (inter-segment adjustments) were ¥25.4B (prior year ¥26.1B), and reductions contributed to achieving companywide Operating Income of ¥24.8B.
[Profitability] Operating margin improved to 3.7% (prior year 3.2%, +0.5pt). Expansion of gross margin to 14.4% (prior year 13.9%, +0.5pt) and containment of SG&A ratio at 10.7% contributed. ROE was 7.3% (prior year 7.4%), broadly stable, supported by an improved Net Income margin of 3.7% (prior year 3.5%, +0.2pt). [Cash Quality] Operating Cash Flow (OCF) was ¥20.5B versus Net Income of ¥23.6B, yielding an OCF/Net Income ratio of 0.87x, indicating some challenge in cash realization of profits. In working capital, Accounts Receivable increased (YoY +¥2.0B) and Accounts Payable decreased (YoY -¥1.6B), affecting cash; OCF/EBITDA ratio was approximately 0.67x (Operating Income + Depreciation ¥30.6B vs. OCF ¥20.5B), at a low level. [Investment Efficiency] Total assets were ¥778.3B (prior year ¥732.0B, +6.3%), and Net Assets were ¥337.7B (prior year ¥295.4B, +14.3%). Total Asset Turnover was 0.86x (prior year 0.89x), slightly down. Capital expenditures were ¥3.6B against Depreciation of ¥5.7B, indicating maintenance-level investment; CapEx/Depreciation ratio was 0.63x. [Financial Soundness] Equity Ratio improved to 43.4% (prior year 40.3%, +3.1pt). Current Ratio was 134.8% (Current Assets ¥523.0B / Current Liabilities ¥388.0B), and Quick Ratio was 131.1%, indicating healthy short-term liquidity. Interest-bearing debt consisted only of short-term borrowings of ¥26.6B; Debt/EBITDA ratio was 0.87x, and interest coverage on an operating income basis was approximately 47.8x (Ordinary Income ¥29.3B vs. interest paid ¥0.6B), reflecting strong credit resilience.
Operating Cash Flow was ¥20.5B (prior year ¥32.9B, -37.8%), a significant YoY decline. Operating cash sub-total was ¥29.7B (prior year ¥38.3B), based on Depreciation ¥5.7B and Profit before tax ¥35.2B. In working capital changes, trade receivables increased by ¥2.0B (prior year decrease of ¥47.9B), accounts payable decreased by ¥1.6B (prior year decrease of ¥37.5B), and inventories increased ¥0.1B (prior year decrease ¥1.3B), reversing the prior year’s large working capital improvements. Corporate tax payments were ¥13.6B outflow. Investing Cash Flow was inflow of ¥4.9B (prior year outflow ¥18.4B); while CapEx of ¥3.6B was executed, proceeds from sale of investment securities of ¥7.4B contributed. Financing Cash Flow was -¥15.0B (prior year -¥39.1B), mainly due to dividends paid of ¥9.9B and net reduction in short-term borrowings of ¥5.1B. Free Cash Flow was ¥25.4B (OCF ¥20.5B + Investing CF ¥4.9B), exceeding dividends ¥9.9B and CapEx ¥3.6B combined by ¥13.5B, supporting sustainability of returns and investment. Cash and deposits increased to ¥81.2B (prior year ¥72.3B, +12.3%), stabilizing liquidity. The decline in OCF/EBITDA ratio is primarily due to the reduction in OCF, likely driven by an elongation of the cash collection cycle.
Of Ordinary Income ¥29.3B, Operating Income ¥24.8B is the core, supplemented by Non-operating income ¥5.4B (mainly dividend income received ¥4.9B). Dividend income is stable, derived from investment securities of ¥177.1B, and represents 0.7% of Revenue, indicating no excessive dependence. Extraordinary gains of ¥6.5B were largely from gain on sale of investment securities ¥6.4B and are temporary factors. Operating-income-based earnings are sustainable with an operating margin of 3.7%, a standard level for a trading company model. Accrual quality shows a gap between OCF ¥20.5B and Operating Income ¥24.8B of ¥4.3B (accrual ratio about 17%), indicating delayed cash conversion due to working capital movements. OCF/Net Income ratio 0.87x is near neutral, but receivables backlog (Accounts Receivable balance ¥418.1B, 62.7% of Revenue) suppresses cash recovery. The gap between Ordinary Income and Net Income is primarily due to income taxes of ¥11.6B (effective tax rate 32.9%), with no abnormal items. Overall, earnings quality at the operating level is stable, but cash conversion efficiency has room for improvement.
Full Year guidance: Revenue ¥701.0B (YoY +5.1%), Operating Income ¥26.1B (YoY +5.2%), Ordinary Income ¥31.1B (YoY +6.0%), Net Income attributable to owners of the parent ¥24.5B; EPS forecast ¥107.34, and dividend forecast ¥22 per share annually (reduction from prior year). Progress vs. full-year guidance based on current results: Revenue 95.1% (¥666.9B/¥701.0B), Operating Income 95.1% (¥24.8B/¥26.1B), Ordinary Income 94.3% (¥29.3B/¥31.1B), Net Income 96.4% (¥23.6B/¥24.5B). Each item is around the mid-90% level of the target, slightly below standard mid-year progress, suggesting somewhat tougher revenue environment versus initial assumptions. The assumptions or revisions underlying the full-year guidance are not explicit in disclosed data, but the guidance appears set on an expectation of recovery in H2. Note that the dividend forecast of ¥22 is half the current year actual of ¥44, so care is needed when comparing across periods.
Annual dividend was ¥44 per share (interim ¥20 + year-end ¥24), maintained at the prior-year level. Payout Ratio was 41.4% (Annual dividend total ¥9.9B / Net Income attributable to owners of the parent ¥23.6B), demonstrating a stable return stance. FCF coverage is 2.57x (Free Cash Flow ¥25.4B / dividend total ¥9.9B), indicating ample capacity. DOE (Dividend on Equity) is approximately 3.0% (dividend total ¥9.9B / year-end net assets ¥337.7B), reflecting a favorable balance between capital efficiency and returns. Treasury stock purchases were ¥1.5B (prior year ¥2.0B), slightly lower, and no share buybacks were executed; shareholder returns are delivered via dividends only, so Total Return Ratio equals the Payout Ratio at 41.4%. The dividend policy emphasizes stable payouts with potential for phased increases aligned with profit growth. Free Cash Flow exceeds the sum of dividends and CapEx (¥13.5B), supporting sustainability of returns. However, given the OCF/Net Income ratio of 0.87x and remaining cash conversion issues, improvements in collection efficiency will be key to expanding returns.
Prolonged accounts receivable collection risk: Accounts Receivable balance of ¥418.1B represents 53.7% of Total Assets and 62.7% of Revenue, a high concentration. OCF/Net Income ratio 0.87x and OCF/EBITDA ratio 0.67x indicate collection delays pressuring capital efficiency. DSO (Days Sales Outstanding) about 229 days shows a lengthening trend; review of customer credit and sales terms is required.
Concentration risk in the Chemical Products Business: The Chemical Products Business accounts for 66.6% of Revenue and 78.5% of Operating Income (¥39.4B / ¥50.2B), indicating high dependence on a specific segment. Fluctuations in chemical prices, deterioration in supply-demand, or weak demand from major customers would directly impact company performance. The Functional Materials Business margin of 5.3% is lower than Chemical Products at 8.9%; improving Functional Materials profitability and diversifying the portfolio are key challenges.
Liquidity risk from concentrated short-term liabilities: Of Current Liabilities ¥388.0B, Accounts Payable ¥331.9B and short-term borrowings ¥26.6B represent the majority, creating high short-term settlement pressure. With Cash and Deposits of ¥81.2B, concurrent delays in receivable collection could create cash flow volatility. Current Ratio 134.8% and Quick Ratio 131.1% are generally healthy, but high receivable dependency means securing liquidity in the event of collection delays is critical.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.7% | 3.4% (1.4%–5.0%) | +0.4pt |
| Net Margin | 3.7% | 2.3% (1.0%–4.6%) | +1.4pt |
Both Operating Margin and Net Margin exceed industry medians, indicating a relatively high-profit structure within the trading company sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.4% | 5.9% (0.4%–10.7%) | -3.5pt |
Revenue growth lags the industry median of 5.9% by 3.5pt, indicating more modest growth relative to peers.
※Source: Company aggregation of public financial statements
Operating leverage materialized, improving Operating Margin from 3.2% to 3.7% (+0.5pt), continuing a profitability improvement trend. Expansion of gross margin to 14.4% and containment of SG&A contributed, with Operating Income growing +17.6% versus Revenue growth of +2.4%, significantly outpacing top-line expansion. High profitability in the Chemical Products Business (margin 8.9%) drives roughly 80% of corporate profit, while the Functional Materials Business (margin 5.3%) is growing revenue but remains lower margin; optimizing segment mix is a focus for further margin improvement.
Equity Ratio improved from 40.3% to 43.4% (+3.1pt), as Comprehensive Income rose sharply to ¥51.7B (prior year ¥9.0B), boosting net assets. The ¥27.5B increase in valuation differences on securities reflects unrealized gains on investment securities of ¥177.1B (prior year ¥137.9B, +28.4%), strengthening capital base. With a Payout Ratio of 41.4% and FCF coverage of 2.57x, return capacity is ample, supporting continuation of stable dividends and potential phased increases tied to profit growth. However, the discrepancy between the full-year dividend forecast ¥22 and the current year actual ¥44 warrants confirmation of disclosure consistency.
OCF ¥20.5B is 0.87x of Net Income ¥23.6B, and OCF/EBITDA ratio is 0.67x, indicating room to improve cash conversion. Prolonged collection of Accounts Receivable ¥418.1B (62.7% of Revenue) is the main factor suppressing OCF; reducing DSO of about 229 days is key to capital efficiency. The concentration of short-term liabilities (Current Liabilities ¥388.0B, of which Accounts Payable ¥331.9B) combined with high receivable dependency introduces liquidity risk if collection delays occur. Strengthening working capital management, revising customer credit, and diversifying away from Chemical Products concentration are prerequisites for improving ROE/ROIC and achieving sustainable growth.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the company from public financial statements. Investment decisions are your responsibility; consult a professional adviser as needed.