| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2297.8B | ¥2474.1B | -7.1% |
| Operating Income / Operating Profit | ¥205.3B | ¥202.2B | +1.5% |
| Ordinary Income | ¥210.5B | ¥190.2B | +10.7% |
| Net Income / Net Profit | ¥171.8B | ¥150.8B | +13.9% |
| ROE | 9.2% | 9.3% | - |
For the fiscal year ended March 2026, Revenue was ¥2,297.8B (YoY -¥176.2B -7.1%), Operating Income was ¥205.3B (YoY +¥3.1B +1.5%), Ordinary Income was ¥210.5B (YoY +¥20.4B +10.7%), and Net Income attributable to owners of the parent was ¥171.8B (YoY +¥21.0B +13.9%), resulting in a year of lower revenue but higher profits. The revenue decline was mainly due to falling freight rates in the ocean-going shipping business, but improvements in non-operating results (recorded foreign exchange gains of ¥9.7B and interest expense of ¥13.6B, a YoY decrease of ¥3.2B) and a special gain of ¥70.4B (gain on sale of fixed assets) contributed to a large increase in net profit. The operating margin improved by 0.7pt to 8.9% from 8.2% in the prior year, and the net margin rose to 7.5% (prior year 6.1%), indicating improved profitability. EPS was 1,022.46円 (prior year 790.18円, +29.4%) and ROE was 9.2%.
[Revenue] Revenue was ¥2,297.8B (YoY -7.1%), a decline. The core ocean-going shipping business contracted to ¥1,970.6B (YoY -8.8%), weighing on overall sales. The ocean-going segment accounted for 85.6% of revenue; softer rates for bulk carriers and tankers and lower volumes drove the revenue decline. Conversely, the domestic coastal shipping business was robust at ¥327.2B (YoY +4.7%), supported by stable domestic demand and a high proportion of long-term contracts. Gross profit was ¥289.9B with a gross margin of 12.6% (prior year 11.3%)—an improvement, although the shipping industry’s structurally low gross margins persist.
[Profitability] Operating Income rose slightly to ¥205.3B (YoY +1.5%). SG&A was contained at ¥84.6B, and cost optimization outpaced the revenue decline, improving the operating margin to 8.9% (prior year 8.2%). Ordinary Income increased substantially to ¥210.5B (YoY +10.7%), aided by improved non-operating results. The main factors were foreign exchange gains of ¥9.7B and a reduction in interest expense (¥16.8B → ¥13.6B). Special gains were ¥70.4B (prior year ¥27.3B), mostly from gains on sale of fixed assets and thus temporary. Profit before tax was ¥280.8B (prior year ¥217.4B, +29.2%), and income taxes were ¥39.9B (effective tax rate 14.2%), a low tax burden, resulting in Net Income attributable to owners of the parent of ¥171.8B (YoY +13.9%). In conclusion, despite lower revenue, improvements in non-operating results and special gains produced a substantial increase in final profits—a lower-revenue, higher-profit outcome.
The Ocean-going Shipping Business posted Revenue of ¥1,970.6B (YoY -8.8%), Operating Income of ¥154.9B (YoY -4.8%), and an operating margin of 7.9% (prior year 7.5%). Despite a larger percentage decline in revenue, the percentage decline in profit was smaller; cost cuts and a shift to higher-margin routes contributed to margin improvement. The Coastal Shipping Business reported Revenue of ¥327.2B (YoY +4.7%), Operating Income of ¥50.4B (YoY +27.3%), and an operating margin of 15.4% (prior year 12.7%), maintaining high profitability. Coastal operations, with a high proportion of long-term contracts, are less sensitive to market volatility and function as a stable earnings source. Other segments (information services, etc.) had Revenue of ¥4.8B and an operating loss of ¥0.1B, and are small in scale. While ocean-going is the core, the high margin and growth in coastal operations contribute to portfolio stabilization.
[Profitability] Operating margin 8.9% (prior year 8.2%), net margin 7.5% (prior year 6.1%) show improvement. Gross margin 12.6% remains low, reflecting structural features of the shipping industry. ROE 9.2% (prior year 11.9%) declined due to higher equity but remains at a healthy level. [Cash Quality] Operating Cash Flow (OCF) ¥354.2B is 2.06x Net Income ¥171.8B, indicating very high cash-generating ability. OCF/EBITDA ratio is 0.96x (EBITDA ¥367.4B = Operating Income ¥205.3B + Depreciation ¥162.2B), in a strong range, showing solid cash backing for profits. [Investment Efficiency] Total asset turnover 0.78x (prior year 0.86x) decreased due to lower sales. Capital expenditures were ¥57.1B, well below depreciation of ¥162.2B (CapEx/Depreciation ratio 0.35x), indicating restrained renewal investment. [Financial Soundness] Equity Ratio 63.2% (prior year 56.5%), Debt/Equity ratio 0.34x (prior year 0.53x) show materially reduced financial leverage and improved soundness. Current ratio 273.3%, quick ratio 237.9% indicate very high short-term payment capacity, and cash & deposits ¥416.5B plus short-term securities ¥239.7B provide liquidity of ¥656.2B.
Operating Cash Flow (OCF) was ¥354.2B (YoY +1.6%), remaining stable; the subtotal ¥389.8B was adjusted for increases in inventories -¥35.7B, corporate tax payments -¥25.6B, etc. The OCF/Net Income ratio is 2.06x, a high level signaling good earnings quality. Investing Cash Flow was +¥20.0B, net proceeds from asset sales exceeding capital expenditures of ¥57.1B. Financing Cash Flow was -¥281.9B, mainly due to repayment of long-term borrowings -¥316.7B (borrowings ¥90.1B - repayments ¥316.7B) and dividend payments -¥54.3B. Free Cash Flow (FCF) was ¥374.2B (OCF ¥354.2B + Investing CF ¥20.0B), ample, covering dividend payments of ¥54.3B 6.9 times over and used for significant long-term debt repayment. Cash and cash equivalents increased by ¥98.4B to ¥656.3B (prior year ¥557.8B), further strengthening financial capacity. The increase in working capital was mainly inventories +¥35.8B (increased stockpiling of fuel and maintenance materials), within the scope of operational continuity.
Of Ordinary Income ¥210.5B, Net Income was ¥171.8B; Profit before tax ¥280.8B includes special gains ¥70.4B, meaning about 29% of Net Income depends on one-off items. The bulk of special gains is gains on sale of fixed assets ¥70.4B, with limited reproducibility next year. Non-operating income of ¥24.8B is mainly composed of foreign exchange gains ¥9.7B, dividend income ¥2.0B, and interest income ¥1.9B; the foreign exchange gains include temporary market-related elements. Non-operating expenses ¥19.7B are mostly interest expense ¥13.6B, down from ¥16.8B in the prior year. Accrual quality is very high: OCF ¥354.2B / Net Income ¥171.8B = 2.06x, and OCF/EBITDA 0.96x is in a favorable range. Other comprehensive income ¥298.8B includes deferred hedge gains/losses ¥48.2B, valuation differences on available-for-sale securities ¥5.6B, and actuarial gains/losses ¥5.5B; the difference of ¥127.0B versus Net Income ¥171.8B is attributable to other comprehensive income. Recurring earnings are comprised of Operating Income ¥205.3B and stable non-operating results, but final profit was boosted by special gains and a low effective tax rate (14.2%); excluding one-off items, underlying net income is assessed to be below the reported amount for the period.
Full Year guidance: Revenue ¥2,300.0B (YoY +0.1%), Operating Income ¥231.0B (YoY +12.5%), Ordinary Income ¥219.0B (YoY +4.1%), Net Income attributable to owners of the parent ¥231.0B (on a reported basis +34.5%), EPS 980.25円, DPS 145円. Versus actuals, Revenue ¥2,297.8B achieved 100.1% of plan (virtually on target), Operating Income ¥205.3B reached 88.9% (below plan), Ordinary Income ¥210.5B reached 96.1% (nearly achieved), and planned Net Income ¥231.0B is higher than the actual ¥171.8B (however, on an underlying basis excluding this period’s special gains there is room for improvement toward plan). The shortfall in Operating Income is inferred to stem from cost factors (fuel and maintenance) and underperformance versus assumed freight yield. The full-year DPS guidance of 145円 reflects normalization from the current period’s DPS of 310円 and is a conservative level, implying a dividend policy based on profit levels after one-off gains.
Interim and year-end dividends were 105円 at the end of Q2 and 205円 at year-end, totaling 310円/share, maintaining a healthy payout ratio of 30.4%. Total dividends were ¥54.3B, equivalent to 31.6% of Net Income attributable to owners of the parent ¥171.8B. Coverage of dividend payments ¥54.3B by FCF ¥374.2B is 6.9x, indicating strong cash-based sustainability. Share buybacks were negligible (-¥0.0B); shareholder returns are centered on dividends. The full-year DPS plan of 145円 (YoY -165円) reflects normalization after one-off gains, and the payout ratio is expected to remain at similar levels. Over the medium to long term, the company is evaluated to prioritize fleet renewal investments and maintaining financial soundness while continuing stable dividends in the 30–40% payout ratio range.
Concentration risk to ocean-going shipping: The ocean-going shipping business accounts for 85.6% of revenue, making the company highly sensitive to international shipping market conditions (e.g., Baltic Dry Index BDI) and freight rate fluctuations. A downturn in commodity markets for major cargoes such as iron ore, coal, and LPG, or a global economic slowdown, could materialize as falling freight rates and lower utilization. With a low gross margin of 12.6%, earnings declines tend to be large in adverse market conditions.
Fuel price and exchange-rate volatility: Increases in bunker fuel prices (e.g., VLSFO) directly raise costs, and if freight cannot be passed through, margins are compressed. Exchange rate (USD/JPY) fluctuations affect revenue, fuel costs, and the currency mismatch of borrowings, impacting P&L; this period recorded foreign exchange gains of ¥9.7B but yen appreciation poses the reverse risk. Additional cost burdens from environmental regulations such as the EU ETS are also expected to rise.
Balance risk between fleet renewal and financial burden: CapEx ¥57.1B is far below depreciation ¥162.2B (CapEx/Depreciation ratio 0.35x), indicating restrained renewal investment. As fleet age increases, maintenance costs and lower utilization, and the need for large investments to meet environmental regulations may arise, making allocation of FCF a key issue. Long-term borrowings have been compressed to ¥480.1B, but attention is needed to rising funding costs for new vessel acquisitions (interest rate risks at the 6–8% level).
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.9% | 6.3% (3.7%–8.5%) | +2.6pt |
| Net Margin | 7.5% | 2.7% (1.6%–4.7%) | +4.7pt |
The company outperforms the industry median (transportation sector) in profitability and ranks in the upper tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -7.1% | 5.0% (-0.4%–9.4%) | -12.1pt |
Revenue growth underperforms the industry median significantly, reflecting pronounced softness in the ocean-going market.
※ Source: Company compilation
Improved profitability and strong cash generation despite declining revenue: Revenue declined -7.1% YoY, but operating margin improved to 8.9% (prior year 8.2%) and net margin to 7.5% (prior year 6.1%). OCF ¥354.2B (2.06x net income) and FCF ¥374.2B show abundant cash generation. Equity Ratio 63.2% and Debt/EBITDA 1.73x indicate very high financial soundness, providing resilience in rising-rate or volatile market environments. The Coastal Shipping Business, with an operating margin of 15.4%, contributes high profitability that stabilizes the portfolio against ocean market volatility.
Caution on reliance on one-off gains and sustainability of profits: Approximately 29% of Net Income ¥171.8B comprises special gains ¥70.4B (gain on sale of fixed assets), with limited reproducibility next year. Foreign exchange gains of ¥9.7B in non-operating income also include temporary market factors. The full-year DPS of 145円 (normalizing from 310円) is a conservative setting that assumes one-off gains are absent; ongoing monitoring of recurring profit levels and cash flow sustainability is required.
Fleet renewal investment and growth strategy execution: CapEx ¥57.1B is far below depreciation ¥162.2B, indicating restrained renewal. Going forward, renewing to more fuel-efficient vessels, compliance with regulations such as the EU ETS, and accumulation of long-term COA contracts will be key to improving earnings. Given the 85.6% reliance on ocean-going operations, expanding coastal operations, shifting to higher-margin routes, and securing green premiums through decarbonization to diversify the portfolio and strengthen competitiveness are focal points for upcoming periods.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; please consult a professional if necessary.