| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1273.0B | ¥1418.7B | -10.3% |
| Operating Income | ¥134.4B | ¥171.0B | -21.4% |
| Ordinary Income | ¥168.8B | ¥173.7B | -2.8% |
| Net Income | ¥127.6B | ¥186.5B | -31.6% |
| ROE | 8.1% | 12.8% | - |
For the fiscal year ended March 2026, Revenue was 1273B (YoY -146B, -10.3%), Operating Income was 134B (YoY -37B, -21.4%), Ordinary Income was 169B (YoY -5B, -2.8%), and Net Income was 128B (YoY -59B, -31.6%). Revenue declined as the ocean shipping market normalized; Operating Income fell 21.4% due to lower freight yields and fixed cost burden, but contributions from non-operating income (equity-method gains ¥19B, dividend income ¥19B, foreign exchange gains ¥11B, etc.) limited the decline at the Ordinary Income level to -2.8%. Net Income declined -31.6% partly due to the drop in prior-year special gains (prior year ¥27B → current ¥13B). Total assets expanded to ¥3467B (+402B, +13.1%); long-term borrowings were increased to ¥1162B (+441B, +61.2%) while short-term borrowings were reduced to ¥255B (-231B, -47.5%), extending debt duration. Operating Cash Flow (OCF) was ¥299B (-2.8%), 2.3x Net Income, with a cash conversion ratio of 1.11x indicating good earnings quality, but Free Cash Flow was -¥123B due to growth investments of ¥640B. ROE fell to 8.1% (prior-year estimate ~13%), driven mainly by lower Net Income margin and reduced asset turnover. Dividends were a total ¥59 (Year-end ¥35, Interim ¥24; including a ¥5 special dividend), payout ratio 33.4%. Guidance for next fiscal year is conservative at Revenue ¥1290B (+1.3%), Operating Income ¥91B (-32.3%), Ordinary Income ¥67B (-60.3%), reflecting further normalization of ocean markets and reduced non-operating contributions.
Revenue was ¥1273B, down ¥146B YoY (-10.3%). The core Ocean Shipping segment (80.4% of Revenue) declined to ¥1025B (-12.8%) driven by freight normalization and fleet utilization stabilization. Domestic/coastal shipping fell slightly to ¥108B (-5.1%). Real estate maintained growth at ¥142B (+8.2%). Gross profit was ¥238B (gross margin 18.7%, down 1.4ppt from 20.1%), with lower freight yields and fixed costs compressing margins. SG&A was ¥104B (SG&A ratio 8.2%, up 0.1ppt from 8.1%) — absolute SG&A decreased ¥10B but the ratio edged up due to lower sales.
Profitability: Operating Income was ¥134B (-21.4%), operating margin 10.6% (down 1.5ppt from 12.1%). Ocean Shipping Operating Income was ¥88B (-33.4%), margin 8.6% (down 2.6ppt from prior estimate 11.2%), a significant deterioration. Real Estate Operating Income was ¥44B (+25.6%), margin 30.7%, providing strong support to consolidated profits. Ordinary Income was ¥169B (-2.8%), with non-operating income of ¥54B (equity-method gains ¥19B (prior ¥3B, +¥16B), dividend income ¥19B, FX gains ¥11B) substantially cushioning the operating decline. Special gains were ¥13B (including gains on sale of available-for-sale securities ¥18B), special losses ¥2B, net one-off +¥11B. Prior year had net one-off +¥26B, so the reduction in one-offs is a key factor in the -32% Net Income decline. Profit before tax was ¥180B (-10.0%), effective tax rate 14.7%, Net Income ¥128B (-31.6%). Non-controlling interests were -¥0.3B, attributable Net Income to parent was ¥154B (-16.2%). Overall, revenues and operating profits declined, but non-operating contributions and one-offs materially supported Ordinary and Net Income levels.
Ocean Shipping (Revenue ¥1025B, -12.8%) had Operating Income ¥88B (-33.4%), margin 8.6%. Profit sensitivity is high due to freight market normalization and cost fixedness, resulting in over 30% drop in segment profit. Domestic/Coastal Shipping (Revenue ¥108B, -5.1%) had Operating Income ¥3B (-33.3%), margin 2.8% — low margin persists. Real Estate (Revenue ¥142B, +8.2%) had Operating Income ¥44B (+25.6%), margin 30.7% — high profitability. Real Estate contributes approximately 32% of consolidated profits, functioning as a stable earnings source to offset Ocean Shipping volatility. Recovery in Ocean Shipping and sustained Real Estate growth are key to future consolidated profit expansion.
Profitability: Operating margin 10.6% (down 1.5ppt from 12.1%), Net Income margin 10.0% (down 3.2ppt from 13.2%). Compression in gross margin to 18.7% (down 1.4ppt from 20.1%) due to lower freight yields and cost stickiness in Ocean Shipping. ROE decreased to 8.1% (prior estimate ~13%), driven by lower Net Income margin and deterioration in total asset turnover (0.367x, prior 0.463x). ROA (on Ordinary Income) was 5.2% (prior 5.8%). Cash Quality: OCF was ¥299B, 2.3x Net Income, OCF/EBITDA 1.11x — good cash conversion. Accrual ratio -4.2% indicates high earnings quality. Working capital supported OCF via reduced accounts receivable +¥20B and increased accounts payable +¥32B. Investment Efficiency: Total asset turnover fell to 0.37x (prior 0.46x) as fleet and real estate asset increases expanded the denominator. Interest coverage was 17.4x (Operating Income ¥134B / Interest expense ¥16B), indicating strong interest payment capacity. Financial Soundness: Equity Ratio 45.7% (prior 47.5%), Debt/Equity 89.5% — within a stable range. Interest-bearing debt (short-term borrowings ¥255B + long-term borrowings ¥1162B) totaled ¥1417B; Debt/EBITDA 5.25x, indicating relatively high leverage. Current ratio 84.6%, quick ratio 84.2% — below 1.0x, warranting attention to short-term liquidity. Cash & deposits ¥141B vs. short-term borrowings ¥255B gives cash/short-term liabilities 0.55x. Increasing long-term borrowings extended funding duration and alleviated short-term rollover risk.
OCF was ¥299B (prior ¥307B, -2.8%), 2.3x Net Income of ¥128B, cash conversion (OCF/EBITDA) 1.11x reflecting high earnings quality. OCF subtotal was ¥306B; working capital changes (AR decrease +¥20B, AP increase +¥32B, inventory increase -¥18B) contributed positively, with income taxes paid -¥23B and net interest/dividend cash flows +¥17B (received ¥33B - paid ¥15B), resulting in OCF of ¥299B. Investing Cash Flow was -¥421B, led by tangible/intangible fixed asset acquisitions -¥640B (about 4.7x depreciation ¥135B) as major growth investment, partly offset by proceeds from fixed asset sales +¥228B and sale of investment securities +¥21B. Free Cash Flow was -¥123B amid the investment cycle. Financing Cash Flow was +¥143B, with long-term borrowings raised +¥493B to fund investments, short-term borrowings net decrease -¥36B, long-term borrowings repayment -¥245B, and dividend payments -¥60B. Cash increased by +¥25B to an ending balance of ¥141B. Working capital improvement contribution was limited, with no signs of accrual manipulation; the business and asset recycling generate cash flows.
Recurring earnings are centered on freight revenues from Ocean and Domestic shipping and rental income from Real Estate. Non-operating income was ¥54B (4.2% of Revenue), with dividend income ¥19B, equity-method gains ¥19B, FX gains ¥11B, etc. Equity-method gains rose significantly from ¥3B to ¥19B (+¥16B), reflecting improved profitability at equity investees, but this is sensitive to market and financial conditions and has neutral sustainability. One-offs: Special gains ¥13B (gains on sale of available-for-sale securities ¥18B, gains on disposal of fixed assets ¥13B), special losses ¥2B, net one-off +¥11B. Prior year net one-off was +¥26B; the decline in one-offs contributed to the -32% Net Income. Effective tax rate 14.7% reflects deferred taxes and segment tax differentials; divergence between taxable income and accounting profit is limited. OCF is 2.3x Net Income and accrual ratio -4.2%, indicating strong cash realization and low risk of accounting profit adjustments. About 80% of recurring earnings are shipping-related and thus exposed to market volatility, but Real Estate stable earnings and non-operating contributions provide diversification.
For next fiscal year (FY2027 ending March 2027), guidance is Revenue ¥1290B (+1.3%), Operating Income ¥91B (-32.3%), Ordinary Income ¥67B (-60.3%), Net Income attributable to parent ¥121B (-21.5%), EPS ¥114.36, Dividend ¥23. The guidance is conservative, incorporating further normalization in Ocean Shipping markets and reduced non-operating contributions. Operating margin is assumed to decline to 7.1%, mainly due to margin compression in Ocean Shipping. Ordinary Income is projected to fall sharply by -60.3%, incorporating reversals of prior FX gains and equity-method gains. Net Income is expected to decline -21.5% as one-offs normalize. Year-to-date progress is Revenue 98.7%, Operating Income 147.7%, Ordinary Income 251.9% — outperforming; the company’s guidance assumes deterioration in the second half in markets and costs. If second-half progress follows plan, full-year targets are achievable, but results remain sensitive to Ocean freight rates, fuel, and FX volatility.
Year-end dividend ¥35 (ordinary ¥28, special ¥5, commemorative ¥2), Interim ¥24, total ¥59. Payout ratio 33.4% (dividend total approx. ¥62B vs. attributable Net Income ¥154B), within a stable range. No share buybacks were executed; Total Return Ratio equals payout ratio. With dividend outflows of ¥62B and Free Cash Flow -¥123B, FCF coverage is negative. Dividend funding is supported by OCF ¥299B, proceeds from asset sales, and long-term borrowings. Retained earnings are ¥1203B, providing ample capacity for dividend payments in the short term. Next-year dividend guidance is ¥23 (cut), implying a payout ratio of about 20% against projected Net Income ¥121B — conservative. Sustained dividend policy depends on recovery in cash generation post-investment cycle and earnings growth.
Ocean Shipping Market Risk: Ocean Shipping accounts for 80.4% of Revenue and ~65% of Operating Income and is highly dependent on freight markets. This fiscal year saw Revenue -12.8% and Operating Income -33.4% as markets normalized. Next year’s forecast also assumes Operating Income -32.3%; further market deterioration risks underperformance. Lower freight yields and fixed cost burden increase profit sensitivity, with potential for further compression from margin 8.6% (prior estimate 11.2%).
Short-term Liquidity Risk: Current ratio 84.6%, quick ratio 84.2% — below 1.0x. Cash & deposits ¥141B vs. short-term borrowings ¥255B gives cash/short-term liabilities 0.55x. Working capital is -¥75B, indicating maturity mismatch. Although interest coverage is 17.4x, short-term liquidity management is critical. Extending duration via long-term borrowings mitigates rollover risk, but liquidity buffer remains limited.
Leverage & Investment Recovery Risk: Interest-bearing debt ¥1417B, Debt/EBITDA 5.25x — leverage is relatively high. Growth investments of ¥640B (about 4.7x depreciation) expanded assets, but payback is in progress; ROE 8.1% and ROA 5.2% are low. Delays in monetizing fleet and Real Estate investments, or declines in utilization/yields, could result in returns below assumed ROIC. Rising interest rates would increase interest expenses and could pressure cash flows.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.6% | 6.3% (3.7%–8.5%) | +4.3pt |
| Net Income Margin | 10.0% | 2.7% (1.6%–4.7%) | +7.3pt |
The company’s Operating and Net Income margins materially exceed industry medians, placing it in an upper tier within transport.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -10.3% | 5.0% (-0.4%–9.4%) | -15.3pt |
Revenue growth rate significantly lags industry median, reflecting the revenue decline from Ocean market normalization.
※Source: Company compilation
While operating margins contracted, OCF generation and cash conversion (1.11x) are strong and indicate high earnings quality. Non-operating contributions (equity-method gains ¥19B, dividend income ¥19B, FX gains ¥11B) underpin Ordinary Income but are sensitive to market and financial conditions, so sustainability is neutral. The structure whereby high-margin, stable Real Estate earnings (margin 30.7%, Operating Income +25.6%) mitigate Ocean Shipping revenue volatility is functioning effectively.
The company is in an investment cycle with Free Cash Flow -¥123B, Debt/EBITDA 5.25x, and current ratio 84.6%, so capital structure warrants caution. However, lengthening debt duration via increased long-term borrowings reduces short-term rollover risk. Interest coverage 17.4x provides strong interest service capacity, and available-for-sale securities ¥344B with unrealized gains provide liquidity in emergencies. After the major investments cycle and commencement of fleet/Real Estate operations, expansion in OCF and improvements in ROE/ROIC are expected. Next-year guidance of Operating Income -32.3% and Ordinary Income -60.3% is conservative and incorporates downside; recovery assumptions hinge on Ocean freight bottoming, long-term contract ratios, and fuel hedge effectiveness.
This report was generated by AI analyzing XBRL financial statement data and is an automated financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.