| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1191.6B | ¥1186.8B | +0.4% |
| Operating Income | ¥223.4B | ¥229.8B | -2.8% |
| Ordinary Income | ¥217.8B | ¥224.9B | -3.1% |
| Net Income | ¥51.1B | ¥20.4B | +150.3% |
| ROE | 6.0% | 2.7% | - |
For the fiscal year ended March 2026, revenue was ¥1191.6B (YoY +¥4.9B +0.4%), Operating Income was ¥223.4B (YoY -¥6.5B -2.8%), Ordinary Income was ¥217.8B (YoY -¥7.0B -3.1%), and Net Income was ¥51.1B (YoY +¥30.7B +150.3%). Revenue rose slightly, but operating profit declined due to an increase in SG&A ratio (12.1%, up +1.0pt from 11.1% a year earlier). Net income rose substantially due to normalization of extraordinary losses (¥8.5B, down -74.9% from ¥34.0B). The Waste Treatment & Resource Recovery segment maintained a high operating margin of 35.2% while reporting a -5.2% decline in operating profit. Renewable Energy turned profitable, with operating income improving from ¥1.1B to ¥7.9B (+593%). ROE was 6.0% and Equity Ratio was 49.8%, preserving financial soundness. Operating Cash Flow was ¥285.4B (YoY +43.9%), and Free Cash Flow was ¥97.2B, sufficient to cover dividends of ¥22.7B and share buybacks of ¥30.2B.
[Revenue] Revenue was ¥1191.6B (+0.4%), a slight increase. By segment, Waste Treatment & Resource Recovery was ¥531.2B (+1.9%), accounting for 44.6% of total and including disaster waste treatment projects related to the Noto Peninsula earthquake. Resource Recycling was ¥431.8B (+1.9%), 36.2% of total, with metal scrap sales at ¥387.0B (+2.1%) holding steady. Renewable Energy was ¥148.9B (+7.8%), 12.5% of total, with power supply revenue of ¥130.1B (+5.2%). Other revenues were ¥118.5B (+2.6%). By customer, sales to the Ishikawa Industrial Resource Circulation Association were ¥251.7B (prior year ¥259.6B, -3.0%). Gross margin improved to 30.9% (up +0.4pt from 30.5% prior year), but SG&A ratio rose to 12.1% (up +1.0pt from 11.1%), causing Operating Margin to decline to 18.7% (down -0.7pt from 19.4%).
[Profitability] Operating Income was ¥223.4B (-2.8%). By segment, Waste Treatment & Resource Recovery was ¥186.9B (-5.2%) and Resource Recycling was ¥34.0B (-2.6%), so the two core businesses recorded declines. Renewable Energy recovered sharply to ¥7.9B (prior year ¥1.1B, +593%), aided by the absence of the prior-year impairment loss of ¥31.1B (including goodwill of ¥17.8B). Non-operating items included interest income ¥0.5B, equity-method income ¥1.3B, and interest expense ¥5.3B, resulting in Ordinary Income of ¥217.8B (-3.1%). Extraordinary items comprised Extraordinary Gains ¥1.4B (gain on disposal of fixed assets) and Extraordinary Losses ¥8.5B (loss on disposal of fixed assets ¥2.5B, impairment loss ¥1.8B), yielding Profit Before Tax of ¥210.8B (prior year ¥191.9B, +9.8%). Income taxes were ¥61.8B (effective tax rate 29.3%, prior year 35.0%), resulting in Net Income of ¥51.1B (+150.3%). In conclusion, the company transitioned from revenue up but operating profit down to revenue and net profit both up due to lower extraordinary losses.
Waste Treatment & Resource Recovery reported Operating Income of ¥186.9B (-5.2%) and maintained a high margin of 35.2%. Resource Recycling recorded Operating Income of ¥34.0B (-2.6%) with a margin of 7.9%, supported by stable metal scrap market conditions. Renewable Energy improved to Operating Income of ¥7.9B (prior year ¥1.1B, +593%) and margin improved to 5.3%, aided by the absence of the prior-year ¥31.1B impairment loss and improved utilization rates. Other businesses posted Operating Income of ¥13.7B (+66.9%) with a margin of 11.5%, driven by strong performance in environmental engineering and regional contribution businesses. Segment assets were Waste Treatment ¥974.3B, Resource Recycling ¥508.4B, and Renewable Energy ¥202.0B, with the two core businesses accounting for 86% of the total.
[Profitability] Operating margin was 18.7% (down -0.7pt from 19.4%)—still high but compressed by higher SG&A. ROE was 6.0%, Net Profit Margin 4.3%, Total Asset Turnover 0.70x (Revenue ¥1191.6B ÷ Average Total Assets ¥1666.6B), and Financial Leverage 2.01x (Average Total Assets ¥1666.6B ÷ Average Equity ¥803.5B). EBITDA was ¥312.6B (Operating Income ¥223.4B + Depreciation ¥88.3B + Goodwill Amortization ¥2.5B), with an EBITDA margin of 26.2%. [Cash Quality] Operating Cash Flow of ¥285.4B is 1.94x Net Income attributable to parent (¥147.3B), and the accrual ratio is -8.1% ((Operating CF ¥285.4B - Net Income ¥147.3B) ÷ Total Assets ¥1712.6B × -1), indicating high earnings quality. Days Sales Outstanding improved to 39.1 days (Accounts receivable ¥128.3B ÷ Revenue ¥1191.6B × 365 days) from 58.6 days prior year. [Investment Efficiency] Total Asset Turnover of 0.70x (down from 0.73x) was affected by the build-up of construction in progress of ¥93.3B (prior year ¥72.7B). ROA (on Ordinary Income basis) was 13.1% (prior year 14.8%). [Financial Soundness] Equity Ratio was 49.8% (up +4.7pt from 45.1%), Current Ratio 122.5% (Current Assets ¥532.6B ÷ Current Liabilities ¥434.8B), Debt/Equity 0.50x (Interest-bearing debt ¥428.1B ÷ Equity ¥852.7B), and Debt/EBITDA 1.37x—within investment-grade range. Interest Coverage was 41.8x (Operating Income ¥223.4B ÷ Interest Expense ¥5.3B).
Operating Cash Flow was ¥285.4B (prior year ¥198.4B, +43.9%). Profit before tax ¥210.8B was adjusted for non-cash items (Depreciation ¥88.3B, Goodwill amortization ¥2.5B, Impairment loss ¥1.8B). A significant contributor was a decrease in accounts receivable of ¥63.8B, while decreases in accounts payable of -¥2.0B and tax payments of -¥93.6B were deductions. Working capital improved due to substantial collection of receivables (¥190.7B → ¥128.3B, -32.7%), and inventories increased slightly (¥33.5B → ¥35.6B). Investing Cash Flow was -¥188.2B (prior year -¥120.8B), mainly due to acquisitions of tangible fixed assets -¥165.8B and acquisition of subsidiary shares -¥18.8B. Financing Cash Flow was -¥64.3B, with borrowings of ¥91.2B offset by repayments -¥51.8B, net decrease in short-term borrowings -¥39.7B, dividends -¥22.3B, and share buybacks -¥30.0B. Free Cash Flow was ¥97.2B (Operating CF ¥285.4B + Investing CF -¥188.2B), covering dividends of ¥22.7B by 4.3x and total shareholder returns (dividends + buybacks ¥53.0B) by 1.8x. Cash and cash equivalents increased to ¥332.2B (prior year ¥299.2B, +11.0%), sufficiently covering short-term borrowings of ¥95.2B and bonds/long-term borrowings maturing within one year totaling ¥151.6B.
Of Ordinary Income ¥217.8B, Operating Income ¥223.4B was the main component. Non-operating income totaled ¥7.9B (interest income ¥0.5B, dividend income ¥0.1B, rental income ¥2.7B, other ¥1.8B), and non-operating expenses totaled ¥13.4B (interest expense ¥5.3B, other ¥3.4B), both relatively small. Extraordinary Gains were ¥1.4B (gain on disposal of fixed assets) and Extraordinary Losses were ¥8.5B (impairment loss ¥1.8B, loss on disposal of fixed assets ¥2.5B), which are temporary factors. The prior year included Extraordinary Losses of ¥34.0B (impairment loss ¥31.4B), and the reduction in extraordinary losses this period boosted Net Income. Operating CF is 1.94x Net Income attributable to parent (¥147.3B), and the accrual ratio is -8.1%, indicating strong cash backing. Total Comprehensive Income was ¥151.5B (Net Income ¥147.3B + Other Comprehensive Income ¥2.5B), with unrealized gains on securities ¥0.6B, actuarial differences on retirement benefits ¥1.1B, and share of other comprehensive income of equity-method affiliates ¥0.8B, clarifying the distinction between recurring earnings and one-off items.
Full-year guidance projects Revenue ¥1056.0B (-11.4%), Operating Income ¥74.0B (-66.9%), Ordinary Income ¥65.0B (-70.2%), and Net Income attributable to parent ¥41.0B (-72.2%), implying a sharp decline in profitability. Operating margin is assumed to fall to 7.0% (down -11.7pt from 18.7% actual), reflecting a conservative assumption that disaster-related projects will peter out, energy and maintenance costs will normalize, and project mix will change. Forecast dividend is ¥25 per year (Year-end ¥15, Interim ¥10; actual this year was ¥20 on an annualized basis, +¥5), with projected payout ratio 28.7% (dividend total ¥12.0B ÷ forecast Net Income ¥41.0B). Progress rates are Revenue 112.8% (Actual ¥1191.6B ÷ Forecast ¥1056.0B) and Operating Income 301.9%, indicating that the forecasts are conservative.
Annual dividend is ¥50 (Interim ¥20, Year-end ¥30), with total dividends of ¥22.7B. Payout ratio is 18.6% (Dividend ¥50 ÷ EPS ¥305.23, or Dividend total ¥22.7B ÷ Consolidated Net Income ¥122.9B)—a conservative level. Share buybacks amounted to ¥30.2B (recorded in Financing CF), and Total Return Ratio is approximately 35.8% ((Dividends ¥22.7B + Buybacks ¥30.2B = ¥52.9B) ÷ Net Income attributable to parent ¥147.3B). DOE (Dividend on Equity) is about 3.2% (Dividends ¥22.7B ÷ Prior year-end Equity ¥754.3B). Dividend coverage by FCF is 4.3x, and coverage of total returns by FCF is 1.8x, indicating high sustainability. Next fiscal year forecast dividend of ¥25 (payout ratio 28.7%) represents a cut, but given FCF generation and leverage headroom, a stable dividend and opportunistic share buybacks remain possible.
Revenue volatility risk from the decline of disaster-related projects: Sales to major customer Ishikawa Industrial Resource Circulation Association account for ¥251.7B (21.1% of revenue) and include Noto Peninsula earthquake-related disaster waste treatment. The substantial decline forecast for next year (Revenue -11.4%, Operating Income -66.9%) implies the potential impact of the one-off project cycle. The core Waste Treatment & Resource Recovery segment’s Operating Income already decelerated by -5.2% YoY, so the end of disaster-response demand could pressure short-term earnings.
Metal scrap market price volatility risk: Metal scrap sales account for ¥387.0B (89.6% of the Resource Recycling segment), and the segment’s operating margin of 7.9% is sensitive to price and procurement volume fluctuations. Metal scrap is highly correlated with market conditions, so a decline in resource prices could simultaneously compress revenue and margins. Although sales rose +2.1% YoY, operating income was -2.6%, suggesting limits to passing on price changes.
Operational and fuel procurement risk in Renewable Energy: Renewable Energy turned profitable with Operating Income ¥7.9B (+593%), but margin at 5.3% is the lowest among segments. The prior year included impairment losses of ¥31.1B, and changes in fuel procurement costs for woody biomass, plant utilization rates, and maintenance expenses can materially affect profitability. Power supply revenue ¥130.1B (87.4% of Renewable Energy revenue) is also exposed to power market conditions and feed-in tariff developments. The build-up of construction in progress ¥93.3B (prior year ¥72.7B) makes the timing of commissioning and revenue contribution focal points; delays or unforeseen costs could impair investment recovery.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 18.7% | 8.1% (3.6%–16.0%) | +10.6pt |
| Net Profit Margin | 4.3% | 5.8% (1.2%–11.6%) | -1.5pt |
Operating margin exceeds the industry median by 10.6pt, indicating a high-profit business model. Net profit margin is below the median, but excluding extraordinary losses the recurring operating profitability is robust.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.4% | 10.1% (1.7%–20.2%) | -9.7pt |
Revenue growth lags the industry median by 9.7pt, reflecting the reversion of disaster-related projects and maturation of core businesses. Next year’s forecast shows a further decline of -11.4%.
※Source: Company compilation
High profitability (Operating Margin 18.7%, EBITDA margin 26.2%) and FCF generation (¥97.2B, 1.8x dividends + buybacks) provide a base to support dividends and share buybacks even under next year’s sharp profit decline forecast. Financial soundness (Debt/EBITDA 1.37x, Equity Ratio 49.8%, Interest Coverage 41.8x) is relatively strong within the industry, leaving room for additional investment or selective M&A.
The large YoY increase in Net Income (+150.3%) is mainly due to normalization of Extraordinary Losses (¥34.0B → ¥8.5B), while operating income decreased -2.8%—a cautious operational trend. With SG&A ratio up +1.0pt and operating leverage reduced, the conservatism in next year’s forecast (Operating Margin 7.0%, down -11.7pt from actual 18.7%) likely embeds the anticipated reversion of disaster-related projects, normalization of renewable energy costs, and shifts in project mix. The divergence between actual progress (Operating Income 301.9% of forecast) suggesting upside and the existing downward trend in the two core segments should be monitored in balance.
Significant improvement in Days Sales Outstanding (58.6 days → 39.1 days) and compression of short-term borrowings (-29.4%) indicate improvements in working capital efficiency and liquidity. The conversion of Construction in Progress ¥93.3B (5.4% of total assets) to fixed assets and its timing of income contribution, stabilization of Renewable Energy utilization, and potential price revisions/public project wins in Waste Treatment will be key to restoring operating margins and improving Total Asset Turnover going forward.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. 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 own responsibility; consult professionals as appropriate before making investment decisions.