| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥878.5B | ¥801.8B | +9.6% |
| Operating Income / Operating Profit | ¥221.9B | ¥215.5B | +3.0% |
| Ordinary Income | ¥224.3B | ¥214.8B | +4.4% |
| Net Income / Net Profit | ¥92.0B | ¥88.0B | +4.5% |
| ROE | 8.1% | 9.3% | - |
For the fiscal year ended March 2026, Revenue was ¥878.5B (YoY +¥76.8B +9.6%), Operating Income was ¥221.9B (YoY +¥6.4B +3.0%), Ordinary Income was ¥224.3B (YoY +¥9.4B +4.4%), and Net Income attributable to owners of the parent was ¥92.0B (YoY +¥4.0B +4.5%), achieving both top-line and bottom-line growth. The core environmental-related business drove Revenue through expanded consolidation scope and increased processing capacity, while non-operating items such as foreign exchange gains of ¥4.0B and interest income of ¥2.5B boosted Ordinary Income. Conversely, goodwill amortization of ¥12.3B from M&A and higher depreciation (¥88.1B, YoY +42.7%) reduced the Operating margin to 25.3% (prior year 26.9%), constraining operating-level profit growth despite top-line expansion. Extraordinary items resulted in net special gains of +¥7.8B (special gains ¥28.3B including gains on sales of investment securities ¥12.7B and subsidy income ¥13.2B, less special losses of ¥20.5B including impairment losses ¥3.1B), supporting final profit. Total assets rose sharply to ¥2,601.9B (YoY +¥752.9B +40.7%), reflecting the recognition of goodwill ¥370.5B and intangible assets ¥375.1B related to the acquisition of subsidiaries such as Scarab Sacre Co., Ltd., and an increase in long-term borrowings to ¥964.6B; Debt/EBITDA rose to 3.11x. Cash flows showed solid Operating Cash Flow (OCF) of ¥254.6B (YoY +10.6%), while Investing Cash Flow was -¥651.1B due to ¥457.4B for subsidiary share acquisitions and ¥172.6B for capital expenditures, turning Free Cash Flow negative at -¥396.5B. Financing needs were met by Financing Cash Flow of ¥414.3B, centered on long-term borrowings of ¥638.0B, and cash and deposits were maintained at ¥523.0B.
[Revenue] Revenue was ¥878.5B (YoY +9.6%), marking near double-digit growth. By segment, the core environmental-related business (waste collection and transport, intermediate treatment, final disposal, etc.) accounted for ¥853.4B (+10.0%), representing 97.1% of consolidated Revenue and driving the increase. Growth in this segment was attributable to M&A effects from adding Scarab Sacre Co., Ltd., Hizen Kankyo Co., Ltd., and four other companies to the consolidation scope, as well as improved utilization rates at existing sites and stable processing unit prices. Other businesses (recyclable resource recycling and sports promotion) recorded ¥28.1B (+1.0%), a marginal increase, contributing limitedly to consolidated Revenue excluding intersegment adjustments.
[Profitability] Operating Income was ¥221.9B (+3.0%) and the Operating margin was 25.3% (prior year 26.9%, -1.6pt), indicating restrained profit growth relative to Revenue. Gross profit was ¥379.5B (gross margin 43.2%, prior year 43.6%, -0.4pt) and SG&A increased to ¥157.7B (prior year ¥133.8B, +17.8%). The main drivers of higher SG&A were goodwill amortization of ¥12.3B (prior year ¥4.5B) following M&A and increased fixed costs such as personnel and logistics associated with the expanded consolidation scope. By segment, the environmental-related business delivered Operating Income of ¥224.8B (+2.7%, margin 26.3%) and remained robust, while Other businesses posted an operating loss of ¥2.1B (prior year -¥2.3B, reduction in deficit by 7.6%), slightly weighing on overall margins. Ordinary Income rose to ¥224.3B (+4.4%), outpacing Operating Income, supported by non-operating income of ¥16.8B (foreign exchange gains ¥4.0B, interest income ¥2.5B, subsidies and other ¥3.5B). Non-operating expenses increased to ¥14.4B (including interest expenses ¥7.8B), but the interest coverage ratio remained high at 28.4x (Operating Income / Interest Expense). Special items produced net special gains of +¥7.8B (special gains ¥28.3B less special losses ¥20.5B), chiefly driven by gains on sales of investment securities ¥12.7B and subsidy income ¥13.2B; one-off charges included impairment losses ¥3.1B and loss on retirement of fixed assets ¥1.5B. Income taxes amounted to ¥70.2B (effective tax rate 30.2%), and after deducting ¥3.4B attributable to non-controlling interests, Net Income attributable to owners of the parent was ¥92.0B (+4.5%), with a Net margin of 10.5% (prior year 11.0%, -0.5pt). In summary, although both Revenue and profit increased, M&A integration costs and higher fixed costs compressed operating-level margins, with non-operating and special items complementing final profit.
The Environmental-related Business recorded Revenue of ¥853.4B (YoY +10.0%), Operating Income of ¥224.8B (YoY +2.7%), and Operating margin of 26.3% (prior year 28.2%, -1.9pt), achieving both Revenue and profit growth while experiencing a margin decline. This segment accounts for 97.1% of consolidated Revenue and nearly all consolidated Operating Income; Revenue was driven by scale expansion through M&A and improved utilization at existing facilities. The margin decline was primarily due to increased goodwill amortization and depreciation associated with newly consolidated subsidiaries, as well as higher fixed costs such as personnel and logistics. Other businesses (recyclable resource recycling and sports promotion) reported Revenue of ¥28.1B (YoY +1.0%) and an Operating loss of ¥2.1B (prior year operating loss ¥2.3B, deficit narrowed by 7.6%), with a margin of -7.4% remaining negative. Although small in scale and having limited consolidated impact, the reduced deficit indicates progress toward profitability. Corporate adjustments (intersegment consolidation adjustments) were -¥0.8B, consistent with Operating Income.
[Profitability] Operating margin was 25.3% (prior year 26.9%, -1.6pt), remaining high but down, mainly due to an increase in SG&A ratio from M&A integration costs and higher fixed costs (SG&A ratio 17.9%, prior year 16.7%, +1.2pt). Net margin was 10.5% (prior year 11.0%, -0.5pt), slightly lower but its decline was mitigated by contributions from non-operating and special items. ROE was 8.1% (prior year 15.8%), sharply lower due to a faster increase in equity (¥946.8B → ¥1,140.6B, +20.5%) than in profit. [Cash Quality] OCF / Net Income was 2.77x (OCF ¥254.6B / Net Income ¥92.0B), indicating healthy conversion of profit to cash. OCF / EBITDA was 0.82x (OCF ¥254.6B / EBITDA ¥310.0B; EBITDA = Operating Income + Depreciation), suggesting scope to improve working capital efficiency. The accrual ratio ((Net Income - OCF) / Total Assets) was -6.2%, indicating cash generation exceeding accounting profit. [Investment Efficiency] Total asset turnover was 0.34x (Revenue ¥878.5B / ending Total Assets ¥2,601.9B), down from 0.43x due to asset increases from M&A. Tangible fixed asset turnover was 0.72x (Revenue / Tangible fixed assets ¥1,217.7B), reflecting a capital-intensive business model. CapEx / Depreciation was 1.96x (CapEx ¥172.6B / Depreciation ¥88.1B), indicating a growth investment mode. [Financial Soundness] Equity Ratio was 43.8% (prior year 51.2%, -7.4pt), declining but at a moderate level. Current Ratio was 216% (Current assets ¥750.5B / Current liabilities ¥347.8B) and Quick Ratio was 216%, indicating ample short-term liquidity. Debt/Equity was 1.28x (Interest-bearing debt ¥1,082.0B / Equity ¥1,140.6B) and Debt/EBITDA was 3.49x (Interest-bearing debt / EBITDA ¥310.0B), showing somewhat increased leverage. Interest coverage was 28.4x (Operating Income ¥221.9B / Interest expense ¥7.8B), reflecting high tolerance for interest burden. Goodwill / Equity ratio was 32.5% (Goodwill ¥370.5B / Equity ¥1,140.6B), highlighting the importance of monitoring impairment risk. Asset retirement obligations were ¥74.8B (5.1% of total liabilities), recognized as future cash outflow obligations.
OCF was ¥254.6B (YoY +10.6%), demonstrating solid performance and generating 1.10x cash relative to Pre-tax Income of ¥232.1B. The subtotal of OCF (before working capital changes) was ¥328.6B, with non-cash charges including Depreciation ¥88.1B and goodwill amortization ¥12.3B added back; after paying corporate taxes of ¥68.2B, ample cash generation remained. Working capital changes modestly contributed via a decrease in trade receivables of ¥1.2B and an increase in trade payables of ¥2.7B, indicating stable working capital management. Investing Cash Flow was a large outflow of -¥651.1B, primarily due to acquisition of subsidiary shares -¥457.4B (M&A including Scarab Sacre Co., Ltd.) and acquisition of tangible fixed assets ¥172.6B (processing facility expansion and capitalization of construction in progress). Subsidy receipts of ¥2.8B partially offset investing outflows, but overall the figure reflects aggressive growth investment. Free Cash Flow (OCF + Investing CF) was negative at -¥396.5B, making the period dependent on external financing. Financing Cash Flow was +¥414.3B, with long-term borrowings of ¥638.0B serving as the main funding source; outflows included long-term borrowings repayments ¥158.5B, dividend payments ¥48.8B, and share buybacks ¥1.5B. Total dividends and buybacks were approximately ¥50.3B, representing 19.7% of OCF, meaning shareholder returns were funded by external financing while Free Cash Flow was negative. Interest and dividend receipts were ¥2.8B and interest paid was ¥8.6B, yielding an interest coverage (OCF / interest paid) of 29.6x, remaining high. Cash and cash equivalents at period-end were ¥544.4B (prior year ¥526.5B, +¥17.9B), indicating liquidity was maintained despite M&A and active investment.
Quality of earnings is supported by recurring Operating Income of ¥221.9B and non-operating income of ¥16.8B (interest income ¥2.5B, foreign exchange gains ¥4.0B, subsidies and other ¥3.5B); non-operating income as a percentage of Revenue is limited at 1.9%, indicating a business model led by core operations. Special items contributed net +¥7.8B (special gains ¥28.3B less special losses ¥20.5B), boosting final profit by approximately 8.5%. Major special gains were gains on sales of investment securities ¥12.7B and subsidy income ¥13.2B, both one-off in nature. Special losses centered on impairment losses ¥3.1B and loss on retirement of fixed assets ¥1.5B, one-time items unrelated to recurring operations. Under JGAAP, goodwill amortization of ¥12.3B is recorded in SG&A and reduces Operating Income, but being a non-cash item, EBITDA—which better reflects cash-generating ability—was ¥310.0B (Operating Income ¥221.9B + Depreciation ¥88.1B), and EBITDA before goodwill amortization reached ¥322.3B. OCF of ¥254.6B is 2.77x Net Income ¥92.0B, and the accrual ratio is -6.2%, supporting cash generation exceeding accounting profits. OCF/EBITDA of 0.82x indicates that due to working capital inefficiencies and one-off M&A integration factors, the target of 0.9x has not yet been met, but overall alignment between cash generation and profit is solid. The gap between Ordinary Income ¥224.3B and Net Income ¥92.0B is ¥132.3B, mainly due to tax burden and deduction of non-controlling interests, with the net effect of special items limited to +¥7.8B. Overall, core earnings power is strong, and excluding one-off factors, recurring profit and cash generation quality is healthy.
Full Year guidance is Revenue ¥939.0B (YoY +6.9%), Operating Income ¥243.0B (YoY +9.5%), Ordinary Income ¥231.0B (YoY +3.0%), Net Income attributable to owners of the parent ¥164.0B (EPS ¥164.25), and dividend ¥27.5 per share. Achievement rates of full-year guidance based on current results are: Revenue 93.5%, Operating Income 91.3%, Ordinary Income 97.1%, Net Income 56.1% (Net Income is a half-year figure and provided for reference). For Operating Income, an additional ¥21.1B is required to meet the full-year guidance, assuming realization of integration synergies and further absorption of fixed costs in H2. The Ordinary Income achievement rate is high at 97.1%, assuming continued contributions from non-operating income. Net Income's current achievement rate is low given its interim nature; H2 operating profit increases and the degree of special items will be key for full-year attainment. Regarding dividends, the announced guidance is ¥27.5 per share, but interim dividend payments already total an annualized ¥53 (interim ¥24.5 + year-end ¥28.5) exceeding the full-year guidance, suggesting dividend policy stability. To achieve full-year guidance, realization of M&A integration synergies (procurement cost reductions, higher utilization, elimination of duplicate costs), maintenance/improvement of processing unit prices, and fixed cost efficiency will be important.
Annual dividend is ¥53 (interim dividend ¥24.5 + year-end dividend ¥28.5), total dividend payout ¥49.3B, with a Payout Ratio of 33.0% (Total dividends / Net Income attributable to owners of the parent ¥92.0B), a sustainable level. Share buybacks amounted to ¥1.5B (purchase amount recorded in Financing CF) and combined dividends and buybacks totaled approximately ¥50.8B, yielding a Total Return Ratio of 55.2%. Given Free Cash Flow of -¥396.5B this period, the dividend cover on a cash basis (OCF / total dividends) was 5.16x, indicating ample cushion in OCF terms, but shareholder returns were financed via external funding (Financing CF ¥414.3B) while Free Cash Flow was negative. This reflects temporary funding needs due to strategic M&A and capital expenditure, and compared with normal OCF levels (¥254.6B) dividend sustainability is assessed as high. Although the full-year guidance dividend was ¥27.5 per share, the actual annual dividend of ¥53 significantly exceeds that, demonstrating a stable dividend policy and strong shareholder return stance. Going forward, monitoring improvement in Free Cash Flow (as M&A activity subsides and Investing CF normalizes) and declines in Debt/EBITDA will be important to assess scope for sustained dividend increases.
M&A integration risk and goodwill impairment risk: Goodwill surged to ¥370.5B (14.2% of total assets, 32.5% of equity) due to acquisitions such as Scarab Sacre Co., Ltd., and integration is ongoing. Delays in realizing integration synergies, unexpected cost increases, or deteriorating business conditions could trigger impairment losses, eroding equity and reducing profitability. Goodwill / EBITDA ratio is 1.20x, indicating some impairment resilience, but continuous monitoring is essential.
Rising leverage and increased interest burden risk: Debt/EBITDA rose to 3.49x (Interest-bearing debt ¥1,082.0B / EBITDA ¥310.0B), and long-term borrowings increased substantially to ¥964.6B (YoY +87.5%). In a rising interest rate environment, interest payments could increase and gradually compress the current high interest coverage of 28.4x. Ensuring financial flexibility and stable expansion of OCF will be important to hedge leverage risk.
Business concentration risk and regulatory/market volatility risk: The Environmental-related Business accounts for 97.1% of Revenue, creating high concentration risk. Changes in permits and approvals related to waste treatment, tighter emission regulations, fluctuations in processing unit prices, or intensified competition could directly affect performance. Also, asset retirement obligations amounting to ¥74.8B (5.1% of total liabilities) are material and changes in estimates or actual cash outflows for decommissioning and restoration could impact finances.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating margin | 25.3% | 8.1% (3.6%–16.0%) | +17.2pt |
| Net margin | 10.5% | 5.8% (1.2%–11.6%) | +4.6pt |
Both Operating margin and Net margin are well above industry medians, placing the company among the top performers in the sector on profitability.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 9.6% | 10.1% (1.7%–20.2%) | -0.5pt |
Revenue growth is roughly in line with the industry median, indicating an average growth pace relative to peers.
※ Source: Company compilation
M&A-driven scale expansion and progress on integration synergies: This fiscal year, acquisitions such as Scarab Sacre Co., Ltd. contributed to Revenue growth of +9.6% YoY and the recognition of Goodwill ¥370.5B and intangible assets ¥375.1B. While Operating margin remains high at 25.3%, it declined by -1.6pt YoY as goodwill amortization ¥12.3B and Depreciation ¥88.1B increased fixed costs and compressed profit. From H2 onward, recovery of Operating margin is expected as integration synergies (procurement cost reductions, elimination of duplicate costs, higher utilization) materialize, but progress should be monitored closely.
Maintaining financial soundness amid aggressive investments and rising leverage: Free Cash Flow was negative at -¥396.5B, and M&A consideration ¥457.4B plus CapEx ¥172.6B were financed by long-term borrowings ¥638.0B, pushing Debt/EBITDA to 3.49x. Interest coverage remains high at 28.4x, and short-term liquidity is ample with Current Ratio 216% and cash deposits ¥523.0B. However, future focus should be on improving OCF/EBITDA (target >0.9x) and reducing leverage to assess sustainability of financial flexibility and shareholder returns.
This report was automatically generated by AI analyzing 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 based on public financial statement data. Investment decisions are your responsibility; please consult a professional advisor as needed.