GUNZE LIMITED
3002・Prime Market・Textiles & Apparels
Business
Gunze Limited is a diversified manufacturing company founded in 1896, originating from Ayabe, Kyoto. It currently operates four segments: Functional Solutions (plastic films, engineering plastics, machinery), Medical (absorbable medical materials), Apparel (innerwear, legwear, textile materials), and Life Create (real estate, sports clubs, greening, solar power generation). Including 45 consolidated subsidiaries and 6 affiliated companies, the group's total net sales amounted to ¥130,918 million (FY2026, ending March 2026). Its main customers span a broad range, including OA equipment, semiconductors, medical institutions, and general consumers, with production and sales bases both in Japan and overseas. Listed on the Prime Market of the Tokyo Stock Exchange.
Business Model
Each segment has a vertically integrated earnings structure combining in-house manufacturing, intra-group processing, and external sales. The Functional Solutions Business drives overall company profits with a high operating margin of 15.2%, while the Medical Business serves as the growth driver. The Apparel Business, though the largest segment by sales, is undergoing structural reform and temporarily recording losses. The Life Create Business functions as a stable earnings source through real estate, sports clubs, and other operations. The company implements capital-cost-based management using ROIC and GVA (Gunze Value Added) on a monthly basis to maximize capital efficiency.
Company Strengths
The Functional Solutions business achieved net sales of ¥47,543 million, operating income of ¥7,234 million, and an operating margin of 15.2% in FY2026 (ending March 2026). Net sales decreased by approximately ¥2,900 million due to the discontinuation of the electronic components business, while operating income improved by approximately ¥300 million. The restructuring of unprofitable businesses and the domestic profit growth driven by the rollout of new environmentally friendly products contributed to maintaining high profitability.
The Medical business develops absorbable products such as adhesion barriers, tissue reinforcement materials, and artificial skin, expanding both domestically and internationally. In FY2026 (ending March 2026), net sales reached ¥13,197 million (up 1.9% year on year), and capital expenditures of ¥2,492 million were made, including factory expansions. Through a five-company structure including Gunze Medical Devices (Shenzhen) Co., Ltd., the company is promoting sales channel expansion into Europe, the United States, the Middle East, South America, and Asia.
As of the end of FY2026 (ending March 2026), net assets stood at ¥113,746 million, maintaining a high equity ratio. Of the ¥17,271 million in operating cash flow, approximately ¥11,300 million was allocated to dividends and share buybacks, reflecting a clearly stated shareholder return policy targeting a DOE of 4.0% or higher. Capital structure management is conducted with targets of a D/E ratio of approximately 0.3x and equity capital of ¥100 billion or more.
ENVALITH's Perspective
Performance Trend
Revenue was ¥130,918 million (down 4.5% year on year), marking the first decline in two periods. The main causes were the loss of approximately ¥2,900 million in sales from the discontinuation of the electronic components business, stagnant consumption and price declines for plastic film in overseas markets, and contraction of the apparel business's mass retailer sales channel. Operating profit fell sharply to ¥4,882 million (down 38.4% year on year), and ordinary profit fell to ¥4,920 million (down 39.9% year on year). Extraordinary losses included ¥3,311 million in business structure improvement expenses (consolidation of apparel production and distribution sites, and voluntary early retirement program), causing profit attributable to owners of parent to plunge to ¥509 million (down 91.9% year on year). As an external factor, price increases driven by surging resource prices and yen depreciation intensified consumers' savings mindset, accelerating the decline in sales through existing apparel channels. On the other hand, operating cash flow increased by ¥5,698 million year on year to ¥17,271 million, reflecting successful inventory reduction. For FY2027 (ending March 2027), the company forecasts operating profit of ¥8,800 million (up 80.3% year on year) and net profit of ¥5,200 million (up 921.6% year on year), with the return to profitability in the apparel business (projected operating profit of ¥1,300 million) being the core driver of the recovery.
Growth Strategy
Aiming for ROE of 8% or higher through completion of Apparel structural reform and accelerated growth in Medical and engineering plastics businesses
FY2025-FY2026 (ending March 2025-2026) are positioned as a structural reform period, promoting product price revisions, SKU reduction, restructuring of production and logistics, streamlining of indirect departments, and strengthening of local production for local consumption. In FY2026 (ending March 2026), inventory valuation losses and voluntary retirement costs totaling ¥3,311 million were recorded, and the company forecasts a return to profitability with operating profit of ¥1,300 million in FY2027 (ending March 2027).
Centered on absorbable products such as artificial skin and anti-adhesion materials, the company continues domestic sales expansion and new product launches while developing distributors and sales companies in Europe and the US, and entering new markets in the Middle East, South America, and Asia. Net sales of ¥14,400 million and operating profit of ¥1,800 million are forecast for FY2027 (ending March 2027) (up 9.1% and up 22.1% year on year, respectively).
The company is establishing a resource circulation model (circular factory) for plastic film and expanding sales channels for new environmentally friendly products. In engineering plastics, expansion of the Jiangnan plant is addressing growing demand in the medical and semiconductor fields, while new market development is underway for energy-related products (SBU). Net sales of ¥49,300 million and operating profit of ¥8,300 million are forecast for FY2027 (ending March 2027).
The company's policy is to flexibly implement shareholder returns (special dividends and share buybacks) exceeding a 100% payout ratio until ROE of 8% is achieved. In FY2026 (ending March 2026), the company conducted share buybacks of ¥5,007 million and paid a dividend of ¥216 per share (ordinary ¥147 plus special ¥69). The same dividend amount is planned for FY2027 (ending March 2027).
Last updated: July 19, 2026