SOTOH CO.,LTD.

Business Details

This segment performs dyeing and finishing for high-end fashion apparel, high-end menswear, formalwear, and office uniform materials, centered on wool and composite materials. It enhances the added value of materials through surface finishing such as raising and glossing, and functional finishing such as water repellency and washability. It is the founding business of the group, and all cash and deposits belong to this segment. Part of the dyeing and finishing process is outsourced to the subsidiary SOTOH Kosan Co., Ltd.

Recent Overview

Errors were found in the cash flow statement in the FY2026 (ending March 2026) earnings report, and it was corrected on June 17, 2026.

In the earnings report published on May 12, 2026, errors were found in the cash flow from operating activities (before correction ¥1,068 million → after correction ¥1,034 million) and cash flow from investing activities (before correction -¥647 million → after correction -¥613 million). The cause of the correction was a misclassification of ¥33 million in insurance cancellation refund proceeds (corrections to gain/loss on disposal of property, plant and equipment, accrued consumption taxes, and other items within operating cash flow, and addition of ¥33 million in proceeds from cancellation of insurance funds to investing cash flow). There is no impact on the balance sheet, income statement, statement of comprehensive income, or statement of changes in equity. The interest coverage ratio was also revised from 119.9x before correction to 116.1x after correction. Segment-level performance figures such as revenue and operating income (loss) are not stated in this amended earnings report.

Key Products

Growth Drivers

• Promoting expansion of orders for synthetic fiber materials and export expansion as a sales strategy
• Developing and proposing differentiated processing (original synthetic fiber processing) to open new markets
• Strengthening collaboration with the Product Sales Business (textiles and apparel) to expand direct sales
• Ongoing capital investment (¥1,527 million in full year FY2026, ending March 2026) to upgrade production capacity and processing technology
• Efforts to improve profitability through correction of processing fees

Risks

• Shortened demand period for winter apparel such as wool coats due to mild winters and warming trends
• Structural, ongoing changes in order patterns due to the entrenchment of reduced forecast-based production and inventory reduction policies by apparel companies and trading companies
• Growing inflow of inexpensive Chinese products into the Japanese market (concerns over increased inflow due to US-China trade issues)
• Rising fixed cost burden due to surging fuel and raw material prices and increased depreciation expenses (¥808 million in full year FY2026, ending March 2026)
• Decline in high-end apparel consumption due to consumer price increases and a shift toward frugality
• An impairment loss of ¥64 million was recorded in FY2025 (ended March 2025), and the risk of additional impairment remains
• Increased financial expense burden due to rising interest expenses (¥9 million in full year FY2026, ending March 2026, versus less than ¥1 million in the prior period)