3436 · SUMCO

Will it survive?

• Can it pay its interest? 0.5×
  Does not cover its interest
  Operating income ¥1.3B ÷ interest expense ¥2.7B
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? ¥270.4B · 201.5× operating profit
  Heavy net debt
  Cash ¥75.3B + ST investments ¥8.0B − debt ¥353.7B
  What this means

  Netting ¥83.3B of cash and short-term investments against ¥353.7B of debt leaves ¥270.4B owed, about 201.5× a year's operating profit (263.6× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 74d
  Long (60+ days)
  DSO 80 + DIO 27 − DPO 33 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 9%
  Solid through the cycle
  10-yr median, range 0%–18%; 0% latest = NOPAT ¥1.1B ÷ invested capital ¥823.2B
  Industry peers: median 21%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 0% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 11%
  Solid through the cycle
  10-yr median margin, range -3%–27%; latest (¥11.0B) = operating cash ¥100.0B − maintenance capex ¥111.0B
  Industry peers: median 21%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -3% of revenue this year, a 11% median across 10 years.

• Are earnings backed by cash? ¥100.0B
  Loss, but cash-generative
  Net income (¥11.8B) · cash from operations ¥100.0B
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? —
  No surplus to allocate
  What this means

  The business didn't generate positive Owner Earnings this year, so any distributions came from the balance sheet or borrowing, not from operations.

• Investing or harvesting? 0.96×
  Maintaining
  Capex ¥111.0B ÷ depreciation ¥115.7B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 9 of 10
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 2 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 16% → 9% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 16% early to 9% lately, median 15% — competition or costs are biting in.

• Reinvestment, incremental ROIC −2%
  What this means

  Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.

• Worst year 2025 · 0.3% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Share count +2.0%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.