| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥654.7B | ¥605.7B | +8.1% |
| Operating Income / Operating Profit | ¥95.7B | ¥76.2B | +25.7% |
| Ordinary Income | ¥99.4B | ¥84.5B | +17.7% |
| Net Income / Net Profit | ¥20.2B | ¥82.4B | -75.5% |
| ROE | 3.6% | 12.6% | - |
For the fiscal year ended March 2026, Revenue was ¥654.7B (vs prior year +¥49.0B +8.1%), Operating Income was ¥95.7B (vs prior year +¥19.6B +25.7%), Ordinary Income was ¥99.4B (vs prior year +¥15.0B +17.7%), and Net Income attributable to owners of the parent was ¥20.2B (vs prior year -¥62.2B -75.5%). The operating performance showed revenue and profit growth, with operating margin improving by 2.0pt to 14.6% (prior year 12.6%). Double-digit growth in the Industrial Products segment (+12.2%) and a favorable mix toward higher-margin businesses contributed. Net income declined sharply due to a net negative impact from special gains/losses (loss on sale of subsidiary shares ¥14.3B, impairment ¥7.8B, etc., with special losses totaling ¥22.9B) and the high prior-year one-off gains (prior year special gains ¥41.9B). Operating Cash Flow (OCF) improved to ¥57.5B (+25.8%), but Free Cash Flow was negative ¥10.9B as working capital absorption (inventory increase -¥25.3B) and a large share buyback (-¥180.6B) pressured cash.
Revenue: Revenue ¥654.7B (+8.1%). By segment, Industrial Products ¥332.6B (+12.2%, 50.7% of total) led the increase. Rising demand for mask blanks, measuring instruments, power transmission and transformation equipment, and food processing machinery, together with favorable FX effects, contributed. Consumer Goods ¥271.2B (+1.3%, 41.4%) showed slower growth, but pet food import wholesale and shredder sales remained resilient. Financials & Other ¥51.5B (+22.5%, 7.9%) expanded its share and profit contribution due to strong real-estate-secured lending and investment management. Gross margin improved 1.5pt to 38.3% (prior year 36.8%) due to a higher weight of high-margin Industrial Products and Financials & Other and tightened cost control.
Profitability: Cost of sales was ¥403.8B, resulting in gross profit ¥250.9B (gross margin 38.3%). SG&A was ¥155.2B (SG&A ratio 23.7%, prior year 24.3%), restrained to grow less than revenue growth (+approx. 5.5% vs revenue +8.1%), and despite goodwill amortization of ¥11.8B, positive operating leverage was realized. Operating Income ¥95.7B (+25.7%), operating margin 14.6% (+2.0pt), demonstrating significant profitability improvement. Non-operating items contributed ¥3.7B, including dividends received ¥4.4B and gains from investment partnerships ¥2.0B. Ordinary Income ¥99.4B (+17.7%). Extraordinary items: gains on sales/transfer ¥21.8B vs losses on sales/impairments ¥22.9B, net -¥1.1B. Income taxes ¥30.9B (effective tax rate 31.4%) and non-controlling interests ¥0.2B were deducted, resulting in Net Income ¥20.2B (-75.5%). One-off items distort year-on-year comparisons; the company’s fundamental earning power should be assessed at the operating level. In conclusion, the company achieved revenue and operating profit growth, but bottom-line profit fell due to volatility in special items.
Consumer Goods: Revenue ¥271.2B (+1.3%), Operating Income ¥24.6B (+3.6%), Margin 9.1% (+0.2pt). Diversified products—retractable straws, high-quality pet food, shredders, plastic components—provided stable earnings, though growth lagged company average.
Industrial Products: Revenue ¥332.6B (+12.2%), Operating Income ¥50.6B (+32.2%), Margin 15.2% (+2.3pt). Representing 50.7% of revenue and contributing 52.9% of Operating Income, this segment drove the company. Strong demand across mask blanks, quartz device measuring instruments, power transmission fittings, food processing machinery, and industrial chains resulted in notable margin improvement.
Financials & Other: Revenue ¥51.5B (+22.5%), Operating Income ¥20.5B (+45.3%), Margin 39.8% (+5.9pt). High returns from lender services backed by real-estate-secured lending and investment operations grew this segment into a key profit contributor, accounting for 21.4% of consolidated Operating Income.
Profitability: Operating margin 14.6% (improved +2.0pt from prior year 12.6%); Net margin 3.1% (down -10.5pt from prior year 13.6%). The decline in net margin was primarily due to one-off items (net special items -¥1.1B vs prior year +¥33.9B) and ongoing goodwill amortization of ¥11.8B. ROE 3.6% (prior year 13.4%) fell materially due to lower net income, though ROIC at the operating level shows an improving trend.
Cash quality: Operating CF / Net Income is 0.86x, below benchmark 1.0, with working capital absorption (inventory +¥25.3B) hindering cash conversion. Operating CF / EBITDA (EBITDA = Operating Income ¥95.7B + Depreciation ¥14.0B = ¥109.7B) is 52.4%, at a low level, indicating the need to improve working capital efficiency. Accrual ratio ((Net Income - Operating CF) / Total Assets) is 3.0%, within acceptable range, but DIO 129 days, DSO 61 days, and CCC 128 days indicate deteriorated efficiency.
Investment efficiency: Total asset turnover 0.51x, asset efficiency flat. ROIC (Operating Income × (1 - tax rate) / Invested Capital) is about 5.6%, implying limited value creation relative to WACC.
Financial soundness: Equity Ratio 43.6% (prior year 55.5%), current ratio 150.3%, quick ratio 134.5%—short-term liquidity is preserved. Interest-bearing debt ¥502.4B (short-term borrowings ¥318.1B + long-term borrowings ¥184.2B) yields Debt/EBITDA 4.58x, indicating relatively high leverage. Interest coverage (Operating Income / Interest expense) is 42x, showing sufficient interest servicing capacity, but cash ¥57.0B / short-term liabilities ¥494.8B = 11.5% indicates weak short-term liability coverage and a visible maturity mismatch.
Operating CF was ¥57.5B (vs prior year ¥45.7B, +25.8%). From interim subtotal ¥88.2B, adjustments included working capital change -¥27.8B, income taxes paid -¥33.3B, etc. In working capital, inventory increase -¥25.3B (build-up of finished goods & work in progress), receivables improvement +¥1.5B, and payable decrease -¥2.6B led to net absorption. Investing CF was -¥68.4B, including net purchases of investment securities about -¥49.8B (purchases -¥78.4B, sales +¥28.6B), acquisition of subsidiary shares -¥100.7B, tangible/intangible asset purchases -¥24.5B, and time deposit withdrawals +¥86.3B. Financing CF was -¥22.7B, with long-term borrowings procured ¥175.0B, short-term borrowings increased +¥24.2B, long-term repayments -¥14.5B, share buybacks -¥180.6B, and dividends paid -¥18.3B. Free Cash Flow was negative ¥10.9B (OCF ¥57.5B + Investing CF -¥68.4B), meaning dividends, investments, and share buybacks were not covered by internal cash generation and were financed by borrowings. Cash at period-end decreased to ¥57.0B (prior year ¥89.7B, -¥32.7B), reducing the liquidity buffer.
Of Ordinary Income ¥99.4B, Operating Income ¥95.7B is the core, while non-operating income ¥7.8B (dividends received ¥4.4B, investment partnership gains ¥2.0B, FX gains ¥1.0B, etc.) is minor at 1.2% of revenue. Special items were net -¥1.1B (gains ¥21.8B, losses ¥22.9B), representing about 5% of Net Income. Major special losses were loss on sale of subsidiary shares ¥14.3B (exit from energy business) and impairment ¥7.8B—one-off items that do not distort recurring earnings. Prior year benefited from special gains of ¥33.9B (investment securities gains ¥9.6B, business transfer gains ¥41.9B), so year-on-year volatility is large. Operating CF ¥57.5B vs Net Income ¥20.2B yields a cash conversion ratio of 2.85x superficially, but this is driven by net income compression from special losses; as shown by Operating CF/EBITDA at 52.4%, underlying cash generation is still improving. The accrual (Net Income - Operating CF) is -¥37.3B, indicating high earnings quality. The divergence between Operating CF and Net Income stems mainly from non-cash special items and goodwill amortization; recurring earning power should be evaluated at the operating level.
Full year plan: Revenue ¥680.0B (vs prior year +3.9%), Operating Income ¥97.0B (+1.3%), Ordinary Income ¥100.0B (+0.6%), Net Income attributable to owners of the parent ¥71.0B, EPS ¥185.4, Dividend ¥37. Progress against plan: Revenue 96.3%, Operating Income 98.6%, Ordinary Income 99.4%, Net Income (parent basis) about 28.5% (disclosed this time ¥20.2B). Low net income progress likely reflects that the one-off special losses this period were not assumed in the full-year plan; operating performance is largely on track. Next fiscal year, focus will be on working capital improvement and sustained Industrial Products growth; excluding volatility in special items, the trend of improving profitability is expected to continue.
Dividends: Interim ¥23, Year-end ¥41, total ¥64 (prior year interim ¥10, year-end ¥64 on a post-adjustment basis). Per-share dividend ¥64 after a 1:5 stock split, equivalent to ¥320 before the split. Total dividend payout ¥15.0B against Net Income attributable to owners of parent ¥67.2B (after consolidated/parent adjustments) implies a payout ratio of 22.3% (adjusted). However, Net Income was compressed by special losses this period, so on an ordinary-income basis dividend burden is light. Share buybacks totaled ¥180.6B, reaching about 41.4% of outstanding shares (treasury stock ratio). Combined dividends and buybacks amounted to ¥195.6B, implying a Total Return Ratio of about 291% relative to Net Income attributable to owners of the parent ¥67.2B, an exceptionally high level. With Free CF -¥10.9B, total returns were largely funded by borrowings. This level of return is interpreted as a one-off measure; next year, with working capital normalization and increased OCF, return pace is expected to normalize. With cash ¥57.0B and OCF ¥57.5B, dividend sustainability appears acceptable, but continuation of share buybacks will depend on cash generation.
Deterioration of working capital efficiency: DIO 129 days and CCC 128 days worsened from prior year, and Operating CF/EBITDA 52.4% shows weakened cash conversion. Continued inventory build-up ¥78.5B (finished goods, WIP, raw materials) could lead to valuation losses, obsolescence risk, and additional working capital needs, potentially causing continued negative Free CF and liquidity pressure.
Short-term debt concentration and refinancing risk: Of interest-bearing debt ¥502.4B, short-term borrowings are ¥318.1B (63%). Cash ¥57.0B vs short-term liabilities ¥494.8B (cash coverage 11.5%) shows a pronounced maturity mismatch. In a rising-rate environment or widening credit spreads, repricing risk for short-term funding could surface, raising interest expense or making refinancing difficult. Interest coverage is 42x, but the buffer against a deteriorating funding environment is limited.
Concentration in Industrial Products and demand cyclicality: The Industrial Products segment accounts for 50.7% of revenue and 52.9% of Operating Income, with exposure to cyclical items such as mask blanks, measuring instruments, and power transmission equipment. A slowdown in semiconductor or energy infrastructure investment could sharply reduce revenue and profit, adversely affecting consolidated results. While product diversification has advanced, resilience to demand cycles in the core segment remains a key watch item.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.6% | 7.8% (4.6%–12.3%) | +6.9pt |
| Net Margin | 3.1% | 5.2% (2.3%–8.2%) | -2.1pt |
Operating-level profitability exceeds the industry median by 6.9pt and ranks high. Net margin is 2.1pt below median due to one-off special losses, but the high operating margin indicates solid fundamental earnings power.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.1% | 3.7% (-0.4%–9.3%) | +4.4pt |
Revenue growth outperforms the median by 4.4pt, maintaining a strong growth position within the industry.
※ Source: Company compilation
Sustained improvement in operating profitability: Operating margin 14.6% (+2.0pt), EBITDA ¥109.7B (margin 16.8%) indicate improvement at the operating base. High growth in Industrial Products (+12.2%) and high-margin Financials & Other (39.8%) improved segment mix and lifted consolidated profitability. If Industrial Products demand continues and inventory adjustments progress, operating profit growth should be sustainable next year.
Working capital efficiency and cash conversion are challenges: Operating CF/EBITDA 52.4%, CCC 128 days, DIO 129 days indicate weak efficiency. Inventory optimization and stronger receivables management could expand OCF and restore Free CF to positive next year. Correcting working capital would support deleveraging, improving liquidity, and sustaining shareholder returns.
Room to recalibrate financial structure: Short-term borrowings ratio 63% and Debt/EBITDA 4.58x keep leverage elevated. Extending debt maturities and reducing interest-bearing debt would resolve the maturity mismatch and improve financial stability. The large share buyback this period (¥180.6B) is viewed as a one-off; future returns and investments are likely to be balanced based on improvements in OCF.
This report is an AI-generated financial analysis document produced by analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor as needed.