| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6306.6B | ¥6146.3B | +2.6% |
| Operating Income / Operating Profit | ¥509.0B | ¥460.0B | +10.7% |
| Ordinary Income | ¥521.6B | ¥466.5B | +11.8% |
| Net Income / Net Profit | ¥138.3B | ¥129.8B | +6.5% |
| ROE | 3.4% | 3.4% | - |
For the fiscal year ended March 2026, Revenue totaled ¥6306.6B (YoY +¥160.3B, +2.6%), Operating Income was ¥509.0B (YoY +¥49.1B, +10.7%), Ordinary Income was ¥521.6B (YoY +¥55.1B, +11.8%), and Net Income attributable to owners of the parent was ¥363.1B (YoY +¥62.3B, +20.7%), achieving both top-line and bottom-line growth. Operating margin improved to 8.1% (up 0.6pt from 7.5% a year earlier) and gross margin expanded to 14.6% (up 0.9pt from 13.7%). EPS rose to ¥311.60 (from ¥253.54, +22.9%), aided by a reduction in shares outstanding due to share cancellations. Operating Cash Flow was ¥424.7B (YoY +155.5%), a substantial increase, and Free Cash Flow generated was ¥268.3B. Equity Ratio stood at 72.0%, indicating very high financial soundness, and interest-bearing debt remained only ¥24.3B, maintaining an effectively debt-free balance sheet.
[Revenue] External customer revenue totaled ¥6306.6B (YoY +2.6%), showing a modest increase. By segment, the Japan COMSYS Group accounted for ¥3205.0B (external sales), representing 50.8% of the total, maintaining stable growth across its three pillars: Telecommunications Carrier Business (¥1062.3B), Social Systems Business (¥1427.7B), and IT Solutions Business (¥715.0B). The NDS Group recorded ¥945.7B (+2.2%), and the Tsuken Group recorded ¥600.0B (+1.5%), both showing steady performance. Conversely, the Sanwa COMSYS Engineering Group declined slightly to ¥327.6B (-1.8%). Overall composition was ¥2828.4B toward telecommunications carriers, ¥1386.1B in IT solutions, and ¥2092.1B in social systems, forming a diversified business portfolio with low dependence on individual customers.
[Profitability] Cost of sales was ¥5387.5B (85.4% of sales), improving the cost ratio year-over-year, resulting in Gross Profit of ¥919.1B (Gross Margin 14.6%, up 0.9pt from 13.7%). Selling, General and Administrative Expenses were ¥410.0B (6.5% of sales), increasing by ¥17.6B YoY, but the absolute increase in gross profit outpaced this, driving Operating Income to ¥509.0B (Operating Margin 8.1%, up 0.6pt from 7.5%), achieving double-digit operating profit growth. Non-operating income totaled ¥18.5B, led by dividend income ¥9.9B and interest income ¥0.8B, while non-operating expenses were ¥5.9B (interest expense ¥0.7B, other ¥1.9B), leading to Ordinary Income of ¥521.6B (YoY +11.8%). Extraordinary items were net +¥3.1B (Extraordinary gains ¥9.1B, Extraordinary losses ¥6.1B), mainly from gains on sales of investment securities ¥6.8B. After deducting income taxes of ¥155.4B (effective tax rate 29.6%) and non-controlling interests of ¥0.6B, Net Income attributable to owners of the parent was ¥363.1B (YoY +20.7%), a significant increase. In conclusion, the company achieved high-quality growth with both revenue and profit increases and improved profitability.
The Japan COMSYS Group is the core segment with Revenue ¥3268.1B and Operating Income ¥260.6B (margin 8.0%), accounting for 51.2% of consolidated operating income. It maintained a stable earnings base across telecommunications carriers, social systems, and IT solutions. The NDS Group reported Revenue ¥953.1B and Operating Income ¥72.6B (margin 7.6%), performing steadily with telecom equipment construction centered in the Tokai area. The Tsuken Group recorded Revenue ¥647.4B and Operating Income ¥62.3B (margin 9.6%), demonstrating high profitability supported by stable demand in Hokkaido. The TOSYS Group posted Revenue ¥396.9B and Operating Income ¥31.3B (margin 7.9%), and the COMSYS Information Systems Group reported Revenue ¥355.3B and Operating Income ¥32.1B (margin 9.0%), both showing strong profitability in information systems. Conversely, the Sanwa COMSYS Engineering Group had Revenue ¥343.1B and Operating Income ¥8.7B (margin 2.5%), remaining low-margin and requiring improvements in cost control. The reportable-segment "Other" showed Revenue ¥205.3B and Operating Income ¥140.9B (margin 68.7%), an extremely high profitability contributed by staffing services and shared services businesses.
[Profitability] Operating margin of 8.1% improved from 7.5% a year earlier (up 0.6pt), primarily due to gross margin improvement to 14.6% (up 0.9pt from 13.7%). ROE of 3.4% was flat year-over-year, but Net Income attributable to owners of the parent rose substantially to ¥363.1B, balanced with expansion of equity. ROA (on an Ordinary Income basis) improved to 9.4% from 8.8% a year ago. EBIT of ¥509.0B plus depreciation ¥111.9B gives EBITDA of ¥620.9B, with an EBITDA margin of 9.8%. [Cash Quality] Operating Cash Flow (OCF) of ¥424.7B is 3.07x Net Income ¥138.3B and 1.17x Net Income attributable to owners of the parent ¥363.1B, indicating strong cash backing of profits. The OCF/EBITDA ratio stood at 0.68x, pressured by a decrease in accounts payable (¥-108.9B) and an increase in accounts receivable (¥-26.3B). Free Cash Flow was ¥268.3B, and capital expenditures of ¥108.9B were 0.97x depreciation ¥111.9B, reflecting maintenance-focused investment. [Investment Efficiency] Total asset turnover was 1.12x (¥6,306.6B ÷ ¥5,657.1B), a slight decline from 1.14x the prior year, but asset efficiency remains high. [Financial Soundness] Equity Ratio stood at 72.0% (Net Assets ¥4,074.5B ÷ Total Assets ¥5,657.1B), extremely robust. Interest-bearing debt was limited to ¥24.3B (short-term borrowings ¥24.1B, long-term ¥0.1B), substantially exceeded by cash and deposits ¥420.3B, indicating an effectively debt-free position. Debt/EBITDA was 0.04x and Interest Coverage was 748.6x (EBIT ¥509.0B ÷ interest expense ¥0.7B), both extremely strong. Current ratio was 248.7% (Current Assets ¥3,308.8B ÷ Current Liabilities ¥1,330.5B) and quick ratio 247.6%, indicating solid short-term safety.
Operating Cash Flow was ¥424.7B (YoY +155.5%), a substantial increase. OCF subtotal (before working capital changes) was ¥586.4B, and after payments of income taxes etc. of ¥-171.6B, OCF totaled ¥424.7B. Working capital pressures came from an increase in trade receivables of ¥-26.3B and a decrease in trade payables of ¥-108.9B, partially offset by an increase in other liabilities of ¥+67.6B. Investing Cash Flow was ¥-156.4B, primarily capital expenditures of ¥-108.9B and acquisition of intangible assets ¥-27.3B. Proceeds from sale of investment securities amounted to ¥10.9B, with purchase outflows of ¥-0.3B, making securities-related activity minor. Free Cash Flow was ¥268.3B (OCF ¥424.7B + Investing CF ¥-156.4B). Financing Cash Flow was ¥-237.8B, driven by share buybacks ¥-100.5B and dividend payments ¥-140.5B (¥-140.5B to owners of the parent, ¥-0.2B to non-controlling interests). Proceeds from disposal of treasury stock amounted to ¥14.7B. As a result, cash and cash equivalents increased by ¥30.4B from beginning-of-period ¥381.5B to end-of-period ¥413.3B. The OCF/EBITDA ratio of 0.68x is low, and improving working capital efficiency is a priority for the next fiscal year.
The majority of Operating Income ¥509.0B is from core operations. Non-operating income ¥18.5B (0.3% of sales) is primarily recurring dividend income ¥9.9B and interest income ¥0.8B. Extraordinary items were net +¥3.1B (extraordinary gains ¥9.1B, extraordinary losses ¥6.1B), mainly gains on sales of investment securities ¥6.8B. The difference between Ordinary Income ¥521.6B and pre-tax income ¥524.7B is only extraordinary items, indicating no structural distortion. Net Income attributable to owners of the parent ¥363.1B is after income taxes ¥155.4B (effective tax rate 29.6%) and non-controlling interests ¥0.6B, and the quality of earnings is high. Comprehensive Income was ¥486.1B (¥479.0B attributable to owners of the parent, ¥7.1B to non-controlling interests), and the divergence with Net Income ¥138.3B is chiefly due to valuation differences on available-for-sale securities ¥61.2B and adjustments related to retirement benefits ¥55.5B, indicating valuation-related gains are adding to comprehensive results. The accrual ratio is -1.1% ((OCF ¥424.7B - Net Income ¥138.3B) ÷ Total Assets ¥5,657.1B), showing earnings with strong cash backing. Goodwill amortization of ¥1.2B is minimal at 0.2% of EBITDA, so distortion relative to IFRS comparatives is negligible.
For FY2027 (year ending March 2027), the company forecasts Revenue ¥6700.0B (YoY +6.2%), Operating Income ¥540.0B (YoY +6.1%), Ordinary Income ¥550.0B (YoY +5.4%), and Net Income attributable to owners of the parent ¥378.6B (YoY +4.3%). Operating margin is expected to be maintained at 8.1%, in line with the prior year. Progress against the full-year forecast at the end of the first half stands at: Revenue 94.1%, Operating Income 94.3%, Ordinary Income 94.8%, and Net Income attributable to owners of the parent 95.9%, indicating results are already near completion and the second half is expected to show only modest increases. EPS forecast is ¥327.22, and annual dividend guidance is ¥65 (interpreted as an interim ¥65 × 1 recording or alternatively a single year-end payment of ¥65), implying a Payout Ratio of 19.9%, which is low. Assuming accumulation of construction backlog and continued cost control, and with improvements in working capital efficiency, further improvements in OCF are expected. Forecasts are subject to macroeconomic fluctuations and uncertainties in construction progress, and actual results may differ from projections.
Annual dividend paid was ¥130 (interim ¥60, year-end ¥70), and total dividends attributable to owners of the parent amounted to ¥140.5B (Payout Ratio 38.7%) relative to Net Income attributable to owners of the parent ¥363.1B. The payout ratio declined slightly from the prior year total dividend ¥130.9B (Payout Ratio 43.5%), but absolute dividend amounts increased with earnings growth. Share buybacks totaled ¥100.5B, and combined with dividends, total shareholder returns amounted to ¥241.0B, yielding a Total Return Ratio of 66.4%. Coverage of total returns by Free Cash Flow ¥268.3B was 1.11x, indicating shareholder returns were executed within cash generation capacity. Next fiscal year's annual dividend guidance is ¥65, and the implied payout ratio against EPS forecast ¥327.22 is 19.9%, a low level. The reduction from ¥130 to ¥65 indicated in the guidance may reflect that the ¥65 figure shows only an interim dividend; confirmation of full-year policy including year-end dividend is required. Treasury shares at period-end numbered 2.3 million shares (acquisition cost ¥67.1B), representing 1.9% of 118.0 million shares outstanding. Dividend payments to shares held by the ESOP trust amounted to ¥0.2B and are included in the total dividend amount.
Variability in telecommunications carrier investment cycle: Sales to major customers such as the NTT Group can materially affect performance. Telecommunications carrier revenue ¥2828.4B represents 44.9% of total sales, and postponement or reduction in capital expenditures directly impacts gross margin and construction volume. While quantitative disclosure of backlog is not provided at this time, Uncompleted Construction Receipts (deposits for uncompleted construction) increased to ¥115.6B from ¥69.6B (up +66.1%), suggesting order intake remains solid. Conversely, Provision for Construction Losses of ¥0.2B (down -86.6% from ¥1.3B) points to margin improvements, but fixed-price contracts on large projects still carry the risk of margin variability.
Cost pressure from labor shortages and rising labor costs: Ongoing labor shortages across the construction industry could drive up subcontracting and labor costs, pressuring gross margins. Although gross margin improved to 14.6%, it remains low by business characteristics, and profit sensitivity to cost shocks is high. SG&A ratio rose to 6.5% (up 0.3pt from 6.2%), and future increases in personnel and indirect costs could dilute operating margins.
Working capital increases and constrained cash conversion: Completed contract receivables ¥2,098.7B constitute 63.4% of current assets, and prolonged collection periods could strain working capital. With OCF ¥424.7B, the OCF/EBITDA ratio at 0.68x is low, and reductions in accounts payable (¥-108.9B) and increases in accounts receivable (¥-26.3B) have suppressed cash conversion. Although an increase in other liabilities ¥+67.6B partially offset this, failure to improve working capital efficiency could reduce Free Cash Flow generation and constrain shareholder returns and growth investments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.1% | 5.5% (3.5%–7.2%) | +2.5pt |
| Net Profit Margin | 2.2% | 3.5% (2.5%–4.4%) | -1.3pt |
Operating margin outperforms the industry median by +2.5pt, indicating high profitability, while net profit margin underperforms by -1.3pt. This may be attributable to timing of recognition of Net Income attributable to owners of the parent and effects of non-controlling interests.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.6% | 9.8% (-2.1%–15.1%) | -7.3pt |
Revenue growth lags the industry median by -7.3pt. While peers demonstrate higher growth, the company’s expansion is modest, reflecting maturity in existing businesses and the challenge of expanding into new areas.
※ Source: Company compilation
Structural improvement in profitability and upward trend in operating margin: Improvements in Gross Margin to 14.6% (up 0.9pt from 13.7%) and Operating Margin to 8.1% (up 0.6pt from 7.5%) are driven by cost control and improved business mix. Provision for Construction Losses of ¥0.2B (down -86.6% from ¥1.3B) supports margin improvement, and continued cost control is underpinning trending margin expansion. Although the rise in SG&A ratio (6.5%) is a concern, if absolute gross profit growth outpaces SG&A increases, operating leverage will be realized. The company expects to maintain an operating margin of 8.1% in the next fiscal year, indicating stability in profitability.
Strong financial position and sustainability of total returns: With an Equity Ratio of 72.0%, effectively no net debt (Interest-bearing debt ¥24.3B vs. cash and deposits ¥420.3B), and Interest Coverage of 748.6x, financial soundness is extremely high. With Free Cash Flow ¥268.3B and total returns ¥241.0B (Total Return Ratio 66.4%), the company has leeway to sustain balanced dividends and buybacks. The ¥65 dividend guidance for the next fiscal year may reflect only an interim dividend; confirmation of full-year policy including a year-end dividend is necessary, but the capacity for returns funded by Free Cash Flow remains sufficient.
Room for improvement in working capital management and OCF/EBITDA: The OCF/EBITDA ratio of 0.68x is low, with decreases in accounts payable (¥-108.9B) and increases in accounts receivable (¥-26.3B) constraining cash conversion. Improving collection efficiency on Completed Contract Receivables ¥2,098.7B would provide room to expand Operating Cash Flow. The increase in Uncompleted Construction Receipts ¥115.6B (+66.1%) indicates solid order intake, and shortening collection cycles as projects progress will be a key focus next fiscal year.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on publicly available financial statements. Investment decisions are your responsibility; please consult a professional advisor as appropriate.