| Metric | This Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6336.7B | ¥4216.7B | +50.3% |
| Operating Income / Operating Profit | ¥187.8B | ¥101.7B | +84.7% |
| Equity-Method Investment Income (Loss) | ¥0.3B | ¥0.3B | +7.4% |
| Ordinary Income | ¥133.2B | ¥73.8B | +80.6% |
| Net Income / Net Profit | ¥32.9B | ¥27.7B | +18.8% |
| ROE | 5.6% | 5.6% | - |
For the fiscal year ended March 2026, the company achieved significant top-line and bottom-line growth with Revenue of ¥6336.7B (YoY +¥2120.0B +50.3%), Operating Income of ¥187.8B (YoY +¥86.1B +84.7%), Ordinary Income of ¥133.2B (YoY +¥59.4B +80.6%), and Net Income attributable to owners of the parent of ¥100.2B (YoY +¥44.2B +79.2%). The Overseas segment drove growth with Revenue +61.0% and Operating Income +94.4%, while Japan also performed solidly with Revenue +22.6% and Operating Income +61.4%. Gross margin improved to 3.8% (from 3.5% YoY +0.3pt) and operating margin improved to 3.0% (from 2.4% YoY +0.6pt). However, non-operating expenses expanded to ¥55.4B (¥28.6B prior year) due to foreign exchange losses of ¥29.0B and increased interest expense of ¥20.7B, causing growth at the ordinary income level to lag operating-level growth.
[Revenue] Revenue was ¥6336.7B (YoY +50.3%), a substantial increase. By segment, Overseas led with ¥4739.9B (YoY +61.0%), accounting for 68.3% of total sales. Japan posted ¥2195.1B (YoY +22.6%), representing 31.7% of sales. Total consolidated sales including inter-segment transactions reached ¥6934.9B (YoY +46.5%). The rapid expansion in Overseas was supported by recovery in demand for semiconductors and electronic components and responses to customers’ production base shifts abroad; Japan was underpinned by increases in domestic customer projects. Cost of sales rose to ¥6094.7B (YoY +50.0%), nearly matching revenue growth, and gross profit was ¥242.0B (YoY +64.7%), improving gross margin to 3.8% (from 3.5% YoY +0.3pt).
[Profitability] Selling, general and administrative expenses (SG&A) were ¥54.2B (YoY +19.6%), growing well below revenue growth, reducing the SG&A-to-sales ratio to 0.9% (from 1.1% YoY -0.2pt) and delivering operating leverage. Operating Income was ¥187.8B (YoY +84.7%) and operating margin improved materially to 3.0% (from 2.4% YoY +0.6pt). By segment, Overseas reported Operating Income of ¥114.4B (margin 2.4%), and Japan reported Operating Income of ¥70.9B (margin 3.2%); Overseas scale expansion and Japan’s higher margins supported overall profitability. Non-operating income totaled ¥0.8B (interest income ¥0.4B, equity-method income ¥0.3B), while non-operating expenses were ¥55.4B (interest expense ¥20.7B, foreign exchange losses ¥29.0B, prior year ¥28.6B), resulting in Ordinary Income of ¥133.2B (YoY +80.6%). After recording extraordinary income of ¥1.1B, pre-tax income was ¥133.2B; after income taxes of ¥33.1B, Net Income attributable to owners of the parent was ¥100.2B (YoY +79.2%), yielding overall increase in revenue and profit.
The Overseas segment delivered Revenue of ¥4739.9B (YoY +61.0%), Operating Income of ¥114.4B (YoY +94.4%), and margin 2.4% (from 2.0% YoY +0.4pt), achieving substantial top-line and bottom-line growth. Operating income growth outpaced revenue growth, suggesting scale benefits and improved project mix. The Japan segment posted Revenue of ¥2195.1B (YoY +22.6%), Operating Income of ¥70.9B (YoY +61.4%), and margin 3.2% (from 2.5% YoY +0.7pt), with marked margin improvement driven by sales efficiency and capture of higher-value projects in the domestic market. Segment assets increased sharply: Overseas ¥2280.0B (from ¥618.6B prior year +268.6%), Japan ¥1169.8B (from ¥521.3B prior year +124.4%), reflecting buildup of inventories and trade receivables.
[Profitability] Operating margin improved to 3.0% (from 2.4% YoY +0.6pt) and net margin to 1.6% (from 1.3% YoY +0.3pt). ROE is 5.6%; although the prior-year figure is not disclosed in this section, improved net assets and profit expansion indicate better capital efficiency. Despite a low-margin structure with gross margin 3.8%, lightweight operations with SG&A ratio 0.9% secured operating-level profitability. [Cash Quality] Operating Cash Flow / Net Income is -9.73x and Operating Cash Flow / EBITDA is -5.12x, indicating very weak cash conversion of profits. Rapid working capital expansion (Inventory +¥1803.0B, Trade Receivables +¥472.4B, Trade Payables +¥651.3B) caused a large operating cash outflow of ¥-974.7B. Free Cash Flow was ¥-978.3B; capital expenditure was limited at ¥0.9B, so the working capital build drove cash outflow. [Investment Efficiency] Total Asset Turnover is 1.84x (Revenue ¥6336.7B / average total assets ~¥3449.6B estimated), indicating good asset efficiency, but DIO of 133 days is prolonged, raising concern over inventory digestion. [Financial Soundness] Equity Ratio fell sharply to 17.2% (from 43.5% YoY -26.3pt), D/E ratio is 4.82x, and Debt/Capital ratio is 66.7%, indicating a shift to a highly leveraged structure. Current Ratio is 120.5%, marginally within a safety band, but Quick Ratio is 42.7% indicating high inventory dependence. Short-term borrowings are ¥1185.7B versus cash and deposits ¥78.3B (cash/short-term debt ratio 0.07x), so liquidity buffer is very thin. Debt/EBITDA is 6.22x and Interest Coverage is 9.09x, posing risk that rising interest burden could press on earnings.
Operating Cash Flow was ¥-974.7B (prior year ¥+92.1B), turning to a large outflow. Subtotal (before working capital changes) was ¥-934.8B, driven mainly by inventory increases of ¥-1708.7B and trade receivables increases of ¥-433.1B. Offsetting inflows included trade payables increase ¥+635.4B and advances received increase ¥+457.0B, but overall working capital led to significant cash outflow. Income taxes paid ¥-19.6B and interest paid ¥-20.7B further reduced operating cash flow to negative. Investing Cash Flow was ¥-3.6B, with restrained capital expenditure of ¥0.9B and intangible asset acquisitions ¥0.3B. Free Cash Flow was ¥-978.3B (prior year ¥+90.0B). Financing Cash Flow financed a net increase in short-term borrowings of ¥+980.97B and paid dividends ¥-20.4B. Cash and cash equivalents decreased from ¥131.7B at the beginning of the period to ¥117.2B at the end, a decrease of ¥-14.5B after considering foreign exchange impact of ¥+4.1B. Operating CF/Net Income -9.73x and Operating CF/EBITDA -5.12x show very weak profit cash realization, and it is important to determine whether the working capital build is a temporary growth-related factor or structural.
Comprehensive income was ¥116.6B versus Net Income attributable to owners of the parent ¥100.2B; the ¥16.4B difference was Other Comprehensive Income (foreign currency translation adjustments +¥22.7B, deferred hedge gains/losses -¥6.3B). The decline from Operating Income ¥187.8B to Ordinary Income ¥133.2B (a reduction of ¥54.6B) was mainly due to non-operating expenses (foreign exchange losses ¥29.0B, interest expense ¥20.7B), which are structural currency and interest burdens rather than one-off items. Extraordinary income ¥1.1B was a minor non-recurring item. The large divergence between Operating CF ¥-974.7B and Net Income ¥100.2B indicates significant accrual (non-cash) profit. Inventory increase ¥1803.0B and trade receivables increase ¥472.4B reflect profit recognition premised on future cash collection; if inventory valuation losses or bad debt crystallize, earnings quality may deteriorate. Currently operating-level profit growth appears supported by business fundamentals, but recovery in cash generation is essential to improve earnings quality.
Full-year guidance is Revenue ¥7500.0B (YoY +18.4%), Operating Income ¥182.0B (YoY -3.1%), Ordinary Income ¥145.0B (YoY +8.8%), and Net Income attributable to owners of the parent ¥110.0B (YoY +9.8%). Progress against the guidance based on this period’s results is: Revenue 84.5%, Operating Income 103.2%, Ordinary Income 91.8%, Net Income 91.0%, indicating Operating Income has already exceeded the full-year plan. The planned decline in Operating Income is presumed due to a normalization of operating leverage following the working capital buildup in this period, incorporating inventory reductions and pricing environment changes in H2. Ordinary-level upside is expected assuming improvements in FX and interest environments, but restraining non-operating expenses remains key. EPS guidance ¥1,617.43 versus this period’s EPS ¥1,472.71 yields progress of 91.0%, so further profit accumulation in H2 is required.
A year-end dividend of ¥540 per share is forecast, with shares outstanding of 6,802 thousand (less 1 thousand treasury shares, base 6,801 thousand shares), implying total dividend payout of approx. ¥3,670M (≈¥36.7B). Dividend payout ratio against Net Income attributable to owners of the parent ¥100.2B is 36.5%, and based on full-year forecast Net Income ¥110.0B is about 33.0%, indicating a stable level. A year-end dividend of ¥540 was paid in the prior year as well, signaling a continuity-focused dividend policy. However, Free Cash Flow of ¥-978.3B is deeply negative, so dividend funding is effectively reliant on borrowings. There were no share buybacks; shareholder returns consist solely of dividends, so Total Return Ratio equals Payout Ratio. Sustainability of dividends depends on achieving positive Operating CF and generating funds through inventory and receivables reductions; balance with financial health will be a key consideration.
Working Capital Reversal Risk: Inventories ¥2215.2B (YoY +437.4%), Trade Receivables ¥1028.5B (YoY +84.9%) have expanded rapidly, with DIO 133 days and Receivables Days 59 days lengthening. If semiconductor supply/demand reverses and inventory stagnation or discount pressure intensifies, valuation losses or revenue declines could further deteriorate Operating CF ¥-974.7B. With a thin gross margin of 3.8%, inventory valuation losses would hit earnings directly.
Refinancing Risk: Short-term borrowings ¥1185.7B (YoY +743.7%) and short-term liabilities ratio 100% with cash and deposits ¥78.3B yields cash/short-term debt ratio 0.07x, leaving almost no liquidity buffer. D/E ratio 4.82x and Debt/EBITDA 6.22x represent high leverage; in a rising interest-rate environment or tighter credit conditions, refinancing terms could be tightened and cash management strained.
FX and Interest Cost Upside Risk: Foreign exchange losses ¥29.0B and interest expense ¥20.7B resulted in non-operating expenses ¥55.4B, reducing Ordinary Income by ¥54.6B. With Overseas sales ratio over 68%, FX volatility has large impact, and dependence on short-term borrowings exposes the company to interest increases. Interest Coverage 9.09x is acceptable now, but the interest burden coefficient 0.71 indicates 29% of profit flows to interest, and a 1% interest rate rise would cause approx. ¥11.9B additional annual burden.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.0% | 3.4% (1.4%–5.0%) | -0.4pt |
| Net Margin | 0.5% | 2.3% (1.0%–4.6%) | -1.8pt |
Operating margin is slightly below the industry median, and net margin is materially below the median due to non-operating expense burdens.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 50.3% | 5.9% (0.4%–10.7%) | +44.5pt |
Revenue growth is outstanding within the industry, reflecting aggressive expansion in a growth phase.
※ Source: Company compilation
Operating-level profitability improved significantly with Operating Margin 3.0% and ROE 5.6%, indicating better capital efficiency; however, extremely weak cash generation with Operating CF ¥-974.7B is the key point of attention. Whether the inventory days of 133 and working capital buildup are temporary or structural will determine earnings quality and valuation. Progress in inventory reduction, receivables collection, and speed of operating CF turning positive are key to financial recovery and sustainable growth.
The company has rapidly shifted to a highly leveraged, low-liquidity financial structure with short-term borrowings ¥1185.7B (YoY +743.7%), D/E ratio 4.82x, and cash/short-term debt ratio 0.07x. Foreign exchange losses ¥29.0B and interest ¥20.7B have pressured Ordinary Income, making control of non-operating expenses a critical issue for earnings stability. Sensitivity to interest and FX environments is high; hedge strategy and improvement of borrowing terms are important monitoring indicators.
The Overseas segment accounts for 68.3% of sales and 61.7% of operating income and functions as the growth engine, but regional performance volatility and supply-chain risks could increase profit volatility. While Operating Income has already exceeded the full-year plan, achievement below the ordinary line depends on containment of non-operating expenses; FX and interest trends and inventory digestion in H2 are the watershed for full-year achievement.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the company from publicly available financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.