| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2037.5B | ¥2163.8B | -5.8% |
| Operating Income / Operating Profit | ¥102.5B | ¥124.6B | -17.7% |
| Equity-method Investment Income (Loss) | ¥0.7B | ¥2.4B | -69.6% |
| Ordinary Income | ¥97.5B | ¥114.2B | -14.6% |
| Net Income / Net Profit | ¥71.9B | ¥78.0B | -7.8% |
| ROE | 13.4% | 15.9% | - |
For the fiscal year ended March 2026, Revenue / Net Sales were ¥2,037.5B (YoY -¥126.3B -5.8%), Operating Income was ¥102.5B (YoY -¥22.1B -17.7%), Ordinary Income was ¥97.5B (YoY -¥16.7B -14.6%), and Net Income attributable to owners of the parent was ¥71.9B (YoY -¥6.1B -7.8%). The core Semiconductor & Electronic Devices business saw revenue contraction due to a weak semiconductor market, partially offset by double-digit growth in the Computer Systems-related business. Operating margin declined to 5.0% (down -0.7pt from 5.8% a year earlier). SG&A totaled ¥212.9B, roughly flat YoY, but the decline in revenue raised the fixed-cost burden and reversed operating leverage. Non-operating items pressured Ordinary Income, including foreign exchange losses of ¥4.4B and interest expense of ¥2.2B, while Special Gains of ¥11.4B (primarily ¥10.8B gain on sale of marketable securities) supported Net Income. Operating Cash Flow (OCF) was ¥156.8B, 2.2x Net Income, aided by inventory reduction of ¥43.7B and increase in advances received of ¥95.9B, indicating strong cash generation. Free Cash Flow (FCF) was ¥168.8B, ample, allowing dividends, share buybacks, and debt repayments while improving the balance sheet. Interest-bearing debt was reduced to ¥174.3B (down -¥74.3B from ¥248.6B prior year), and Equity Ratio improved to 33.1% (prior year 30.5%). ROE fell to 13.4%, but this is viewed as a temporary adjustment during a business-model transition. Management expects recovery next year to Revenue ¥2250B (+10.4%) and Ordinary Income ¥113B (+15.9%).
Revenue of ¥2,037.5B represented a decline of ¥126.3B YoY (-5.8%). By segment, the Semiconductor & Electronic Devices business contracted to ¥1,625.5B (YoY -9.2%, 79.8% of sales), reflecting customers’ inventory adjustments and reduced orders amid a semiconductor market downcycle. In contrast, the Computer Systems-related business expanded to ¥412.0B (YoY +10.4%, 20.2% of sales), driven by Storage & Network equipment ¥244.7B (YoY +7.1%) and Maintenance & Monitoring services ¥167.4B (YoY +15.6%). Expansion of higher-margin systems businesses suggests qualitative improvement in the business portfolio, but total revenue declined as semiconductor weakness outweighed the systems growth. Gross margin was 15.5% (down -0.1pt from 15.6%), and Cost of Sales was ¥1,722.1B (YoY -¥64.4B -3.6%), a smaller decline than revenue, with limited impact from price declines and product-mix deterioration.
Operating Income was ¥102.5B (YoY -¥22.1B -17.7%), with an operating margin of 5.0% (down -0.7pt from 5.8%). SG&A was ¥212.9B (YoY +¥0.1B), essentially flat, but SG&A ratio rose to 10.4% (up +0.6pt from 9.8%) due to lower sales, increasing the fixed-cost burden. Major expense items included salaries and allowances ¥84.0B (prior ¥79.3B) and retirement benefit expenses ¥6.5B (prior ¥6.7B), indicating a stable cost structure, but expense cuts lagged revenue declines, creating negative operating leverage. Ordinary Income was ¥97.5B (YoY -¥16.7B -14.6%); non-operating income included interest income ¥0.6B and equity-method investment income ¥0.7B, partially offset by foreign exchange losses ¥4.4B (improved from prior year ¥10.4B) and interest expense ¥2.2B (down from ¥2.7B). Special items included Special Gains ¥11.4B (mainly ¥10.8B gain on sale of marketable securities), and Special Losses were minor (impairment loss on fixed assets ¥0.1B). Profit before tax was ¥108.8B; after income taxes ¥30.0B (effective tax rate 27.6%) and non-controlling interests ¥0.4B, Net Income attributable to owners of the parent was ¥71.9B (YoY -7.8%). Net margin was 3.5% (down -0.1pt from 3.6%), with the decline limited due to support from special gains. Comprehensive income was ¥86.8B, exceeding Net Income; Other Comprehensive Income contributed foreign currency translation adjustments ¥5.8B and actuarial adjustments related to retirement benefits ¥4.1B. Overall, while revenue and operating profit declined, non-operating and special items reduced the decline in Net Income, which is viewed as a temporary adjustment during a structural transition.
The Semiconductor & Electronic Devices business recorded Sales of ¥1,625.5B (YoY -9.2%) and Segment Profit of ¥32.1B (down from ¥61.5B prior year, -47.9%), a significant profit decline. Segment margin fell to 2.0% (down -1.4pt from 3.4%), pressured by semiconductor market adjustments and intensified price competition. The Computer Systems-related business posted Sales of ¥412.0B (YoY +10.4%) and Segment Profit of ¥65.4B (up from ¥52.7B prior year, +24.2%), with margin improving to 15.9% (up +1.8pt from 14.1%). While semiconductors remain the core with 79.8% of sales, the Computer Systems segment accounted for 67.1% of total segment profit (of total segment profit ¥97.5B), indicating a shift of profit contribution toward higher-margin systems business. Growth in Computer Systems was notably driven by Maintenance & Monitoring services (¥167.4B, +15.6% YoY), strengthening the stock-revenue base and improving margins. Short-term headwinds persist in semiconductors, but systems growth supports consolidated profit and advances portfolio quality improvement.
Profitability: Operating margin 5.0% (down -0.7pt from 5.8%), Ordinary Income margin 4.8% (down -0.5pt from 5.3%), Net margin 3.5% (down -0.1pt from 3.6%). Gross margin 15.5% (down -0.1pt). SG&A ratio rose to 10.4% (from 9.8%), with increased fixed-cost burden the main driver of operating margin compression. ROE was 13.4%; Dupont decomposition is consistent with Net margin 3.5% × Total Asset Turnover 1.26x × Financial Leverage 3.02x. The decline from an estimated ROE of 19.1% prior year was driven mainly by slower asset turnover and lower operating margins; financial leverage fell from 3.20 to 3.02. ROA (on Ordinary Income basis) fell to 6.1% (prior 7.1%).
Cash Quality: OCF / Net Income was 2.18x, a high level indicating good accrual quality. OCF subtotal (before working capital changes) was ¥175.0B; inventory decrease ¥43.7B and increase in advances received ¥95.9B drove cash generation, while an increase in trade receivables ¥56.3B was a headwind. Free Cash Flow was ¥168.8B, 2.35x Net Income. With a payout ratio of 40.2%, FCF coverage was 5.6x, supporting dividend sustainability.
Investment Efficiency: Total Asset Turnover was 1.26x (down from 1.38x). Days Inventory Outstanding (DIO) was 99 days, Days Sales Outstanding (DSO) 98 days, and Cash Conversion Cycle (CCC) 146 days, indicating room to improve working capital efficiency. Capital expenditure was ¥27.2B, exceeding estimated depreciation of ¥10.3B (from the OCF statement), indicating continued growth investment.
Financial Soundness: Equity Ratio improved to 33.1% (prior 30.5%), and D/E ratio fell to 2.02x (from 2.39x) due to reductions in interest-bearing debt. Current ratio was 176.9% and quick ratio 121.9%, indicating good liquidity. Interest-bearing debt stood at ¥174.3B (short-term borrowings ¥23.4B, long-term borrowings ¥150.9B, of which securitized ¥90.0B, commercial paper ¥30.0B), a significant reduction of -¥74.3B from ¥248.6B prior year. Interest coverage was 46.2x (Operating Income ¥102.5B ÷ Interest Expense ¥2.2B), indicating strong ability to service interest.
OCF was ¥156.8B (down -17.1% from ¥189.2B prior year) but remained high at 2.18x Net Income ¥71.9B. OCF subtotal was ¥175.0B; key working capital movements included inventory decrease ¥43.7B (progress in inventory compression), increase in advances received ¥95.9B (more advance payment conditions accompanying order progress), and increase in accounts payable ¥40.2B, which were positive, while increase in trade receivables ¥56.3B was negative. Income taxes paid were ¥16.5B and interest paid ¥3.0B, resulting in final OCF of ¥156.8B. Investing Cash Flow was a net inflow of ¥12.0B (large improvement from prior year outflow ¥-20.7B), mainly due to sale of marketable securities ¥12.2B, exceeding capital expenditures ¥2.7B. Proceeds from sale of fixed assets ¥4.5B also contributed as part of asset-efficiency initiatives. Free Cash Flow was ¥168.8B (OCF ¥156.8B + Investing CF ¥12.0B), roughly flat from prior year ¥169.2B. Financing Cash Flow was an outflow of ¥-178.5B, including short-term borrowings repayments ¥58.7B, long-term borrowings repayments ¥32.7B, and reduction of commercial paper ¥40.0B, driving reductions in interest-bearing debt, partly financed by long-term borrowings of ¥96.6B for refinancing. Dividends paid were ¥30.0B and share buybacks ¥20.0B, supporting shareholder returns. Cash and cash equivalents at year-end were ¥76.2B (down ¥7.6B from ¥83.8B prior year), but balance sheet improvement was achieved alongside dividends and buybacks. Foreign exchange effects contributed ¥2.0B to cash.
Core earnings are Operating Income ¥102.5B, with the ¥5.0B difference to Ordinary Income reflecting negative non-operating items. Non-operating income totaled ¥3.1B (interest income ¥0.6B, equity-method investment income ¥0.7B, insurance dividends ¥0.5B, etc.), versus non-operating expenses ¥8.1B (interest expense ¥2.2B, foreign exchange losses ¥4.4B, etc.), yielding net non-operating -¥5.0B. The difference from Ordinary Income to Net Income was affected by special items: Special Gains ¥11.4B (¥10.8B gain on sale of marketable securities, ¥0.6B gain on sale of fixed assets) minus Special Losses ¥0.1B (impairment on fixed assets), a net uplift of ¥11.3B. Profit before tax was ¥108.8B; after taxes ¥30.0B and non-controlling interests ¥0.4B, Net Income attributable to owners of the parent was ¥71.9B. While Operating Income declined by ¥22.1B YoY, Net Income declined by only ¥6.1B, limited mainly by special gains. The ¥10.8B gain on sale of marketable securities appears to be part of reducing strategic equity holdings and is likely non-recurring. Foreign exchange losses ¥4.4B are an ordinary item but variable; improvement in FX conditions would enhance profitability. Comprehensive income ¥86.8B exceeded Net Income by ¥14.9B in Other Comprehensive Income, consisting of foreign currency translation adjustments ¥5.8B, retirement benefit adjustments ¥4.1B, and deferred hedges -¥1.6B. OCF ¥156.8B was 2.18x Net Income, indicating high accrual quality. Sustainable earnings will depend on recovery in Operating Income; excluding Special Gains, core Net Income is estimated in the low ¥60B range, making operational improvement crucial next year.
Full-year guidance: Revenue / Net Sales ¥2,250B (YoY +¥212.5B +10.4%), Ordinary Income ¥113B (YoY +¥15.5B +15.9%), Net Income attributable to owners of the parent ¥78.5B, EPS ¥265.78, and annual dividend ¥39. Revenue assumes semiconductor market recovery and continued growth in the Computer Systems business, targeting double-digit sales growth; Ordinary Income is expected to increase through improved operating efficiency and stabilization of non-operating items. Compared with the current year, sales +10.4% vs Ordinary Income +15.9% implies operating leverage recovery. Net Income of ¥78.5B (from ¥71.9B current) implies +¥6.6B (+9.2%), but given the one-off Special Gains ¥11.4B recorded this year, realization depends on operational recovery. The planned annual dividend of ¥39 is a material cut from this year’s ¥107 (interim ¥35, year-end ¥72), reflecting that this year included special/commemorative distributions. The implied payout ratio versus forecast EPS ¥265.78 is 14.7%, a low level consistent with a normalized dividend base. Advances received ¥392B and inventory ¥467B are converging to appropriate ranges at the fiscal year-end, supporting improved cash generation as sales recover. Achievability of guidance depends on timing of semiconductor cycle recovery and order trends in Computer Systems; current inventory compression and debt reduction have preserved financial flexibility.
Annual dividend for the year was ¥107 (interim ¥35, year-end ¥72), with payout ratio 40.2%, a sustainable level. Prior year total dividend was ¥52 (interim + year-end), and this year included a larger year-end distribution, totaling dividend cash outflow ¥37.3B. Versus FCF ¥168.8B, dividends ¥30.0B imply FCF coverage 5.6x, indicating ample capacity. Share buybacks of ¥20.0B were conducted, and proceeds from disposals ¥5.2B effectively reduced net repurchases to ¥14.8B. Combined with dividends, total shareholder returns were approximately ¥44.8B, equivalent to a Total Return Ratio of about 62.3%. Next year’s projected annual dividend ¥39 represents a sharp reduction from ¥107 this year, but the current year’s year-end ¥72 likely included one-off elements such as special or commemorative dividends, so ¥39 is presumed to be the regular dividend level. Versus forecast EPS ¥265.78, the ¥39 dividend yields a payout ratio of 14.7%, low, reflecting prioritization of cash retention and debt reduction given cash position ¥76B and strong FCF generation. Management emphasizes maintaining a balance between stable dividends and flexible total returns, with potential continued share buybacks while prioritizing growth investment and debt reduction.
Semiconductor market volatility risk: The Semiconductor & Electronic Devices business accounts for 79.8% of sales and is highly sensitive to market cycles; this year it recorded -9.2% sales and -47.9% segment profit decline. Inventory ¥467B and DIO 99 days indicate elevated inventory levels, posing risks of valuation losses and price declines if the market weakens. Delays in cycle recovery could lead to missed sales and profit targets next year.
Working capital efficiency risk: DSO 98 days, DIO 99 days, and CCC 146 days show long working capital turnover, and increased working capital needs during a sales recovery could strain liquidity. Trade receivables ¥544B and inventory ¥467B represent 62.3% of total assets; collection delays or inventory stagnation would weaken liquidity and cash generation. Advances received ¥392B provide support but may be subject to refund risk upon order changes or delivery delays.
Leverage and interest-rate risk: D/E 2.02x is somewhat high relative to industry peers, and of ¥174.3B interest-bearing debt, ¥90.0B is securitized/short-term, creating short-term refinancing pressure. Rising interest rates would increase interest expense; while interest coverage 46.2x is strong now, further declines in Operating Income would erode coverage. Foreign exchange losses ¥4.4B are a recurring risk, and yen depreciation could increase foreign-currency denominated liabilities and procurement costs.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.0% | 3.4% (1.4%–5.0%) | +1.7pt |
| Net Margin | 3.5% | 2.3% (1.0%–4.6%) | +1.2pt |
Both Operating Margin and Net Margin exceed industry medians, indicating relatively strong profitability for a specialist trading company / distributor.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -5.8% | 5.9% (0.4%–10.7%) | -11.6pt |
Revenue growth lags the industry median by -11.6pt, reflecting temporary underperformance due to the semiconductor market adjustment.
※ Source: Company compilation
Progress of business-portfolio shift: Although the Semiconductor & Electronic Devices business (79.8% of sales) saw lower sales and margin deterioration, the Computer Systems business (20.2% of sales) now generates 67.1% of segment profit, indicating a shift to a higher-profit structure. Expansion of Maintenance & Monitoring services (+15.6% YoY) strengthens recurring revenue and is key to margin improvement, reducing dependence on the semiconductor cycle and enhancing medium- to long-term earnings stability. Management’s plan for next year (Sales +10.4%, Ordinary Income +15.9%) assumes semiconductor market recovery and continued high-margin systems growth, potentially expanding consolidated margins through mix improvement.
Strengthening cash generation and balance-sheet quality: OCF / Net Income 2.18x, FCF ¥168.8B, inventory reduction ¥43.7B, and advances received increase ¥95.9B were main drivers. Interest-bearing debt was reduced to ¥174.3B (YoY -¥74.3B), D/E fell to 2.02x, and Equity Ratio improved to 33.1%, strengthening the balance sheet and improving capacity for investment in growth and resilience to rising rates. Payout ratio 40.2% and FCF coverage 5.6x support shareholder returns; share buybacks ¥20.0B further reflect a shareholder-friendly stance.
Monitor recovery in profitability: Operating margin at 5.0% fell -0.7pt vs prior year, mainly due to higher SG&A ratio, highlighting limited fixed-cost flexibility. Special Gains ¥11.4B supported Net Income; underlying operating profitability on a recurring basis remains weakened. Improvement in operating margins next year depends on semiconductor market recovery and sustaining high margins in the systems business, and working capital efficiency (DSO 98 days, DIO 99 days, CCC 146 days) remains an issue. Quarterly monitoring of segment margins, inventory levels, and advances received will be leading indicators of profitability and cash generation, and the degree of capture of semiconductor cycle recovery will determine the likelihood of performance rebound.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as necessary.