| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥23376.3B | ¥17064.6B | +37.0% |
| Operating Income / Operating Profit | ¥8703.7B | ¥4517.5B | +92.7% |
| Profit Before Tax | ¥7840.9B | ¥3706.7B | +111.5% |
| Net Income / Net Profit | ¥5545.0B | ¥2723.2B | +103.6% |
| ROE | 39.6% | 36.9% | - |
For the fiscal year ended March 2026, KIOXIA HOLDINGS CORPORATION achieved revenue of ¥23,376B (YoY +¥6,311B +37.0%), Operating Income of ¥8,704B (YoY +¥4,186B +92.7%), Ordinary Income of ¥929B (YoY +¥921B +12,095.4%), Profit Before Tax of ¥7,841B (YoY +¥3, ... see note), and Net Income of ¥5,545B (YoY +¥2,822B +103.6%), recording substantial top-line and bottom-line growth. A sharp recovery in the NAND flash memory market and mix improvement drove results, expanding gross margin to 43.3% (prior year 33.4%) and operating margin to 37.2% (prior year 26.5%), materially improving profitability. Net income doubled versus the prior year, and ROE reached an exceptionally high level of 51.9%. Operating Cash Flow was ¥6,165B, securing Free Cash Flow of ¥3,950B, and Cash and Cash Equivalents increased by ¥3,028B to ¥4,707B. The Equity Ratio improved to 37.9% (prior year 25.3%), and Net Assets doubled to ¥13,991B driven by capital increases and profit retention.
(Note: The original reported figure for Ordinary Income in the Executive Summary was stated as 経常利益929億円 while Profit Before Tax was ¥7,841B in other sections. This translation preserves reported numeric values as presented in the source document.)
[Revenue] Revenue of ¥23,376B (YoY +37.0%) was primarily driven by recovery in the NAND market and improved product mix. By application, SSD & Storage was ¥13,626B (+37.5%), Smart Devices ¥7,600B (+51.7%), and Other ¥2,150B (+0.4%), with strong growth in data-center SSDs and smartphone products. Trade receivables increased to ¥6,606B (YoY +¥4,220B, +176.9%), growing far faster than revenue and lengthening collection cycles to DSO of 103 days (current period). As the company operates a single memory segment, revenue growth was driven by higher NAND prices, improved utilization, and a shift to higher-value-added products.
[Profitability] Cost of sales was ¥13,247B (56.7% of sales), yielding gross profit of ¥10,129B and a gross margin of 43.3% (+9.9pt YoY). Selling, General & Administrative expenses were ¥1,466B (6.3% of sales), up ¥147B (+14.7%) YoY but well below the sales growth rate, reflecting absorption of fixed costs. Operating Income was ¥8,704B (operating margin 37.2%), a sharp expansion of +92.7% YoY, demonstrating strong operating leverage. Financial income was ¥95B against financial expenses of ¥967B, producing net financial cost of ¥872B and an interest coverage ratio of approximately 9.0x, improved from the prior year. Equity-method investment income was ¥9B and other non-operating income was ¥40B, resulting in Profit Before Tax of ¥7,841B (same as reported). After corporate taxes of ¥2,296B (effective tax rate 29.3%), Net Income was ¥5,545B (net margin 23.7%), a substantial increase of +103.6% YoY. Ordinary Income of ¥929B was significantly reduced from Operating Income due to financial expense drag, but Profit Before Tax reflects the high operating profitability. In conclusion, market recovery and cost improvements drove revenue and profit growth.
[Profitability] ROE of 51.9% reflects net margin of 23.7%, total asset turnover of 0.633x, and financial leverage of 2.64x; the large improvement in net margin (prior year 16.0%) was the principal driver. Operating margin of 37.2% improved +10.7pt from 26.5% a year earlier, with improvements in gross margin to 43.3% (prior year 33.4%, +9.9pt) and SG&A ratio to 6.3% (prior year 7.5%, -1.2pt).
[Cash Quality] Operating Cash Flow of ¥6,165B exceeded Net Income of ¥5,545B, yielding an OCF/NI ratio of 1.11x, indicating good conversion of profits to cash. However, from operating cash flow before working capital changes of ¥7,607B, receivables increase of -¥3,977B and inventory increase of -¥558B were significant deductions, revealing deterioration in working capital efficiency. Free Cash Flow was ¥3,950B (= Operating CF ¥6,165B + Investing CF -¥2,215B), ample to absorb capital expenditures of ¥2,811B and intangible asset investment of ¥26B.
[Investment Efficiency] CapEx of ¥2,811B was 0.90x of depreciation of ¥3,128B, indicating renewal-level investment; CapEx to sales ratio of 12.0% is typical for semiconductor manufacturing. Inventory of ¥4,126B produced DIO of 114 days (prior year DIO calc: 352,863百万円/1,137,027百万円×365=113 days), similar to prior year, but accounts receivable of ¥6,606B resulted in DSO of 103 days (prior year: 238,594百万円/1,137,027百万円×365=77 days), showing lengthening collection cycles and notable working capital inefficiency.
[Financial Soundness] Equity Ratio improved materially to 37.9% (prior year 25.3%), and the current ratio of 147% (Current Assets ¥16,178B / Current Liabilities ¥10,980B) secures short-term liquidity. Interest-bearing debt comprises current borrowings/bonds ¥1,755B + non-current borrowings ¥8,721B + lease liabilities ¥605B = ¥11,081B; net interest-bearing debt is ¥6,374B after deducting cash and equivalents of ¥4,707B, yielding a D/E ratio of 0.79x. Interest coverage of 9.0x (Operating Income ¥8,704B / Financial Expenses ¥967B) is healthy. Estimated Debt/EBITDA is below 1.0x (EBITDA = Operating Income ¥8,704B + Depreciation ¥3,128B = ¥11,832B), indicating debt levels are within acceptable range.
Operating Cash Flow starts from Profit Before Tax of ¥7,841B, adding back Depreciation & Amortization of ¥3,128B, impairment losses of ¥4B, financial expenses of ¥967B (interest paid has been deducted), adjusting for equity-method investment loss -¥9B, gains on disposal of fixed assets ¥12B, and other non-cash items to reach operating cash flow before working capital changes of ¥7,607B. Changes in working capital included Receivables increase -¥3,977B, Inventory increase -¥558B, Payables increase +¥532B, and other working capital changes -¥207B, generating net working capital outflow of -¥4,210B. After interest & dividend received +¥40B, interest paid -¥887B, and corporate taxes paid -¥594B, Operating CF totaled ¥6,165B (prior year ¥4,764B, +29.4%). Investing CF was -¥2,215B (CapEx -¥2,811B, Proceeds from sale of tangible fixed assets +¥63B, Intangible asset investment -¥26B, Government subsidies received +¥564B, Others -¥5B), producing Free Cash Flow of ¥3,950B (prior year ¥3,034B, +30.2%). Financing CF was -¥961B, reflecting proceeds from long-term borrowings ¥5,356B and repayments -¥6,164B, bond issuance ¥3,267B, lease liability repayments -¥305B, redemption of preferred shares -¥3,230B, share issuance +¥116B, and share buybacks -¥0B. FX effects were +¥38B, leading to an increase in Cash and Cash Equivalents of +¥3,028B to ¥4,707B. While Operating CF/Net Income of 1.11x indicates high-quality earnings conversion, expansion of receivables and inventory is pressuring working capital; normalization of inventory and receivables will be key to sustaining CF in subsequent periods.
Operating Income of ¥8,704B reflects core business earning power, driven by NAND market recovery, utilization improvements, and product mix shifts that expanded gross margins. Financial income of ¥95B is minor; most financial expenses of ¥967B are interest on borrowings, with net financial cost of ¥872B recognized as recurring expense. Equity-method investment income ¥9B, other income ¥89B, and other expenses ¥49B are limited, so the majority of Profit Before Tax ¥7,841B stems from recurring operating results. Other Comprehensive Income was ¥922B (Unrealized gains on available-for-sale securities ¥803B, Remeasurements of defined benefit plans ¥20B, Foreign currency translation adjustments on overseas operations ¥62B, Cash flow hedges ¥37B), and Total Comprehensive Income was ¥6,467B, ¥922B above Net Income of ¥5,545B; this is mainly valuation differences in financial assets and is neutral with respect to income sustainability. Operating CF exceeding Net Income (OCF/NI = 1.11x) and the operating cash flow before working capital changes of ¥7,607B broadly aligning with Profit Before Tax of ¥7,841B indicate accounting accruals are within a normal range. However, the receivables increase of -¥3,977B highlights an expanding gap between sales recognition timing and cash collection, warranting caution about divergence between reported revenue and real economic demand. A one-off factor includes government subsidies of ¥564B recorded in Investing CF, which are not recurring operating revenue. Overall, recurring operating earnings predominate and the quality of earnings is high, but working capital inefficiency poses a risk by delaying cash conversion of profits.
Full-year guidance was Fiscal Year revenue of ¥17,500B (versus current period actual ¥23,376B, -25.1%) and Operating Income of ¥12,980B (versus actual -49.1%), implying progress rates of 133.6% for revenue and 67.1% for operating income, i.e., current results significantly exceeded guidance. This suggests the mid-period rapid market recovery and price improvements exceeded assumptions used when formulating guidance. The dividend forecast remains ¥0 per share, continuing a no-dividend policy. The gap between guidance and actuals could reflect initially conservative guidance assumptions and/or lack of a year-end revision to full-year outlook; focus will be on any future revisions to guidance.
Ordinary share dividend this period was ¥0 (prior year ¥0), resulting in a payout ratio of 0%. Share buybacks were ¥0B (not executed in the prior year), producing a Total Return Ratio of 0%. Given Free Cash Flow of ¥3,950B, capacity exists to resume dividends, but the company appears to prioritize internal reserves to (1) prepare for market volatility, (2) meet capital expenditure needs (¥2,811B this period), (3) service interest-bearing debt of ¥11,081B with interest burden of ¥967B, and (4) address working capital expansion. Preferred shares were redeemed in July 2025, removing constraints on dividend capacity for common shares. Resumption of dividends would depend on stabilization of Operating CF via working capital normalization, reduction of net debt of ¥6,374B and interest burden, and sustained market recovery.
Working capital efficiency deterioration risk: Expansion of Receivables ¥6,606B (DSO 103 days, prior year 77 days) and Inventory ¥4,126B (DIO 114 days, prior year 113 days) led to net working capital outflow of ¥4,210B. In a market downturn, inventory impairment and bad-debt risk on receivables could materialize, severely pressuring Operating CF.
Prolonged high interest burden risk: Financial expenses of ¥967B (prior year ¥853B) imply an effective interest rate of about 8.7% on interest-bearing debt of ¥11,081B, which is high. Growth in long-term borrowings (non-current +¥3,409B) means refinancing in a rising-rate environment could reduce interest coverage and compress Net Income.
NAND market reversal risk: This period’s operating margin of 37.2% depended on NAND price increases and utilization recovery. If the market reverses (supply excess or price declines), gross margins could deteriorate rapidly and high fixed-cost base could lead to a sharp decline in Operating Income. Compared with prior-year operating margin of 26.5%, there is latent risk of a decline exceeding 10pt.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 51.9% | 6.3% (3.2%–9.9%) | +45.6pt |
| Operating Margin | 37.2% | 7.8% (4.6%–12.3%) | +29.5pt |
| Net Margin | 23.7% | 5.2% (2.3%–8.2%) | +18.5pt |
The company’s profitability substantially exceeds manufacturing medians, with ROE, operating margin, and net margin all in the top 5% range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 37.0% | 3.7% (-0.4%–9.3%) | +33.3pt |
Revenue growth substantially exceeds the median by +33.3pt, indicating exceptionally high growth within the manufacturing sector.
※ Source: Company compilation
Strong earnings recovery in a recovering market: Operating margin recovered to 37.2% (prior year 26.5%) and ROE to 51.9% (prior year 45.9%), restoring top-tier manufacturing profitability. NAND price increases and utilization improvements were drivers, while a reduction in SG&A ratio (-1.2pt) and a leaner cost structure amplified operating leverage and improved downside resilience. Robust cash generation — Operating CF ¥6,165B and Free CF ¥3,950B — can be evaluated as funding for future growth investments and debt reduction.
Working capital normalization is key to next-period CF: Receivables +¥4,220B (+176.9%) and inventory +¥558B expansion led to net working capital outflow of -¥4,210B, and OCF/NI of 1.11x is below the level seen when working capital is normalized. If receivables and inventory normalize, next-period Operating CF could improve to 1.3–1.5x Net Income; conversely, a market downturn could lead to inventory write-downs and collection delays that materially compress CF. Trends in DSO (103 days) and DIO (114 days) will be leading indicators for next-period CF.
Potential inflection point for shareholder returns under no-dividend policy: With Free CF ¥3,950B and dividend at zero, the company is extremely conservative on shareholder returns. Improvement in Equity Ratio to 37.9% and Net Assets doubling to ¥13,991B have strengthened the balance sheet, but interest-bearing debt ¥11,081B and interest burden ¥967B remain. If (1) working capital normalizes and Operating CF stabilizes, (2) net debt ¥6,374B is reduced and interest burden falls, and (3) market recovery is sustained, resumption of dividends and a shift to a payout ratio of 20–30% could be considered. Key metrics to monitor for dividend resumption timing are next-period DSO/DIO trends, interest burden trajectory, and the conservativeness of management’s guidance.
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