| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥13508.8B | ¥11368.2B | +18.8% |
| Operating Income / Operating Profit | ¥441.7B | ¥349.0B | +26.6% |
| Equity-method Investment Income | - | - | - |
| Ordinary Income | ¥449.4B | ¥354.5B | +26.8% |
| Net Income / Net Profit | ¥306.6B | ¥149.9B | +104.5% |
| ROE | 18.1% | 9.8% | - |
For the fiscal year ended March 2026, Revenue was ¥13,508.8B (YoY +¥2,140.6B +18.8%), Operating Income was ¥441.7B (YoY +¥92.7B +26.6%), Ordinary Income was ¥449.4B (YoY +¥94.9B +26.8%), and Net Income was ¥306.6B (YoY +¥156.7B +104.5%), achieving both top-line and bottom-line growth. Revenue rose by roughly 20% driven by expanded domestic IT infrastructure demand, and the operating margin improved to 3.3% (YoY +0.2pt) as SG&A absorption produced operating leverage. Net Income doubled year-on-year, partly due to the absence of prior-year extraordinary losses and one-off tax burdens, which amplified the increase relative to Ordinary Income. Against the full-year guidance (Revenue ¥11,890.0B, Operating Income ¥365.0B), the company significantly exceeded targets at 113.6% of Revenue and 121.0% of Operating Income, underscoring resilient corporate IT investment demand and progress on cost efficiency.
[Revenue] Revenue was ¥13,508.8B (YoY +18.8%), a substantial increase of ¥2,140.6B. The core IT Infrastructure Distribution Business accounted for ¥13,367.2B (+18.9%), representing approximately 98.9% of the total, supported by corporate PC refresh demand and expanded server/infrastructure investment. The Industrial Machinery Business recorded Revenue of ¥144.0B (+11.7%), a double-digit increase, but its composition remained limited at 1.1%, so the overall impact was modest. Cost of goods sold was ¥12,562.5B with a cost ratio of 93.0% (roughly unchanged from 93.0% prior year), yielding a gross margin of 7.0% flat year-on-year, indicating margin maintenance amid price competition.
[Profitability] Operating Income was ¥441.7B (YoY +26.6%). With gross margin stable, SG&A of ¥504.6B (SG&A ratio 3.7%, improved by 0.2pt from 3.9%) was absorbed, generating operating leverage. Non-operating income totaled ¥14.6B (interest income ¥0.5B, dividend income ¥3.2B), and non-operating expenses totaled ¥6.8B (interest expense ¥3.1B), producing a net non-operating balance of +¥7.7B, a modest positive contribution, indicating the business remained core-driven. Ordinary Income was ¥449.4B (+26.8%), following Operating Income. There were Special Gains of ¥2.7B (e.g., gain on sale of fixed assets) and Special Losses of ¥5.4B (impairment loss ¥0.4B, loss on disposal of fixed assets ¥0.8B, etc.), netting -¥2.7B. Profit before tax was ¥446.7B, income taxes were ¥126.4B (effective tax rate 28.3%), resulting in Net Income of ¥306.6B (+104.5%). The larger increase in Net Income versus Ordinary Income was driven by the prior year’s one-off tax burdens and extraordinary losses. By segment, the IT Infrastructure Distribution Business delivered Operating Income of ¥430.3B (+26.4%, operating margin 3.2%), accounting for approximately 97% of total Operating Income. The Industrial Machinery Business posted ¥11.3B (+32.3%, operating margin 7.8%), showing high margins but small absolute contribution. In conclusion, the results reflect solid top-line and core operating profit growth, driven by the core business.
The IT Infrastructure Distribution Business achieved Revenue of ¥13,367.2B (YoY +18.9%), Operating Income of ¥430.3B (YoY +26.4%), and an operating margin of 3.2% (improved +0.2pt from 3.0%), delivering double-digit growth in revenue and profit. Corporate PC refresh cycles and increased cloud/server demand lifted revenue; although gross margin was flat, absorbing SG&A improved profitability. The Industrial Machinery Business recorded Revenue of ¥144.0B (+11.7%), Operating Income of ¥11.3B (+32.3%), and an operating margin of 7.8% (up +1.2pt from 6.6%), demonstrating notable margin improvement but remaining a small portion (1.1%) of total revenue, with limited contribution to group performance. Both segments reported revenue and profit growth, but business concentration is extremely high toward IT Infrastructure Distribution, making demand trends in that segment the key determinant of performance.
[Profitability] Operating margin 3.3% (up +0.2pt from 3.1%), Net margin 2.3% (up +1.0pt from 1.3%), Gross margin 7.0% (flat from 7.0%), where flat gross margin suggests margin maintenance under pricing competition while SG&A ratio improvement enabled operating leverage. ROE was high at 18.1%, up +1.3pt from 16.8% prior year. Decomposing ROE into Net Margin × Total Asset Turnover × Financial Leverage: 2.3% × 2.92 × 2.72 = 18.2%, indicating that high total asset turnover (2.92x) is the primary driver of capital efficiency.
[Cash Quality] Operating Cash Flow (OCF) was ¥145.7B, which is 0.48x of Net Income ¥306.6B, indicating a low cash conversion of profits. The principal cause is working capital absorption from accounts receivable +¥1,204B and inventories +¥1,320B, only partially offset by accounts payable +¥628B. EBITDA was ¥460.4B (Operating Income ¥441.7B + D&A ¥18.7B), and OCF/EBITDA was 0.32x, showing weak cash conversion. Free Cash Flow (FCF) was ¥83.9B (OCF ¥145.7B − Investing CF ¥61.8B), which is insufficient versus dividend payments ¥84.9B and capex ¥28.2B combined, but can be covered by drawing down cash on hand.
[Investment Efficiency] Total Asset Turnover was high at 2.92x, reflecting efficient asset use; total assets rose only +4.8% YoY despite strong revenue growth. Capital expenditure was ¥28.2B (0.2% of Revenue), small in scale. Investment in intangible assets was ¥32.7B, including system investments.
[Financial Soundness] Equity Ratio was 36.8% (up +2.2pt from 34.6%). D/E ratio was 0.11x (interest-bearing debt ¥183.7B / Equity ¥1,698.3B). Net interest-bearing debt was -¥267.8B, indicating an effectively debt-free position and ample financial capacity. Current ratio was 153.4% and quick ratio 132.3%, showing good liquidity, but short-term liabilities ratio was 59.4%, indicating a bias toward short-term borrowings and current liabilities. Cash and deposits were ¥451.5B (9.8% of total assets), 4.1x short-term borrowings ¥109.0B, limiting short-term refinancing risk; however, monitoring the balance with receivables turnover is important.
OCF was ¥145.7B, up ¥86.6B (+146.6%) from prior year ¥59.1B, but still low at 0.48x relative to Net Income ¥306.6B. OCF before working capital changes totaled ¥277.4B, indicating solid operating performance prior to working capital. However, increases in accounts receivable -¥1,204B and inventories -¥1,320B, partially offset by accounts payable +¥628B, resulted in a net working capital absorption of -¥1,896B. Corporate tax payments of -¥132.4B further reduced cash, leaving final OCF at ¥145.7B. Inventories rose ¥587.2B (+29.1% YoY), and accounts receivable increased to ¥2,742.8B (+4.3%), extending DSO to approximately 74 days; the advance buildup of receivables and inventory tied to revenue expansion pressured liquidity. Investing CF was -¥61.8B, primarily capital expenditure -¥28.2B and intangible asset investment -¥32.7B, while sale of investment securities contributed +¥16.2B. FCF was ¥83.9B (up from ¥34.3B prior year by +¥49.6B) but remained short of total shareholder returns of ¥169.4B (dividends + share buybacks), resulting in financing CF of -¥196.6B. Repayment of long-term borrowings was -¥39.3B, and cash and deposits declined from ¥554.2B prior year to ¥451.5B (−¥102.7B). While seasonality may explain some OCF weakness due to working capital buildup, normalization of inventory and receivables turnover next fiscal year is a precondition for recovery in cash generation.
Earnings quality is generally sound: Operating Income ¥441.7B constitutes the bulk of earnings, and the difference to Ordinary Income of ¥449.4B is a modest positive non-operating contribution of +¥7.7B (including dividend income ¥3.2B). Special items were net -¥2.7B (gain on sale of fixed assets ¥5.3B, impairment loss ¥0.4B, loss on disposal of fixed assets ¥0.8B, etc.), a minor impact, meaning most of Net Income ¥306.6B is derived from core operations. The reason Net Income growth (+104.5%) far exceeded Ordinary Income growth (+26.8%) is largely the reversal of prior-year special losses and a decline in the effective tax rate (prior year 31.2% → current 28.3%). Comprehensive income was ¥346.1B, ¥39.5B above Net Income, supported by valuation gains on other securities +¥20.5B, deferred hedge gains +¥3.8B, and retirement benefit adjustments +¥4.9B. Given OCF of ¥145.7B is 0.48x of Net Income, there is some reservation from an accrual perspective about the cash realization of profits. The main cause is sizable increases in receivables and inventory; while partly a temporary response to demand, attention is required regarding delayed receivable collection and inventory valuation risk. The divergence between Ordinary Income and Net Income stems from tax burden changes and one-off items, while the earnings profile remains primarily business-driven and the impact of transitory items is assessed as limited.
Full-year guidance had been Revenue ¥11,890.0B, Operating Income ¥365.0B, Ordinary Income ¥367.0B, and Net Income ¥253.0B, but actual results were Revenue ¥13,508.8B (113.6% of guidance), Operating Income ¥441.7B (121.0%), Ordinary Income ¥449.4B (122.5%), and Net Income ¥306.6B (121.2%), significantly exceeding all items. Progress rates show Revenue exceeded guidance by about 13.6pt and Operating Income by about 21.0pt, reflecting stronger-than-expected corporate IT investment demand and improved cost efficiency. The margin by which Operating Income exceeded guidance (+21.0%) outpaced Revenue excess (+13.6%), suggesting that SG&A absorption produced more operating leverage than anticipated. Guidance EPS had been ¥291.09, while actual EPS was ¥362.07, a +24.4% beat. Forecast dividend was ¥55, and actual annual dividend was ¥105 (interim ¥50, year-end ¥55), meaning the dividend policy was executed as expected. No forward guidance for next fiscal year was disclosed, but the sizable outperformance this fiscal year suggests a robust earnings base heading into next year.
Annual dividend was ¥105 (interim ¥50, year-end ¥55), with payout ratio 33.2% (based on EPS ¥362.07), a conservative level. Prior year dividend was ¥45 (year-end only), implying a more-than-doubling of dividends in practice. Total dividend payout was approximately ¥84.9B, equivalent to 27.7% of Net Income ¥306.6B, indicating sufficient dividend capacity. Share buybacks of ¥84.5B were executed during the period, and combined with dividends ¥84.9B the total shareholder return was ¥169.4B, corresponding to a Total Return Ratio of about 55.2%. Free Cash Flow of ¥83.9B was below total return of ¥169.4B, so shareholder returns were funded in part by drawing down cash on hand; however, ample cash and deposits ¥451.5B provided a buffer. A payout ratio of 33.2% leaves room for dividend growth, but given low OCF (0.48x of Net Income) and working capital expansion, sustaining both dividends and growth investment requires improvement in OCF via working capital normalization. Net interest-bearing debt is effectively negative, providing strong financial flexibility and no immediate concern for short-term dividend continuity; however, sustainable dividend increases will require improvements in both profit growth and cash generation.
Working Capital Expansion Risk: OCF was ¥145.7B (0.48x of Net Income ¥306.6B). Accounts receivable increased by ¥1,204B and inventories by ¥1,320B, causing a large expansion in working capital. DSO extended to about 74 days, creating potential risks of delayed collections and inventory obsolescence/valuation losses. OCF/EBITDA is 0.32x, indicating weak cash conversion; if inventory and receivables turnover do not normalize next year, liquidity pressure and deterioration in FCF sustainability are possible.
Business Concentration Risk: The IT Infrastructure Distribution Business accounts for 98.9% of Revenue and 97.4% of Operating Income, indicating very high segment concentration. With a low gross margin of 7.0%, the company is sensitive to price competition and rebate trends, and susceptible to cyclicality in corporate IT investment (PC refresh and server demand). A slowdown in the core business or intensified competition could materially impact consolidated results.
Short-term Liability Concentration Risk: Short-term liabilities account for 59.4% of total liabilities; of current liabilities ¥2,780.3B, short-term borrowings are ¥109.0B and accounts payable ¥2,346.9B, reflecting a large short-term liability base. Cash and deposits ¥451.5B are 4.1x short-term borrowings, ensuring immediate liquidity, but combined with buildups in receivables and inventory, there is potential for seasonal working capital tightness and refinancing risk tied to supplier payment timing. Given weak OCF, careful maturity management of short-term liabilities and monitoring of cash position are important.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.3% | 3.4% (1.4%–5.0%) | -0.1pt |
| Net Margin | 2.3% | 2.3% (1.0%–4.6%) | -0.0pt |
Profitability is roughly in line with industry medians; both operating and net margins are in a standard position.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 18.8% | 5.9% (0.4%–10.7%) | +13.0pt |
Revenue growth outperformed the industry median by +13.0pt, indicating top-tier growth.
※ Source: Company compilation
Revenue +18.8% and Operating Income +26.6% made the top-line and bottom-line strength clear, with full-year guidance exceeded at 113.6% of Revenue and 121.0% of Operating Income. The core IT Infrastructure Distribution Business captured corporate PC refresh and server demand expansion, and SG&A absorption produced operating leverage, improving Operating Margin to 3.3% (YoY +0.2pt). ROE remained high at 18.1% (prior year 16.8%), supported by a highly efficient model with Total Asset Turnover of 2.92x. Earnings were business-driven with minor special items, confirming the resilience of core earnings power.
However, OCF was ¥145.7B (0.48x of Net Income ¥306.6B), with working capital expansion from accounts receivable +¥1,204B and inventories +¥1,320B absorbing cash. OCF/EBITDA was 0.32x and DSO lengthened to about 74 days. FCF was ¥83.9B, insufficient against total shareholder returns (dividends + buybacks) of ¥169.4B, so cash on hand was used to fund returns. Whether inventory and receivable turnover normalize next year, or working capital efficiency improves, is key to restoring cash generation. Financial soundness is high (D/E 0.11x, net interest-bearing debt effectively negative), so near-term dividend continuity is secure, but sustainable increases in dividends alongside growth investment require improvement in OCF.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions should be made at your own responsibility, and you should consult professionals as necessary.