| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥519.2B | ¥526.6B | -1.4% |
| Operating Income | ¥25.4B | ¥34.0B | -25.3% |
| Ordinary Income | ¥24.9B | ¥33.7B | -26.0% |
| Net Income | ¥16.9B | ¥20.2B | -16.6% |
| ROE | 16.4% | 19.9% | - |
FY2026 results: Revenue ¥519.2B (vs prior year -¥7.3B -1.4%), Operating Income ¥25.4B (vs prior year -¥8.6B -25.3%), Ordinary Income ¥24.9B (vs prior year -¥8.8B -26.0%), Net Income ¥16.9B (vs prior year -¥3.4B -16.6%). Despite marginally lower revenue, operating margin contracted to 4.9% (down -1.6pt from 6.5% prior year), driven by higher SG&A and profitability deterioration in certain segments, resulting in a topline and bottom-line decline. The core CAMERA Business accounted for 78.4% of revenue and was slightly down, while the BYCYCLE Business contracted sharply by -60.9% and turned to a loss; the WATCH Business also saw margin compression to 2.9%. Operating Cash Flow improved materially to ¥30.5B (YoY +152.8%) due to inventory reduction effects, yielding FCF of ¥17.7B.
[Revenue] Revenue was ¥519.2B (YoY -1.4%), a slight decline. By segment, the CAMERA Business was ¥407.3B (-1.2%), representing 78.4% of company revenue and only a modest decrease. The WATCH Business earned ¥104.0B (+2.4%), maintaining revenue growth, but the BYCYCLE Business shrank to ¥3.1B (-60.9%) and significantly dragged on consolidated results. The PEN Business was ¥4.8B (+2.7%), small but up. Gross margin improved to 18.8% (+0.6pt YoY) as cost-of-sales efficiency progressed. By geography, domestic sales exceed 90%, indicating limited overseas exposure.
[Profitability] Operating Income was ¥25.4B (YoY -25.3%), a substantial decline. SG&A rose to ¥72.2B (SG&A ratio 13.9%), with increased customer acquisition and operating costs such as promotion expenses ¥1.3B and commission fees ¥1.4B compressing profits. By segment, CAMERA generated Operating Income ¥41.7B (margin 10.2%, YoY -8.5%) and remained the earnings driver; WATCH decreased to ¥3.0B (margin 2.9%, -30.9% YoY); BYCYCLE turned to an operating loss of -¥0.5B. Allocation of corporate-level expenses ¥16.9B also pressured segment profits, driving the consolidated operating margin down to 4.9%. Ordinary Income was ¥24.9B (YoY -26.0%), with non-operating expenses of ¥0.7B including interest expense ¥0.5B. Extraordinary losses included impairment losses ¥3.9B and disposal of fixed assets ¥0.0B, totaling ¥0.3B, resulting in profit before tax of ¥24.6B (YoY -16.5%). After corporate taxes ¥7.8B (effective tax rate 31.6%), Net Income was ¥16.9B (YoY -16.6%), concluding with revenue and profit declines.
The CAMERA Business remains the mainstay, producing Operating Income ¥41.7B (margin 10.2%) and accounting for the majority of corporate profits, although down -8.5% YoY. Cost increases under slightly lower sales weighed on results. The WATCH Business saw margin decline to 2.9% (YoY -30.9%) and profitability deteriorated despite revenue growth. The BYCYCLE Business contracted sharply (-60.9% revenue) and swung to an operating loss of ¥0.5B, suggesting possible withdrawal or scale-back decisions. The PEN Business maintained high profitability with a margin of 14.9%, improving operating income by +6.7% despite small scale. Allocation of corporate expenses of ¥16.9B compressed segment profits, indicating scope for efficiency improvements in administrative functions.
[Profitability] Operating margin was 4.9%, down -1.6pt from 6.5% prior year, driven mainly by a rise in SG&A ratio to 13.9%. Net margin contracted to 3.2% (down -0.6pt from 3.8%). ROE was 16.4%, down from 19.9% prior year, but high total asset turnover of 2.87x (Revenue ¥519.2B ÷ Total Assets ¥180.9B) provided support. [Cash Quality] Operating Cash Flow ¥30.5B equals 1.81x Net Income ¥16.9B; EBITDA ¥27.5B (Operating Income ¥25.4B + Depreciation ¥2.1B) yields an OCF-to-EBITDA ratio of 1.11x, indicating high quality. Inventory turnover days extended to 77.9 days (Inventories ¥90.0B ÷ Cost of Sales ¥421.7B × 365 days), up from 69.0 days, signaling weaker inventory efficiency. [Investment Efficiency] Capex ¥0.1B is only 0.05x depreciation ¥2.1B, showing very limited maintenance investment. Intangible asset investment ¥12.7B (mainly software development) could determine future digital investment returns. [Financial Soundness] Equity ratio 56.7% (prior year 56.2%), current ratio 231.3% (Current Assets ¥145.0B ÷ Current Liabilities ¥62.7B) are healthy, but quick ratio is 87.8%, indicating high inventory dependency. Short-term borrowings ¥24.0B and long-term borrowings ¥14.6B total ¥38.6B versus cash ¥18.1B, yielding net interest-bearing debt ¥20.5B. Interest coverage is robust at 53.8x (EBIT ¥25.4B ÷ Interest Expense ¥0.5B).
Operating Cash Flow was ¥30.5B, a significant improvement YoY +152.8%. Pre-working-capital operating cash subtotal was ¥39.6B; after corporate tax payments ¥8.7B, decreases in inventories ¥9.5B and in trade receivables ¥5.1B contributed to cash inflows. This was partially offset by a decrease in trade payables ¥2.7B. The strong OCF this period includes a one-off inventory compression effect; given the extension of inventory days to 77.9, sustainability requires caution. Investing Cash Flow was -¥12.8B, with capex ¥0.1B and intangible asset investment ¥12.7B (mainly software development) comprising most of outflows. FCF was ¥17.7B (Operating CF ¥30.5B - Investing CF ¥12.8B), which nearly covered shareholder returns of ¥18.7B (dividends ¥8.7B + share buybacks ¥10.0B). Financing Cash Flow was -¥16.9B: net increase in short-term borrowings ¥11.0B and long-term borrowings ¥8.0B were offset by long-term borrowings repayments ¥17.8B, dividends ¥8.7B, and share buybacks ¥10.0B. Cash increased by ¥8.1B, ending the period with ¥18.1B.
Ordinary Income ¥24.9B versus Net Income ¥16.9B shows an ¥8.0B divergence, primarily due to corporate taxes ¥7.8B and extraordinary losses ¥0.3B (including impairment losses ¥3.9B, some of which were adjusted prior to ordinary income). Non-operating expenses ¥0.7B consist of interest expense ¥0.5B and foreign exchange losses ¥0.1B, at customary levels. The recorded impairment loss ¥3.9B is a temporary factor reducing earnings quality. Operating Cash Flow ¥30.5B being 1.81x Net Income is mainly due to working capital inflows from reductions in inventories and receivables; accruals are -¥13.6B (Net Income ¥16.9B - Operating CF ¥30.5B), negative, indicating cash generation exceeding accounting profits. However, if inventory compression is transient, accrual sustainability is limited, and aligning recurring profit growth with cash generation will be a future challenge.
Full Year guidance: Revenue ¥551.0B (FY basis YoY +6.1%), Operating Income ¥27.5B (+8.5%), Ordinary Income ¥27.0B (+8.5%), Net Income ¥18.5B (+9.9%). Compared to current results, revenue progress rate is 94.2% (¥519.2B ÷ ¥551.0B), operating income progress 92.3% (¥25.4B ÷ ¥27.5B), net income progress 91.4% (¥16.9B ÷ ¥18.5B), indicating underperformance against guidance. This period’s higher SG&A and segment weakness have impacted results; full-year attainment assumes cost control and improvements in inventory efficiency. Guidance anticipates revenue and earnings growth, but reversing the current decline requires SG&A restraint and segment turnarounds.
Year-end dividend is ¥47 per share, total dividend payout ¥8.7B, with dividend payout ratio 59.8% (dividends ¥8.7B ÷ Net Income ¥16.9B × calculated only on year-end dividend), returning over half of earnings. Dividend coverage relative to FCF is 2.03x (FCF ¥17.7B), adequately covered. Additionally, share buybacks ¥10.0B were executed, bringing total shareholder returns to ¥18.7B (dividends ¥8.7B + buybacks ¥10.0B), and total return ratio to 110.7%, exceeding profits. Treasury stock increased to ¥1.4B at period end (YoY +¥0.9B); outstanding shares 21,354 thousand, less treasury stock 135 thousand yields period-end shares 21,219 thousand. Average shares outstanding 21,450 thousand produce BPS ¥483.29 and EPS ¥78.57. Given payout ratio and FCF coverage, dividend sustainability is supported at current profit and cash levels, but total return ratio exceeding 100% suggests buybacks are being used as a cyclical, tactical measure.
Segment concentration risk: CAMERA Business accounts for 78.4% of revenue and the majority of operating income; demand swings or competitive price pressure in this business directly impact consolidated performance. A YoY revenue decline of -1.2% and profit decline of -8.5% indicate deceleration, and delayed diversification undermines earnings stability.
Deterioration in inventory efficiency: Inventory turnover days extended to 77.9 days; inventories ¥90.0B represent 49.7% of total assets. If inventory obsolescence or discounting pressures increase, gross margin and OCF sustainability will be affected. If this period’s inventory-driven cash inflow (¥9.5B) is one-off, CF quality may decline in subsequent periods.
Dependence on short-term debt and underinvestment: Short-term borrowings ¥24.0B exceed cash ¥18.1B, exposing the company to refinancing and interest-rate risks. Capex ¥0.1B is only 0.05x depreciation ¥2.1B, extremely low, raising concerns that insufficient maintenance investment could impair medium-term competitiveness and efficiency.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.9% | 4.6% (1.7%–8.2%) | +0.3pt |
| Net Margin | 3.2% | 3.3% (0.9%–5.8%) | -0.1pt |
Operating margin slightly exceeds the industry median, while net margin is around the median, placing the company mid-pack on profitability within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.4% | 4.3% (2.2%–13.0%) | -5.7pt |
Revenue growth trails the industry median by -5.7pt, indicating lower growth relative to peers.
※ Source: Company compilation of public financial statements
The slight downward trend in the core CAMERA Business (78.4% of revenue) and SG&A-driven operating margin decline to 4.9% highlight a structural profitability issue. The WATCH Business margin deterioration and BYCYCLE Business turning loss-making mean segment turnarounds and efficiency of corporate expenses (¥16.9B) are prerequisites for profit recovery.
Operating Cash Flow ¥30.5B was high due to inventory compression (¥9.5B inflow), but the extension of inventory days to 77.9 suggests worsening efficiency; future CF quality depends on alignment of inventory with real demand and sales improvements. Capex ¥0.1B (0.05x depreciation) is extremely low, raising concerns that underinvestment could impede medium-term competitiveness.
Shareholder returns are proactive with a payout ratio of 59.8% and total return ratio 110.7%, but FCF ¥17.7B only just covers total returns ¥18.7B. Sustaining returns depends on profit growth and stabilized cash flows. Short-term borrowings ¥24.0B exceed cash ¥18.1B, so preparations for interest-rate and refinancing risks are necessary.
This report was auto-generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.