| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥763.6B | ¥786.7B | -2.9% |
| Operating Income / Operating Profit | ¥36.7B | ¥32.9B | +11.4% |
| Equity-method Investment Income (Loss) | - | - | - |
| Ordinary Income | ¥40.9B | ¥36.0B | +13.7% |
| Net Income / Net Profit | ¥28.8B | ¥24.9B | +15.7% |
| ROE | 7.5% | 7.2% | - |
For the fiscal year ended March 2026, Revenue was ¥763.6B (YoY -¥23.1B, -2.9%) and despite the revenue decline, Operating Income was ¥36.7B (YoY +¥3.8B, +11.4%), Ordinary Income ¥40.9B (YoY +¥4.9B, +13.7%), and Net Income ¥28.8B (YoY +¥3.9B, +15.7%), achieving double-digit profit growth. In the context of lower sales and higher profits, Gross Margin improved to 16.2% (from 14.9% prior year, +1.3pt) and Operating Margin improved to 4.8% (from 4.2% prior year, +0.6pt), indicating significant profitability enhancement. Non-operating items contributed at the ordinary income stage, notably Dividend Income Received of ¥1.3B and Foreign Exchange Gains of ¥0.9B. Net Profit Margin improved to 3.8% (from 3.2% prior year, +0.6pt) and ROE modestly improved to 7.5% (from 7.3% prior year, +0.2pt). Operating Cash Flow (OCF) expanded sharply to ¥84.0B (YoY +421.9%), driven by collection of Trade Receivables of ¥52.0B and inventory reduction of ¥10.3B which released working capital. Free Cash Flow (FCF) was ¥77.2B, sufficient to cover dividend payments of ¥9.4B. Cash and Deposits increased to ¥147.8B (25.9% of Total Assets), and the Current Ratio was 258.0%, indicating strong liquidity. Dividends were set at ¥90 per share annually (interim ¥44, year-end ¥46) with a Payout Ratio of 31.4%, leaving room for further increases.
[Revenue] Revenue was ¥763.6B (YoY -¥23.1B, -2.9%). As the company operates a single segment (sales of control equipment, industrial equipment, measuring instruments, etc.), segment-level analysis is not available, but the significant improvement in Gross Margin suggests progress in passing through price increases and improving product mix. Gross Profit was ¥123.9B (from ¥117.9B prior year, +¥6.0B, +5.1%), with Gross Margin at 16.2%, an improvement of +1.3pt from 14.9% prior year. Although demand softness exerted negative volume effects, price realization and inventory optimization reducing discount pressure are considered primary drivers of Gross Margin improvement.
[Profitability] SG&A was ¥87.2B (from ¥84.9B prior year, +¥2.2B, +2.6%), with an SG&A ratio of 11.4% (from 10.8% prior year, +0.6pt). The increase in SG&A amid lower sales is likely due to higher personnel costs, promotional expenses, and DX investments, partially offsetting operating leverage. Operating Income was ¥36.7B (from ¥32.9B prior year, +¥3.8B, +11.4%), with an Operating Margin of 4.8% (from 4.2% prior year, +0.6pt). Non-operating income included Dividend Income Received ¥1.3B (from ¥1.1B prior year, +¥0.2B) and Foreign Exchange Gains ¥0.9B (improved from Foreign Exchange Loss ¥0.02B prior year), bringing total non-operating income to ¥4.3B (from ¥3.1B prior year, +¥1.2B). Ordinary Income was ¥40.9B (from ¥36.0B prior year, +¥4.9B, +13.7%), with an Ordinary Income Margin of 5.4% (from 4.6% prior year, +0.8pt). Extraordinary items nearly offset (Extraordinary Gains ¥0.2B—gain on sale of investment securities ¥0.1B and gain on sale of fixed assets ¥0.1B; Extraordinary Losses ¥0.4B—impairment loss ¥0.1B and loss on retirement of fixed assets ¥0.2B), so Ordinary Income largely flowed through to Net Income. Pre-tax Income was ¥40.8B and the effective tax rate was 29.4%, typical. Net Income attributable to owners of the parent, after deducting Non-controlling Interests of ¥0.4B, was ¥28.8B (from ¥24.9B prior year, +¥3.9B, +15.7%), with a Net Profit Margin of 3.8% (from 3.2% prior year, +0.6pt). In conclusion, the company achieved earnings growth despite lower sales.
[Profitability] Operating Margin was 4.8% (from 4.2% prior year, +0.6pt), and Net Profit Margin was 3.8% (from 3.2% prior year, +0.6pt), indicating improved profitability. Gross Margin at 16.2% (from 14.9% prior year, +1.3pt) reflects price pass-through and product mix improvements, while SG&A Ratio at 11.4% (from 10.8% prior year, +0.6pt) deteriorated due to higher costs amid lower revenue. ROE was 7.5% (from 7.3% prior year, +0.2pt), driven mainly by improvement in Net Profit Margin, while Total Asset Turnover was 1.34x (from 1.45x prior year), declining. [Cash Quality] OCF of ¥84.0B is 2.9x Net Income of ¥28.8B, indicating very high cash quality, aided by large working capital release (Trade Receivable collection ¥52.0B, Inventory reduction ¥10.3B). OCF/EBITDA ratio was 2.05x, showing excellent cash conversion. Accrual Ratio was -9.7%, indicating cash-led earnings. [Investment Efficiency] Capital Expenditure was ¥6.7B, exceeding Depreciation & Amortization of ¥4.5B (Capex/D&A = 1.48x), indicating growth investment. FCF was ¥77.2B, ample and covering dividend payments multiple times. [Financial Soundness] Equity Ratio was 67.1% (from 63.4% prior year, +3.7pt), Current Ratio 258.0% (from 237.9% prior year, +20.1pt), Quick Ratio 233.8% (from 211.3% prior year, +22.5pt), demonstrating a very strong balance sheet. Cash and Deposits ¥147.8B represent 25.9% of Total Assets, interest-bearing debt is virtually zero, and Interest Coverage (Operating Income / Interest Paid) is 879.1x, extremely high. Investment Securities ¥54.1B (from ¥39.8B prior year, +35.8% increase) reflect accumulated valuation gains.
OCF was ¥84.0B (from ¥16.1B prior year, +421.9%), approximately 2.9x Net Income ¥28.8B. Operating cash flow subtotal (before working capital changes) was ¥94.0B including Depreciation ¥4.5B, Allowance for Doubtful Accounts expense ¥2.8B, and Increase in Provisions ¥4.5B. In working capital, Trade Receivables decreased by ¥52.0B (collections), Inventory decreased by ¥10.3B (optimization), and Trade Payables decreased by ¥18.2B (shortened payment terms), resulting in a net cash inflow of ¥44.1B. After corporate tax payments of ¥11.6B, OCF reached ¥84.0B. Investing Cash Flow was -¥6.8B, primarily Capex -¥6.7B: acquisition of tangible fixed assets -¥6.7B and intangible fixed assets -¥0.2B, offset by proceeds from sale of fixed assets ¥0.2B and proceeds from sale of investment securities ¥0.2B. FCF (OCF + Investing CF) was ¥77.2B, strongly positive. Financing Cash Flow was -¥9.4B, driven by dividend payments -¥9.4B (all attributable to owners of the parent -¥9.4B). Treasury stock acquisitions -¥0.01B and treasury stock disposals ¥0.3B were nearly neutral. Ending Cash and Deposits were ¥147.8B (from ¥79.1B beginning balance, +¥68.7B), with FX effects contributing +¥1.0B. The large working capital release aligns with normalization of inventory and receivables, suggesting structural improvement.
Operating Income ¥36.7B versus Ordinary Income ¥40.9B indicates net non-operating income increased by ¥4.3B (after deducting non-operating expenses ¥0.1B), so non-operating contribution to Ordinary Income was 11.6%. Breakdown of non-operating income: Dividend Income Received ¥1.3B, Foreign Exchange Gains ¥0.9B, and Other ¥0.5B. Dividend income is a stable revenue source from investment securities, while foreign exchange gains include a temporary effect from yen depreciation. Extraordinary items nearly offset (Extraordinary Gains ¥0.2B—gain on sale of investment securities ¥0.1B and gain on sale of fixed assets ¥0.1B; Extraordinary Losses ¥0.4B—impairment loss ¥0.1B and loss on retirement of fixed assets ¥0.2B), so Ordinary Income flowed directly to Net Income. Comprehensive Income was ¥44.6B, ¥15.8B higher than Net Income ¥28.8B, contributed by Net Unrealized Gains on Available-for-Sale Securities ¥9.6B, Remeasurements of Defined Benefit Plans ¥5.3B, and Foreign Currency Translation Adjustments ¥0.9B. Valuation gains on investment securities boosted Equity, consistent with an increase in Deferred Tax Liabilities of ¥15.7B (from ¥8.9B prior year, +¥6.8B). OCF at 2.9x Net Income and accrual ratio -9.7% confirm cash-led profit recognition driven by receivables and inventory collection. The majority of Ordinary Income was from Operating Income (89.7%), with non-operating elements (foreign exchange, dividends, etc.) accounting for 10.3%; foreign exchange volatility remains a risk.
Full Year (FY) guidance is Revenue ¥840.0B (YoY +10.0%), Operating Income ¥40.7B (YoY +10.9%), Ordinary Income ¥43.8B (YoY +7.1%), Net Income ¥30.6B (EPS forecast ¥239.97). Compared to current results, this implies Revenue +¥76.4B (+10.0%), Operating Income +¥4.0B (+10.9%), and Ordinary Income +¥2.9B (+7.1%). Progress rates are Revenue 90.9%, Operating Income 90.1%, Ordinary Income 93.4%, generally on track. Assumptions include sustained Gross Margin improvements and SG&A control; under these assumptions, achieving next fiscal year's targets appears feasible. Dividend forecast is ¥48 per share annually (Payout Ratio 20.0%), reduced from this year’s actual ¥90, likely calculated based on forecast EPS; actual dividends could remain at around ¥90 depending on results.
Annual dividend was ¥90 (interim ¥44, year-end ¥46; prior year ¥30, increase of +¥60), with a Payout Ratio of 31.4% (dividends only). Against Net Income ¥28.8B, total dividends were ¥9.4B (all attributable to owners of the parent ¥9.4B), and the Payout Ratio of 31.4% leaves room for further increases. Share buybacks were minimal at -¥0.01B on the cash flow statement, and Total Return Ratio is roughly equivalent to the Payout Ratio at 31.4%. FCF coverage is robust at 77.2B/9.4B = 8.2x, and together with Cash and Deposits ¥147.8B (25.9% of Total Assets), dividend sustainability is high. The full-year forecast dividend of ¥48 appears to be EPS-based; on an actual results basis, continued dividend increases are possible. Improved transparency of dividend policy and clear medium-to-long-term return guidelines would be welcome.
Demand volatility risk: Revenue declined YoY by -2.9%, affected by slowdown in FA and capital expenditure cycles. While Gross Margin improvement enabled operating profit growth, continued volume weakness could widen the revenue decline and erode operating leverage, pressuring margins. The full-year forecast assumes Revenue recovery of +10.0%; delayed demand recovery would be a downside risk.
Gross Margin fluctuation risk: Gross Margin at 16.2% (from 14.9% prior year, +1.3pt) was driven by price pass-through and product mix improvements, but intensified competition or rising procurement costs due to FX volatility (Foreign Exchange Gains ¥0.9B contributed) could compress margins. SG&A Ratio rose to 11.4% (from 10.8% prior year, +0.6pt), so maintaining or improving Gross Margin is key to preserving Operating Income.
Working capital reversal risk: OCF of ¥84.0B was driven by Trade Receivable collection ¥52.0B and Inventory reduction ¥10.3B; however, in a revenue recovery phase receivables and inventory may rise again, creating cash outflow pressure. With DSO (Days Sales Outstanding) at 82 days and relatively long credit terms, working capital increases accompanying sales growth could strain the balance sheet.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.8% | 3.4% (1.4%–5.0%) | +1.5pt |
| Net Profit Margin | 3.8% | 2.3% (1.0%–4.6%) | +1.5pt |
Both Operating Margin and Net Profit Margin exceed industry median by +1.5pt, placing the company in the upper range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -2.9% | 5.9% (0.4%–10.7%) | -8.8pt |
Revenue Growth Rate at -2.9% is -8.8pt below the industry median of +5.9%, indicating below-median growth.
※ Source: Company compilation
Profitability improvement during a sales decline: Gross Margin 16.2% (from 14.9% prior year, +1.3pt) and Operating Margin 4.8% (from 4.2% prior year, +0.6pt) reflect price pass-through and product mix improvements, exceeding the industry median by +1.5pt. Sustaining SG&A control and Gross Margin improvements is key to achieving the full-year guidance.
High-quality cash flow and robust balance sheet: OCF ¥84.0B (2.9x Net Income), FCF ¥77.2B, driven by receivable collection and inventory compression, Cash and Deposits ¥147.8B (25.9% of Total Assets), Current Ratio 258.0%, Equity Ratio 67.1%—all indicate very high financial soundness, supporting dividend capacity (FCF coverage 8.2x) and room for growth investment.
Scope to restore growth and improve operating efficiency: Revenue Growth Rate -2.9% lags industry median +5.9% by -8.8pt, but full-year guidance assumes +10.0% recovery. ROE 7.5% needs improvement relative to peers; focusing on sustaining Operating Margin over 5% and shortening DSO of 82 days are focal points to enhance medium-term capital efficiency. Investment Securities ¥54.1B (valuation gains) and Comprehensive Income ¥44.6B contribute positively; attention to progress on BSAOCI strategy is warranted.
This report was automatically generated by AI analyzing XBRL earnings release data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference data compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.
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