| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥532.8B | ¥516.2B | +3.2% |
| Operating Income / Operating Profit | ¥82.4B | ¥79.4B | +3.8% |
| Ordinary Income | ¥95.0B | ¥81.3B | +16.9% |
| Net Income / Net Profit | ¥35.0B | ¥21.7B | +61.4% |
| ROE | 10.3% | 7.0% | - |
For the fiscal year ended March 2026, results came in with Revenue ¥532.8B (YoY +¥16.6B +3.2%), Operating Income ¥82.4B (YoY +¥3.0B +3.8%), Ordinary Income ¥95.0B (YoY +¥13.7B +16.9%), and Net Income attributable to owners of parent ¥35.0B (YoY +¥13.3B +61.4%), reflecting revenue and profit growth. Operating margin remained high at 15.5% (up +0.1pt from 15.4% a year ago), Ordinary Income margin improved to 17.8% (up +2.1pt), and Net Income margin rose to 6.6% (up +2.4pt). In addition to steady growth at the operating level, non-operating income of ¥13.9B (chiefly foreign exchange gains ¥7.2B, dividends received ¥3.7B, and interest income ¥2.4B) and a large reduction in extraordinary losses (¥18.1B in the prior year → ¥2.2B this period) drove the gains at the ordinary and net income levels. By segment, the Development Business recorded Operating Income ¥56.9B (+7.3%), accounting for approximately 69% of consolidated operating profit; the Sales Business showed solid performance with Revenue ¥208.3B (+6.0%); and the Operations & Construction Business maintained a high margin of 29.0% while reporting a slight decline in profit.
[Revenue] Revenue ¥532.8B (+3.2%) is composed of Development Business ¥258.9B (+0.6%), Operations & Construction Business ¥71.3B (+2.4%), and Sales Business ¥208.3B (+6.0%). The Development Business achieved slight revenue growth while maintaining high profitability with an operating margin of 21.9%, supported by stable orders for large-scale mainframe system development and open-system system integration. The Sales Business was driven by growth in license sales and system equipment sales. The Operations & Construction Business saw only modest revenue growth but preserved the highest profitability among the three segments with an operating margin of 29.0%. Gross margin improved to 25.8% (up +0.3pt from 25.5%) due to intake of high value-added projects and effective cost control.
[Profitability] Operating Income ¥82.4B (+3.8%) comprises Development Business ¥56.9B (+7.3%), Operations & Construction Business ¥20.7B (-2.5%), and Sales Business ¥22.7B (+4.5%). SG&A expenses were ¥55.0B (SG&A ratio 10.3%), increasing ¥2.6B YoY but contained below the revenue growth rate, yielding modest operating leverage. Ordinary Income ¥95.0B (+16.9%) significantly outpaced the +3.8% operating-level growth, largely due to foreign exchange gains of ¥7.2B within non-operating income of ¥13.9B. Non-operating expenses were minor at ¥1.3B, and the increase at the ordinary level was primarily driven by expansions in forex, interest, and dividend income. Pre-tax income was ¥92.9B, from which income taxes and related expenses of ¥35.6B (effective tax rate 38.3%) and non-controlling interests of ¥1.3B were deducted, resulting in Net Income attributable to owners of parent ¥35.0B (+61.4%). The reduction in extraordinary losses from ¥18.1B in the prior year (mainly valuation losses on investment securities) to ¥2.2B this period contributed materially to the large increase in net income. In conclusion, revenue and profit growth, combined with increased non-operating income and reduced extraordinary losses, produced strong gains at the ordinary and net income levels.
The Development Business is the core segment with Revenue ¥258.9B (+0.6%), Operating Income ¥56.9B (+7.3%), and a margin of 21.9%, accounting for roughly 69% of consolidated operating income. Stable orders for large-scale mainframe systems and open-system system integration, along with improved profitability, contributed to the margin expansion. The Operations & Construction Business recorded Revenue ¥71.3B (+2.4%), Operating Income ¥20.7B (-2.5%), and a margin of 29.0%, maintaining the highest margin among the three segments but showing a slight YoY decrease in profit, possibly due to cost increases. The Sales Business achieved Revenue ¥208.3B (+6.0%), Operating Income ¥22.7B (+4.5%), and a margin of 10.9%; growth was supported by license/package software sales and system equipment sales volume increases, but the Sales Business has the lowest margin among segments, and mix shifts can materially affect consolidated margins. Corporate-level expenses (unallocated G&A and R&D) totaled ¥17.9B, reconciling segment profit sum ¥100.3B to reported Operating Income ¥82.4B.
[Profitability] Operating margin 15.5% (prior 15.4%) is +7.4pt above the industry median 8.1%, supported by high value-added projects in Development and high margins in Operations & Construction. Net margin 6.6% (prior 4.2%) exceeds the industry median 5.8% by +0.7pt, improved by reduced extraordinary losses and expanded non-operating income. ROE 10.3% was achieved under a conservative capital structure with an Equity Ratio of 65.5%, indicating good capital efficiency. [Cash Quality] Operating Cash Flow (OCF)/Net Income ratio is 1.34x (OCF ¥47.0B / Net Income ¥35.0B); the OCF subtotal was ¥76.0B, with inventory decrease +¥26.4B and accounts payable decrease -¥33.7B offsetting each other, and income taxes paid ¥35.0B representing cash outflow. The accrual ratio ((OCF ¥47.0B - Net Income ¥35.0B) / Total Assets ¥519.2B) = 2.3% is low, indicating generally good cash realization of profits. [Investment Efficiency] CapEx 7000万円 / Depreciation ¥2.1B = 0.33x indicates continued investment restraint, with the need to increase medium-to-long-term growth investments. Total asset turnover was 1.03x (Revenue ¥532.8B / Total Assets ¥519.2B), at an appropriate level. [Financial Soundness] Equity Ratio 65.5% (up +5.1pt from 60.4% prior), Current Ratio 256% (Current Assets ¥359.7B / Current Liabilities ¥140.4B), and Quick Ratio 246% ensure very high safety. Interest-bearing debt is limited to short-term borrowings ¥0.7B, yielding Debt/EBITDA ratio 0.01x and effectively near net cash. Cash and deposits ¥209.4B far exceed current liabilities, limiting maturity mismatch risk.
OCF was ¥47.0B (prior ¥57.8B, -18.7%). Of the OCF subtotal ¥76.0B, inventory decrease +¥26.4B contributed positively; increases in trade receivables -¥5.2B and decreases in trade payables -¥33.7B detracted; and income taxes paid -¥35.0B were a cash outflow. Inventory fell significantly from ¥41.2B in the prior year to ¥14.9B this period, reflecting inventory normalization, while accounts payable decreased from ¥77.3B to ¥43.6B, and normalization of payment terms temporarily suppressed OCF. Interest and dividends received ¥6.0B (prior ¥4.8B) supplemented operating receipts. Investing Cash Flow was -¥18.2B, driven by capital expenditures ¥0.7B, intangible asset acquisitions ¥2.1B, and investment securities acquisitions ¥1.5B, partially offset by recovery of loans ¥1.2B and sales of investment securities ¥0.5B. Financing Cash Flow was -¥24.4B, mainly due to dividend payments ¥24.0B, partially offset by disposal of treasury stock ¥1.0B and increase in non-controlling interests from acquisition of subsidiary shares ¥5.1B. Free Cash Flow (FCF) was ¥28.8B (OCF ¥47.0B + Investing CF -¥18.2B), exceeding dividend payments ¥24.0B and enabling shareholder returns to be funded from internal resources. Cash and deposits at period-end were ¥209.4B (opening ¥198.2B, +¥11.2B), and cash and cash equivalents were ¥202.2B (opening ¥197.4B, +¥4.9B), maintaining ample liquidity.
The increase in Net Income to ¥35.0B was driven by steady operating-level growth (+¥3.0B), expansion in non-operating income ¥13.9B (including foreign exchange gains ¥7.2B, dividends received ¥3.7B, and interest income ¥2.4B), and a large reduction in extraordinary losses (¥18.1B prior → ¥2.2B current). Non-operating income ¥13.9B equals 2.6% of revenue, below the 5% threshold, but the foreign exchange gains ¥7.2B depend on external factors and carry reversal risk. Non-operating expenses were minor at ¥1.3B, reflecting negligible interest expense ¥0.01B and minimal interest-bearing debt. Extraordinary items comprised extraordinary gains ¥0.1B (gain on sale of investment securities) and extraordinary losses ¥2.2B (valuation losses on investment securities ¥2.1B), markedly reduced from prior-year valuation losses ¥18.1B, contributing to net income improvement. Comprehensive income ¥53.3B exceeded Net Income ¥35.0B, affected by foreign currency translation adjustments -¥5.8B, valuation difference on available-for-sale securities +¥1.8B, and retirement benefit adjustments -¥0.1B. OCF ¥47.0B / Net Income ¥35.0B = 1.34x indicates generally good cash conversion, and the accrual ratio 2.3% is low, supporting high accounting quality of profits. However, part of the large gains at the ordinary and net income levels depends on foreign exchange gains and reduced extraordinary losses, so sustainability should be monitored.
Full-year guidance is Revenue ¥555.0B (performance progress 96.0%), Operating Income ¥86.0B (95.9%), Ordinary Income ¥90.0B (105.6%), and Net Income attributable to owners of parent ¥55.0B (63.6% progress, noting actual ¥35.0B). Except for Net Income underperformance, Revenue and Operating Income are roughly on plan, while Ordinary Income outperformed by +5.6%. The Ordinary Income upside is presumed driven by expansion in non-operating income including foreign exchange gains ¥7.2B. Net Income fell short of guidance; this may reflect divergence between assumptions used in the forecast (EPS 435.34 yen → Net Income approx. ¥55B) and actuals (EPS 443.34 yen → Net Income ¥35.0B after non-controlling interests), possibly due to differences in assumed tax rates and non-controlling interests. Dividend guidance was an annual ¥100 but actual distributions were ¥200 (interim ¥90 + year-end ¥110), representing a significant increase in shareholder returns.
Annual dividend was ¥200 (interim ¥90 + year-end ¥110), a substantial increase of +¥120 YoY. Payout Ratio is 54.4% (dividend ¥200 / EPS 367.48 yen; using EPS 443.34 yen the ratio is 45.1%) and remains within sustainable range. Against Net Income ¥35.0B, total dividends amounted to ¥24.0B, yielding a payout ratio of 68.6%, but OCF ¥47.0B exceeds this and FCF ¥28.8B nearly covers it. The doubling of actual dividends versus the forecasted ¥100 is presumed to reflect improved profitability this period and abundant liquidity (cash ¥209.4B) leading to strengthened shareholder returns. There were no share buybacks; shareholder returns consisted solely of dividends. DOE 7.6% (total dividends / equity) sits within the ROE 10.3% range, indicating consistency with capital efficiency. Going forward, maintaining dividend sustainability while balancing stabilization of OCF/Net Income ratio and growth investments will be a key issue.
Foreign Exchange Risk: This period foreign exchange gains ¥7.2B (7.6% of Ordinary Income) significantly contributed to ordinary-level income growth, but a reversal in FX markets could worsen non-operating results. Foreign exchange gains account for roughly 52% of non-operating income ¥13.9B, indicating vulnerability due to reliance on external factors.
Segment Mix Risk: The Sales Business represents 39.1% of revenue but has an operating margin of 10.9%, materially below Development 21.9% and Operations & Construction 29.0%. Expansion of the lower-margin Sales Business could compress consolidated margins, so sustaining growth in high-margin segments is important.
Working Capital Volatility Risk: This period inventory decrease +¥26.4B and trade payables decrease -¥33.7B offset each other, and working capital swings affected OCF. If order conditions or payment terms change and DSO 64 days (receivables ¥93.2B / daily sales ¥1.46B) lengthens further, cash generation could decline.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 15.5% | 8.1% (3.6%–16.0%) | +7.4pt |
| Net Margin | 6.6% | 5.8% (1.2%–11.6%) | +0.7pt |
Both operating and net margins exceed the industry median, placing the company among the top in the industry for profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.2% | 10.1% (1.7%–20.2%) | -6.9pt |
Revenue growth lags the industry median, and the pace of top-line expansion is below peer average.
※ Source: Company compilation
Profitability advantage vs. need for growth investment: While operating margin 15.5% and ROE 10.3% place the company among industry leaders in profitability and capital efficiency, revenue growth +3.2% underperforms the industry median 10.1%, indicating a modest top-line expansion pace. CapEx/Depreciation 0.33x suggests continued investment restraint, and increasing medium-to-long-term growth investment is a discussion point for maintaining competitiveness.
Dependence on non-operating income and sustainability: The large gains at the ordinary and net income levels this period relied heavily on foreign exchange gains ¥7.2B and a substantial reduction in extraordinary losses (¥18.1B → ¥2.2B). Non-operating income derived from FX and interest-rate factors is inherently less sustainable, making autonomous growth at the operating level important in future periods.
Financial safety and room for shareholder returns: With Equity Ratio 65.5%, Current Ratio 256%, and cash ¥209.4B, financial safety is very high and the company is effectively net cash. Annual dividend ¥200 (payout ratio 54.4%) can be largely covered by FCF ¥28.8B, and ample liquidity supports continued stable dividends. Improving working capital management (DSO 64 days) to further raise the OCF/Net Income ratio would strengthen dividend sustainability.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It is not 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; please consult a professional if necessary.