| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥4162.0B | ¥3694.4B | +12.7% |
| Operating Income | ¥620.3B | ¥476.2B | +30.3% |
| Ordinary Income | ¥608.2B | ¥478.9B | +27.0% |
| Net Income | ¥722.9B | ¥452.1B | +59.9% |
| ROE | 13.0% | 9.1% | - |
For the fiscal year ended March 2026, Revenue was ¥4,162.0B (YoY +¥468B, +12.7%), Operating Income was ¥620.3B (YoY +¥144B, +30.3%), Ordinary Income was ¥608.2B (YoY +¥129B, +27.0%), and Net Income was ¥722.9B (YoY +¥271B, +59.9%). Operating margin improved to 14.9% from 12.9% a year earlier (+2.0pt), and net margin expanded to 17.4% (prior year 12.2%, +5.2pt). Gross margin rose to 31.6% (prior year 30.7%, +0.9pt) while SG&A ratio declined to 16.7% (prior year 17.8%, -1.1pt), reflecting overall profitability enhancement. The revenue and profit growth was driven primarily by the Electronics segment, with Revenue of ¥2,434.0B (+23.4%) and Operating Income of ¥452.0B (+68.5%), delivering both high growth and higher profitability. The large increase in Net Income was supported not only by operating improvements but also by special gains, notably investment securities sale gains of ¥494.0B, contributing to total special income of ¥593.0B (special losses were impairments of ¥164.0B etc. totaling ¥290.0B, net +¥303.0B). While improvement at the ordinary profit level is evident, approximately 42% of the increase in final profit relies on one-time factors.
[Revenue] Revenue was ¥4,162.0B (YoY +12.7%), led by external sales in Electronics of ¥2,433.0B (+23.4%) which drove company-wide growth. The Electronics segment accounted for 58.5% of revenue mix, supported by expanding demand for package substrates and foreign exchange effects. Ceramics saw external sales of ¥826.0B (-1.2%) (slight decline), and Others were ¥1,052.0B (-4.5%). Including inter-segment transactions, Ceramics totaled ¥831.0B and Others ¥1,052.0B; overall revenue trend was upward but concentration toward Electronics increased. Gross margin improved by 0.9pt to 31.6%, aided by lower cost of sales (efficiencies in raw materials and manufacturing costs). SG&A increased to ¥696.0B (prior year ¥657.0B, +6.0%) but SG&A ratio fell to 16.7% (prior year 17.8%, -1.1pt) due to revenue growth, resulting in operating leverage.
[Profitability] Operating Income was ¥620.3B (+30.3%), with operating margin improving to 14.9% (prior year 12.9%, +2.0pt). A significant improvement in Electronics operating margin to 18.6% (prior year 13.6%, +5.0pt) lifted overall profitability, while Ceramics deteriorated sharply to 9.2% (prior year 14.5%, -5.3pt), highlighting a polarization between segments. Non-operating income included interest income of ¥27.0B, dividend income of ¥10.0B, and FX gains of ¥3.0B, totaling non-operating income of ¥48.0B; non-operating expenses were ¥60.0B (interest expense ¥14.0B, FX losses ¥13.0B, etc.), resulting in net non-operating loss of ¥-12.0B (prior year -¥3.0B). Ordinary Income was ¥608.2B (+27.0%) with an ordinary margin of 14.6% (prior year 13.0%, +1.6pt), reflecting operating-level improvements. Special income totaled ¥593.0B (investment securities sale gains ¥494.0B, gains on sale of fixed assets ¥4.0B, subsidies ¥91.0B, etc.), while special losses were ¥290.0B (impairment losses ¥164.0B — Electronics ¥139.0B, Ceramics ¥20.0B, Others ¥5.0B — and loss on retirement of fixed assets ¥16.0B, etc.), yielding net special income of +¥303.0B. Pre-tax income was ¥911.2B (YoY +77.1%), tax rate 29.6% (prior year 33.8%), and Net Income was ¥722.9B (+59.9%), net margin 17.4% (prior year 12.2%, +5.2pt). Net income attributable to parent (after deducting non-controlling interests of ¥4.0B) was ¥637.0B (+89.0%), reflecting both operating improvement and significant contribution from special items. In conclusion, the company achieved revenue and profit growth with improved profitability, but the lift in Net Income depends substantially on one-off items.
Electronics delivered Revenue of ¥2,434.0B (+23.4%), Operating Income of ¥452.0B (+68.5%), and operating margin of 18.6% (prior year 13.6%, +5.0pt), achieving high growth and higher profitability driven by expanded demand and price improvements for package substrates. The segment accounted for 73.0% of consolidated Operating Income and is the core earnings driver. However, an impairment loss of ¥139.0B was recorded (including ¥106.0B at a Philippine subsidiary and ¥32.0B for idle assets), reflecting conservative outlooks due to intensified competition in PC products. Ceramics posted Revenue of ¥832.0B (-1.2%), Operating Income of ¥76.0B (-37.4%), and operating margin of 9.2% (prior year 14.5%, -5.3pt), with demand weakness for environmental ceramic products and rising costs squeezing profitability; an impairment loss of ¥20.0B (idle assets) was also recorded. Others recorded Revenue of ¥1,052.0B (-4.5%), Operating Income of ¥90.0B (+3.0%), and operating margin of 8.5% (prior year 7.9%, +0.6pt), securing slight profit increases through cost control despite revenue declines; an impairment loss of ¥5.0B (idle assets) was booked. Consolidated Operating Income after adjustments was ¥620.3B; intersegment elimination of ¥3.0B and corporate expenses of -¥1.0B (net +¥2.0B) had minimal impact. Profit concentration in Electronics has increased, while Ceramics' declining profitability poses a portfolio challenge.
[Profitability] Operating margin 14.9% (prior year 12.9%, +2.0pt), Ordinary margin 14.6% (prior year 13.0%, +1.6pt), Net margin 17.4% (prior year 12.2%, +5.2pt) all improved. Improvement in gross margin to 31.6% (prior year 30.7%, +0.9pt) and decline in SG&A ratio to 16.7% (prior year 17.8%, -1.1pt) produced operating leverage. ROE was 13.0% (prior year 9.1%, +3.9pt), indicating notable improvement in return on equity. Dupont decomposition shows that expansion of net margin (12.2% → 17.4%) was the primary driver, complemented by improvement in total asset turnover to 0.43x (prior year 0.34x) and reduction in financial leverage to 1.72x (prior year 2.17x). ROA improved substantially to 7.5% (prior year 4.2%, +3.3pt). EBITDA was ¥686.0B (prior year ¥542.0B, +26.6%), with an EBITDA margin of 16.5% (prior year 14.7%, +1.8pt).
[Cash Quality] Operating Cash Flow / Net Income was 1.47x (prior year 2.63x) and declined, but considering the contribution of special gains to Net Income, cash quality remains solid. OCF/EBITDA was 1.55x (prior year 2.19x), weakened by working capital movements (accounts receivable increase -¥101.0B, deferred revenue decrease -¥111.0B) which dampened cash efficiency. Working capital turnover days: DSO 70 days (prior year 65 days, +5 days), DIO 17 days (prior year 23 days, -6 days), DPO 35 days (prior year 28 days, +7 days); deterioration in receivables turnover is notable. CCC improved to 52 days (prior year 60 days, -8 days) but receivables management remains an issue.
[Investment Efficiency] Total asset turnover improved to 0.43x (prior year 0.34x), fixed asset turnover to 0.95x (prior year 0.80x). Tangible fixed asset turnover improved to 1.00x (prior year 0.84x), indicating asset efficiency gains. Construction-in-progress stands at ¥1,118.0B (25.5% of tangible fixed assets), representing large ongoing investments; attention is needed on how commissioning will affect turnover.
[Financial Soundness] Equity ratio improved significantly to 58.0% (prior year 45.3%, +12.7pt), strengthening financial stability. Current ratio 210% (prior year 168%, +42pt), quick ratio 201% (prior year 161%, +40pt) indicate strong short-term liquidity. Debt/Equity was 0.19x (prior year 0.36x) and interest-bearing debt/EBITDA was 1.68x (prior year 3.06x), reflecting a substantial reduction in leverage. Interest coverage was 45.7x (prior year 41.2x). Cash and equivalents of ¥2,957.0B represent 30.8% of total assets and 2.6x of interest-bearing debt of ¥1,150.0B, indicating very ample financial capacity.
Operating Cash Flow was ¥1,064.0B (prior year ¥1,189.0B, -10.5%), maintaining a solid level against pre-tax income of ¥911.2B, but pressured by deterioration in working capital. Operating CF subtotal (before working capital changes) was ¥1,194.0B, exceeding pre-tax income; adding back depreciation of ¥662.0B and adjusting special items (adding impairment ¥164.0B, subtracting investment securities sale gains -¥494.0B, etc.) indicate strong underlying cash generation. Working capital changes: accounts receivable increase -¥101.0B (prior year -¥23.0B), inventory increase -¥11.0B (prior year -¥25.0B), accounts payable increase ¥41.0B (prior year ¥49.0B), deferred revenue decrease -¥111.0B (prior year +¥120.0B), where receivables deterioration and decrease in deferred revenue pressured CF. Corporate tax payments -¥236.0B (prior year -¥100.0B) also increased outflows. Investing CF improved significantly to -¥524.0B (prior year -¥1,642.0B), due to reduced capital expenditure of -¥1,061.0B (prior year -¥1,975.0B) and proceeds from sale of investment securities ¥575.0B (prior year ¥346.0B) supporting asset recycling. Intangible asset acquisition was minor at -¥11.0B (prior year -¥10.0B). Free Cash Flow turned positive to ¥540.0B (prior year -¥452.0B), driven by spending restraint and asset disposals. Financing CF was -¥1,575.0B (prior year -¥71.0B), reflecting large net outflows: long-term debt repayments -¥900.0B (prior year -¥350.0B), net short-term debt reduction -¥200.0B (prior year no net change), bond redemptions -¥400.0B (prior year -¥350.0B) to reduce interest-bearing debt. Refinancing included bond issuance ¥350.0B and long-term borrowings ¥350.0B. Dividend payments were -¥70.0B (prior year -¥56.0B) and share repurchases -¥0.1B (prior year -¥6.0B) were limited. Cash and equivalents decreased by -¥977.0B to ¥2,929.0B (prior year ¥3,907.0B), with FX impact of +¥58.0B (prior year -¥5.0B) mitigating declines. The year-on-year decline in Operating CF was attributable to working capital deterioration and higher tax payments despite higher Net Income; receivables management and recovery of deferred revenue are key for the next fiscal year.
There is a divergence of +¥115.0B between Ordinary Income of ¥608.2B and Net Income of ¥722.9B, primarily due to net special items of +¥303.0B (pre-tax) that boosted final profit. The primary sources of special income of ¥593.0B were investment securities sale gains of ¥494.0B (a one-time item in the period) and subsidies of ¥91.0B (related to capital investment with some recurring aspect). Most of the special losses of ¥290.0B were impairment losses of ¥164.0B, reflecting conservative write-downs tied to competitive deterioration in Electronics including ¥106.0B at the Philippine subsidiary and signaling a conservative outlook for future earnings. Non-operating income of ¥48.0B (interest income ¥27.0B, dividend income ¥10.0B, etc.) was stable, while non-operating expenses of ¥60.0B (interest expense ¥14.0B, FX losses ¥13.0B, etc.) reduced operating income by -¥12.0B. Comprehensive income was ¥671.0B, ¥52.0B below Net Income of ¥722.9B, affected by other comprehensive income of -¥29.0B (foreign currency translation +¥160.0B, valuation difference on securities -¥130.0B, deferred hedges -¥2.0B). The foreign currency translation gain of +¥160.0B is an unrealized, non-cash item from weaker yen valuation of overseas assets; valuation differences on securities of -¥130.0B reflect equity price declines and are not recognized in profit or loss. Improvements at the ordinary level are likely sustainable — Operating Income ¥620.3B and Ordinary Income ¥608.2B indicate stronger underlying earnings power — but note that approximately 42% of Net Income (¥303.0B/¥722.9B) depends on one-off items. The impairment charges reflect conservative accounting and may suggest room for future profitability improvement, but additional impairment risk remains depending on competitive dynamics.
For FY ending March 2027, management guidance is Revenue ¥5,000.0B (YoY +20.1%), Operating Income ¥900.0B (YoY +45.1%), Ordinary Income ¥900.0B (YoY +48.0%), Net Income ¥580.0B (YoY -19.7%), EPS ¥207.70 (prior ¥228.16, -9.0%). On a full-year basis, the first-half actuals represent high progress: Revenue ¥4,162.0B (83.2% of full-year forecast), Operating Income ¥620.3B (68.9% of full-year forecast). The company anticipates an uplift in the second half of Revenue ¥838.0B (+20.1%) and Operating Income ¥280.0B (+51.6%). The substantial projected increase at operating and ordinary levels factors in increased Electronics utilization and benefits from new equipment ramp-up, whereas the Net Income guidance of ¥580.0B is ¥143.0B below the prior year ¥723.0B, reflecting expected absence of this period’s special gains (i.e., the ¥494.0B investment securities sale gains). Operating margin is forecast to improve to 18.0% (prior year 14.9%, +3.1pt), but recovery scenarios for Ceramics and Others are not specified, implying continued concentration in Electronics. Dividend guidance is year-end ¥15 (interim ¥30, total annual equivalent ¥45), an increase from the prior year annual ¥20 (post-split equivalent ¥10). Based on progress, the forecast is conservative reflecting strong first-half results; second-half recovery of deferred revenue, inventory adjustments, FX movements, and ramp-up yields of new equipment are key to achieving guidance.
Dividends are interim ¥30 and forecast year-end ¥15 (up from prior year year-end ¥10), totaling an annual equivalent of ¥45 (on a pre-split basis). Dividend payouts against Net Income of ¥722.9B amount to approximately ¥70.0B (based on interim results), implying a payout ratio around 9.7%, which is low. On a parent attributable net income basis of ¥637.0B, the payout ratio is 11.0%, indicating a conservative return policy. With Free Cash Flow of ¥540.0B, dividend coverage is 7.7x, suggesting low downside risk to dividends. Share buybacks were minimal at ¥0.1B, so total return ratio is effectively similar to the dividend payout ratio. Management prioritizes reducing interest-bearing debt of ¥1,150.0B while maintaining abundant cash of ¥2,957.0B. With Debt/EBITDA at 1.68x and equity ratio at 58.0%, financial flexibility is ample, suggesting potential for raising payout ratio over the medium term. However, considering construction-in-progress of ¥1,118.0B, increased depreciation and working capital demand upon commissioning, the company is likely to prioritize investment in the near term. A stock split (1:2 effective January 1, 2026) aims to improve liquidity and broaden the retail shareholder base. Dividend policy emphasizes stable dividends with flexibility to respond to earnings volatility.
Concentration risk in Electronics: With a revenue mix of 58.5% and Operating Income contribution of 73.0%, dependence on Electronics is high; fluctuations in demand for package substrates can materially affect consolidated results. Competitive pressure in PC product markets led to impairment of ¥106.0B at a Philippine subsidiary, evidencing price declines and mix deterioration. Semiconductor demand cycles, customer capex trends, and development of alternative technologies are sources of earnings volatility.
Large investment ramp-up risk: Construction-in-progress ¥1,118.0B (25.5% of tangible fixed assets) indicates ongoing large-scale capital expenditures with a capex/depreciation ratio of 1.60x in growth-investment mode. Delays in yield improvements or utilization rates of new equipment, or downside demand shocks, could delay fixed-cost absorption and increase impairment risk. Depreciation expense rose to ¥662.0B (prior year ¥542.0B, +22.1%) and may continue to pressure profits.
Working capital management and liquidity risk: Receivables days 70 (prior year 65, +5 days) and deferred revenue decrease -¥111.0B indicate worsening working capital efficiency, with Operating CF declining -10.5% YoY. Growth-driven working capital needs, changes in trade terms, and customer payment delays could lengthen the cash conversion cycle and increase reliance on external funding. Although short-term debt ratio is 45.5%, cash ¥2,957.0B / short-term liabilities ¥2,216.0B = 1.33x, indicating strong near-term liquidity and limited immediate refinancing risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.9% | 7.8% (4.6%–12.3%) | +7.2pt |
| Net Margin | 17.4% | 5.2% (2.3%–8.2%) | +12.2pt |
Profitability materially exceeds industry medians, driven by high-margin Electronics.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 12.7% | 3.7% (-0.4%–9.3%) | +9.0pt |
Revenue growth outperforms the industry median by +9.0pt.
※Source: Company compilation
Sustainable improvement at the ordinary profit level: Operating margin 14.9% (+2.0pt) and Ordinary margin 14.6% (+1.6pt) indicate strengthened core earnings power, led by Electronics’ higher profitability (Operating margin 18.6%, +5.0pt). Decline in SG&A ratio (-1.1pt) and improvement in gross margin (+0.9pt) generated operating leverage and support continued margin expansion alongside revenue growth. However, Net Income of ¥722.9B relies on special gains (investment securities sale, etc.) for about 42% of the increase, so Net Income is expected to decline next year to ¥580.0B (-19.7%) as one-off gains abate.
Balance of financial soundness and investment capacity: Equity ratio 58.0% (+12.7pt), Debt/EBITDA 1.68x (improved from 3.06x), and cash ¥2,957.0B (30.8% of assets) reflect a very strong financial position. The company reduced interest-bearing debt by ¥900.0B while simultaneously executing large-scale investments (construction-in-progress ¥1,118.0B), demonstrating balance between growth investment and financial strength. With a payout ratio of 9.7% and free cash flow of ¥540.0B (FCF coverage 7.7x), there is room to maintain or increase dividends. Over the medium term, raising payout ratios and realizing returns from investments are key to enhanced shareholder returns.
Segment polarization and working capital management are issues: The profitability gap between Electronics (Operating margin 18.6%) and Ceramics (9.2%, -5.3pt) has widened; Ceramics recovery is necessary to stabilize consolidated performance. Impairments (¥164.0B, of which ¥139.0B related to Electronics) reflect competitive pressures, and PC product mix deterioration risk remains. Working capital deterioration (DSO 70 days, +5 days; deferred revenue decrease -¥111.0B) has reduced cash quality (Operating CF / Net Income 1.47x vs prior 2.63x). Next fiscal year, improvement in receivables management and successful commissioning of new equipment (conversion of construction-in-progress to assets and increased depreciation burden) will be key to cash flow.
This report was auto-generated by AI analyzing XBRL statutory filing data. It is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public filings. Investment decisions are your responsibility; consult a professional if necessary.