| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1313.8B | ¥1281.4B | +2.5% |
| Operating Income / Operating Profit | ¥114.1B | ¥104.9B | +8.8% |
| Ordinary Income | ¥117.9B | ¥105.9B | +11.3% |
| Net Income / Net Profit | ¥70.4B | ¥69.3B | +1.7% |
| ROE | 9.0% | 9.1% | - |
For the fiscal year ending March 2026, revenue was 1,313.8B (YoY +32.4B +2.5%), operating income 114.1B (YoY +9.2B +8.8%), ordinary income 117.9B (YoY +12.0B +11.3%), and net income attributable to owners of the parent 75.7B (YoY +2.0B +2.7%), achieving both revenue and profit growth. Operating margin improved to 8.7% from 8.2% a year earlier (+0.5pt), and gross margin rose to 19.5% from 19.0% (+0.5pt), indicating ongoing profitability enhancement. By segment, Electronics led with operating income up +87.7%, and Daily Life & Healthcare also posted solid growth of +11.9%. Conversely, the core Transportation segment saw revenue +4.2% but operating income -8.5%, revealing a profitability gap among segments. Operating Cash Flow was 134.0B (YoY +16.0%), FCF was 112.5B, maintaining ample cash generation; while executing dividends and ¥45.7B of share buybacks, year-end cash increased to 265.3B.
Revenue: Revenue increased to 1,313.8B (YoY +2.5%). By segment, Transportation 428.4B (share 32.6%, +4.2%), Daily Life & Healthcare 364.7B (27.8%, -0.9%), Building & Construction 263.3B (20.0%, +3.5%), Electronics 256.9B (19.6%, +4.1%), with core Transportation and Electronics driving the increase. By region, Japan 651.4B (49.6%), US 171.5B (13.0%), Thailand 169.7B (12.9%); domestic accounts for half, while overseas sales ratio is 50.4%, making the business sensitive to FX. Main drivers of revenue growth were volume increases toward automotive and ICT markets and FX effects (recorded ¥3.3B forex gains in non-operating income).
Profitability: Cost of goods sold ratio improved to 80.5% (prior year 81.0%), lifting gross margin to 19.5%. SG&A was 142.0B (10.8% of sales), constrained from 13.8% a year earlier, producing operating income of 114.1B (operating margin 8.7%), up +8.8% YoY. Segment profit margins: Daily Life & Healthcare 10.8%, Transportation 10.4% (high), Electronics 7.1%, Building & Construction 4.0% (low). Electronics delivered operating income 18.4B (prior 9.8B) — +87.7% — contributing materially to consolidated profit, while Transportation operating income declined to 44.6B (prior 48.7B) -8.5%. Non-operating income included interest income 1.1B, dividend income 1.9B, forex gains 3.3B, totaling 8.2B and lifting ordinary income to 117.9B (YoY +11.3%). Extraordinary income was 12.5B (gain on sale of investment securities 7.8B, gain on sale of fixed assets 4.7B), extraordinary losses 5.4B (impairment/asset retirement loss 0.9B etc.), netting a positive 7.1B. After income taxes 31.7B (effective tax rate 25.3%) and non-controlling interests 17.6B, net income attributable to owners of the parent was 75.7B (YoY +2.7%). In conclusion, strong Electronics performance and gross margin improvement drove revenue and profit growth.
Transportation: Revenue 428.4B (+4.2%), operating income 44.6B (-8.5%), margin 10.4%. Revenue was solid but profitability declined due to worse product mix and higher input costs. As the largest contributor (39.1% of consolidated operating income), improving profitability is a key challenge.
Daily Life & Healthcare: Revenue 364.7B (-0.9%), operating income 39.4B (+11.9%), margin 10.8%. Slight revenue decline but higher profits from price revisions and cost reductions; highest margin among segments and stable profitability.
Electronics: Revenue 256.9B (+4.1%), operating income 18.4B (+87.7%), margin 7.1%. Operating income nearly doubled YoY, driven by demand recovery in energy and IT equipment markets and improved margins; largest contributor to consolidated profit growth.
Building & Construction: Revenue 263.3B (+3.5%), operating income 10.4B (+2.9%), margin 4.0%. Modest revenue and profit growth but lowest margin among segments; increased competition in construction materials is a headwind. Segment assets: Transportation 104.7B, Daily Life & Healthcare 128.8B, Electronics 90.5B, Building & Construction 70.4B; asset efficiency (profit/assets) is higher in Daily Life & Healthcare and Electronics.
Profitability: Operating margin 8.7% improved 0.5pt from 8.2%; gross margin 19.5% (prior 19.0%) aided by lower COGS ratio. ROE 9.0% fell from 11.4% a year earlier, reflecting a timing lag between increased equity (757.8B → 784.4B) and only a small rise in net income (+1.7%). ROA (based on ordinary income) improved to 9.9% (prior 9.1%).
Cash quality: Operating Cash Flow (OCF) 134.0B is 1.77x net income 75.7B, high level. OCF/EBITDA 0.85x is slightly below the 0.9x benchmark, mainly due to a temporary working capital outflow from accounts payable reduction of 26.2B; qualitative concerns are limited. Accrual ratio -4.9% indicates a cash-led earnings profile.
Investment efficiency: Total asset turnover 1.10x (prior 1.10x) unchanged. Capex 48.4B exceeded depreciation 42.7B, showing a balance between renewal and growth investments.
Financial soundness: Equity ratio 65.9% (prior 65.1%), current ratio 228.6%, quick ratio 198.0%—robust. D/E ratio 0.14x, Debt/EBITDA 0.69x, interest coverage 30.9x, indicating ample financial capacity. Cash and deposits 265.5B cover short-term interest-bearing debt 75.9B by 3.5x.
Operating Cash Flow was a solid 134.0B (YoY +16.0%). Starting from pre-tax profit 125.0B, non-cash depreciation 42.7B was added back. Working capital movements included inventory decrease 15.2B and trade receivables decrease 7.1B as positive contributions, while accounts payable decrease 26.2B was a negative factor, leading to a slight overall working capital cash outflow. After income taxes paid 25.7B, the subtotal of operating cash flow was 160.4B, resulting in final OCF of 134.0B. Investing Cash Flow was -21.5B: capex -48.4B offset by proceeds from sale of tangible fixed assets 19.0B and proceeds from sale of investment securities 9.1B. FCF was 112.5B (OCF 134.0B - investing CF 21.5B), ample, covering total shareholder returns of 67.3B (dividends 23.9B + share buybacks 45.7B) by 1.67x. Financing Cash Flow was -92.9B, driven by net decrease in short-term borrowings 15.0B, repayment of long-term debt 6.0B, and share buybacks and dividend payouts. Year-end cash was 265.3B, up 20.8B YoY, confirming sufficient liquidity.
Ordinary income 117.9B mainly comprised operating income 114.1B; non-operating income 8.2B (dividend income 1.9B, forex gains 3.3B, etc.) is 0.6% of sales, indicating low dependency and good recurring earnings quality. Extraordinary gains 12.5B (gain on sale of investment securities 7.8B, gain on sale of fixed assets 4.7B) represent 16.5% of net income 75.7B and contributed materially, but operating profit increase (+9.2B) was the main driver, so reliance on one-off gains is limited. Extraordinary losses 5.4B were within a normal range. Effective tax rate 25.3% is appropriate; deferred tax assets 7.2B and deferred tax liabilities 26.9B show conservative tax accounting. Comprehensive income 115.6B significantly exceeded net income 70.4B, with other comprehensive income (translation adjustments 3.6B, valuation difference on securities 15.6B, retirement benefit adjustments 3.2B) contributing +22.4B. Expansion of valuation difference on securities reflects fair value gains on investment securities 83.5B (prior 61.9B), increasing unrealized gains and enhancing the qualitative depth of shareholders’ equity. OCF 134.0B is 1.90x net income 70.4B; OCF/EBITDA 0.85x and accrual quality are generally healthy, and the accounts payable reduction is judged temporary.
Full year forecast: revenue 1,420.0B (YoY +8.1%), operating income 120.0B (YoY +5.2%), ordinary income 120.0B (YoY +1.8%), net income attributable to owners of the parent 68.0B (YoY -10.2%). Progress vs current results: revenue 92.5%, operating income 95.1%, ordinary income 98.3%, net income 111.3%. Net income shows higher progress due to one-off gains such as proceeds from sale of investment securities. Revenue and operating income are slightly behind pace, with Transportation’s profit decline and low profitability in Building & Construction weighing. Achieving the full year depends on sustained Electronics demand in H2 and recovery of Transportation profitability. The YoY decline in forecasted net income likely reflects a conservative assumption excluding one-off gains. Dividend guidance is annual ¥27.0 per share (interim ¥20.0 already paid, year-end ¥7.0 expected), versus actual annual ¥54.0 (interim ¥20.0, year-end ¥34.0), the difference driven by an increased year-end dividend in results.
Annual dividend is ¥54.0 per share (interim ¥20.0, year-end ¥34.0), with payout ratio 35.1% against EPS ¥153.72. Total dividend amount is approximately 23.9B (including 0.4B dividend on shares held in trust). Adding share buybacks of ¥45.7B, total shareholder returns are approx. 69.6B, representing a total return ratio of about 92.0% relative to net income attributable to owners of the parent 75.7B — a high level. FCF 112.5B covers total returns by 1.62x; dividends alone are covered approximately 4.7x. Given cash and deposits 265.5B and strong OCF generation, dividend sustainability is high. Treasury shares at year-end were 36.9 million shares (7.2% of 51.3 million shares outstanding), with proactive buybacks of ¥45.7B during the period. Share repurchases support per-share value and improve capital efficiency, which is expected to help underpin ROE. Dividend policy emphasizes stable dividends while using flexible share buybacks to enhance total returns.
Risk of widening segment profitability gap: Continued profit decline in Transportation (margin 10.4%) and low profitability in Building & Construction (4.0%) are structural challenges. Deterioration in core segment profitability could suppress consolidated margins and may not be fully offset by strong Electronics results. Improving order prices and cost-structure reform are key.
Cash flow volatility from working capital changes: Accounts payable decreased ¥26.2B from ¥207.1B to ¥179.2B YoY, contributing to OCF/EBITDA 0.85x which is below the 0.9x benchmark. Reduced trade payables may reflect changes in payment terms or supplier dynamics and, if working capital management remains unstable, could impact cash generation. Inventory 99.5B (prior 109.4B) is being optimized, but trade receivables 213.3B (prior 211.9B) rose slightly, necessitating monitoring of collection cycles.
FX volatility and dependence on overseas sales: Overseas sales ratio is 50.4%, with Thailand 169.7B and US 171.5B as major markets, making the company sensitive to currency movements. This period booked forex gains of 3.3B, but a strengthening yen could reverse non-operating income and pressure ordinary income. Regional tangible fixed assets are also significant (Thailand 46.5B, US 67.4B), creating valuation risk on local-currency assets. Disclosure of hedging strategy is limited, so improving FX sensitivity transparency is a task.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.7% | 7.8% (4.6%–12.3%) | +0.9pt |
| Net Margin | 5.4% | 5.2% (2.3%–8.2%) | +0.2pt |
Operating margin exceeds the industry median by 0.9pt, indicating above-average profitability. Net margin also exceeds the median by 0.2pt, though there remains room for improvement versus the IQR upper bound of 8.2%.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.5% | 3.7% (-0.4%–9.3%) | -1.2pt |
Revenue growth lags the industry median of 3.7% by 1.2pt, indicating a slower top-line expansion. The gap to the IQR upper bound 9.3% is substantial; accelerating growth is key to maintaining competitiveness.
※Source: Company compilation
Rapid growth in Electronics and change in consolidated earnings structure: The Electronics segment posted operating income +87.7%, becoming the main driver of consolidated profit, backed by demand recovery in energy and IT equipment markets; sustainability of this trend will be critical. Conversely, core Transportation shows revenue +4.2% but operating income -8.5%, indicating a transitional phase with diversification of revenue pillars. Changes in segment profit composition enhance risk diversification but delayed recovery in Transportation margins could slow growth.
Coexistence of ample cash generation and active shareholder returns: OCF 134.0B and FCF 112.5B sustain dividends 23.9B and share buybacks 45.7B, with total returns 69.6B covered 1.62x by FCF. Cash and deposits 265.5B and D/E 0.14x indicate solid financial flexibility to balance growth investments and shareholder returns. Total return ratio 92.0% is high, but dividend payout ratio 35.1% is within a sustainable range; buybacks are a flexible capital policy to be expected going forward. Comprehensive income 115.6B includes valuation gains on securities 15.6B, enhancing the qualitative depth of shareholders’ equity.
Trend of gross margin improvement and structural profitability issues: Gross margin 19.5% improved 0.5pt from 19.0%, suggesting stabilization of raw material costs and progress in price pass-through. Operating margin 8.7% exceeds industry median 7.8% but lags the IQR upper bound 12.3%; low profitability in Building & Construction (4.0%) suppresses consolidated averages. High profitability in Daily Life & Healthcare (10.8%) contrasts with weak segments, so correcting inter-segment disparities is key for medium-term margin improvement. Revenue growth 2.5% trails the industry median 3.7%, highlighting the dual need for top-line acceleration and margin improvement to sustain competitiveness.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are the sole responsibility of the investor; please consult a professional advisor as necessary before making investment decisions.