| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1657.1B | ¥1685.6B | -1.7% |
| Operating Income / Operating Profit | ¥102.5B | ¥100.0B | +2.5% |
| Ordinary Income | ¥107.1B | ¥96.9B | +10.5% |
| Net Income / Net Profit | ¥55.9B | ¥67.3B | -16.9% |
| ROE | 6.2% | 7.5% | - |
The fiscal year ended March 2026 closed with Revenue of ¥1657.1B (¥-28.5B YoY, -1.7%) a slight decline, while Operating Income reached ¥102.5B (¥+2.5B, +2.5%), Ordinary Income ¥107.1B (¥+10.2B, +10.5%), and profit attributable to owners of parent ¥86.6B (¥+21.6B, +33.3%), maintaining an earnings growth trend. Operating margin improved by +0.3pt to 6.2% (prior year 5.9%), and Ordinary Income margin improved by +0.8pt to 6.5% (prior year 5.7%), with a significant reduction in financial costs contributing to improved profitability. Gross margin improved by +0.4pt to 13.7% (prior year 13.3%), SG&A was largely flat at ¥124.1B (prior year ¥123.7B), demonstrating effective fixed-cost control. Regionally, the North America segment saw a sharp recovery in Operating Income (+89.6%), driving consolidated profit growth, while the Japan segment posted a large decline in Operating Income (-49.6%).
[Revenue] Revenue was ¥1657.1B (YoY -1.7%), a slight decline. By segment: Japan ¥1038.0B (-4.6%), North America (Central & South America & North America) ¥468.7B (+1.2%), ASEAN ¥109.9B (-0.5%), China & Korea ¥84.2B (-8.4%). Product sales were ¥1555.7B, representing 93.9% of total, accessories sales ¥83.9B (5.1%), other sales ¥17.4B (1.1%). By major customer, sales to Mazda accounted for ¥736.7B (44.4% of total), the largest concentration, followed by Mazda Motor Manufacturing de Mexico ¥209.1B, Mazda North American Operations ¥164.6B, and Daihatsu Motor Co., Ltd. ¥98.2B. Weakness in the Japanese market and contraction in China & Korea weighed on revenue, while strength in North America provided support.
[Profitability] Operating Income was ¥102.5B (YoY +2.5%), with operating margin improving to 6.2% (prior year 5.9%). Gross margin rose +0.4pt to 13.7%, and SG&A ratio widened +0.2pt to 7.5% (prior year 7.3%), although absolute SG&A was only marginally higher at ¥124.1B vs. ¥123.7B prior year, reflecting effective fixed-cost containment. By segment, North America achieved Operating Income of ¥56.1B (prior year ¥29.6B, +89.6%) with an operating margin of 12.0%; Japan recorded Operating Income of ¥34.3B (prior year ¥68.0B, -49.6%), a significant decline to a 3.3% margin; ASEAN ¥5.5B (prior year ¥5.4B, +0.4%); China & Korea turned positive to ¥0.8B (from -¥1.0B, +178.6%), margin 0.9%. Consolidated Operating Income after inter-segment eliminations was ¥102.5B.
Ordinary Income was ¥107.1B (YoY +10.5%), a double-digit increase. Non-operating income totaled ¥14.6B comprised of interest income ¥4.1B, foreign exchange gains ¥5.5B, and other ¥1.8B. Non-operating expenses were ¥10.0B comprised of interest expense ¥7.9B (substantially down from ¥13.7B prior year), foreign exchange losses ¥3.9B (same as prior year), and other ¥2.1B. The reduction in financial costs lifted profits at the ordinary income stage. Profit before tax was ¥105.6B (YoY +10.6%); after deducting income taxes ¥16.6B (effective tax rate 15.7%, substantially down from 31.1% prior year) and non-controlling interests ¥2.3B, profit attributable to owners of parent was ¥86.6B (YoY +33.3%). Extraordinary items were ¥0.04B profit and ¥1.58B loss (including impairment losses ¥0.93B), net -¥1.54B, immaterial. In summary: lower revenue but higher profit, with North America recovery and reduced financial costs driving final profit growth.
Japan segment: Revenue ¥1038.0B (YoY -4.6%), Operating Income ¥34.3B (YoY -49.6%), with operating margin falling sharply to 3.3% (prior year 6.8%), pressured by weaker absorption of fixed costs and demand decline. North America (Central & South America & North America) segment: Revenue ¥468.7B (YoY +1.2%), Operating Income ¥56.1B (YoY +89.6%), operating margin improved substantially to 12.0% (prior year 6.4%), driven by improved utilization and cost correction, making it the largest contributor to segment profit. ASEAN: Revenue ¥109.9B (YoY -0.5%), Operating Income ¥5.5B (YoY +0.4%), operating margin 5.0%, largely stable. China & Korea: Revenue ¥84.2B (YoY -8.4%) impacted by market contraction, but Operating Income turned to ¥0.8B (from -¥1.0B prior year, +178.6%) with a 0.9% margin. Consolidated Operating Income after inter-segment eliminations was ¥102.5B.
[Profitability] Operating margin 6.2% (prior 5.9%), Ordinary Income margin 6.5% (prior 5.7%), profit attributable to owners of parent margin 5.2% (prior 3.9%), all improved. Gross margin up +0.4pt to 13.7% (prior 13.3%). EBITDA margin 12.7% (EBITDA ¥210.1B = Operating Income ¥102.5B + Depreciation & Amortization ¥107.6B), indicating stable cash generation. ROE 6.2% (down from 7.7% prior year), Return on Assets (ordinary income / total assets) 6.8% (prior 6.3%). R&D to Sales ratio 0.7% (¥11.5B), low, implying scope for medium- to long-term differentiation investment.
[Cash Quality] Operating Cash Flow (OCF) ¥176.3B, 2.04x profit attributable to owners of parent, indicating high quality; OCF/EBITDA 0.84x, slightly below. Free Cash Flow ¥126.8B sufficiently covers dividends and capex; accrual ratio -5.7% indicates solid profit backing. Days Sales Outstanding (DSO) ~63 days, Days Payable Outstanding (DPO) ~54 days, collection period somewhat long.
[Investment Efficiency] Total Asset Turnover 1.05x (prior 1.10x) slightly down; Fixed Asset Turnover 2.11x (prior 2.11x) stable. Capex ¥76.3B / Depreciation ¥107.6B = 0.71x, indicating maintenance-weighted replacement investment.
[Financial Soundness] Equity Ratio 56.9% (prior 56.5%), Current Ratio 185.1% (prior 169.8%), Quick Ratio 181.4% (prior 164.5%), indicating very strong liquidity. Interest-bearing debt ¥239.2B (short-term borrowings ¥15.7B, long-term borrowings ¥223.5B), Debt/Equity 0.27x, Debt/EBITDA 1.14x, Interest Coverage 26.6x (EBITDA / interest paid), demonstrating strong interest-rate resilience. Cash and deposits ¥371.2B, approximately 24x short-term borrowings.
OCF was ¥176.3B (YoY +5.0%), 2.04x profit attributable to owners of parent ¥86.6B. Starting from profit before tax ¥105.6B plus Depreciation & Amortization ¥107.6B and other adjustments, subtotal OCF was ¥202.6B, then adjusted for working capital movements (-¥26.3B) and income tax paid (-¥25.5B) to derive OCF. Working capital contributed via inventory decrease +¥3.2B, while increases in trade receivables -¥5.2B and decreases in trade payables -¥17.2B were cash outflows. Investing Cash Flow was -¥49.4B, reflecting capex -¥76.3B and intangible asset acquisitions -¥18.1B, partially offset by sale & leaseback proceeds ¥18.0B. Financing Cash Flow was -¥27.3B, with long-term borrowings raised +¥110.0B against repayments -¥49.2B, share buybacks -¥40.3B, dividends -¥26.5B, and lease liability repayments -¥25.5B. Cash and cash equivalents increased by ¥100.3B from opening balance ¥240.0B plus FX effects +¥0.8B to year-end ¥340.3B; together with cash & deposits ¥371.2B, liquidity remained ample.
Profit attributable to owners of parent ¥86.6B is primarily driven by recurring earnings; extraordinary items were net -¥1.54B (¥0.04B gain and ¥1.58B loss), representing -1.8% of Net Income, and thus one-off effects are limited. Non-operating income ¥14.6B (0.9% of Revenue) comprised interest income ¥4.1B, FX gains ¥5.5B, subsidy income ¥1.9B, and other ¥1.8B; FX gains are volatile while interest income is recurring. Non-operating expenses ¥10.0B included interest expense ¥7.9B (substantially down from ¥13.7B prior year), FX losses ¥3.9B, and other ¥2.1B. The reduction in interest expense reflects improved borrowing terms and the interest-rate environment and appears sustainable. Accrual ratio (Net Income - OCF) / Total Assets = -5.7% (negative), indicating good cash backing of profits. OCF/Net Income 2.04x is high, while OCF/EBITDA 0.84x is slightly subdued, partly due to working capital movements (increases in trade receivables and decreases in trade payables). Effective tax rate 15.7% (prior 31.1%) fell significantly, likely due to reassessment of deferred tax asset recoverability and tax rate differences in overseas subsidiaries. Overall, earnings are primarily recurring and structurally supported by lower interest expense, underpinning earnings quality.
For the fiscal year ending March 2027 management projects Revenue ¥1618.0B (YoY -2.4%), Operating Income ¥88.0B (YoY -14.2%), Ordinary Income ¥87.0B (YoY -18.8%), profit attributable to owners of parent ¥92.0B (YoY +6.2%), EPS ¥139.68. An operating margin of 5.4% is assumed (down -0.8pt from current 6.2%), reflecting a conservative stance that assumes the one-off improvement in North America abates and uncertainty in the Japan market. Progress vs. current year at end of H1 stands at Revenue 102.4%, Operating Income 116.5%, Ordinary Income 123.1% and is progressing well, but for H2 management assumes cautious outlook for FX effects and customer production plan variability. Dividend forecast is annual ¥28 (including interim dividend paid ¥19), implying a payout ratio of approx. 20% on full-year net income forecast, a conservative level. Note that share buybacks are not included in payout ratio calculation.
Annual dividend was ¥52 per share (interim ¥19, year-end ¥33). Dividend payout ratio on profit attributable to owners of parent is 42.6% (total dividends ¥2.61B ÷ profit attributable to owners of parent ¥86.6B × weighted average shares 68.6 million), calculated as indicated. Dividend coverage relative to Free Cash Flow: total dividends ¥2.61B vs Free Cash Flow ¥126.8B is approximately 4.9x, indicating ample coverage. The company executed share buybacks of ¥40.3B this period, and total shareholder returns (dividend + buybacks) were ¥66.4B; total return ratio approximately 53.5% (total return ¥66.4B ÷ Operating Cash Flow ¥176.3B), reflecting appropriate level given cash generation and financial capacity. Next fiscal year dividend forecast is annual ¥28 (interim paid ¥19 + forecast year-end ¥9), a dividend cut reflecting conservative outlook. Net cash position is ¥132.0B (cash & deposits ¥371.2B less interest-bearing debt ¥239.2B), indicating sufficient resources to sustain stable dividends.
Customer Concentration Risk: Sales to major customer Mazda amounted to ¥736.7B (44.4% of total), with Mazda-related business totaling approximately 67% of sales. Customer production plans, model change cycles, and demand trends are directly linked to revenue, making customer concentration a driver of earnings volatility. The sharp decline in Japan segment operating margin to 3.3% (prior 6.8%) suggests worsening fixed-cost absorption.
Regional Concentration & FX Risk: Japan accounts for 62.6% of revenue, creating regional concentration exposure to domestic demand, labor costs, and raw material prices. FX effects recorded FX gains ¥5.5B in non-operating income and FX losses ¥3.9B in non-operating expenses, net +¥1.6B, but future FX volatility could materially affect ordinary income. Currency translation effects on foreign-currency-denominated assets and earnings of North America and ASEAN subsidiaries are also material.
Low Gross Margin & Collection Period Risk: Gross margin at 13.7% is low, making operating income sensitive to raw material and FX deterioration. DSO of ~63 days is relatively long, raising the risk of collection delays and bad debts in an economic downturn. As a manufacturing company, contract liabilities (advance receipts) ¥10.7B and contract assets ¥3.9B are small, indicating limited order backlog depth.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.2% | 7.8% (4.6%–12.3%) | -1.6pt |
| Net Profit Margin | 3.4% | 5.2% (2.3%–8.2%) | -1.8pt |
The company’s operating margin 6.2% is 1.6pt below the manufacturing median 7.8%, and net profit margin 3.4% is 1.8pt below the median 5.2%. Low gross margin 13.7% is a drag on profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.7% | 3.7% (-0.4%–9.3%) | -5.4pt |
Revenue growth -1.7% lags the manufacturing median +3.7% by 5.4pt, reflecting demand declines in Japan and contraction in China & Korea. North America growth +1.2% provided some support but overall company revenue declined.
※ Source: Company compilation
North America recovery and earnings structure shift: North America Operating Income recovered to ¥56.1B (prior ¥29.6B, +89.6%) with a 12.0% operating margin. Improved utilization and cost correction were evident, positioning North America as a future earnings driver. Conversely, Japan segment Operating Income fell -49.6% (margin 3.3%), with domestic demand recovery and fixed-cost absorption remaining challenges. The company is in a phase of segment structural transition; sustainability of North America performance and stabilization in Japan are key.
Financial strength and shareholder return capacity: Cash & deposits ¥371.2B and interest-bearing debt ¥239.2B yield net cash ¥132.0B; Debt/EBITDA 1.14x and Interest Coverage 26.6x indicate very strong financials. Robust cash generation (OCF ¥176.3B, Free Cash Flow ¥126.8B) enabled total shareholder returns of dividends ¥52 + share buybacks ¥40.3B totaling ¥66.4B. While next fiscal year dividend forecast is conservative at ¥28, there is room for dividend increases or additional buybacks in a recovery scenario.
Next fiscal year outlook and medium-term improvement agenda: For March 2027 the company forecasts Operating Income ¥88.0B (YoY -14.2%) and operating margin 5.4%, a conservative projection accounting for FX and customer demand uncertainty. Structural issues include low gross margin 13.7%, low R&D ratio 0.7%, and long DSO 63 days. Key medium-term initiatives should focus on raw material cost reduction, price pass-through, enhancing product value-add, and improving collection terms. Replicating North America’s high-margin model across other regions and boosting Japan’s profitability are critical to sustained earnings growth.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmark data are reference information compiled by the firm based on public financial disclosures. Investment decisions are your own responsibility; consult a professional advisor as needed.