| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥1393.6B | ¥1311.5B | +6.3% |
| Operating Income | ¥174.4B | ¥153.8B | +13.4% |
| Ordinary Income | ¥178.4B | ¥164.8B | +8.2% |
| Net Income | ¥103.2B | ¥74.3B | +38.9% |
| ROE | 10.1% | 8.3% | - |
For the fiscal year ended March 2026, Revenue was ¥1393.6B (YoY +¥82.1B, +6.3%), Operating Income was ¥174.4B (YoY +¥20.6B, +13.4%), Ordinary Income was ¥178.4B (YoY +¥13.6B, +8.2%), and Net Income was ¥103.2B (YoY +¥28.9B, +38.9%). Revenue achieved a third consecutive year of growth. At the operating level, both revenue and profit increased, with Gross Margin at 33.6% (prior 32.5%, +1.1pt) and Operating Margin at 12.5% (prior 11.7%, +0.8pt), indicating improved profitability. Conversely, Net Income attributable to owners of the parent was ¥109.9B (prior ¥137.2B), a decline of -19.9%. The decline was mainly due to the absence of prior-year special gains (¥25.0B gain on disposal of fixed assets) and an increased corporate tax burden of ¥52.2B (effective tax rate 29.2%). By segment, profit growth was driven by Japan, Southeast Asia, and Korea, while Europe & Americas experienced a significant deterioration with Operating Income down -49.4%. Financially, the company maintained soundness and profitability with an Equity Ratio of 64.6% and ROE of 10.1%.
[Revenue] Revenue of ¥1393.6B represents an increase of ¥82.1B YoY (+6.3%). By segment, Japan ¥530.5B (+6.4%), China ¥339.0B (+7.5%), Europe & Americas ¥333.2B (+10.9%) drove growth, while Korea ¥215.5B (-2.0%) slightly declined and Southeast Asia ¥250.3B (+0.3%) was flat. Revenue mix by region: Japan 38.1%, China 24.3%, Europe & Americas 23.9%, Southeast Asia 18.0%, Korea 15.5%. Recovery in domestic demand supported Japan, market expansion supported China, and FX effects and price revisions contributed to growth in Europe & Americas. Overall, both price pass-through and volume expansion underpinned revenue growth, continuing the three-year growth trend.
[Profitability] Cost of goods sold was ¥925.8B (prior ¥885.5B), yielding Gross Profit ¥467.8B and Gross Margin 33.6% (prior 32.5%, +1.1pt). The improvement in Gross Margin was due to easing raw material cost pressure and the penetration of price revisions. SG&A was ¥293.4B (prior ¥272.2B, +7.8%), expanded due to increases in executive compensation ¥102.9B (prior ¥96.7B) and transportation costs ¥57.8B (prior ¥53.1B), but the increase was controlled below the revenue growth rate. Operating Income improved to ¥174.4B (YoY +¥20.6B, +13.4%) and Operating Margin improved to 12.5% (prior 11.7%, +0.8pt). Non-operating items included interest income ¥5.1B, dividends ¥3.4B, and foreign exchange gains ¥3.2B, while interest expense ¥4.7B and foreign exchange losses ¥5.6B largely offset these, resulting in Ordinary Income of ¥178.4B (YoY +¥13.6B, +8.2%). Extraordinary gains/losses mostly offset each other with ¥1.9B gain on disposal of fixed assets and ¥1.5B impairment loss, netting to +¥0.6B, negligible. Income before income taxes was ¥179.0B, from which corporate taxes of ¥52.2B (effective tax rate 29.2%) and non-controlling interests of ¥16.8B were deducted, resulting in Net Income attributable to owners of the parent of ¥109.9B (prior ¥137.2B, -19.9%). The decrease in Net Income was primarily due to the absence of the prior-year one-off gain on disposal of fixed assets (¥25.0B) and increased tax burden, while earnings up to the ordinary level showed an improving trend. In summary, revenue and profitability increased at operating and ordinary levels, but Net Income declined due to one-off items and higher taxes.
Japan segment: Revenue ¥530.5B (prior ¥498.5B, +6.4%), Operating Income ¥32.9B (prior ¥22.2B, +48.1%), Margin 6.2% (prior 4.5%, +1.7pt). Recovery in domestic demand and price revisions improved profitability.
China segment: Revenue ¥339.0B (prior ¥315.5B, +7.5%), Operating Income ¥29.7B (prior ¥27.2B, +9.3%), Margin 8.8% (prior 8.6%, +0.2pt). Market expansion and higher sales volumes drove revenue growth and steady profits.
Korea segment: Revenue ¥215.5B (prior ¥220.0B, -2.0%), Operating Income ¥32.8B (prior ¥25.4B, +28.8%), Margin 15.2% (prior 11.6%, +3.6pt). Despite lower revenue, profitability improved substantially, expanding profits.
Southeast Asia segment: Revenue ¥250.3B (prior ¥249.7B, +0.3%), Operating Income ¥41.2B (prior ¥38.5B, +7.0%), Margin 16.5% (prior 15.4%, +1.1pt). Revenue was flat but high profitability was maintained; this segment recorded the highest margin companywide and contributed about 24% of consolidated Operating Income.
Europe & Americas segment: Revenue ¥333.2B (prior ¥300.5B, +10.9%), Operating Income ¥11.1B (prior ¥21.9B, -49.4%), Margin 3.3% (prior 7.3%, -4.0pt). Despite revenue growth, profitability deteriorated sharply as softening demand and cost increases pressured earnings. High margins in Southeast Asia and Korea supported consolidated profitability, while the deterioration in Europe & Americas constrained margin expansion companywide.
[Profitability] Operating Margin 12.5% (prior 11.7%, +0.8pt), Net Margin 7.4% (prior 10.5%, -3.1pt), ROE 10.1% (declined from prior single-year 13.7%; 3-year average estimated around 12.0%). Gross Margin 33.6% (prior 32.5%, +1.1pt) benefited from easing raw material cost pressure and price pass-through. SG&A ratio 21.1% (prior 20.8%, +0.3pt) increased slightly despite revenue growth. Operating-level profitability improved, but Net Margin deteriorated due to the absence of special gains and higher tax burden.
[Cash Quality] Operating Cash Flow (OCF) ¥144.2B was nearly flat (prior ¥145.4B, -0.8%), and OCF / Net Income is 1.40x (based on Net Income ¥103.2B), indicating good cash conversion. From OCF subtotal ¥176.6B, working capital changes absorbed -¥19.5B (Inventories -¥14.1B, Accounts Receivable -¥12.4B, Accounts Payable +¥7.0B), and corporate tax payments -¥36.3B pressured cash flows. Free Cash Flow (FCF) was ¥159.8B (OCF ¥144.2B + Investing CF ¥15.6B), up from prior ¥144.4B, covering dividends ¥52.1B and share buybacks ¥0.0B with surplus.
[Investment Efficiency] Total assets ¥1575.6B (prior ¥1447.8B). Total asset turnover 0.88x (prior 0.91x) declined due to increases in inventory and receivables. Accounts Receivable ¥368.2B (prior ¥340.9B) implies DSO about 96 days; Inventories ¥169.2B (prior ¥156.9B) implies inventory days about 67, indicating lengthening. Tangible fixed assets ¥226.2B vs. Capital Expenditure ¥25.3B, CapEx / Depreciation 1.37x, securing renewal investment, but CapEx to Sales 1.8% is modest and no large-scale expansion investments observed. R&D expense ¥6.1B (0.4% of sales) is low, limiting product differentiation investment.
[Financial Soundness] Equity Ratio 64.6% (prior 57.7%, +6.9pt). Interest-bearing debt ¥435.7B (short-term borrowings ¥136.7B, long-term borrowings ¥27.4B, current portion of long-term debt ¥17.0B, lease liabilities ¥9.9B) yields Debt/Equity 45.8% and Debt/EBITDA approx. 2.2x, both low. Current ratio 270.8% (Current assets ¥1177.2B / Current liabilities ¥434.8B), Quick ratio 231.8% (Quick assets ¥1008.0B / Current liabilities ¥434.8B) indicate very high short-term solvency. Cash and deposits ¥402.6B vs. short-term interest-bearing debt around ¥170B gives Cash / Short-term Debt 2.4x, indicating ample liquidity. Interest coverage is 37.3x (Operating Income ¥174.4B / Interest Expense ¥4.7B), so interest burden is minimal. Overall, the balance sheet is very healthy with ample fundraising capacity.
OCF ¥144.2B (prior ¥145.4B, -0.8%) was generated from OCF subtotal ¥176.6B after working capital changes -¥19.5B and corporate tax payments -¥36.3B. Working capital change breakdown: inventory increase -¥14.1B, accounts receivable increase -¥12.4B, accounts payable increase +¥7.0B, indicating inventory and receivables accumulation absorbed cash. Considering depreciation ¥18.5B (prior ¥17.0B), OCF / EBITDA (Operating Income ¥174.4B + Depreciation ¥18.5B ≒ ¥192.9B) is 0.75x, low, with working capital expansion suppressing cash generation. Investing Cash Flow was +¥15.6B (prior -¥1.0B), a net inflow driven by proceeds from sale of investment securities and deposit refunds offsetting tangible fixed asset acquisitions -¥25.3B. Financing Cash Flow was -¥103.4B (prior -¥124.8B), with principal outflows including net reduction in short-term borrowings -¥34.2B, net increase in long-term borrowings +¥0.1B, dividend payments -¥52.0B, and dividends to non-controlling interests -¥13.1B. FCF ¥159.8B (OCF + Investing CF) covers total dividends ¥52.1B by about 3.1x, indicating highly sustainable dividends. Cash balance increased by ¥58.8B from beginning cash ¥321.7B to ending cash ¥380.6B; ending cash and deposits ¥402.6B (liquidity assets including short-term securities ¥415.9B) remain ample. While cash generation is solid, improving working capital efficiency (shortening DSO, reducing inventories) is key to further improving OCF and lifting ROE.
Ordinary Income ¥178.4B includes non-operating income ¥15.5B and non-operating expenses ¥11.5B, netting to +¥4.0B, small, indicating most ordinary-level earnings derive from operating activities. Non-operating income mainly comprises interest income ¥5.1B, dividend income ¥3.4B, and FX gains ¥3.2B, reflecting stable income from financial assets and FX valuation gains. Non-operating expenses are mainly interest expense ¥4.7B and FX losses ¥5.6B; FX effects are mixed with net FX effect slightly negative. Extraordinary items include gain on disposal of fixed assets ¥1.9B, impairment loss ¥1.5B, gain on sale of investment securities ¥0.2B and valuation loss ¥0.2B, netting to +¥0.6B, negligible. The prior year included a one-off gain on disposal of fixed assets ¥25.0B, whose absence is the main reason for the YoY decline in Net Income. Comprehensive income ¥189.9B (Net Income ¥103.2B + Other Comprehensive Income ¥63.2B) includes FX translation adjustment ¥32.2B, valuation difference on available-for-sale securities ¥26.2B, and adjustments for retirement benefits ¥4.8B, which materially exceed Net Income. The difference between OCF ¥144.2B and Net Income ¥103.2B is explained by Depreciation ¥18.5B, working capital change -¥19.5B, and corporate tax payments -¥36.3B, indicating accruals are driven primarily by working capital expansion. Ordinary earning capacity improved at the operating and ordinary levels; the decline in Net Income is due to one-off items and tax burden, so the quality of earnings is not structurally impaired.
Year-end dividend ¥63 (breakdown: Ordinary dividend ¥49 + Special dividend ¥14), interim dividend ¥48, resulting in annual dividend ¥111 (prior ¥40, a substantial increase). Payout Ratio is 55.5% relative to Net Income attributable to owners of the parent ¥109.9B (EPS basis ¥221.66), up from 35.0% prior (+20.5pt). Total dividends ¥52.1B are covered by FCF ¥159.8B at 32.6%, and dividend capacity from FCF is very high. Given cash and deposits ¥402.6B (liquidity assets including short-term securities ¥415.9B), dividend sustainability is high. Share buybacks were -¥0.0B this period (prior ¥0B), none executed. The special dividend ¥14 is a flexible performance-linked return measure; continuity beyond the current period depends on future performance. The total annual dividend ¥111 (Ordinary ¥49 + Special ¥14) represents a significant increase of ¥71 from the prior year’s ¥40, indicating a stronger shareholder return stance. The higher payout ratio and introduction of the special dividend materially expand shareholder returns.
Deterioration in Europe & Americas profitability: Revenue ¥333.2B (+10.9%) vs. Operating Income ¥11.1B (-49.4%), Margin 3.3% (prior 7.3%, -4.0pt). Softening demand and cost increases are pressuring profitability, representing the largest margin risk companywide. Europe & Americas’ contribution to consolidated Operating Income has fallen to about 6%, requiring urgent remedial measures.
Working capital expansion: Accounts Receivable ¥368.2B (DSO about 96 days), Inventories ¥169.2B (inventory days about 67) with working capital changes pressuring OCF by -¥19.5B. OCF / EBITDA 0.75x is low; improving working capital efficiency is key to boosting cash generation and capital efficiency.
Low R&D investment: R&D expense ¥6.1B (0.4% of sales) is well below industry norms, posing a risk to product differentiation and pricing power. The ability to withstand raw material cost fluctuations and competitive pressure may be limited, raising concerns about medium- to long-term growth sustainability.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.5% | 7.8% (4.6%–12.3%) | +4.8pt |
| Net Margin | 7.4% | 5.2% (2.3%–8.2%) | +2.2pt |
Both Operating Margin and Net Margin materially exceed the industry median, securing a top-tier profitability level within the manufacturing cohort.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.3% | 3.7% (-0.4%–9.3%) | +2.6pt |
Revenue growth outperforms the industry median, indicating relatively strong growth among the manufacturing cohort.
※ Source: Company compilation
Notable improvements in operating-level profitability and strong financial soundness. Operating Margin 12.5% (prior 11.7%, +0.8pt), Equity Ratio 64.6% (prior 57.7%, +6.9pt), Debt/EBITDA approx. 2.2x. Price pass-through and easing raw material cost pressure improved operating profitability, while the balance sheet remains very robust. FCF ¥159.8B covers total dividends ¥52.1B by about 3.1x, indicating very high dividend sustainability. Annual dividend ¥111 (Ordinary ¥49 + Special ¥14) is a large increase from ¥40 prior, demonstrating a stronger shareholder return stance.
Focus going forward is on addressing the deterioration in Europe & Americas profitability and improving working capital efficiency. Europe & Americas recorded Operating Income down -49.4%, compressing margins to 3.3% and constraining consolidated margin expansion. Working capital is large with Accounts Receivable ¥368.2B (DSO about 96 days) and Inventories ¥169.2B (inventory days about 67), resulting in OCF / EBITDA 0.75x; compressing working capital is key to enhancing cash generation and lifting ROE. R&D expense ¥6.1B (0.4% of sales) is low; strengthening product differentiation investment is required to sustain medium- to long-term competitiveness.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Please make investment decisions at your own responsibility and consult professionals as necessary.