| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥900.2B | ¥896.6B | +0.4% |
| Operating Income / Operating Profit | ¥38.1B | ¥47.2B | -19.4% |
| Ordinary Income | ¥38.6B | ¥45.7B | -15.4% |
| Net Income / Net Profit | ¥-5.0B | ¥8.0B | -66.5% |
| ROE | -1.2% | 1.7% | - |
For the fiscal year ended March 2026, Revenue was ¥900.2B (YoY +¥3.7B +0.4%), Operating Income was ¥38.1B (YoY -¥9.2B -19.4%), Ordinary Income was ¥38.6B (YoY -¥7.0B -15.4%), and Net Income attributable to owners of the parent was ¥11.4B (YoY -¥18.9B -61.0%). Revenue held slight growth, but SG&A rose to ¥132.9B (+8.1%) far outpacing revenue growth, causing the operating margin to decline from 5.3% to 4.2% (-1.1pt). The company recorded an impairment loss of ¥9.2B on fixed assets in the Vibration Control Business, and a high effective tax rate of 51.1% materially compressed net profit. By segment, Functional Products (Revenue +3.7%, Profit -7.2%) and Vibration Control (Revenue -0.8%, Profit -6.0%) posted lower profits; Metal Processing declined 25.9% and turned to a loss; Hoses grew Revenue 10.4% and doubled profit, illustrating mixed results. Operating Cash Flow was ¥80.4B (+21.3%) and remained seven times net income, securing Free Cash Flow of ¥26.6B. Total shareholder returns of ¥44.5B (including ¥31.6B share buybacks) exceeded FCF and were supplemented by cash on hand and increased long-term borrowings (+87%). The result is revenue growth with profit decline, driven by one-off charges and structural cost increases—making this a challenging fiscal year.
Revenue: Revenue of ¥900.2B (YoY +0.4%) showed only modest growth. Segment composition: Functional Products ¥426.9B (47.4%, YoY +3.7%), Vibration Control ¥378.6B (42.1%, YoY -0.8%), Life Science ¥10.4B (1.2%, YoY +6.2%), Hoses ¥52.8B (5.9%, YoY +10.4%), Metal Processing ¥39.6B (4.4%, YoY -25.9%). Functional Products growth was driven by steady demand for seal components and wiper rubbers; Hoses achieved double-digit growth by capturing rubber product demand; Life Science maintained single-digit growth. Conversely, Vibration Control saw a slight decline due to weakening demand for dampers and mounts, and Metal Processing fell by one-quarter largely from decreased demand from construction machinery, weighing on consolidated performance. A change in consolidated subsidiary fiscal periods (including 15 months from the India subsidiary) produced revenue uplift of ¥2.9B in Functional Products and ¥5.5B in Vibration Control, so underlying growth rates are lower.
Profitability: Operating Income was ¥38.1B (YoY -19.4%), with an operating margin of 4.2% (prior 5.3%, -1.1pt). Cost of sales was ¥729.3B (cost ratio 81.0%), nearly flat YoY (+¥0.9B), maintaining a gross margin of 19.0% (prior 19.0%). SG&A was ¥132.9B (SG&A ratio 14.8%), rising ¥9.9B YoY (+8.1%) and substantially outpacing revenue growth (+0.4%), reversing operating leverage. SG&A increases included freight ¥2.4B, depreciation ¥4.7B, and retirement benefit costs ¥2.2B, reflecting company-wide cost increases. Segment operating profits: Functional Products ¥46.4B (margin 10.9%, -7.2%), Vibration Control ¥26.9B (margin 7.1%, -6.0%), Life Science ¥2.6B (margin 24.7%, +2.4%), Hoses ¥4.2B (margin 8.0%, +104.9%), Metal Processing -¥2.0B (margin -5.1%, -351.2%). Declines in margins for the two core businesses and the loss in Metal Processing weighed heavily. Ordinary Income was ¥38.6B (YoY -15.4%), slightly above operating income by ¥0.5B: non-operating income ¥7.5B (including foreign exchange gains ¥0.9B, interest income ¥0.8B, subsidies ¥2.8B, equity-method investment income ¥1.6B) exceeded non-operating expenses ¥6.9B (including interest expense ¥1.9B). A special loss of ¥9.2B (entirely impairment loss for fixed assets in Vibration Control) was recorded, resulting in pre-tax income of ¥29.5B (YoY -33.8%). Income taxes were ¥15.1B (effective tax rate 51.1%) due to insufficient tax-exempt adjustments and regional mix, after deducting non-controlling interests of ¥3.0B, Net Income attributable to owners of the parent was ¥11.4B (YoY -61.0%), and net profit margin deteriorated to 1.3% (prior 3.3%, -2.0pt). In summary: revenue up, profit down—special losses and high tax burden compressed net income.
Functional Products: Revenue ¥426.9B (YoY +3.7%), Operating Income ¥46.4B (YoY -7.2%), margin 10.9% (prior 12.1%, -1.2pt). Demand for seal components and wiper blade rubbers remained solid, but higher raw material and logistics costs plus a worse mix pressured margins.
Vibration Control: Revenue ¥378.6B (YoY -0.8%), Operating Income ¥26.9B (YoY -6.0%), margin 7.1% (prior 7.5%, -0.4pt). Weakening demand for dampers, mounts, and urethane products and the ¥9.2B impairment reduced profitability.
Life Science: Revenue ¥10.4B (YoY +6.2%), Operating Income ¥2.6B (YoY +2.4%), margin 24.7% (prior 25.6%, -0.9pt), maintaining high profitability driven by continued growth in bio-related products.
Hoses: Revenue ¥52.8B (YoY +10.4%), Operating Income ¥4.2B (YoY +104.9%), margin 8.0% (prior 4.3%, +3.7pt), with improved results from capturing rubber product demand and efficiency gains.
Metal Processing: Revenue ¥39.6B (YoY -25.9%), Operating Loss ¥2.0B (turning from ¥0.8B profit prior), hit by weak demand from construction machinery—structural reform is urgently required. Company-wide costs increased to ¥40.0B (prior ¥36.8B), further depressing consolidated operating profit.
Profitability: Operating margin 4.2% (prior 5.3%, -1.1pt), Gross Profit Margin 19.0% (prior 19.0%, flat), SG&A ratio 14.8% (prior 13.7%, +1.1pt). Despite maintained gross profit, higher SG&A reduced operating margin. Ordinary income margin 4.3% (prior 5.1%, -0.8pt). ROE -1.2% (prior 7.1%) arises mainly from a large decline in net profit margin (1.3% vs prior 3.3%, -2.0pt), total asset turnover 1.10x (prior 1.13x), and financial leverage 1.86x (prior 1.73x). ROA 4.7% (ordinary income basis, prior 5.8%) also declined.
Cash Quality: Operating Cash Flow (OCF) ¥80.4B, seven times Net Income ¥11.4B, indicating very strong cash conversion. Accrual ratio -8.4% indicates high quality; OCF/EBITDA 0.89x (EBITDA = Operating Income ¥38.1B + Depreciation ¥52.2B = ¥90.3B) is generally healthy. Free Cash Flow ¥26.6B (OCF ¥80.4B - Investing CF ¥53.8B) covers dividends ¥12.9B by 2.1x, supporting sustainability.
Investment Efficiency: Total asset turnover 1.10x (prior 1.13x) slightly declined. Fixed asset turnover 2.68x (Revenue ¥900.2B ÷ Fixed Assets ¥336.4B). Inventory turnover 13.12x (Cost of Sales ¥729.3B ÷ average inventories approx ¥55.6B) is at a moderate level. Capital expenditures ¥52.3B roughly matched depreciation ¥52.2B, indicating maintenance-level investment.
Financial Soundness: Equity Ratio 53.6% (prior 57.9%, -4.3pt) declined but remains healthy. Current Ratio 193.8% (Current Assets ¥480.4B ÷ Current Liabilities ¥247.9B), Quick Ratio 166.1% ((Current Assets - Inventories) ÷ Current Liabilities), indicating strong short-term liquidity. Net Debt ¥140.4B (Interest-bearing debt ¥183.7B - Cash ¥143.3B), D/E ratio 0.32x, Net Debt/EBITDA 1.55x, Interest Coverage 46.8x (OCF ¥80.4B ÷ Interest Paid ¥1.9B converted to 0.5 years) — financial capacity is adequate. Short-term debt ratio 50.4% (Short-term interest-bearing debt ¥97.6B ÷ Total interest-bearing debt ¥183.7B) is high, but Cash / Short-term debt 2.03x (Cash ¥143.3B ÷ Short-term interest-bearing debt ¥70.6B) provides a buffer.
OCF was ¥80.4B (YoY +¥13.8B +21.3%). Pre-tax income ¥29.5B was supported by non-cash items including depreciation ¥52.2B, impairment ¥9.2B, and provision increases ¥0.8B. Working capital movements included Inventories -¥3.1B (slight inventory increase), Trade Receivables +¥3.4B (improved collections), and Trade Payables -¥7.4B (shorter payment terms), totaling a cash outflow of -¥7.1B, which is modest. After deducting corporate tax payments ¥13.9B from operating subtotal ¥94.7B and adjusting interest flows -¥0.3B, final OCF was ¥80.4B. Investing CF was -¥53.8B, consisting of CapEx -¥52.3B (mainly production equipment for Functional Products and Vibration Control), intangible assets -¥4.1B, proceeds from sale of investment securities +¥1.6B, and changes in time deposits +¥0.3B. Financing CF was -¥8.1B: the company raised long-term borrowings +¥58.6B and short-term borrowings +¥16.5B, while repaying long-term borrowings -¥21.5B, repaying short-term borrowings -¥15.8B, paying dividends -¥12.9B, and conducting share buybacks -¥31.6B. Including foreign exchange effects +¥1.1B, cash increased by ¥19.6B to an ending balance of ¥143.3B (prior ¥122.4B). FCF ¥26.6B covers dividends ¥12.9B by 2.1x, but total shareholder returns including buybacks ¥44.5B exceeded FCF and were funded by cash drawdown and net borrowing increase ¥37.1B (effectively external financing) plus an increase in long-term borrowings (+¥32.3B). The quality of OCF is high; excluding non-cash items such as impairment and provisions, cash generation remains solid due to good working capital management.
Of Ordinary Income ¥38.6B, non-operating income ¥7.5B (equity-method investment income ¥1.6B, interest income ¥0.8B, foreign exchange gains ¥0.9B, subsidies ¥2.8B) contains items with relatively lower persistence and variability. After offsetting non-operating expenses ¥6.9B (interest expense ¥1.9B and other non-operating costs ¥3.1B), non-operating items contributed a modest +¥0.5B uplift to ordinary income. Special losses included an impairment loss of ¥9.2B as a one-time charge due to revaluation of fixed assets in the Vibration Control Business, and recurrence risk is low. Income taxes ¥15.1B imply an effective rate of 51.1% on pre-tax income ¥29.5B due to insufficient tax-exempt adjustments and regional profit mix; normalization to around 35% is expected next year. Non-controlling interests ¥3.0B (prior ¥2.7B) are stable. Comprehensive income ¥24.1B (owners of the parent ¥20.4B, non-controlling interests ¥3.7B) significantly exceeded net income of -¥5.0B because other comprehensive income totaled +¥29.1B (foreign currency translation adjustment ¥7.3B, deferred hedging gains/losses ¥2.1B, equity-method investee OCI ¥0.3B, etc.), producing valuation differences that diverge from cash earnings. OCF ¥80.4B is seven times consolidated net income ¥11.4B, demonstrating very strong cash generation; non-cash items such as depreciation ¥52.2B and impairment ¥9.2B have a technical upward effect on OCF, but even excluding those, working capital management is sound and earnings quality is healthy aside from one-off items.
For FY ending March 2027, guidance is Revenue ¥850.0B (YoY -¥50.2B -5.6%), Operating Income ¥33.0B (YoY -¥5.1B -13.3%), Ordinary Income ¥33.0B (YoY -¥5.6B -14.6%), Net Income attributable to owners of the parent ¥23.0B (YoY +¥11.6B +101.3%), EPS ¥161.72. Revenue is conservatively forecast to decline, but normalization (impairments largely completed) and SG&A control are expected to gradually improve operating margin from 3.9%. At fiscal year-end, revenue progress rate was 106.0% (actual ¥900.2B ÷ forecast ¥850.0B), operating income progress rate 115.5% (actual ¥38.1B ÷ forecast ¥33.0B), ordinary income progress rate 117.0% (actual ¥38.6B ÷ forecast ¥33.0B), thus exceeding plan. Net income progressed only 49.6% (actual ¥11.4B vs forecast ¥23.0B) due to one-off impairment ¥9.2B and high tax burden (effective tax rate 51.1%); next year is expected to normalize as these factors abate and tax rate returns to ~35%. Forecast dividend ¥50.0 is a cut, but payout ratio relative to normalized profit would be around 30%, restoring soundness. Achievement depends on restoring profitability in Vibration Control, eliminating Metal Processing losses, and executing price pass-through and cost optimization.
The company paid an annual dividend of ¥85.0 (interim ¥42.5, year-end ¥42.5), a large increase of ¥47.5 YoY. Total dividends of ¥12.9B against Net Income attributable to owners ¥11.4B imply a payout ratio of 106.8%, exceeding profits; this is due to one-off impairment and high tax burden compressing net income, while on an ordinary income base of ¥38.6B the payout ratio would be a healthy 33.4%. The company repurchased shares totaling ¥31.6B (average price ¥2,033, shares acquired 1,555k), bringing total returns to ¥44.5B. Total Return Ratio ((Dividends ¥12.9B + Share Buybacks ¥31.6B) ÷ Net Income ¥11.4B) = 390.4%, a high level, but coverage of total returns by FCF is 1.7x (¥44.5B ÷ ¥26.6B), so sustainability is limited. Shortfall was covered by cash drawdown and net borrowing increase (although cash increased ¥19.6B, net borrowings rose ¥37.1B, indicating external financing), and by increased long-term borrowings (+¥32.3B). Issued shares 15,909k less treasury shares 1,687k equals outstanding shares 14,222k, with period average shares 15,537k; share buybacks aim to improve capital efficiency. Next year’s forecast dividend ¥50.0 represents a reduction, but at forecast net income ¥23.0B the payout ratio normalizes to about 30%. If FCF continues to generate stable high ¥20Bs (late ¥20B range), the policy of dividends plus buybacks remains feasible; however, normalizing Total Return Ratio to within FCF is a medium-term task.
Auto demand cycle and pricing power risk: Functional Products and Vibration Control account for about 90% of Revenue and are heavily dependent on OEM demand for seal and vibration-control parts. Although Functional Products margin is 10.9% and Vibration Control 7.1%, customer concentration and asymmetric bargaining power can delay price pass-through during raw material cost spikes and compress margins. The large revenue decline (-25.9%) and loss in Metal Processing shows high dependence on specific customers/industries, increasing earnings volatility in sudden supply-demand shifts.
Structural cost increases and reversed operating leverage: SG&A ¥132.9B rose +8.1% YoY, far outstripping revenue growth +0.4%, reducing operating margin by 1.1pt. Fixed cost increases in personnel, logistics, and systems are the main causes and are difficult to make variable in the short term. The ¥9.2B impairment in Vibration Control is one-off, but the ¥2.0B loss in Metal Processing may be structural, risking additional restructuring costs. If price adjustments and production efficiency measures lag, the margin downtrend could continue.
Working capital and liquidity management risk: Trade receivables ¥153.3B (DSO 62 days) rose ¥3.5B YoY, showing signs of slower collections and increased working capital burden. Inventories ¥68.6B (inventory turnover days ~34) increased slightly, but demand weakness in Metal Processing and Vibration Control raises risk of obsolete inventory. Short-term interest-bearing debt ratio 50.4% is high and refinancing conditions (rate hikes, credit tightening) could exert pressure; although Cash / Short-term debt 2.03x provides a buffer, accelerating DSO reduction and inventory efficiency is urgent.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.2% | 7.8% (4.6%–12.3%) | -3.5pt |
| Net Profit Margin | -0.6% | 5.2% (2.3%–8.2%) | -5.8pt |
Profitability is below industry median: operating margin -3.5pt and net profit margin -5.8pt. One-off charges and SG&A increases are the main causes, positioning the company in the lower tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.4% | 3.7% (-0.4%–9.3%) | -3.3pt |
Revenue growth lags the median by 3.3pt, reflecting slowdown in Vibration Control and Metal Processing and underperformance in an overall manufacturing recovery.
※ Source: Company compilation
Removal of one-off factors and progress in profit normalization: The ¥9.2B impairment in Vibration Control and high effective tax rate 51.1% are likely limited to this year; next year management expects Operating Income ¥33.0B (Operating margin 3.9%) and Net Income ¥23.0B (Net margin 2.7%) to normalize. If impairment effects subside, tax rate normalizes to ~35%, and SG&A is controlled, ROE could recover to around 5%. Monitor quarterly margin trends (target operating margin 5%, SG&A/Revenue <14%) and the pace of narrowing the Metal Processing loss.
Maintenance of cash generation and capital allocation discipline: As long as OCF ¥80.4B (7.0x Net Income) remains strong, dividend sustainability is high. Normalizing next year’s dividend to ¥50 (payout ~30%) should align total returns within FCF. However, this year’s total returns including share buybacks ¥31.6B exceeded FCF ¥26.6B and needs correction; medium-term maintenance of FCF/Total Returns >1.0 is a prerequisite for balance sheet health. Shortening receivables DSO (62 days) is key to improving capital efficiency.
Portfolio restructuring and rebuilding competitive advantage: High-margin smaller businesses Hoses (margin 8.0%, profit +105%) and Life Science (margin 24.7%) can drive growth, while core businesses Functional Products (margin 10.9% from 12.1%) and Vibration Control (7.1% from 7.5%) continue margin erosion. The ¥2.0B loss in Metal Processing requires successful structural reforms (plant consolidation, product mix review) to avoid further costs. Defending auto market share, strengthening price negotiation power, and shifting resources to Hoses and Bio are conditions to maintain competitiveness mid-term. Investors will look for concrete measures to close the gaps versus industry benchmarks (Operating margin -3.5pt, Growth -3.3pt) such as cost reduction, selective order intake, and M&A.
This report is an earnings analysis generated automatically by AI based on XBRL financial statement data. It does not constitute 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; consult a professional advisor as needed.