| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1192.6B | ¥1155.9B | +3.2% |
| Operating Income | ¥120.7B | ¥34.8B | +246.9% |
| Pre-tax Income | ¥126.5B | ¥34.7B | +264.2% |
| Net Income | ¥84.6B | ¥18.2B | +363.7% |
| ROE | 9.1% | 2.2% | - |
For the fiscal year ended March 2026, Revenue was ¥1192.6B (YoY +¥36.6B, +3.2%), Operating Income was ¥120.7B (YoY +¥86.0B, +246.9%), Profit Before Tax (IFRS) was ¥82.4B (YoY +¥12.0B, +17.1%), and Net Income attributable to parent company shareholders was ¥105.7B (YoY +¥90.7B, +606.2%). Revenue maintained a modest growth trend, while profitability benefited from the reversal of a large impairment recorded in the prior year (¥59.4B) and a substantial reduction in other expenses (¥65.7B → ¥5.9B), driving the Operating Margin to 10.1% (prior year 3.0%), an improvement of +7.1pt. By segment, the Automotive Business (50.6% of revenue) led with Operating Income of ¥56.8B (+16.0%), and Industrial Materials also maintained profit growth with Operating Income of ¥32.6B (+28.5%). High-Performance Elastomer Products turned from a loss to profit (Operating Income ¥4.3B), contributing to company-wide margin improvement. Gross margin improved to 29.9% (+200bp YoY), SG&A ratio remained at 21.9% (similar to prior year), and Core Operating Income expanded to ¥95.5B (prior year ¥74.4B) — a +28.4% increase. Equity-method investment income of ¥12.2B and net financial income (financial income ¥9.7B less financial expense ¥4.0B) also contributed, lifting Profit Before Tax to ¥126.5B (+264.2%).
Revenue: Revenue of ¥1192.6B (YoY +3.2%) sustained growth. By segment, the Automotive Business recorded ¥603.9B (+4.0%), representing 50.6% of total revenue, supported by steady demand for accessory drive belts and motorcycle drive belts. Industrial Materials posted ¥388.1B (+1.9%), 32.5% of revenue, with V-belts for industrial machinery and conveyor belts remaining resilient. High-Performance Elastomer Products generated ¥144.2B (+1.4%), 12.1% of revenue, aided by precision components such as cleaning blades and high-function rollers. Other Businesses (medical devices, robot-related devices, etc.) amounted to ¥56.4B (+7.8%), maintaining growth despite small scale. Overall, international expansion and FX translation effects (foreign operations translation difference of ¥26.7B recorded in Other Comprehensive Income) supported revenue growth, and gross margin improved to 29.9% (+200bp YoY), driven by price normalization and product mix improvement.
Profitability: Cost of goods sold was ¥836.3B (YoY +1.0%), gross profit ¥356.3B (YoY +8.6%), yielding a gross margin of 29.9% (prior 28.4%). SG&A was ¥260.8B (YoY +4.1%); although SG&A grew slightly faster than sales, SG&A ratio rose only +0.2pt to 21.9% (prior 21.7%), indicating generally effective cost control. Operating Income was ¥120.7B (YoY +246.9%), raising the Operating Margin to 10.1% (prior 3.0%). Two main factors drove the improvement. First, prior-year impairment losses of ¥59.4B (primarily in High-Performance Elastomer Products and Other Businesses) were recorded in other expenses, whereas this year impairment declined significantly to ¥2.4B, reducing other expenses from ¥65.7B to ¥5.9B (improvement of ¥59.8B). Second, segment Core Operating Income rose to ¥95.5B (prior ¥74.4B), an increase of ¥21.1B, indicating stronger underlying earnings. Other income rose to ¥18.8B (prior ¥6.8B), up ¥12.0B, possibly reflecting gains on disposal of fixed assets and asset-efficiency measures. Equity-method investment income decreased to ¥12.2B (prior ¥16.3B), down ¥4.1B, but net financial contribution (financial income ¥9.7B less financial expense ¥4.0B = +¥5.7B) supported results. Ordinary Income (economic-equivalent) was ¥82.4B (YoY +17.1%). Although “Ordinary Income” is not disclosed under IFRS, the economic equivalent including financial results (Operating Income + Financial Income - Financial Expense + Equity-method income) is approximately ¥138.1B, which led to Profit Before Tax of ¥126.5B (YoY +264.2%). After deducting income taxes of ¥20.6B (effective tax rate 16.3%), Net Income was ¥105.9B, and Net Income attributable to parent company shareholders was ¥105.7B (YoY +606.2%). Net margin improved to 8.9% (prior 1.3%), up +7.6pt, sustaining revenue and profit growth.
Automotive Business: Revenue ¥603.9B (+4.0%), Core Operating Income ¥56.8B (+16.0%), margin 9.4% (prior 8.4%, +1.0pt). Orders for accessory drive belts and motorcycle transmission belts remained robust; price revisions and manufacturing efficiency improvements supported margin expansion. Industrial Materials Business: Revenue ¥388.1B (+1.9%), Core Operating Income ¥32.6B (+28.5%), margin 8.4% (prior 6.6%, +1.8pt). V-belts for industrial machinery, conveyor belts, and rice-husking rolls remained stable; raw material price stabilization and productivity gains boosted profits. High-Performance Elastomer Products: Revenue ¥144.2B (+1.4%), Core Operating Income ¥4.3B (prior -¥0.15B), margin 3.0%, achieving turnaround from prior-year loss. Demand recovery for precision components (cleaning blades, high-performance rollers, precision belts) and business structural improvement after prior-year impairment contributed. Other Businesses (medical devices, robot-related devices, etc.): Revenue ¥56.4B (+7.8%), Core Operating Income ¥2.4B (-18.2%), margin 4.3% (prior 5.0%), where proactive investments in growth areas pressured margins.
Profitability: Operating Margin of 10.1% improved +7.1pt from 3.0%, returning toward the company’s normal earning power. Gross margin of 29.9% (prior 28.4%) improved +200bp, reflecting price normalization and product-mix improvement. SG&A ratio of 21.9% (prior 21.7%) rose slightly but cost discipline was maintained. ROE improved significantly to 12.1% (prior 1.8%), composed of Net Margin 8.9% (prior 1.3%) × Total Asset Turnover 0.904 (prior 0.958) × Financial Leverage 1.42 (prior 1.47). The +7.6pt improvement in net margin was the main driver of ROE recovery; the slight decline in asset turnover was due to increases in inventory and trade receivables.
Cash Quality: Operating Cash Flow / Net Income = ¥155.9B ÷ ¥105.7B = 1.48x, indicating strong cash backing of profits. Accrual ratio = (Net Income ¥105.7B - Operating CF ¥155.9B) ÷ Total Assets ¥1318.9B = -3.8%, indicating a cash-generative profit structure. Free Cash Flow (FCF) was ¥118.9B (Operating CF ¥155.9B - Investing CF ¥37.0B), sufficient to cover total shareholder returns of ¥52.8B (dividends ¥32.4B + share repurchases ¥20.4B). Investment Efficiency: Total Asset Turnover declined to 0.904x (prior 0.958x) due to increased inventory and trade receivables. DSO = Trade Receivables ¥233.98B ÷ (Revenue ¥1192.6B ÷ 365) ≒ 72 days; DIO = Inventory ¥210.9B ÷ (COGS ¥836.3B ÷ 365) ≒ 92 days; CCC (Inventory + Receivables - Payables) = ¥210.9B + ¥233.98B - ¥189.1B = ¥255.8B, equivalent to about 78 days of working capital tied up. Year-on-year increases in inventory (+¥15.6B) and receivables (+¥4.2B) pressured asset turnover, indicating room for improvement.
Financial Soundness: Equity Ratio 70.2% (prior 68.0%) indicates a strong capital base. D/E ratio (Short-term borrowings ¥52.3B + Long-term borrowings ¥17.9B - Cash ¥217.1B) ÷ Equity ¥928.7B = -14.7%, reflecting net cash position. Of interest-bearing debt ¥70.2B, short-term borrowings account for 74.5%, but cash is approximately 4.1x short-term borrowings, limiting liquidity risk. Current Ratio = ¥683.3B ÷ ¥335.8B = 203%, indicating sufficient short-term payment capacity.
Operating CF was ¥155.9B (YoY +44.9%). Starting from Profit Before Tax ¥126.5B, addbacks included depreciation ¥54.5B and impairment losses ¥2.4B; adjustments for equity-method income -¥12.2B and FX gains -¥3.3B; changes in working capital were inventory increase -¥5.5B, receivables increase +¥3.1B, payables decrease -¥1.9B, netting to a minor cash outflow of -¥4.3B, bringing the subtotal to ¥165.1B. With interest/dividend received ¥15.4B, interest paid -¥1.1B, corporate tax paid -¥26.8B, and tax refunds ¥3.4B, Operating CF settled at ¥155.9B. Investing CF was -¥37.0B, composed of net increase/decrease in time deposits +¥9.0B, capital expenditures -¥47.3B, proceeds from sale of fixed assets ¥1.1B, intangible asset acquisitions -¥3.2B, sales of capital nature financial instruments ¥3.3B, and other ¥0.1B. FCF was ¥155.9B - ¥37.0B = ¥118.9B, covering dividends ¥32.4B and share buybacks ¥20.4B (total shareholder return ¥52.8B) by 2.25x. Financing CF was -¥85.9B, comprising net repayment of short-term borrowings -¥14.6B, long-term borrowings repayments -¥4.5B, lease liabilities repayments -¥12.7B, treasury stock purchases -¥20.4B, dividends to parent company shareholders -¥32.4B, and dividends to non-controlling interests -¥1.4B. After FX translation effect +¥6.9B, cash increased by ¥39.9B to an ending balance of ¥217.1B. Capital expenditures of ¥47.3B versus depreciation ¥54.5B result in CapEx/Depreciation = 0.87x, indicating maintenance-level investment and conservative capital spending.
Of Net Income ¥105.7B, the recurring earnings base composed of Core Operating Income ¥95.5B plus equity-method income ¥12.2B and net financial income ¥5.7B amounts to roughly ¥113.4B. However, the increase in Other Income ¥18.8B (prior ¥6.8B, +¥12.0B) and reduction in Other Expenses to ¥5.9B (prior ¥65.7B, -¥59.8B) significantly contributed. Prior-year Other Expenses included impairment losses of ¥59.4B; the sharp decline to impairment losses of ¥2.4B this year created a positive swing. The breakdown of Other Income ¥18.8B is not disclosed but suggests gains on disposal of fixed assets and asset-efficiency measures. Financial income of ¥9.7B (other recurring elements such as interest and dividend income) and reduced financial expense ¥4.0B (prior ¥5.9B) reflect lower interest and FX losses. Equity-method income ¥12.2B (prior ¥16.3B) fluctuates with partner performance but remains a recurring element. Operating CF ¥155.9B vs. Net Income ¥105.7B yields CF/Net Income 1.48x and accrual ratio -3.8%, supporting a healthy cash-generative profit profile. Nevertheless, the profit uplift from increased Other Income and normalization of Other Expenses includes one-off elements; next year attention should focus on the sustainability of Core Operating Income and trends in non-operating items. Comprehensive Income ¥157.0B exceeded Net Income ¥105.9B by +48.1%, driven by Other Comprehensive Income of ¥51.1B (foreign operations translation difference ¥26.7B, FVOCI financial assets fair value gains ¥17.6B, equity-method investee OCI ¥7.1B, remeasurements of defined benefit plans ¥0.1B), indicating valuation gains that strengthen financial position.
The company’s plan projected Revenue ¥1200.0B, Operating Income ¥110.0B, Net Income attributable to parent company shareholders ¥80.0B, EPS ¥196.31, and dividend ¥50.0 (Full Year). Actual results were Revenue ¥1192.6B (vs. plan -0.6%), Operating Income ¥120.7B (vs. plan +9.7%), and Net Income attributable to parent company shareholders ¥105.7B (vs. plan +32.1%), materially exceeding profit plans. The Operating Income overperformance was driven by better-than-assumed improvement in Other Expenses and accumulation of Core Operating Income. Net Income outperformance reflected increased Other Income and lower tax burden (effective tax rate 16.3%). The company paid interim dividend ¥40 and year-end ¥80 (including commemorative dividend ¥20), totaling ¥120 for the year, materially above the planned ¥50. The year-end ¥80 includes ¥60 ordinary dividend + ¥20 founding 120th anniversary commemorative dividend; ordinary dividend level is expected to revert to the base dividend of ¥50 (planned) in subsequent years. Company guidance for the next fiscal year (FY2027 ending March 2027) anticipates Revenue ¥1200.0B, Operating Income ¥110.0B (YoY -8.9%), and Net Income ¥80.0B (YoY -24.3%), projecting reduced profits due to reversion of increased Other Income and reduced Other Expenses this year. Revenue is expected to be flat, and Operating Income ¥110.0B implies normalization to an Operating Margin around 9.2%, which is not excessively conservative. Net Income forecast ¥80.0B presumes reversion of non-recurring Other Income and a return to sustainable earnings on an EPS ¥196.31 basis. Forecast dividend ¥50 (Full Year) excludes the commemorative dividend and represents the base distribution; payout ratio versus expected EPS ¥196.31 is about 25.5%, a conservative and sustainable level.
Dividends totaled interim ¥40 + year-end ¥80 (including commemorative ¥20) for a full-year ¥120, an increase of ¥82 vs. prior year dividend ¥38 (+215.8%). Year-end ¥80 comprised ¥60 ordinary + ¥20 founding 120th anniversary commemorative dividend. Total dividends amounted to ¥32.35B (prior ¥32.40B), implying a payout ratio of 30.6% against Net Income attributable to parent company shareholders ¥105.7B. Excluding the commemorative ¥20, the base dividend is ¥100, giving a base payout ratio of approximately 25.5%. Share buybacks of ¥20.44B were executed, increasing treasury stock from -¥36.78B to -¥56.64B. Total shareholder return (dividends ¥32.35B + buybacks ¥20.44B) was ¥52.79B, yielding a total return ratio of ¥52.79B ÷ ¥105.7B = 49.9%. Against FCF ¥118.9B, total return coverage was 2.25x, demonstrating ample capacity. Forecast dividend for next year is ¥50 (Full Year, after commemorative dividend lapse), reverting to a payout ratio of about 25.5% vs. forecast EPS ¥196.31, a conservative and sustainable level. Given cash ¥217.1B and Operating CF ¥155.9B, dividend sustainability is strong. Share buybacks were executed this year; continuation in subsequent years depends on future announcements.
Revenue concentration risk in Automotive Business: The Automotive Business accounts for ¥603.9B or 50.6% of revenue; performance is linked to vehicle production volumes and OEM production cuts. Electrification (EV adoption) could reduce demand for conventional accessory drive belts; delays in developing and launching EV-compatible products may lead to revenue and profit declines. DSO is 72 days, indicating elevated receivables of ¥233.98B and associated collection risk.
Prolonged low working capital efficiency risk: Inventory ¥210.9B (DIO 92 days) and trade receivables ¥233.98B (DSO 72 days) lock up working capital of ¥255.8B. Total Asset Turnover fell to 0.904x YoY, with inventory and receivables increases pressuring capital efficiency. Emergence of inventory write-downs or increases in aging receivables could reduce Operating CF and ROE. The rapid increase in deferred tax assets to ¥19.5B (from ¥6.5B, +201%) indicates expanded recognition of tax effects, but if assumptions on future taxable income deteriorate, there is risk of reversal of deferred tax assets.
FX volatility risk: A foreign operations translation difference of ¥26.7B was recognized in Other Comprehensive Income, signaling significant FX translation effects on overseas subsidiaries and investments. A reversal of yen depreciation could reduce yen-equivalent revenue and profits and compress comprehensive income. Additionally, overseas sales competitiveness and raw material procurement costs are affected by FX, so monitoring hedge effectiveness and sensitivity is necessary.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 12.1% | 6.3% (3.2%–9.9%) | +5.8pt |
| Operating Margin | 10.1% | 7.8% (4.6%–12.3%) | +2.4pt |
| Net Margin | 7.1% | 5.2% (2.3%–8.2%) | +1.9pt |
ROE 12.1% exceeds the manufacturing median 6.3% by +5.8pt, and Operating Margin 10.1% also outperforms the median 7.8% by +2.4pt. Profitability ranks in the upper tier within the industry, reflecting business restructuring benefits following last year’s large impairment.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.2% | 3.7% (-0.4%–9.3%) | -0.5pt |
Revenue growth 3.2% slightly lags the industry median 3.7%, placing growth near the industry median. High concentration in the Automotive Business suggests that improving working capital efficiency is key to accelerating growth.
※ Source: Company aggregation of public financial statements
Recovery of Operating Margin to 10.1% and improvement in underlying earning power: Operating Income recovered to ¥120.7B (+246.9%) and Operating Margin to 10.1% (prior 3.0%), demonstrating visible results of business improvement following prior-year impairments. Accumulation of Core Operating Income ¥95.5B (+28.4%) and normalization of Other Expenses (¥65.7B → ¥5.9B) were material contributors. By segment, Automotive margin 9.4% (+1.0pt), Industrial Materials margin 8.4% (+1.8pt), and the turnaround of High-Performance Elastomer Products lifted corporate margins. ROE 12.1% (prior 1.8%) exceeds the industry median 6.3% by +5.8pt, placing profitability among the industry leaders. Going forward, sustaining and expanding core margins after one-off Other Income effects is essential for continued growth.
Strengthened cash generation and enhanced shareholder returns: Operating CF ¥155.9B (+44.9%) and FCF ¥118.9B were secured; Operating CF / Net Income 1.48x shows good cash conversion. Total shareholder return ¥52.8B (dividends ¥32.4B + buybacks ¥20.4B) was covered 2.25x by FCF, and cash rose by ¥39.9B to ¥217.1B. Full-year dividend ¥120 (including commemorative ¥20) was paid; forecast dividend next year ¥50 (no commemorative) implies payout ratio about 25.5% vs. forecast EPS ¥196.31, conservative and sustainable. Equity Ratio 70.2% and net cash position (D/E -14.7%) indicate a robust financial profile, supporting stable dividends and tactical buybacks.
Room for improvement in working capital efficiency and revenue concentration in Automotive Business: Inventory ¥210.9B (DIO 92 days) and receivables ¥233.98B (DSO 72 days) tie up working capital ¥255.8B, reducing Total Asset Turnover to 0.904x. If inventory and receivables efficiency improve, further cash generation and ROE improvement are expected. With Automotive Business representing 50.6% of revenue, the risk of declining demand for drive belts amid EV adoption makes development and introduction of EV-compatible products and expansion of Industrial Materials and High-Performance Elastomer Products critical for portfolio diversification. Company guidance for next year forecasts Operating Income ¥110.0B (-8.9%) and Net Income ¥80.0B (-24.3%), reflecting reversion of Other Income and normalization of core profits; this is not an overly conservative stance. Improving working capital efficiency and cultivating non-automotive growth areas are medium-term priorities.
This report was automatically generated by AI analyzing XBRL financial statement data and is intended as an analytical summary of the financial results. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the company from publicly disclosed financial statements and are for reference only. Investment decisions are your responsibility; please consult a professional advisor as needed.