| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥7312.1B | ¥6529.9B | +12.0% |
| Operating Income / Operating Profit | ¥1381.6B | ¥1296.6B | +6.6% |
| Profit Before Tax | ¥1654.8B | ¥1333.1B | +24.1% |
| Net Income / Net Profit | ¥1164.7B | ¥927.8B | +25.5% |
| ROE | 15.1% | 13.8% | - |
For the fiscal year ended March 2026, the company achieved revenue of ¥7,312.1B (YoY +¥782.1B, +12.0%), Operating Income of ¥1,381.6B (YoY +¥85.0B, +6.6%), Ordinary Income of ¥1,219.9B (YoY +¥84.7B, +7.5%), and Net Income of ¥1,164.7B (YoY +¥236.9B, +25.5%), recording year-on-year increases in both revenue and profit. Revenue posted double-digit growth for the second consecutive year, supported by steady automotive demand and the June acquisition of Niterra Materials; Net Income rose substantially due to an expansion in financial income of ¥322.6B (YoY +¥217.6B). Operating margin declined slightly to 18.9% (down 1.0pt from 19.9% a year earlier), while net margin improved to 15.9% (up 1.7pt from 14.2%), reflecting the pronounced boost from financial income.
【Revenue】Revenue reached ¥7,312.1B (+12.0%), a new record high. The core Automotive Business grew stably to ¥5,875.1B (+8.2%), accounting for 80.3% of total revenue. The Component Solutions segment showed high growth at ¥1,299.3B (+27.0%), aided by the expanded consolidation scope from the June acquisition of Toshiba Materials (now Niterra Materials). Other segments, though small at ¥137.7B (+74.2%), recorded substantial increases driven by materials sales. Cost of sales was ¥4,503.4B (+10.6%), and gross margin declined to 38.4% (down 1.1pt from 39.5%), reflecting integration costs of acquired businesses and changes in segment mix.
【Profitability】SG&A expenses were ¥1,404.3B (+5.1%), growing at a slower pace than revenue, resulting in generally favorable operating leverage. Operating Income rose to ¥1,381.6B (+6.6%) though operating margin contracted to 18.9% (from 19.9%, -1.0pt). Financial income increased sharply to ¥322.6B (from ¥107.9B a year earlier, +198.8%), driven by foreign exchange gains and expanded investment returns. Financial expenses decreased to ¥49.3B (from ¥71.4B, -31.0%), and the improved net financial position supported growth in Ordinary Income. Other expenses included impairment losses of ¥40.4B and losses on sales of equity-method investments of ¥45.2B, yet Profit Before Tax expanded to ¥1,654.8B (+24.1%). Income taxes were ¥490.1B (effective tax rate 29.6%), resulting in Net Income of ¥1,164.7B (+25.5%), achieving both revenue and profit growth.
The Automotive Business reported revenue of ¥5,875.1B (+8.2%), Operating Income of ¥1,353.0B (+0.8%), and a margin of 23.0%, maintaining high profitability. As the core business, it generated the majority of consolidated Operating Income, supported by steady demand for spark plugs and exhaust gas sensors. Component Solutions delivered high growth with revenue of ¥1,299.3B (+27.0%) but continued to post an operating loss of ¥45.8B (margin -3.5%). This segment is in a growth-investment phase covering cutting tools, semiconductor-related parts, and fuel cells; integration costs from acquisitions and development expenditures have delayed profitability. The Other segment, while small at ¥137.7B (+74.2%), achieved Operating Income of ¥74.4B (margin 54.0%) driven by high-margin materials sales. Consolidated profitability is led by the core Automotive Business, while turning the growth segments profitable will be key to improving overall margins.
【Profitability】ROE was 15.7% (up 1.6pt from 14.1%), supported by improved net margin and better asset turnover. Operating margin was 18.9% (down 1.0pt from 19.9%), while EBITDA margin remained high at 25.1% (Operating Income + Depreciation ¥450.2B ÷ Revenue). Gross margin fell to 38.4% (down 1.1pt from 39.5%), reflecting integration of acquired businesses and cost pressures. 【Cash Quality】Operating Cash Flow / Net Income was 0.94x (OCF ¥1,093.8B ÷ Net Income ¥1,164.7B), generally consistent, but OCF/EBITDA was 0.60x (OCF ¥1,093.8B ÷ EBITDA ¥1,831.8B), indicating working capital increases constrained cash conversion. Working capital efficiency deteriorated: DSO 86 days (Trade Receivables ¥1,721.7B ÷ Daily Sales ¥20.0B), DIO 176 days (Inventories ¥2,177.5B ÷ Daily Cost of Sales ¥12.3B), and CCC 206 days (DSO + DIO - DPO), highlighting receivables and inventory build-up. 【Investment Efficiency】Total Asset Turnover was 0.60x (Revenue ¥7,312.1B ÷ Average Total Assets ¥12,105.5B), down from 0.68x due to asset increases from large M&A. ROIC (NOPAT ÷ Invested Capital) is estimated at approximately 11.4% (Operating Income ¥1,381.6B × (1 - 0.296) ÷ Average Invested Capital ¥8,539.4B), exceeding capital cost. 【Financial Soundness】Equity Ratio was 62.8% (down 5.3pt from 68.1%), still solid, but interest-bearing debt increased to ¥2,424.6B (from ¥1,566.8B, +54.8%) to fund M&A. Debt/EBITDA rose temporarily to 13.2x (Interest-bearing debt ¥2,424.6B ÷ EBITDA ¥1,831.8B), while interest coverage remained strong at 28.0x (Operating Income ¥1,381.6B ÷ Financial Expenses ¥49.3B).
Operating Cash Flow was ¥1,093.8B (down 17.7% from ¥1,329.2B), where depreciation ¥450.2B and impairment losses ¥40.4B were added back to Profit Before Tax ¥1,654.8B, but increases in working capital restrained cash generation. Inventory increased ¥167.8B, trade receivables rose ¥90.0B, trade payables decreased ¥15.5B, and other working capital items resulted in cash outflows of ¥226.7B, totaling roughly ¥50B0 of working capital burden. Corporate tax payments of ¥434.3B were also heavy, compressing OCF from a pre-working-capital subtotal of ¥1,508.3B by about ¥400B. Investing Cash Flow was -¥1,655.3B, driven by capital expenditures of ¥367.6B and acquisitions of subsidiaries amounting to ¥1,474.9B (Niterra Materials acquisition), and acquisition of investment securities ¥36.5B. Part proceeds included sales of property, plant & equipment ¥44.8B and sales of investment securities ¥113.2B. Free Cash Flow was -¥561.5B, a significant negative primarily due to one-off M&A investment. Financing Cash Flow was ¥286.2B, with long-term borrowings of ¥996.0B raised to fund acquisitions and refinancing, while dividends ¥363.7B and share buybacks ¥167.6B (total ¥531.3B) were returned to shareholders; net increase in short-term borrowings was ¥5.2B and repayments of long-term borrowings were ¥137.7B. Cash and cash equivalents decreased by ¥204.4B from ¥2,081.9B at the beginning of the period to ¥1,877.5B at year-end; even accounting for a positive foreign exchange translation effect of ¥66.5B, liquidity was somewhat compressed due to front-loaded investments and shareholder returns.
Operating Income of ¥1,381.6B is based on an ongoing earnings base centered on the core Automotive Business (margin 23.0%), while financial income of ¥322.6B (4.4% of revenue) lifted final profit, widening the gap between operating and net profit stages. Financial income mainly comprised interest and dividends received ¥37.0B and foreign exchange gains, including temporary factors dependent on FX and interest rate environments. Other expenses included impairment losses ¥40.4B and losses on sales of equity-method investments ¥45.2B, but these represented less than 4% of Net Income ¥1,164.7B and did not materially impair recurring earnings quality. Accrual quality is generally acceptable with OCF/Net Income at 0.94x, but OCF/EBITDA at 0.60x remains low due to working capital increases; inventory accumulation (+¥338.2B) and accounts receivable increases (+¥245.6B) pressured cash conversion. Comprehensive Income was ¥1,498.3B (Net Income ¥1,164.7B + Other Comprehensive Income ¥333.6B), including foreign currency translation gains ¥276.3B and FVOCI changes in financial assets ¥43.9B, resulting in a 28.6% divergence between Net Income and Comprehensive Income. Financial income is subject to market conditions next fiscal year, and the sustainability of operating income levels will determine earnings quality.
Full-year guidance forecasts revenue of ¥7,900.0B (vs. actual +8.1%) and Operating Income of ¥1,500.0B (+8.6%), expecting revenue and profit growth. However, profit attributable to owners of parent is projected at ¥1,050.0B (down from actual ¥1,128.9B, -7.0%), reflecting conservative assumptions including PPA amortization from acquisitions, normalization of financial income, and increased non-controlling interests. First-half results represented revenue ¥3,656.0B (46.3% of full-year plan) and Operating Income ¥690.8B (46.1% of plan), indicating generally steady progress; the second half is planned at revenue ¥4,244.0B (+16.1%) and Operating Income ¥809.2B (+17.1%). Forecast EPS of ¥535.00 and dividend forecast of ¥105.00 imply a payout ratio of 19.6%, a conservative level that leaves room for shareholder returns depending on integration progress and cash generation recovery. Backlog data were not disclosed; the outlook assumes sustained demand in the core Automotive Business and phased realization of integration synergies.
Annual dividend was ¥205 (interim ¥93, year-end ¥112), with a payout ratio of 38.2% (based on reported EPS ¥570.43), at a sustainable level. Total dividends amounted to ¥364.0B (consistent with dividend payments of ¥363.7B in the cash flow statement). Additionally, share buybacks of ¥167.6B were executed, bringing total shareholder returns to ¥531.3B. The total return ratio (dividends + buybacks) was 47.1% (Total returns ¥531.3B ÷ Net Income ¥1,128.9B), demonstrating an active shareholder return stance. However, Free Cash Flow was negative at -¥561.5B, with FCF coverage at -0.94x, indicating current returns were not covered by internal cash flow and were financed by borrowings to support M&A. Next fiscal year’s forecast dividend of ¥105 (implying a 19.6% payout on forecast EPS ¥535) leaves headroom; if integration progress restores Operating Cash Flow and normalizes working capital, sustainability of stable dividends is high.
Segment concentration and cyclicality: The Automotive Business accounts for 80.3% of revenue and the majority of Operating Income, making consolidated results sensitive to demand cycles and structural shifts such as electrification. Given the high proportion of Operating Income (¥1,353.0B) generated by this segment, fluctuations in the auto market can materially affect consolidated performance. Risk of declining spark plug demand due to electrification and the company’s ability to respond to exhaust emission regulation trends will determine medium- to long-term earnings stability.
Integration execution and delayed realization of synergies: The June acquisition of Niterra Materials significantly increased goodwill and intangible assets to ¥1,621.5B, representing 13.3% of total assets. Delays in integration progress or slower-than-expected synergy realization raise the risk of underperformance and future impairment. Component Solutions is still loss-making (Operating Loss ¥45.8B) and in the process of monetization; early realization of integration benefits will be key to improving consolidated margins.
Working capital efficiency deterioration and weaker cash conversion: DSO 86 days, DIO 176 days, and CCC 206 days indicate significant receivables and inventory build-up, and OCF/EBITDA of 0.60x shows a marked decline in cash conversion efficiency. If working capital normalization is delayed, under a high leverage environment (Debt/EBITDA 13.2x) the company may face constrained cash generation, limiting shareholder returns and investment capacity.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| ROE | 15.7% | 6.3% (3.2%–9.9%) | +9.4pt |
| Operating Margin | 18.9% | 7.8% (4.6%–12.3%) | +11.1pt |
| Net Margin | 15.9% | 5.2% (2.3%–8.2%) | +10.7pt |
Profitability metrics significantly exceed industry medians, indicating high profitability.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.0% | 3.7% (-0.4%–9.3%) | +8.3pt |
Growth outpaces the industry median by 8.3pt, driven by M&A effects and steady core-business performance.
※Source: Company compilation
The reported results show record revenue and double-digit Net Income growth, while maintaining high profitability with an Operating Margin of 18.9% and an EBITDA Margin of 25.1%. ROE of 15.7% exceeds the industry median by 9.4pt, driven by the core Automotive Business (margin 23.0%). However, Operating Margin declined by 1.0pt YoY, with integration costs from acquisitions and continued losses in growth segments weighing on margins.
The large M&A (Niterra Materials) increased goodwill and intangible assets to ¥1,621.5B and raised interest-bearing debt to ¥2,424.6B (Debt/EBITDA 13.2x). Although the Equity Ratio of 62.8% indicates a solid financial base, deterioration in OCF/EBITDA to 0.60x and a CCC of 206 days show a clear decline in cash conversion efficiency. Normalizing working capital (compressing inventory and receivables) and early realization of integration synergies are top priorities. A trajectory of EBITDA growth from integration and subsequent deleveraging will determine medium-term capital efficiency and valuation.
With a payout ratio of 38.2% and a total return ratio of 47.1%, the company is shareholder-friendly, but FCF was negative at -¥561.5B, and returns were not funded by internal cash flows due to M&A investments. Next year’s forecast implies revenue and operating profit growth but a decline in profit attributable to owners of parent, reflecting conservative assumptions including PPA amortization and normalization of financial income. Improvements in working capital efficiency and Operating Cash Flow recovery would enable balancing stable dividends with growth investments.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It is not 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.
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