| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2519.1B | ¥2565.1B | -1.8% |
| Operating Income / Operating Profit | ¥370.1B | ¥397.3B | -6.8% |
| Ordinary Income | ¥393.8B | ¥416.9B | -5.6% |
| Net Income / Net Profit | ¥317.6B | ¥321.8B | -1.3% |
| ROE | 13.3% | 14.9% | - |
For the fiscal year ended March 2026, Revenue was ¥2519.1B (YoY -¥46.0B, -1.8%), Operating Income was ¥370.1B (YoY -¥27.2B, -6.8%), Ordinary Income was ¥393.8B (YoY -¥23.1B, -5.6%), and Net Income was ¥317.6B (YoY -¥4.2B, -1.3%). The primary cause of the company-wide revenue decline was demand adjustment in the High-Performance Products segment (-12.3%), but gross margin remained high at 27.7% and the operating margin stayed strong at 14.7%. Non-operating items included foreign exchange gains of ¥5.9B and dividend income received of ¥5.9B which provided support. Extraordinary items included litigation settlement payments of ¥6.0B and impairments of ¥4.2B, resulting in a net special items impact of -¥6.6B, which was limited. Disposal and cancellation of treasury stock increased shareholders’ equity to ¥2,396.1B (YoY +¥231.8B, +10.7%), securing ROE of 13.3%. Operating Cash Flow (OCF) decreased to ¥239.4B (YoY -23.4%), remaining at 0.75x of Net Income. The main drivers were corporate tax payments of ¥151.8B, decrease in accounts payable of ¥37.5B, and working capital increases such as inventory buildup. Free Cash Flow was ¥137.8B, but room to cover combined dividend and share buybacks was limited. The guidance for next fiscal year forecasts Revenue ¥2,700B (+7.2%) and Operating Income ¥450B (+21.6%), expecting margin recovery from normalization in High-Performance Products markets and cost controls.
[Revenue] Revenue totaled ¥2,519.1B, a slight decline of -1.8% YoY. By segment, High-Performance Products fell significantly to ¥390.9B (-12.3%) as demand adjustment in semiconductor and LCD manufacturing equipment markets hit hard. Meanwhile, Plant construction & sales were ¥795.0B (+1.3%), Industrial Products ¥647.0B (+0.6%), Automotive Parts ¥515.0B (+0.6%) — showing resilience. Building Materials were ¥284.9B (-2.1%) with a slight decline. By region, Japan was ¥2,000.7B (-1.7%), Asia ¥393.9B (-2.8%), and Other ¥124.5B (-0.4%), with declines across all regions. Segment composition: Plant 31.6%, Industrial Products 25.7%, Automotive Parts 20.5%, High-Performance Products 15.5%, Building Materials 11.3%; contraction in High-Performance Products drove the company-wide revenue decline.
[Profitability] Cost of sales was ¥1,820.1B (cost ratio 72.3%) producing gross profit of ¥699.0B and gross margin of 27.7% (prior year 27.6%), essentially flat. SG&A was ¥328.8B (SG&A ratio 13.1%), up +5.9% YoY, and the increase in costs versus lower sales pressured operating income. Operating Income was ¥370.1B (operating margin 14.7%), down -6.8% YoY. By segment, High-Performance Products operating income was ¥69.1B (-32.5%), Industrial Products ¥101.2B (-8.5%), Plant ¥119.8B (-4.2%) also declined. Conversely, Automotive Parts was ¥53.1B (+17.0%) and Building Materials ¥26.9B (+91.8%), substantially offsetting the company-wide decline. Non-operating income totaled ¥29.7B (dividend income ¥5.9B, foreign exchange gains ¥5.9B, interest income ¥1.5B, etc.), non-operating expenses ¥6.0B (interest expense ¥2.1B, forex losses ¥0.9B, etc.), resulting in Ordinary Income of ¥393.8B (ordinary income margin 15.6%). Special gains/losses netted -¥6.6B (gain on sales of investment securities ¥2.3B, litigation settlement ¥6.0B, impairments ¥4.2B, etc.), yielding income before income taxes of ¥387.1B. Income taxes were ¥69.6B (effective tax rate 18.0%), and non-controlling interests ¥1.2B were deducted, resulting in Net Income attributable to owners of parent of ¥317.6B (net margin 12.6%). In conclusion, the sharp decline in High-Performance Products and higher SG&A caused lower sales and profits, but margins remained high and recoveries in Automotive Parts and Building Materials provided support.
Plant construction & sales: Revenue ¥795.0B (+1.3%), Operating Income ¥119.8B (-4.2%), margin 15.1% (down 0.8pt from 15.9% prior year). Industrial Products: Revenue ¥647.0B (+0.6%), Operating Income ¥101.2B (-8.5%), margin 15.6% (down 1.6pt from 17.2%). High-Performance Products: Revenue ¥390.9B (-12.3%), Operating Income ¥69.1B (-32.5%), margin 17.7% (down 5.2pt from 22.9%). Adjustment in semiconductor and LCD manufacturing equipment markets hit prices and utilization, the largest driver of company-wide operating profit decline. Automotive Parts: Revenue ¥515.0B (+0.6%), Operating Income ¥53.1B (+17.0%), margin 10.3% (improved 1.4pt from 8.9%) — helped by model mix and utilization improvements. Building Materials: Revenue ¥284.9B (-2.1%), Operating Income ¥26.9B (+91.8%), margin 9.5% (up 4.7pt from 4.8%) — profitability-focused order strategy and construction efficiency paid off. Segment assets totaled ¥2,431.6B (prior year ¥2,296.9B), with notable increases in High-Performance Products assets ¥445.2B (+9.1%) and Industrial Products assets ¥755.5B (+8.1%) reflecting inventory and construction-related asset build-up.
[Profitability] Operating margin was 14.7%, down 0.8pt from 15.5% prior year; gross margin 27.7% was flat; SG&A ratio 13.1% rose 1.0pt from 12.1% prior year. ROE was 13.3%, down 2.2pt from 15.5% prior year. Components: Net margin 12.6% (up 0.1pt from 12.5%), Total Asset Turnover 0.82x (prior year 0.89x), Financial leverage 1.28x (prior year 1.34x). EBITDA was ¥443.3B (Operating Income ¥370.1B + Depreciation & Amortization ¥73.1B), giving an EBITDA margin of 17.6%. [Cash Quality] OCF/Net Income ratio 0.75x and OCF/EBITDA 0.54x indicate weak cash conversion of earnings. Cash Conversion Cycle (CCC) ~124 days (Receivables collection 49 days + Inventory 108 days - Payables 33 days), worsening YoY. Inventory days (DIO) 108 days is long for manufacturing; inventory optimization is an issue. [Investment Efficiency] Estimated ROIC about 9.8% (estimated NOPAT ¥287B ÷ estimated invested capital ¥2,930B), exceeding cost of capital. Total Asset Turnover 0.82x declined from 0.89x prior year. [Financial Soundness] Equity Ratio 78.0% (up 3.5pt from 74.5% prior year), Current Ratio 368.8%, Quick Ratio 324.9% — extremely robust. Interest-bearing debt ¥97.5B (only short-term borrowings ¥97.5B) versus cash & deposits ¥577.2B, resulting in net cash of ¥479.7B. Debt/EBITDA 0.22x, interest coverage approximately 173x (OCF ¥239.4B ÷ interest paid ¥2.1B) — indicating very strong financial capacity.
OCF was ¥239.4B, down -23.4% from ¥312.5B prior year. At 0.75x of Net Income (¥317.6B), cash conversion was weak; main causes were corporate tax payments ¥151.8B, decrease in accounts payable ¥37.5B, inventory buildup, and slight increase in accounts receivable — working capital reverse turn. Operating cash flow subtotal (before working capital changes) was ¥387.5B and remained solid, but loosened working capital management pressured cash. Investing Cash Flow was -¥101.5B, with capital expenditures ¥80.3B and intangible asset acquisitions ¥7.0B as main items. Proceeds from sales were limited (sales of investment securities ¥2.9B, property sales ¥1.2B). Free Cash Flow was ¥137.8B (substantially down from ~¥303B prior year). Financing Cash Flow was -¥169.9B, driven by dividend payments ¥84.4B, share buybacks ¥80.1B, net decrease in short-term borrowings ¥1.2B, and bond redemptions ¥50.0B. Cash and cash equivalents were ¥566.3B, down ¥19.8B from ¥586.1B prior year. OCF/EBITDA ratio 0.54x and FCF/CapEx ratio 1.72x indicate investments are covered, but cash generation capacity has materially declined YoY. Working capital compression (inventory reduction and acceleration of construction-related receivable collections) is key for sustaining next period’s returns and investments.
Overall quality of earnings is generally good. Of Ordinary Income ¥393.8B, Operating Income accounted for ¥370.1B (94%), indicating core business-driven earnings. Non-operating income ¥29.7B comprised dividend income ¥5.9B, foreign exchange gains ¥5.9B, interest income ¥1.5B, rental income ¥6.1B, and other ¥9.7B, representing 1.2% of Revenue — small. Non-operating expenses ¥6.0B (interest expense ¥2.1B, forex losses ¥0.9B, other ¥3.0B) were minor. Special items netted -¥6.6B (2.1% of Net Income), with gains on sales of investment securities ¥2.3B and property sales ¥0.8B offset by litigation settlement ¥6.0B, impairments ¥4.2B, loss on retirement of fixed assets ¥2.4B, and disaster losses ¥1.6B. The limited impact of special items suggests Ordinary Income appropriately reflects core earnings power. However, OCF/Net Income 0.75x and OCF/EBITDA 0.54x suggest delayed cash realization of accruals, and working capital build-up partially impairs earnings quality. Comprehensive income was ¥395.7B, ¥78.1B higher than Net Income ¥317.6B, comprised of foreign currency translation adjustments ¥27.6B, valuation difference on available-for-sale securities ¥21.1B, and actuarial gains/losses adjustments ¥29.5B. Expansion of valuation differences contributes to balance sheet strengthening but embeds market valuation risk.
For the fiscal year ending March 2027, the company guides Revenue ¥2,700B (+7.2% YoY), Operating Income ¥450B (+21.6%), Ordinary Income ¥450B (+14.3%), Net Income ¥320B (+0.8%), EPS ¥167.51, Dividend ¥35 (post-split basis). An improvement to operating margin of 16.7% is assumed, premised on normalization in High-Performance Products markets, mix improvement, and SG&A restraint. As a progress assessment versus current results, achievement ratios are Revenue 93.3%, Operating Income 82.2%, Ordinary Income 87.5%, suggesting a second-half weighted or conservative guidance. Segment breakdown is not disclosed, but assumptions likely include a rebound in High-Performance Products, stable growth in Plant and Industrial Products, and continued earnings improvement in Automotive Parts and Building Materials. If current working capital increases persist into next fiscal year, downward pressure on FCF generation could constrain returns and investment sustainability; thus inventory compression and improved collection of construction-related receivables are critical to meeting guidance. FX and raw material price assumptions are undisclosed, but given non-operating forex gains of ¥5.9B (1.6% of Operating Income), FX contribution is limited and core operational improvement is expected to be the driver.
Annual dividend comprised interim ¥76 and year-end ¥88, totaling ¥164 (prior year ¥52; the +¥112 includes effect of share split). Payout ratio approx. 22.0%; total return ratio including share buybacks is estimated over 50% (dividends ¥70.2B + share buybacks ¥80.1B). Total returns of approx. ¥150B exceed Free Cash Flow ¥137.8B, indicating single-year returns outstrip FCF. Strong cash & deposits ¥577.2B underpin enhanced returns funded by accumulated reserves. Next fiscal year forecast dividend ¥35 (post-split basis) suggests continued shareholder return policy. Treasury stock decreased by ¥115.9B from -¥145.6B prior period to -¥29.7B this period (disposal/cancellation), contributing to improved capital efficiency. Sustainability of total returns depends on recovery of OCF (working capital correction) and achievement of profit growth, so quarterly progress and cash generation monitoring will be important.
Prolonged working capital management risk: Inventory days 108 and CCC 124 indicate elongation. Decrease in accounts payable ¥37.5B and inventory build-up have weakened cash conversion (OCF/Net Income 0.75x). Continued inventory adjustments and extended construction-related receivables next fiscal year would pressure FCF generation and constrain return and investment capacity. Rigorous inventory control and stronger construction progress management are urgent.
Market dependence risk for High-Performance Products segment: High-Performance Products posted Revenue -12.3% and Operating Income -32.5%, with margin contraction from 22.9% to 17.7% (5.2pt). Continued delayed recovery in semiconductor and LCD manufacturing equipment markets or intensified competition would continue to depress company-wide operating income. If assumed market normalization underpinning next fiscal year’s profit growth is delayed, guidance miss risk could materialize.
SG&A control risk: SG&A rose +5.9% YoY, far outpacing sales growth of -1.8%, reversing operating leverage. SG&A ratio rose to 13.1% (from 12.1%). Cost restraint is essential to achieve next fiscal year’s profit targets, but if fixed costs such as R&D and personnel do not scale favorably with sales growth, margin improvement may be delayed.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.7% | 7.8% (4.6%–12.3%) | +6.9pt |
| Net Margin | 12.6% | 5.2% (2.3%–8.2%) | +7.4pt |
Profitability is among the top in manufacturing, with both operating and net margins well above the industry median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.8% | 3.7% (-0.4%–9.3%) | -5.5pt |
Growth lags the industry median, and the adjustment in High-Performance Products suppressed company-wide growth. Achieving next fiscal year’s revenue plan is key to returning to benchmark levels.
※Source: Company aggregation
Sustainability of high-profit structure and likelihood of turnaround next fiscal year: The company maintains high manufacturing profitability with Operating Margin 14.7%, Gross Margin 27.7%, ROE 13.3%, and a very strong financial position (Equity Ratio 78.0%, net cash ¥479.7B). This period’s profit decline was mainly due to a temporary adjustment in High-Performance Products and increased SG&A, not structural competitiveness erosion. Next fiscal year’s guidance (Revenue +7.2%, Operating Income +21.6%) assumes market normalization and cost controls, with continued earnings support from Automotive Parts and Building Materials. Monitor quarterly order and inventory trends to assess feasibility of margin recovery.
Room for improvement in working capital management and cash generation: OCF/Net Income 0.75x, OCF/EBITDA 0.54x, and CCC 124 days indicate issues in cash conversion. Shortening inventory days from 108, optimizing accounts payable, and accelerating construction-related receivable collections could enable OCF recovery above ¥300B. Although total returns (~¥150B) exceeded Free Cash Flow ¥137.8B in the single year, ample cash reserves (¥577.2B) supported returns. Next fiscal year, combining working capital compression and profit growth should expand FCF and enable sustainable shareholder returns and growth investments.
This report was automatically generated by AI analyzing XBRL financial statement data to produce a financial analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by our company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.