| Metric | Current Period | Prior Year Comparable | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1494.4B | ¥1251.1B | +19.4% |
| Operating Income / Operating Profit | ¥141.6B | ¥102.6B | +38.0% |
| Ordinary Income | ¥56.4B | ¥83.8B | -32.8% |
| Net Income / Net Profit | ¥5.0B | ¥4.4B | +14.2% |
| ROE | 0.8% | 0.7% | - |
For the fiscal year ended March 2026, Revenue amounted to ¥1,494.4B (YoY +¥243.3B, +19.4%), Operating Income was ¥141.6B (YoY +¥39.0B, +38.0%), Ordinary Income was ¥56.4B (YoY -¥27.4B, -32.8%), and Net Income was ¥5.0B (YoY +¥0.6B, +14.2%). Stronger sales and improved gross margin in the core BRASS Business drove a material increase in operating-level profits; however, the recognition of ¥94.0B in non-operating expenses resulted in a significant decline in Ordinary and below. Revenue increased for the second consecutive year. The operating margin improved from 8.2% to 9.5% (+1.3pt), but the net profit margin deteriorated from 4.2% to 0.3% (-3.9pt).
[Revenue] Revenue totaled ¥1,494.4B (YoY +19.4%), marking the second consecutive year of top-line growth. By segment, the core BRASS Business accounted for ¥1,388.9B (+23.0%), representing 93.0% of the total, driven by volume growth and improved selling prices for brass materials serving housing-related, consumer electronics, and automotive markets. The PRECISION Business recorded ¥61.1B (+6.6%) with steady demand for camera mounts and similar products, while the FITTINGGALVANIZING Business declined to ¥119.9B (-8.2%) due to reduced demand for residential steel pipe fittings. Sales to major customer Tōsen Sangyo totaled ¥197.4B, 13.2% of the total, up 7.4% YoY.
[Profitability] Cost of sales was ¥1,290.7B (YoY +16.5%), growing at a slower pace than sales, resulting in Gross Profit of ¥203.7B (+32.1%) and a gross margin of 13.6% (up +1.3pt from 12.3% a year earlier). Selling, General & Administrative expenses were ¥62.1B (+20.4%), roughly in line with sales growth, with an SG&A ratio of 4.2% (prior year 4.1%), essentially flat. Consequently, Operating Income was ¥141.6B (+38.0%) and the operating margin improved to 9.5% (from 8.2%, +1.3pt), indicating a meaningful improvement in core profitability. Conversely, non-operating expenses surged to ¥94.0B (prior year ¥25.7B, +265.8%), comprising interest expense ¥1.4B, foreign exchange loss ¥0.3B, other non-operating expenses ¥0.4B and derivative valuation losses among other items. This expansion of non-operating expenses drove Ordinary Income down sharply to ¥56.4B (-32.8%). Extraordinary items contributed net +¥3.2B, including negative goodwill gain ¥1.9B (related to the consolidation of Mitani Shindō) and gains on sale of investment securities ¥0.9B. Profit before tax was ¥59.5B (-29.0%); after deducting income taxes of ¥16.4B and non-controlling interests of ¥7.2B, Net Income attributable to owners of the parent was ¥35.9B (-31.1%). In summary, while top-line and operating profitability improved, large non-operating cost increases led to declines in Ordinary and Net Income.
The BRASS Business posted Revenue of ¥1,388.9B (+23.0%) and Operating Income of ¥111.8B (+57.7%), yielding an operating margin of 8.0% (up +0.9pt from 7.1%). Increased demand and revised selling prices for brass materials serving housing, consumer electronics, and automotive sectors, along with scale-driven production efficiency improvements, supported margin expansion. The PRECISION Business delivered Revenue of ¥61.1B (+6.6%) and Operating Income of ¥9.1B (+45.2%), with a margin of 14.8% (up +3.9pt from 10.9%), maintaining high profitability due to steady demand for precision components such as camera mounts and yield improvements. In contrast, the FITTINGGALVANIZING Business recorded Revenue of ¥119.9B (-8.2%) and Operating Income of ¥18.7B (-15.3%), with a margin of 15.6% (down -1.3pt from 16.9%), pressured by a decline in residential steel pipe fitting demand and higher fixed cost burden. After deducting corporate expenses of ¥6.3B, consolidated Operating Income was ¥141.6B, with BRASS contributing approximately 79% of operating profit.
[Profitability] Operating margin improved to 9.5% (from 8.2%, +1.3pt) and gross margin improved to 13.6% (from 12.3%, +1.3pt). ROE was 0.8%, a steep decline of -9.6pt from 10.4% the prior year, mainly driven by deterioration in net profit margin to 0.3% (from 4.2%). EBITDA amounted to ¥165.6B (Operating Income ¥141.6B + Depreciation ¥24.0B), producing an EBITDA margin of 11.1%, indicating solid operating cash-generating capacity. [Cash Quality] Operating Cash Flow (OCF) was ¥29.6B, equivalent to 0.83x of Net Income ¥35.9B, with delayed cash realization primarily due to inventory increases of ¥66.6B and corporate tax payments of ¥25.2B. The OCF/EBITDA ratio was 0.18x, low, with working capital expansion being a bottleneck. [Investment Efficiency] Total asset turnover was 1.53x (improved from 1.44x), inventory turnover was 3.4x (inventory turnover days 109 days) down from 3.8x a year ago. Capex/Depreciation was 1.58x, indicating active renewal and capacity expansion investment. [Financial Soundness] Equity Ratio was 64.2% (up +4.1pt from 60.1%), and Debt/Equity ratio was 0.21x, maintaining low leverage. Current ratio was 236% and quick ratio 203%, showing healthy short-term liquidity; however, cash and deposits of ¥12.9B represent only 10.8% of short-term borrowings of ¥119.7B, indicating limited liquidity on hand. Interest-bearing debt totaled ¥131.5B (short-term borrowings ¥119.7B + long-term borrowings ¥11.8B), with Debt/EBITDA of 0.79x and interest coverage (EBIT / interest expense) of 101x, reflecting very high financial resilience.
Operating Cash Flow was ¥29.6B, down -44.2% from ¥53.1B in the prior year. Pre-tax profit of ¥59.5B plus depreciation ¥24.0B and other adjustments produced an operating cash subtotal of ¥54.0B, but working capital increases were significant: inventory increase ¥66.6B and trade receivables increase ¥0.6B offset partially by trade payables increase ¥13.3B, other current assets decrease ¥7.9B, and other current liabilities increase ¥22.2B. After deducting corporate tax payments of ¥25.2B, OCF was ¥29.6B. Investing Cash Flow was -¥48.3B, led by capital expenditures of ¥38.0B and acquisition of subsidiary shares ¥13.5B (consolidation of Mitani Shindō), partially offset by net decrease in short-term loans ¥2.1B and proceeds from sale of securities ¥1.8B. Financing Cash Flow was -¥5.4B, with financing activities including net increase in short-term borrowings ¥16.2B and long-term debt proceeds ¥11.8B, and uses including long-term debt repayments ¥8.3B, dividend payments ¥7.9B, and share buybacks ¥12.7B. As a result, Free Cash Flow was -¥18.7B and cash and deposits decreased by ¥24.0B to ¥12.9B. Dividend and capex together were not covered by internal cash generation, so the company supplemented with increased short-term borrowings and drawing down liquidity.
Core recurring earnings are centered on Operating Income of ¥141.6B. Non-operating income was ¥8.7B (dividends received ¥2.2B, interest income ¥0.1B, etc.), equivalent to 0.6% of sales, indicating low dependency. One-off items included Extraordinary Gains of ¥3.4B (negative goodwill ¥1.9B, gain on sale of investment securities ¥0.9B), representing 9.5% of Net Income ¥35.9B and thus limited. By contrast, the sharp increase in non-operating expenses to ¥94.0B materially distorted the earnings structure; these included interest expense ¥1.4B, foreign exchange loss ¥0.3B and other non-operating expenses ¥0.4B including derivative valuation losses. The expansion of non-operating expenses compressed Ordinary Income to 39.8% of Operating Income, and the interest burden coefficient (Ordinary Income / Operating Income) was 0.40, a low level. Operating Cash Flow being below Net Income (0.83x) indicates delayed cash conversion due to inventory increases of ¥66.6B, deteriorating earnings quality. The accrual ratio (Net Income - OCF) / Net Assets is 0.6%, suggesting low accounting discretion, but non-operating cost structure casts a shadow over earnings sustainability.
The full-year plan forecasts Revenue ¥1,800.0B (YoY +20.5%), Operating Income ¥100.0B (-29.4%), Ordinary Income ¥100.0B (+77.4%), Net Income ¥65.0B (+81.1%), and EPS ¥787.28. The plan assumes an operating margin of 5.6%, a decline of -3.9pt from the current period 9.5%, reflecting conservative assumptions including normalization of raw material prices, reversal of inventory valuation effects, and stabilization of production efficiency. Ordinary Income is assumed to be in line with Operating Income, premised on normalization of the large non-operating expenses incurred this period. Progress rates are Sales 83.0%, Operating Income 141.6%, Ordinary Income 56.4%; Operating Income has already exceeded the full-year plan, but the company appears to conservatively assume raw material cost increases and demand volatility in H2. The dividend forecast of ¥50 implies a payout ratio of 6.4% versus planned EPS ¥787.28, providing ample cushion and signaling a stance to maintain a stable dividend policy.
The annual dividend is ¥90 (interim ¥45, year-end ¥45), with a payout ratio of 22.2% relative to Net Income attributable to owners of the parent ¥35.9B. Total dividends amounted to ¥8.2B (on a shares outstanding basis after treasury stock deduction), which is 27.7% of Operating Cash Flow ¥29.6B and a level that can be covered by OCF. However, Free Cash Flow is negative at -¥18.7B, and together with share buybacks of ¥12.7B, total shareholder returns were ¥20.9B, significantly exceeding OCF and supplemented by increased short-term borrowings and reduced liquidity. Weighted average shares outstanding during the period were 8.30M shares, treasury stock 0.61M shares, with a treasury stock ratio of 6.9%. Next year’s dividend guidance is ¥50, a decrease of -44.4% YoY, which is very conservative relative to planned EPS ¥787.28 (payout ratio 6.4%) and may be revised upward depending on performance progress. The dividend policy aims for stable dividends while flexibly executing share buybacks considering FCF and working capital trends.
Working Capital Expansion Risk: Inventory stood at ¥384.2B, up ¥87.0B YoY, composed of finished goods ¥100.8B, raw materials ¥121.7B, and work-in-progress ¥161.6B, with WIP representing 42.1% and suggesting lengthening production lead times. Inventory days were 109 days (worsened by +12 days from 97 days), and CCC (cash conversion cycle) extended to 128 days, pressuring cash generation. The build-up of WIP reflects higher operating rates to meet demand but also raises risk of yield deterioration and production delays, creating potential for inventory valuation losses.
Short-term Funding Dependence Risk: Short-term borrowings amounted to ¥119.7B, representing 38.8% of current liabilities ¥308.4B, and the short-term liability ratio is 91%, concentrating maturities in the short term. Cash and deposits ¥12.9B are only 10.8% of short-term borrowings, indicating high rollover dependence. With 91% of interest-bearing debt being short-term, the structure carries refinancing risk under rising interest rates or deteriorating credit conditions. Although Debt/EBITDA is 0.79x and interest coverage is 101x suggesting strong financial resilience, limited on-hand liquidity and short-term concentration are vulnerabilities for funding.
Volatility of Non-Operating Expenses Risk: Non-operating expenses surged to ¥94.0B (prior year ¥25.7B, +265.8%), heavily pressuring Ordinary Income. The composition includes interest expense ¥1.4B, foreign exchange loss ¥0.3B, and derivative valuation losses among other items, yielding an interest burden coefficient (Ordinary Income / Operating Income) of 0.40. The structure of achieving high operating profitability while final profits are eroded by expanding non-operating costs exposes vulnerability to FX, interest rate, and commodity price fluctuations, reducing earnings sustainability and predictability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.5% | 7.8% (4.6%–12.3%) | +1.7pt |
| Net Margin | 0.3% | 5.2% (2.3%–8.2%) | -4.9pt |
Operating margin is +1.7pt above the industry median, indicating solid operating profitability, but net margin is -4.9pt below the median, highlighting pronounced expansion of non-operating expenses relative to peers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 19.4% | 3.7% (-0.4%–9.3%) | +15.7pt |
Revenue growth materially exceeds the industry median by +15.7pt, reflecting successful market share gains and price improvements.
※Source: Company compilation
Core competitiveness is evidenced by an operating margin of 9.5% (industry median +1.7pt) and an EBITDA margin of 11.1%, driven by revenue and profit growth in the core BRASS Business (Revenue +23.0%, Operating Income +57.7%). Improvements in gross margin (+1.3pt) and production efficiency due to scale contributed, supporting a sustainable trend of two consecutive years of revenue growth and improving operating profitability. However, the net margin of 0.3% (industry median -4.9pt) is materially lagging due to expansion of non-operating expenses ¥94.0B; non-recurring items such as derivative valuation losses diluted final profits and warrant close monitoring.
Working capital expansion (inventory +¥66.6B, CCC 128 days) and dependence on short-term borrowings (short-term liability ratio 91%, cash/short-term borrowings 10.8%) reveal financial vulnerability. With FCF at -¥18.7B, internal funds are insufficient to cover dividend and capex needs, and the company has supplemented via increased short-term borrowing and drawing down liquidity. While resilience metrics remain strong (Debt/EBITDA 0.79x, coverage 101x), improvements in inventory management and smoothing of maturity profiles are key priorities.
The company’s plan for next fiscal year projects revenue ¥1,800B (+20.5%) alongside a conservative Operating Income target of ¥100B (-29.4%), implying an operating margin of 5.6% (-3.9pt). The assumptions include normalization of raw material prices and reversal of inventory valuation effects. Ordinary Income of ¥100B (+77.4%) assumes normalization of non-operating expenses, and a dividend of ¥50 (payout ratio 6.4%) is highly conservative with upside potential. Achievement of operational progress and working capital improvements will be critical to expanding shareholder returns and restoring investment capacity.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on publicly disclosed financial statements. Investment decisions are your responsibility; please consult professionals as appropriate before making investment decisions.