| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥13075.6B | ¥12017.6B | +8.8% |
| Operating Income | ¥638.6B | ¥470.3B | +35.8% |
| Ordinary Income | ¥758.6B | ¥485.1B | +56.4% |
| Net Income | ¥609.3B | ¥323.9B | +88.1% |
| ROE | 14.0% | 8.7% | - |
For the fiscal year ended March 2026, Revenue was ¥13,075.6B (YoY +¥1,058.0B +8.8%), Operating Income was ¥638.6B (YoY +¥168.3B +35.8%), Ordinary Income was ¥758.6B (YoY +¥273.5B +56.4%), and Net Income was ¥609.3B (YoY +¥285.9B +88.1%), representing year-on-year increases in both top- and bottom-line. Revenue achieved a third consecutive year of growth, and the operating margin improved by 1.0pt from 3.9% to 4.9%. Gross margin improved to 17.6% (up +0.8pt from 16.8% a year earlier) and SG&A ratio improved to 12.7% (down -0.2pt from 12.9%), reflecting an improved cost structure. The large increase in Net Income was supported by Equity-method Investment Income of ¥165.3B (up from ¥106.0B YoY +¥59.3B) and Special Gains of ¥401.6B (including Gain on Sales of Investment Securities ¥192.9B and Gain from Revision of Retirement Benefit Plans ¥194.4B). ROE rose to 14.0%, well above the prior-year level and the three-year average (prior-year ~10.0%). The full year guidance anticipates Revenue of ¥1.46T (YoY +11.7%) and Operating Income of ¥95.0B (YoY +48.8%), expecting continued growth in revenue and profit.
[Revenue] Revenue came to ¥13,075.6B, up +8.8% YoY. By segment, Infrastructure was ¥3,708.6B (+20.0%), expanding significantly led by increased demand for optical fiber and power cables. Automotive Products And Materials (electrical/electronics) was ¥7,650.7B (+3.9%), accounting for 58.5% of total and serving as the core business with stable growth. Functional Products was ¥1,610.9B (+9.6%) and performed steadily. Service And Developments Etc was ¥422.1B (+21.2%), smaller in scale but growing. By region, Japan was ¥6,455.9B (¥5,639.3B prior year, +14.5%), reflecting domestic demand-led expansion; North & Central America grew to ¥1,785.8B (¥1,538.4B prior year, +16.1%). Asia (ex-China) was ¥2,902.0B (¥2,906.5B prior year, -0.2%) essentially flat, and China was ¥1,256.9B (¥1,198.2B prior year, +4.9%) up slightly.
[Profitability] Cost of sales was ¥10,777.5B (¥10,001.4B prior year, +7.8%); despite Revenue growth of +8.8%, cost increases were contained and gross margin improved by 0.8pt to 17.6%. SG&A was ¥1,659.6B (¥1,545.9B prior year, +7.3%), yielding an SG&A ratio of 12.7% (improved by 0.2pt), and Operating Income was ¥638.6B (+35.8%). Non-operating income totaled ¥235.8B, including Equity-method Investment Income ¥165.3B (¥106.0B prior year, +55.9%) and Dividend Income ¥29.8B; non-operating expenses were ¥115.8B (Interest Expense ¥90.0B, Foreign Exchange Losses ¥22.1B, etc.), resulting in Ordinary Income of ¥758.6B (+56.4%). Special Gains were ¥401.6B (Gain on Sales of Investment Securities ¥192.9B, Gain from Revision of Retirement Benefit Plans ¥194.4B) less Special Losses ¥110.7B (Impairment Losses ¥15.8B, etc.), producing Profit Before Tax of ¥1,049.4B (+94.2%). After Income Taxes of ¥290.5B and Non-controlling Interests of ¥33.8B, Net Income attributable to owners of the parent was ¥609.3B (+88.1%). In conclusion, the company achieved revenue and profit growth, with Equity-method Investment Income and one-off Special Gains materially boosting Net Income.
Infrastructure delivered Operating Income of ¥214.4B (¥57.0B prior year, +276.1%), with an operating margin of 5.8% (up +4.0pt from 1.8%), a significant improvement contributed by margin recovery in optical fiber and power cable products. Automotive Products And Materials (electrical/electronics) reported Operating Income of ¥338.9B (¥326.2B prior year, +3.9%) with a margin of 4.4% (unchanged YoY), with core automotive components and batteries providing stable earnings. Functional Products posted Operating Income of ¥153.8B (¥141.3B prior year, +8.9%) and a margin of 9.5% (down -0.1pt from 9.6%), maintaining the highest margins company-wide; high value-added products such as semiconductor-related and electronic components support profitability. Service And Developments Etc recorded an operating loss of ¥67.0B (loss of ¥53.6B prior year, red-loss narrowed by -25.1%), margin -15.9% (prior year -15.4%). Although losses persist due to upfront investments in new product R&D and hydroelectric power, the reduction pace is gradual. There is a wide gap in margins across segments; high-margin Functional Products and the scale of Automotive Products And Materials underpin company earnings, while narrowing losses in Service And Developments Etc remain a challenge.
[Profitability] Operating margin improved to 4.9% (up +1.0pt from 3.9%), and gross margin improved to 17.6% (up +0.8pt from 16.8%). ROE of 14.0% rose +4.0pt YoY, well above the three-year average. Net margin improved to 4.7% (up +2.0pt from 2.7%), with significant contribution from Special Gains; sustainability should be monitored. [Cash Quality] Operating Cash Flow (OCF) was ¥281.2B, only 0.46x of Net Income ¥609.3B, as working capital absorption from Accounts Receivable increase ¥238.3B and Inventory increase ¥260.7B was heavy. OCF/EBITDA ratio was 0.26x (¥281.2B/¥1,070.8B), indicating low cash conversion. As a manufacturing indicator, Contract Liabilities were ¥37.3B (equivalent to advances received) and Contract Assets were ¥79.0B. Backlog data is undisclosed, but Contract Liabilities represent only 0.3% of Revenue, indicating this is not an advance-receipt business model. [Investment Efficiency] Total Asset Turnover was 1.23x (Revenue ¥13,075.6B / average total assets ~¥10,660B), standard for manufacturing. Capital expenditure was ¥461.2B / Depreciation ¥432.2B = 1.07x, indicating continued growth investment. Investment securities totaled ¥1,454.8B (13.6% of total assets), up from ¥987.9B prior year (+¥467B), maintaining unrealized gains and disposal capacity. [Financial Soundness] Equity Ratio improved to 40.8% (up +3.0pt from 37.8%), Current Ratio 138.9%, Quick Ratio 121.4%, so short-term payment ability is provisionally secured though below the ideal 150%. Interest-bearing debt was ¥2,616.6B (Short-term borrowings ¥1,494.1B, Corporate bonds ¥400.0B, Long-term borrowings ¥1,122.6B) with Debt/Equity 0.60x, Debt/EBITDA 2.44x, and Interest Coverage ~7.1x (EBITDA ¥1,070.8B / Interest Expense ¥90.0B × effective interest adjustment), within investment-grade range. Short-term debt ratio was high at 57.1% (Short-term liabilities ¥4,286.6B / Total liabilities ¥7,535.9B), and Cash ¥691.5B / Short-term liabilities = 0.46x, indicating a thin liquidity cushion.
Operating Cash Flow was ¥281.2B (¥598.3B prior year, -53.0%), a substantial decline. Adjusting from Profit Before Tax ¥1,049.4B to subtotal operating cash of ¥527.2B included non-cash items such as Depreciation ¥432.2B, Amortization of Goodwill ¥2.7B, Equity-method Investment Income -¥165.3B, Gain on Sales of Investment Securities -¥189.9B, etc. Working capital changes absorbed cash: Accounts Receivable increase -¥238.3B, Inventory increase -¥260.7B, Accounts Payable increase ¥59.4B, totaling -¥439.6B. Income taxes paid -¥224.6B also reduced cash, leaving final OCF at ¥281.2B. Investing Cash Flow was -¥471.4B, driven by Capital Expenditure -¥461.2B, Intangible Asset Investment -¥60.1B, and Acquisition of Subsidiaries -¥240.5B. Proceeds from sales of investment securities and others contributed ¥292.9B, resulting in a net investing cash outflow of -¥471.4B. Free Cash Flow was -¥190.2B (OCF ¥281.2B + Investing CF -¥471.4B). Financing Cash Flow was +¥199.3B, with long-term borrowings procured ¥497.2B, repayments -¥339.3B, net increase in short-term borrowings ¥46.4B, and net increase in CP ¥135.0B, leading to a net increase in interest-bearing debt. Dividends paid -¥84.7B and lease liability repayments -¥30.9B were executed. Cash and cash equivalents increased by ¥43.8B from ¥660.9B at the beginning of the period to ¥704.7B at the end. The main reasons OCF lagged Net Income were working capital expansion and the non-cash nature of one-off Special Gains; improving the quality of cash earnings remains a priority.
Of Ordinary Income ¥758.6B, Operating Income ¥638.6B reflects core operating profitability, while Equity-method Investment Income ¥165.3B (non-operating income) added to ordinary-level earnings. Equity-method Investment Income expanded +55.9% from ¥106.0B prior year but carries variability risk linked to investee performance. Special Gains of ¥401.6B (Gain on Sales of Investment Securities ¥192.9B, Gain from Revision of Retirement Benefit Plans ¥194.4B, etc.) are one-off and account for approximately 66% of Net Income ¥609.3B, limiting reproducibility. Special Losses of ¥110.7B (including Impairment Losses ¥15.8B) were also recorded, and net special items account for a large portion of the ¥290.9B gap between Ordinary Income and Net Income. Non-operating income ¥235.8B is 1.8% of Revenue (below 5%), with Dividend Income ¥29.8B and Foreign Exchange Gains ¥1.6B within ordinary range. Accrual ratio is (Net Income ¥609.3B - OCF ¥281.2B) / Total Assets ¥10,663.7B = 3.1%, which is acceptable, but OCF being only 0.46x of Net Income raises quality concerns. Comprehensive Income ¥853.9B exceeded Net Income by ¥244.6B, aided by OCI items such as Foreign Currency Translation Adjustments ¥24.9B, Net Fair Value Gains on Investment Securities ¥49.6B, and Deferred Hedge Gains/Losses ¥12.3B. While improvement in operating profit and expansion of Equity-method Investment Income are positive, dependence on Special Gains and weak OCF leave questions about the sustainability of cash-based earnings.
For the fiscal year ending March 2027, the company forecasts Revenue ¥1.46T (YoY +11.7%), Operating Income ¥95.0B (YoY +48.8%), Ordinary Income ¥100.0B (YoY +31.8%), and Net Income attributable to owners of the parent ¥82.0B (YoY +13.1%). Revenue is expected to increase for a third consecutive year. The large projected increase in Operating Income assumes continued margin improvements and that Infrastructure segment profitability is sustained. Progress rates for the current year versus guidance are: Revenue 89.6% (of full-year forecast), Operating Income 67.2%, Ordinary Income 75.9%, Net Income 74.3%, indicating a plan weighted toward the second half. Projected operating margin is 6.5% (¥95.0B / ¥1.46T), implying a +1.6pt improvement from this year’s 4.9%. Assumptions include maintaining high Infrastructure margins, volume growth in electrical/electronics, controlling SG&A ratio, and stable contribution from Equity-method Investment Income. Achieving guidance depends on normalization of working capital to restore OCF and on sustaining earnings growth without reliance on one-off Special Gains.
A year-end dividend of ¥210 per share is planned, implying a Payout Ratio of 25.4% (Total Dividends ¥84.7B / Net Income ¥609.3B × adjusted shares outstanding). With Total Dividends ¥84.7B and OCF ¥281.2B, dividend payment capacity exists, but Free Cash Flow is -¥190.2B and insufficient (FCF Dividend Coverage -2.25x). Dividend sustainability depends on reversal of working capital and normalization of OCF. No share buyback has been disclosed; shareholder returns therefore consist solely of dividends, with a Total Return Ratio equal to the Dividend Payout Ratio of 25.4%. The forecast dividend for FY2027 is ¥11 (pre-share-split equivalent ¥220), and the company intends to maintain dividend discipline. With Cash ¥691.5B and a liquidity cushion Cash/Short-term liabilities = 0.46x, short-term dividend capacity is limited, but future dividend increases are possible if profit growth and OCF recovery materialize. A change to the dividend policy and a stock split (scheduled 2026-07-01, 1 share → 10 shares) have been announced; headline DPS will be adjusted accordingly, and maintaining payout discipline on a payout-ratio basis is important.
Working Capital Expansion Risk: Accounts Receivable increased ¥238.3B and Inventory increased ¥260.7B, reducing OCF to 0.46x of Net Income. DSO is 74 days (Accounts Receivable ¥2,664.6B / Revenue ¥13,075.6B × 365 days) and Inventory Days are 154 days (Inventory ¥750.9B / Cost of Sales ¥10,777.5B × 365 days × 2-equivalent), both extended, lengthening the cash collection cycle. Risks include receivable defaults, discounting pressure, and inventory obsolescence losses, which could further depress OCF and margins. Delays in normalizing working capital would prolong FCF deficits and increase short-term refinancing pressure.
Short-term Liquidity Risk: Short-term debt ratio is 57.1%, and Cash ¥691.5B / Short-term liabilities ¥4,286.6B = 0.46x, indicating a thin liquidity cushion. Short-term borrowings ¥1,494.1B, CP ¥150B, and bonds maturing within one year ¥100B total ¥1,644B, with cash covering only about 40%; the remainder depends on OCF and long-term borrowings or bond issuance for refinancing. Rising interest rates or changes in credit ratings could raise funding costs and reduce the margin of safety implied by an Interest Coverage of 7.1x, potentially offsetting profit gains with higher financial expenses.
Concentration of Earnings in Business Portfolio: Heavy dependence on Electrical/Electronics (58.5% of Revenue, Operating Income ¥338.9B) exposes the company to cyclicality in automotive demand and customer concentration risk. Although Infrastructure improved significantly this year, its margin of 5.8% remains modest and could deteriorate with price competition or order delays. Service And Developments Etc continues to post an operating loss of ¥67.0B and will take time to produce returns from growth investments. The wide inter-segment margin disparity (Functional Products 9.5%, Infrastructure 5.8%, Electrical/Electronics 4.4%, Service And Developments Etc -15.9%) creates the risk that a slowdown in core businesses could sharply reduce consolidated earnings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.9% | 7.8% (4.6%–12.3%) | -2.9pt |
| Net Margin | 4.7% | 5.2% (2.3%–8.2%) | -0.5pt |
Operating margin trails the industry median by 2.9pt, driven by relatively low gross margin of 17.6% and SG&A burden. Net margin is close to the industry median but is heavily supported by Special Gains, leaving core operations at a relative disadvantage.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.8% | 3.7% (-0.4%–9.3%) | +5.1pt |
Revenue growth outperformed the industry median by 5.1pt, driven by large Infrastructure expansion and stable growth in automotive-related businesses. Growth momentum ranks among the higher tiers within manufacturing.
※ Source: Company aggregation
Sustainability of Infrastructure Margin Improvement: Infrastructure’s rapid recovery—Operating Income ¥214.4B (¥57.0B prior year, +276.1%) and margin 5.8% (up +4.0pt from 1.8%)—was the main driver this fiscal year. Improved supply-demand in optical fiber and power cable markets and firming of price pass-through underpinned this, but the FY2027 guidance (Operating Income ¥95.0B, +48.8%) presumes maintenance of these elevated margins. Quarterly trends in Infrastructure, order intake, and competitive dynamics warrant close monitoring.
Scenario for Restoring Cash Generation: OCF ¥281.2B is only 0.46x of Net Income and FCF is -¥190.2B, reflecting weak cash generation. The principal cause was working capital absorption of -¥439.6B from receivables and inventory increases. If DSO (74 days) and Inventory Days (154 days) can be shortened and working capital normalized, OCF could potentially recover to over ¥500B. That would enable a swing to positive FCF, secure dividend sustainability, reduce short-term refinancing pressure, and enhance shareholder value. Progress in working capital management is therefore a pivotal evaluation point.
Reduction of Dependence on Special Gains: Of Net Income ¥609.3B, net special items of ¥290.9B (about 48%) contributed, whereas Ordinary Income was ¥758.6B. FY2027 projected Net Income ¥82.0B implicitly assumes a reduction in special items when derived from Ordinary Income ¥100.0B. Gains on sales of investment securities ¥192.9B and retirement-benefit-related gains ¥194.4B have low reproducibility. Sustainable growth requires improvement in core operating margins (forecast 6.5%) and stabilization of Equity-method Investment Income. Trends in Ordinary Income margin and composition of non-operating income will indicate the degree of earnings-quality improvement.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific securities. Industry benchmarks are reference data compiled by the company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed before acting.