| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥11823.6B | ¥9793.8B | +20.7% |
| Operating Income | ¥1887.1B | ¥1355.2B | +39.2% |
| Ordinary Income | ¥1994.8B | ¥1372.4B | +45.4% |
| Net Income | ¥940.0B | ¥364.1B | +158.2% |
| ROE | 15.8% | 8.4% | - |
The fiscal year ended March 2026 recorded a substantial increase in revenue and profit: Revenue ¥1兆1,823.6B (YoY +¥2,029.8B +20.7%), Operating Income ¥1,887.1B (YoY +¥531.9B +39.2%), Ordinary Income ¥1,994.8B (YoY +¥622.4B +45.4%), and Net Income attributable to owners of the parent ¥1,571.6B (YoY +¥661.0B +72.5%). The Telecommunication Systems segment (Information & Communication Business) led performance with Revenue ¥6,531.7B (+44.7%) and Operating Income ¥1,527.3B (+65.7%, margin 23.4%), accounting for 55.2% of company-wide revenue and 81.0% of operating income. Gross margin improved to 28.1% (prior 26.6%) and operating margin to 16.0% (prior 13.8%). ROE was 15.8% (down from 24.4% prior), mainly due to denominator expansion from an increase in equity (+¥1,578.6B +36.3%), while absolute Net Income increased substantially. Equity-method investment income of ¥119.6B (2.1x prior ¥57.4B) contributed to the upside in Ordinary Income. Extraordinary items were net +¥51.3B (gain on sale of marketable securities ¥23.7B, gain on sale of subsidiary shares ¥30.7B, etc.), contributing only roughly 3% to Net Income. Cash and deposits were ¥1,812.2B (YoY -¥28.8B), essentially flat, and Operating Cash Flow (OCF) expanded to ¥1,329.0B (+14.7%).
Revenue: Revenue was ¥1兆1,823.6B (+20.7%), marking a second consecutive year of substantial growth. By segment, Telecommunication Systems recorded ¥6,531.7B (+44.7%, 55.2% share), driven by increased demand for optical fiber, optical cable, and network equipment. Energy Business recorded ¥1,584.4B (+8.2%, 13.4% share), Automotive Business ¥1,793.7B (+1.3%, 15.2% share) showing steady growth. Electronics Business declined to ¥1,728.7B (-7.3%, 14.6% share) due to weaker demand for printed wiring boards and similar products. By region: U.S. ¥5,222.0B (44.2% share), Japan ¥2,414.3B (20.4%), Other ¥3,679.3B (31.1%), with U.S. communication infrastructure investment expansion contributing. Cost of sales was ¥8,500.8B (+24.7%), outpacing revenue growth (+20.7%), but product mix improvements lifted gross margin to 28.1% (prior 26.6%, +1.5pt).
Profitability: Operating Income was ¥1,887.1B (+39.2%). SG&A expenses increased to ¥1,435.8B (+14.9%), but revenue growth (+20.7%) outpaced SG&A, producing operating leverage. Operating margin improved to 16.0% (prior 13.8%, +2.2pt). Segment margins: Telecommunication Systems 23.4% (prior 20.4%), Energy 12.0% (prior 8.2%) expanded, while Electronics 4.4% (prior 12.3%) and Automotive 3.8% (prior 3.3%) remained low-margin. Ordinary Income was ¥1,994.8B (+45.4%), aided by equity-method investment income ¥119.6B (2.1x prior ¥57.4B) and non-operating income totaling ¥168.7B including interest income ¥18.4B (prior ¥15.7B). Non-operating expenses decreased to ¥61.0B (prior ¥86.3B); interest expense improved to ¥20.7B (prior ¥32.1B) due to reduced borrowings. Extraordinary items netted +¥51.3B (gain on sale of marketable securities ¥23.7B, gain on sale of subsidiary shares ¥30.7B, insurance proceeds ¥25.4B, impairment ¥0.6B, business restructuring costs ¥34.3B, litigation settlement ¥48.0B, etc.), contributing roughly 3% uplift to Net Income. Profit before tax was ¥2,046.1B (+68.5%); after income taxes ¥425.6B (effective tax rate 20.8%) and non-controlling interests ¥48.9B, Net Income attributable to owners of the parent was ¥1,571.6B (+72.5%). In conclusion, revenue growth and significant margin expansion in the high-margin Telecommunication Systems business, together with growth in equity-method investment income, drove the strong results.
Telecommunication Systems: Revenue ¥6,531.7B (+44.7%), Operating Income ¥1,527.3B (+65.7%, margin 23.4%), supported by increased demand for optical fiber, optical cable, and network equipment. It accounted for 81.0% of consolidated operating income and is the core earnings driver.
Electronics Business: Revenue ¥1,728.7B (-7.3%), Operating Income ¥76.7B (-66.5%, margin 4.4%), impacted by weaker demand for printed wiring boards and electronic wires and the absence of prior-year impairment of ¥7,273百万円.
Automotive Business: Revenue ¥1,793.7B (+1.3%), Operating Income ¥68.1B (+17.0%, margin 3.8%), low-margin but on an improving trend.
Energy Business: Revenue ¥1,584.4B (+8.2%), Operating Income ¥189.4B (+58.6%, margin 12.0%), supported by steady demand for power cables and efficiency improvements.
Real Estate Business: Revenue ¥110.3B (+1.9%), Operating Income ¥49.6B (+2.1%, margin 44.9%), maintaining high profitability.
Other: Revenue ¥96.9B (+6.1%), Operating loss ¥23.9B, in early-stage new business investment.
Profitability: Operating margin 16.0% (prior 13.8%, +2.2pt) and Net Profit margin 13.3% (prior 9.3%, +4.0pt) improved significantly. Gross margin 28.1% (prior 26.6%) reflects product mix improvement. ROE 15.8% (down from 24.4%), with denominator expansion due to equity growth (+36.3%), while Net Income increased +72.5% in absolute terms. ROA (on Ordinary Income) improved to 22.2% (prior 17.7%). Equity-method investment income ¥119.6B contributed at the Ordinary Income level.
Cash Quality: Operating CF ¥1,329.0B (Net Income ¥1,571.6B → 0.85x), with working capital absorption from accounts receivable increase ¥378.2B and inventories increase ¥283.7B causing some decline relative to Net Income. OCF/EBITDA (EBITDA = Operating Income + Depreciation = ¥2,135.9B) is 0.62x, indicating room to improve cash conversion efficiency.
Investment Efficiency: Total asset turnover 1.22x (prior 1.18x) modestly increased. Days Sales Outstanding (DSO) 65 days (Accounts receivable ¥2,101.8B ÷ daily sales ¥32.4B) indicates extended collection period. Inventory days 17 days, short.
Financial Soundness: Equity Ratio 61.2% (prior 52.4%, +8.8pt), Current Ratio 236.6% (prior 199.7%), Quick Ratio 216.6% (prior 182.0%) all improved significantly. Debt/Equity ratio 0.63x (prior 1.07x) reflecting reduced borrowings. Interest-bearing debt (short-term borrowings ¥247.3B + long-term borrowings ¥402.5B + bonds ¥200.0B) total ¥849.8B versus Cash and deposits ¥1,812.2B, resulting in Net Cash +¥962.4B and effectively debt-free. Interest coverage (Operating Income ÷ Interest expense) is 91.2x, indicating very high payment capability.
Operating CF was ¥1,329.0B (prior ¥1,159.1B, +14.7%). Starting from profit before tax ¥2,046.1B, add back non-cash expenses including depreciation ¥248.8B and goodwill amortization ¥16.7B, and subtract equity-method investment income ¥119.6B, yielding Operating CF before working capital changes ¥1,764.3B. Working capital movements: increase in accounts receivable ¥378.2B (DSO lengthening) and inventories ¥283.7B (stock buildup) pressured cash, partially offset by increase in trade payables ¥155.5B. After income taxes paid ¥441.6B, Operating CF was ¥1,329.0B. Investing CF was -¥362.0B, driven by acquisitions of tangible and intangible fixed assets ¥390.6B (mainly CAPEX), proceeds from sale of marketable securities ¥25.4B, and proceeds from sale of subsidiary shares ¥17.5B, resulting in net outflow. Financing CF was -¥1,113.2B, including repayment of long-term borrowings ¥609.6B, net decrease in short-term borrowings ¥19.2B, bond redemption ¥100.0B, and dividend payments ¥446.4B (parent ¥446.4B + non-controlling interests ¥11.1B), a substantial outflow. FCF (Operating CF + Investing CF) was ¥967.0B, covering dividends ¥446.4B and CAPEX ¥390.6B (total ¥837.0B) by 1.16x, indicating a sustainable level. Cash and deposits were ¥1,812.2B (opening ¥1,849.9B → -¥37.7B), a slight decline; excluding FX effects +¥92.8B, the change was essentially an outflow. Operating CF/Net Income 0.85x and Operating CF/EBITDA 0.62x are affected primarily by working capital increases (AR and inventory); improving collection and shortening DSO are key.
Earnings quality is generally high: most of Ordinary Income ¥1,994.8B is comprised of Operating Income ¥1,887.1B, and non-operating income ¥168.7B represents only 1.4% of Revenue. Breakdown of non-operating income: equity-method investment income ¥119.6B (recurring), interest income ¥18.4B, dividend income ¥8.6B, FX gains ¥4.9B, etc., with limited one-off items. Extraordinary items net +¥51.3B (gain on sale of marketable securities ¥23.7B, gain on sale of subsidiary shares ¥30.7B, insurance proceeds ¥25.4B, gain on sale of fixed assets ¥7.0B, impairment ¥0.6B, business restructuring costs ¥34.3B, litigation settlement ¥48.0B, etc.), contributing roughly 3% to Net Income ¥1,571.6B. The divergence between Ordinary Income and Net Income (Ordinary ¥1,994.8B → profit before tax ¥2,046.1B) is explainable by extraordinary items +¥51.3B. Accrual ratio is 2.5% ((Net Income ¥1,571.6B - Operating CF ¥1,329.0B) ÷ Net Income), kept at a low level, indicating reasonable cash backing of earnings. However, Operating CF/Net Income 0.85x falls below the high-quality benchmark of 1.0x, mainly due to increases in accounts receivable and inventory. Comprehensive income ¥2,031.6B (parent ¥1,973.0B) exceeded Net Income ¥1,571.6B, aided by other comprehensive income +¥401.6B (foreign currency translation adjustments ¥337.4B, valuation differences on available-for-sale securities ¥33.4B, retirement benefit adjustments ¥19.8B, etc.). Excluding FX effects, fundamental earning power should be assessed at the Operating Income level; Operating margin 16.0% remains high relative to peers.
For the fiscal year ending March 2027 (next fiscal year), guidance forecasts Revenue ¥1,2430.0B (+5.1%), Operating Income ¥2,110.0B (+11.8%), Ordinary Income ¥2,180.0B (+9.3%), and Net Income attributable to owners of the parent ¥1,560.0B (-0.7%). Operating-level profit growth is expected, while Net Income is projected to decline slightly due to the absence of one-off special gains this period (e.g., gain on sale of subsidiary shares). EPS forecast ¥94.22 (this period actual ¥94.93), dividend forecast ¥19.00 per share (post-split basis as of April 1, 2026: 1 share → 6 shares; pre-split equivalent ¥114 per share, compared with this period actual ¥225, ~51% level). Revenue growth assumes continued strength in Telecommunication Systems and FX effects; Operating Income growth assumes SG&A control and operating leverage from scale. The slower growth in Ordinary Income (+9.3%) relative to Operating Income (+11.8%) may incorporate projected moderation in equity-method investment income growth and FX assumptions. Net Income is forecast slightly lower due to the reduction of extraordinary gains, but core earnings (Operating and Ordinary) are expected to grow. Progress ratio is not applicable at the full-year close. Key factors to monitor: order trends in Telecommunication Systems, FX assumptions (USD/EUR), recovery pace in Electronics Business, and working capital management for OCF improvement.
Dividends paid: interim ¥95 and year-end ¥130, total ¥225 per share (pre-split basis). Cash dividends to owners of the parent totaled ¥446.4B, implying a Payout Ratio of 28.4% against Net Income attributable to owners of the parent ¥1,571.6B. Share buybacks were ¥40M (including disposals ¥250M), small in scale, so Total Return Ratio roughly equals the Payout Ratio. FCF ¥967.0B covers dividend + share buybacks ¥446.4B by 2.2x, ample coverage. DOE (Dividends ÷ Equity) is 7.4% (XBRL disclosure), indicating progress in capital return efficiency. Next fiscal year dividend forecast ¥19.00 per share (post-split basis; pre-split equivalent ¥114), a reduction from this period’s ¥225, but reflecting the stock split (1→6); the underlying per-share payout level is effectively maintained. Lack of historical trend data prevents confirmation of consecutive dividend increases, but an increase was implemented this period, and with a target payout around 30% there is room for further increases in line with earnings growth. With Cash and deposits ¥1,812.2B and strong CF generation (Operating CF ¥1,329.0B), dividend sustainability is high.
Business concentration risk: Telecommunication Systems accounts for 55.2% of Revenue and 81.0% of Operating Income, making the company sensitive to fluctuations in demand for optical fiber and communication equipment. Adjustments in carrier capital expenditure cycles, intensified competition, or price declines could materially impact consolidated performance. High reliance on a high-margin business (23.4% segment margin) underscores the importance of monitoring order intake and backlog (contract liabilities ¥112.5B, contract assets ¥287.4B) as leading demand indicators.
Deterioration in cash conversion efficiency: Operating CF/EBITDA 0.62x and Operating CF/Net Income 0.85x indicate weak cash generation relative to profits. DSO of 65 days and increases in accounts receivable ¥378.2B and inventories ¥283.7B have absorbed working capital. While some working capital growth is inevitable with high growth, failure to strengthen receivables management and shorten DSO could increase CF volatility and reduce financial flexibility.
Weak profitability in Electronics Business: Electronics recorded Revenue -7.3% and Operating Income -66.5% (margin 4.4%), a material profit decline. Continued soft demand for printed wiring boards could prolong low profitability and cap consolidated margins. Although restructuring costs ¥34.3B were recorded, delayed recovery in profitability would further increase dependence on the Telecommunication Systems business and reduce portfolio diversification benefits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 16.0% | 7.8% (4.6%–12.3%) | +8.2pt |
| Net margin | 8.0% | 5.2% (2.3%–8.2%) | +2.8pt |
Operating margin 16.0% exceeds the manufacturing median 7.8% by 8.2pt, driven by high margins in Telecommunication Systems. Net margin 8.0% also exceeds the median 5.2% by 2.8pt.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 20.7% | 3.7% (-0.4%–9.3%) | +17.0pt |
Revenue growth 20.7% exceeds the manufacturing median 3.7% by 17.0pt, led by the strong expansion of Telecommunication Systems.
※ Source: Company compilation
High-margin, high-growth Telecommunication Systems drove consolidated performance, delivering Operating margin 16.0% (industry median 7.8% +8.2pt) and ROE 15.8%, indicating strong profitability. Revenue +20.7% and Operating Income +39.2% demonstrate operating leverage, and continuation of this momentum underpins the next fiscal year’s growth outlook (Revenue +5.1%, Operating Income +11.8%). Equity-method investment income ¥119.6B (YoY 2.1x) contributed to Ordinary Income upside, highlighting the growing contribution from equity investments and partners.
Financial position is extremely robust: Equity Ratio 61.2% (prior 52.4% +8.8pt), Net Cash +¥962.4B, Interest coverage 91.2x signal ample liquidity and solvency. Current Ratio 236.6%, Quick Ratio 216.6% indicate strong short-term liquidity. Payout Ratio 28.4% and FCF ¥967.0B cover dividends + CAPEX by 1.16x, enabling simultaneous growth investment and shareholder returns. Dividend was increased (post-split effectively maintained), suggesting stable shareholder returns.
However, cash conversion efficiency (Operating CF/EBITDA 0.62x, DSO 65 days) needs improvement; sustained high profitability requires working capital management (compression of AR and inventory). Profit concentration in Telecommunication Systems (81.0%) heightens sensitivity to communication investment cycles, so monitoring order trends, contract liabilities ¥112.5B and contract assets ¥287.4B, and recovery in Electronics (margin 4.4%) are key mid-term evaluation points.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are compiled by the company based on public financial statement data and are for reference only. Investment decisions are your responsibility; please consult a professional advisor as necessary.