| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2777.4B | ¥2378.6B | +16.8% |
| Operating Income | ¥273.2B | ¥209.3B | +30.5% |
| Ordinary Income | ¥261.3B | ¥112.7B | +131.8% |
| Net Income | ¥162.0B | ¥117.6B | +37.8% |
| ROE | 15.3% | 12.8% | - |
For the fiscal year ending March 2026, Revenue was ¥2,777.4B (YoY +¥398.9B, +16.8%), Operating Income was ¥273.2B (YoY +¥63.9B, +30.5%), Ordinary Income was ¥261.3B (YoY +¥148.6B, +131.8%), and Net Income attributable to owners of the parent was ¥162.0B (YoY +¥44.4B, +37.8%), delivering substantial profit increases at all levels. Operating Income growth was 1.8x that of Revenue, reflecting notable profitability improvement. Gross margin expanded to 18.2% (from 16.2%, +2.0pt) and Operating Margin to 9.8% (from 8.8%, +1.0pt), driven by price pass-through and fixed-cost efficiency. Ordinary Income margin doubled to 9.4% from 4.7% last year, but non-operating items were a drag of net ▲¥11.9B (equity-method loss ¥4.7B, interest expense ¥6.4B, etc.). Extraordinary gains of ¥31.1B (gain on sale of investment securities ¥21.1B, etc.) boosted Net Income; excluding one-off items, underlying Net Income is estimated at around ¥140B. ROE improved to 15.3% year-over-year, and the Equity Ratio rose substantially to 51.2% (from 39.7%, +11.5pt), strengthening the financial base.
[Revenue] Revenue of ¥2,777.4B (+16.8%) was driven by the Energy & Infrastructure Business. That business reported Revenue of ¥1,323.4B (+2.6%), a slight increase, while the Communications & Components Business expanded to Revenue of ¥1,383.7B (YoY +¥36.7B), reflecting contributions from TOTOKU Co., Ltd., which joined the group last year, and benefits from reorganization. By geography, Japan ¥2,456.9B, Asia ¥286.3B, Other ¥34.2B — domestically led. Gross margin improved to 18.2% (from 16.2%, +2.0pt) due to stabilization of material prices, established price pass-through, and improvement in the mix toward higher-margin projects. The segment “Other” (outside reportable segments) saw Revenue of ¥182.3B (▲1.3%), a slight decline, although efficiency improvements in logistics and other areas are progressing.
[Profitability] Gross profit was ¥506.2B (YoY +¥130.6B) while SG&A was ¥233.0B (YoY +¥55.2B). Growth in fixed costs was restrained relative to Revenue growth, resulting in Operating Income of ¥273.2B (YoY +30.5%) and an Operating Margin of 9.8% (+1.0pt). In non-operating items, interest income ¥0.4B and dividend income ¥1.4B were offset by interest expense ¥6.4B and equity-method loss ¥4.7B, producing a net headwind of ▲¥11.9B from Operating Income to Ordinary Income of ¥261.3B (YoY +131.8%). After Extraordinary gains ¥31.1B (gain on sale of investment securities ¥21.1B; gain on sale of fixed assets ¥3.1B, etc.) and Extraordinary losses ¥5.3B (impairment ¥5.3B), Pre-tax Income was ¥287.0B. Corporate taxes and other were ¥85.3B (effective tax rate 29.7%), and non-controlling interests ¥13.3B, resulting in Net Income attributable to owners of the parent of ¥162.0B (YoY +37.8%). In conclusion, revenue and profit increased, and even excluding extraordinary gains the operational improvement is clear, attributable to price measures and economies of scale.
The Energy & Infrastructure Business recorded Revenue ¥1,323.4B (+2.6%), Operating Income ¥204.3B (+21.9%), and Operating Margin 15.4%, maintaining stable high profitability as the core segment. Large projects such as power cables and infrastructure equipment and price revisions lifted profits, contributing 74.8% of consolidated Operating Income. The Communications & Components Business reported Revenue ¥1,383.7B and Operating Income ¥69.3B (Operating Margin 5.0%); Revenue scale expanded due to last year’s TOTOKU integration and reorganization effects, but margins remain low. Other (new businesses, logistics, etc.) posted Revenue ¥182.3B (▲1.3%), Operating Income ¥13.0B (+18.5%), Operating Margin 7.1%, with profitability improving through operational efficiencies. After corporate costs ¥13.4B (R&D, etc.), consolidated Operating Income was ¥273.2B, and the company’s structure remains highly dependent on Energy & Infrastructure.
[Profitability] Operating Margin of 9.8% improved from 8.8% (+1.0pt), composed of Gross Margin 18.2% (prior 16.2%, +2.0pt) and SG&A ratio 8.4% (prior 7.4%, +1.0pt). ROE of 15.3% exceeds the company's past performance (prior 14.3%), and is decomposed as Net Margin 5.8% × Total Asset Turnover 1.34 × Financial Leverage 1.95x. ROA was 7.8% (from 5.6%, +2.2pt), indicating marked improvement in profitability. EBITDA (Operating Income + Depreciation) was ¥339.1B, with an EBITDA margin of 12.2%, maintaining double-digit levels. [Cash Quality] Operating Cash Flow (OCF) was ¥162.3B, equal to Net Income ¥162.0B (OCF/Net Income 1.00x); OCF/EBITDA was 0.48x, a neutral level. CapEx of ¥58.6B versus Depreciation ¥65.9B kept capital expenditures within depreciation, generating Free Cash Flow (FCF) of ¥137.5B. [Investment Efficiency] Total Asset Turnover improved to 1.34x/year (prior 1.13x), Fixed Asset Turnover 2.07x/year, and Inventory Turnover 19.5x/year, showing good inventory efficiency. Days Sales Outstanding (DSO) improved to 62.4 days from 63.6 days but remains above 60 days, so continued strengthening of credit management is necessary. [Financial Soundness] Equity Ratio rose significantly to 51.2% (from 43.7%, +7.5pt), Debt-to-Capital ratio 0.95x, and Debt/Equity 37.9%, within a safe range. Interest-bearing debt was ¥423.2B (short-term ¥230B; long-term ¥164.8B; lease liabilities, etc. included), Debt/EBITDA was 1.25x, and Interest Coverage was 42.7x (Operating Income / Interest Expense), indicating ample financial room. Current Ratio was 149.7% and Quick Ratio 129.7%, securing short-term solvency, but cash and deposits ¥107.6B vs. short-term liabilities ¥710.9B yields a cash/short-term liabilities ratio of 0.15x, indicating somewhat thin liquidity on hand.
Operating Cash Flow was ¥162.3B (YoY +23.8%). Starting from Pre-tax Income ¥287.0B, non-cash expenses including Depreciation ¥65.9B, goodwill amortization ¥4.2B, and impairment ¥5.3B were added back. Equity-method loss ¥4.7B and adjustments for gain on sale of investment securities ▲¥21.1B and gain on sale of fixed assets ▲¥3.1B resulted in a subtotal of ¥295.3B. Working capital absorbed cash: increase in trade receivables ▲¥36.9B and increase in inventories ▲¥12.7B, partially offset by increase in trade payables +¥11.8B. After payment of corporate taxes and other ▲¥129.1B, final Operating Cash Flow was ¥162.3B. Investing Cash Flow was ▲¥24.8B: capital expenditure ▲¥58.6B and intangible asset investment ▲¥11.7B were partly offset by proceeds from sale of fixed assets ¥9.4B and sale of investment securities ¥32.9B, resulting in limited net investment activity. Free Cash Flow was ample at ¥137.5B. Financing Cash Flow was ▲¥223.5B (dividends ▲¥52.3B; net repayments of short-term borrowings ▲¥236.9B; long-term borrowings raised +¥172.4B). The company reduced short-term debt and shifted to longer-term funding, optimizing the debt structure. Ending cash was ¥106.1B (down ▲¥85.5B from opening ¥191.5B), but this was planned allocation for debt repayment and dividends, so liquidity risk is limited.
Core earnings are Operating Income ¥273.2B; the gap to Ordinary Income ¥261.3B (▲¥11.9B) reflects that non-operating expenses ¥27.9B (interest expense ¥6.4B; equity-method loss ¥4.7B; other non-operating expenses ¥6.3B, etc.) exceeded non-operating income ¥16.0B (dividend income ¥1.4B; other ¥4.7B). Extraordinary gains ¥31.1B (gain on sale of investment securities ¥21.1B; gain on sale of fixed assets ¥3.1B; liquidation gain on subsidiaries ¥7.5B, etc.) were one-off and boosted Net Income by about 19.2% of Net Income ¥162.0B. Underlying Net Income excluding one-offs is estimated at approximately ¥130B, and sustainable earning power is concentrated at the operating level. Goodwill amortization ¥4.2B is a non-cash charge that compresses Net Income, making results conservative compared with IFRS peers. Operating Cash Flow ¥162.3B is nearly equal to Net Income ¥162.0B; an OCF/Net Income ratio of 1.00x indicates low accruals, but OCF/EBITDA 0.48x is affected by working capital absorption (increases in trade receivables and inventory), so cash conversion is somewhat weak. Comprehensive Income was ¥207.7B, exceeding Net Income ¥162.0B, with Other Comprehensive Income +¥45.7B (pension adjustments +¥13.0B; foreign currency translation adjustments ▲¥5.0B; valuation differences on securities +¥2.1B, etc.), but these are fair-value fluctuations and not recurring operating earnings.
For FY2027 (year ending March 2027), management plans Revenue ¥3,250B (YoY +17.0%), Operating Income ¥285B (YoY +4.3%), Ordinary Income ¥279B (YoY +6.8%), and Net Income attributable to owners of the parent ¥185B (YoY +14.2%). Progress rates are Revenue 85.5%, Operating Income 95.9%, Ordinary Income 93.7%, and Net Income 87.6%, indicating Operating Income is close to being achieved and a slowdown in profit growth is expected in H2. Operating Margin is projected to decline to 8.8% from 9.8% (▲1.0pt), a conservative assumption with profit growth lagging Revenue growth. The plan likely assumes normalization of material prices and FX and changes in project mix (increase in large lower-margin projects); sustained price pass-through and smoothing of Energy & Infrastructure projects are key to meeting targets. Dividend guidance is annual ¥110 (interim ¥45; year-end ¥65), a large reduction from prior year ¥223, based on an assumed EPS decline to ¥624.66 and a conservative payout ratio of 17.6%. On an actual basis, payout ratio was 35.3% (annual dividend ¥223 / EPS ¥636.48), and there remains room to maintain dividends at that level next year.
The company paid an annual dividend of ¥223 (interim ¥90; year-end ¥133), with a payout ratio of 35.3% (Net Income attributable to owners of the parent ¥162.0B; EPS ¥636.48), within an appropriate range. Total dividends of ¥52.3B against FCF ¥137.5B give an FCF coverage of 2.6x, indicating high sustainability. Share buybacks were limited at ¥0.05B, and Total Return Ratio was approximately 32.3% (dividends + share buybacks ¥52.4B / Net Income ¥162.0B), reflecting a dividend-focused return policy. Shares outstanding were 30,827,000 shares; treasury stock 1,211,000 shares; weighted-average shares outstanding 29,602,000 shares; BPS ¥3,322.34. Financial leverage is low (Debt/Equity 37.9%), providing room for dividend increases, but management’s plan for next year is conservative with dividend guidance of ¥110. To maintain the prior-year payout ratio of 35.3%, an annual dividend of around ¥220 would be reasonable against projected EPS ¥624.66, suggesting the company’s plan leaves downward flexibility.
Business concentration risk: Energy & Infrastructure accounts for 74.8% of Operating Income, making performance sensitive to power investment and renewable connection trends. If large projects are prolonged or incur cost overruns, margins could deteriorate; smoothing backlog and strengthening project management are necessary. Although segment margin was high at 15.4% year-over-year, next year is modeled to drop to 8.8% due to project mix changes, which could expose structural dependency risks.
Working capital risk: Trade receivables ¥473.1B and inventories ¥142.3B are sizable, and elongation of receivables collection (DSO 62 days) and inventory build-up can strain Operating Cash Flow. OCF/EBITDA 0.48x is low, indicating significant working capital absorption. With a short-term liabilities ratio of 58.3% and cash and deposits ¥107.6B representing only 15.1% of short-term liabilities ¥710.9B, funding risk exists under credit tightening. Strengthening credit management, revising contract terms (payment terms), and inventory optimization to improve cash conversion are urgent.
Financial structure risk: Short-term borrowings ¥230B and current liabilities ¥710.9B vs. cash and deposits ¥107.6B leave on-hand liquidity thin at 15.1%. The shift to long-term borrowings ¥164.8B has progressed, but short-term dependence remains high and refinancing or covenant deterioration risk persists. Debt/EBITDA 1.25x and Interest Coverage 42.7x show financial headroom, but most short-term funds are tied up in working capital, constraining response to sudden funding needs or market deterioration. Expanding commitment lines, further lengthening maturities, and increasing cash buffers are desirable.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.8% | 7.8% (4.6%–12.3%) | +2.1pt |
| Net Margin | 5.8% | 5.2% (2.3%–8.2%) | +0.6pt |
Both Operating Margin and Net Margin exceed the manufacturing median, placing the company in the upper tier within the industry for profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 16.8% | 3.7% (-0.4%–9.3%) | +13.1pt |
Revenue growth far exceeds the industry median, reflecting strong capture of Energy & Infrastructure demand and reorganization effects.
※ Source: Company compilation
Structural improvement in profitability: Expansion of Gross Margin +2.0pt and Operating Margin +1.0pt reflects established price pass-through and fixed-cost efficiencies, aided by a higher-margin project mix in Energy & Infrastructure. ROE 15.3% surpasses past company performance and shows improved capital efficiency. Next year’s conservative Operating Margin assumption of 8.8% (▲1.0pt) still allows upside if pricing policies persist and project smoothing is achieved. Even excluding one-off gains (about 19.2% of Net Income), operational improvement is evident and sustainable earning power is confirmed.
Room to improve cash conversion: OCF/EBITDA 0.48x and DSO 62 days indicate working capital efficiency is a challenge, but shifting short-term borrowings to long-term has optimized the debt profile. FCF ¥137.5B and payout ratio 35.3% provide ample return capacity, and combined with low Debt/EBITDA 1.25x, financial flexibility is significant. Strengthening credit controls and inventory optimization to improve cash conversion could enable both increased liquidity and balance of dividends and growth investments. Correcting the short-term liabilities ratio 58.3% would further reduce funding risk.
This report is an earnings analysis document automatically generated by AI that analyzed XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on publicly disclosed financial statements. Investment decisions are your responsibility; please consult professionals as necessary before making investment decisions.