| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥384.2B | ¥308.0B | +24.7% |
| Operating Income / Operating Profit | ¥44.2B | ¥22.7B | +94.7% |
| Ordinary Income | ¥46.4B | ¥25.6B | +81.4% |
| Net Income / Net Profit | ¥5.1B | ¥3.8B | +33.2% |
| ROE | 1.2% | 1.0% | - |
For the fiscal year ended March 2026, Revenue was ¥384.2B (YoY +¥76.2B +24.7%), Operating Income was ¥44.2B (YoY +¥21.5B +94.7%), Ordinary Income was ¥46.4B (YoY +¥20.8B +81.4%), and Net Income attributable to owners of the parent was ¥5.1B (YoY +¥1.3B +33.2%). At the operating stage, gross margin improved to 25.8% (prior year 23.5%) (+2.3pt), and operating margin expanded to 11.5% (prior year 7.4%) (+4.1pt). However, the recognition of special losses of ¥24.7B (impairment losses) compressed profit before tax to ¥31.8B, and a high effective tax rate of 46.4% limited final-stage profitability to 1.3%. Operating Cash Flow secured ¥36.5B, but working capital absorbed funds due to inventory increase of ¥22.9B and accounts receivable increase of ¥1.0B, leaving the OCF/EBITDA ratio low at 0.60x. After capital expenditures of ¥16.5B, Free Cash Flow was ¥17.2B. The core Wires & Processed Products segment doubled, with Revenue of ¥335.2B (+27.8%) and segment profit of ¥44.4B (+101%), while Electronic & Medical Components performed steadily with Revenue of ¥48.8B (+7.0%). On the financial side, cash of ¥179.0B against interest-bearing debt of ¥52.3B resulted in a strong net cash position of ¥126.6B.
[Revenue] Revenue rose significantly to ¥384.2B (YoY +¥76.2B +24.7%). The core Wires & Processed Products segment increased to ¥335.2B (+27.8%) driven by demand expansion and the contribution of Yoshinogawa Densen, consolidated in Q1. Electronic & Medical Components also grew to ¥48.8B (+7.0%). While regional and customer breakdowns were not disclosed, increases in inventories (+¥7.7B) and accounts receivable (+¥9.9B) suggest heightened sales activities domestically and internationally. Foreign exchange translation adjustments added +¥22.8B, with yen depreciation boosting JPY-converted overseas sales.
[Profitability] Profitability at the operating stage improved substantially. Cost of goods sold was ¥284.9B, yielding gross profit of ¥99.3B and gross margin of 25.8%, up +2.3pt from 23.5% last year. SG&A was ¥55.1B (SG&A ratio 14.4%, prior year 16.1%); although absolute SG&A increased by ¥5.9B, it declined as a percentage of sales due to revenue growth. Operating Income of ¥44.2B (operating margin 11.5%) rose ¥21.5B YoY, a +94.7% increase. Non-operating items comprised interest income ¥2.5B, dividend income ¥0.7B, and foreign exchange gains ¥0.8B, totaling ¥3.8B of income, while interest expense ¥0.6B and foreign exchange losses ¥0.3B comprised ¥1.6B of expense, resulting in net non-operating income of ¥2.2B and Ordinary Income of ¥46.4B (+81.4%). However, an impairment loss of ¥24.7B was recognized at the special items stage; even after adding special gains of ¥10.1B (gain on sale of investment securities ¥5.7B and gain on negative goodwill ¥4.4B), profit before tax was compressed to ¥31.8B. After income taxes of ¥14.8B (effective tax rate 46.4%) and non-controlling interests of ¥0.6B, Net Income attributable to owners of the parent was ¥5.1B (YoY +33.2%). This represents an increase but is limited relative to the doubling at the operating level. Comprehensive income reached ¥43.8B due to foreign currency translation adjustments of ¥22.8B and valuation gains on securities of ¥4.0B, amounting to 8.6x Net Income. In conclusion, while the company achieved revenue and operating income growth, one-off impairment losses and high tax burden curtailed final profit growth.
The Wires & Processed Products segment recorded Revenue of ¥335.2B (YoY +27.8%), segment profit of ¥44.4B (YoY +101%), and a margin of 13.3%, delivering substantial revenue and profit growth and serving as the main driver of consolidated operating income. A gain on negative goodwill of ¥4.4B arising from the consolidation of Yoshinogawa Densen was recorded as a special gain. Conversely, this segment incurred impairment losses on fixed assets of ¥24.7B, reflecting a reconsideration of profitability for certain operations. The Electronic & Medical Components segment posted Revenue of ¥48.8B (+7.0%), segment profit of ¥9.1B (+0.7%), and a margin of 18.6%, maintaining high profitability while posting near-flat profit growth. Other segments are limited in scale with Revenue of ¥0.3B and segment profit of ¥0.2B. Corporate adjustments (company-wide costs) were ¥9.5B, up from ¥8.7B the prior year, indicating increased head office administrative costs.
[Profitability] Operating margin improved to 11.5% from 7.4% last year (+4.1pt), supported by an improved gross margin of 25.8% (prior year 23.5%, +2.3pt). ROE is low at 1.2%, calculated as Net Income attributable to owners of the parent ¥5.1B divided by equity ¥424.1B; the restraint on Net Income from special losses and high tax rate is the primary cause. ROA (on Ordinary Income basis) improved to 8.9% from 5.5% (+3.4pt), reflecting enhanced operating-level profitability. [Cash Quality] Operating Cash Flow of ¥36.5B is 7.2x Net Income ¥5.1B, which is quantitatively strong, but inventory increase of ¥22.9B and accounts receivable increase of ¥1.0B absorbed working capital, leaving OCF/EBITDA at a low 0.60x. CapEx was ¥16.5B versus depreciation ¥16.2B, roughly balanced, maintaining maintenance investment level (CapEx/Revenue 4.3%). Free Cash Flow of ¥17.2B covers dividends of ¥6.6B by 2.6x. [Investment Efficiency] Total asset turnover improved slightly to 0.68x from 0.65x, but working capital efficiency lengthened with DSO 71 days, DIO 141 days, and CCC 180 days, worsening YoY. [Financial Soundness] Equity Ratio remains high at 77.1% (prior year 82.2%), with comfortable liquidity—Current Ratio 554.6% and Quick Ratio 507.2%. Cash of ¥179.0B versus interest-bearing debt of ¥52.3B yields net cash of ¥126.6B, Debt/EBITDA 0.87x, and Interest Coverage 78.9x, indicating ample financial capacity.
Operating Cash Flow was ¥36.5B (YoY -6.2%), starting from profit before tax before income taxes of ¥31.8B plus depreciation ¥16.2B and impairment losses ¥24.7B, less gain on negative goodwill ¥4.4B and gain on sale of investment securities ¥5.7B, yielding a subtotal of ¥40.0B. In working capital, inventory increase of ¥22.9B (stockbuild amid demand expansion) and accounts receivable increase of ¥1.0B absorbed cash, while accounts payable increase of ¥2.3B partially offset this, resulting in net working capital cash outflow of -¥21.6B. After payment of corporate taxes of ¥6.1B, Operating Cash Flow of ¥36.5B was secured. Investing Cash Flow was -¥19.2B, mainly due to CapEx of -¥16.5B, acquisition of intangible assets -¥1.6B, and acquisition of subsidiary shares -¥9.9B; proceeds from sale of investment securities ¥6.4B and net decrease in time deposits ¥0.2B provided cash. Free Cash Flow (Operating + Investing) was ¥17.2B, a YoY decline of -42.1%, but still sufficient to internally fund dividends and CapEx. Financing Cash Flow was +¥15.3B, driven by execution of long-term borrowings ¥40.0B, net decrease in short-term borrowings -¥1.0B, and repayment of long-term borrowings -¥17.2B, resulting in an increase in interest-bearing debt of +¥22.6B; after dividend payment -¥6.6B, cash increased by ¥43.1B and ending cash balance was ¥151.2B.
Core recurring earnings are rooted in Operating Income of ¥44.2B, with non-operating income adding ¥3.8B (interest income ¥2.5B, dividend income ¥0.7B, foreign exchange gains ¥0.8B) to reach Ordinary Income of ¥46.4B. Non-operating income ratio to sales is limited at 1.0%, indicating low reliance on non-core earnings. One-off items include special gains of ¥10.1B (gain on sale of investment securities ¥5.7B and gain on negative goodwill ¥4.4B) and special losses comprising impairment losses ¥24.7B and loss on disposal of fixed assets ¥0.1B totaling ¥24.7B. Consequently, Ordinary Income ¥46.4B diverged to profit before tax ¥31.8B (-¥14.6B), and Net Income ¥5.1B amounted to only 11% of Ordinary Income. From an accrual perspective, Operating Cash Flow ¥36.5B vs Net Income ¥5.1B yields an OCF/Net Income multiple of 7.2x, which is healthy, but OCF/EBITDA remained at 0.60x; increases in working capital (inventory ¥22.9B, receivables ¥1.0B) constrained cash conversion. Comprehensive income ¥43.8B, driven by foreign currency translation adjustments ¥22.8B and valuation gains on securities ¥4.0B, equaled 8.6x Net Income, indicating large valuation-item volatility. While recurring earning power has improved at the operating level, final profit underperformed due to one-off impairment, and normalization is expected in subsequent periods.
Full-year guidance forecasts Revenue ¥430.0B (YoY +11.9%), Operating Income ¥45.0B (YoY +1.9%), Ordinary Income ¥47.0B (YoY +1.3%), and Net Income attributable to owners of the parent ¥34.0B. While Operating and Ordinary Income are assumed to be roughly in line with the prior year, Net Income is expected to jump +567% YoY, reflecting the anticipated absence of the special loss (impairment ¥24.7B) this year. Progress against first-half results is high at 89.4% for Revenue, 98.2% for Operating Income, and 98.7% for Ordinary Income, with the second half expected to see further revenue and profit growth though limited expansion at operating/ordinary stages. EPS forecast is ¥218.71 and dividend guidance is ¥25 (payout ratio expected to decline from 34.4% to 11.4%). Maintaining gross margin and improving working capital efficiency to enhance cash generation are key to achieving the plan.
Annual dividend is ¥47 (interim ¥23, year-end ¥24). Total dividends of ¥6.6B against Net Income attributable to owners of the parent ¥5.1B resulted in a payout ratio of 129.6%, representing a distribution materially exceeding profits. This appears to reflect continuity with prior-year practice, and dividend payments of ¥6.6B are covered 2.6x by Free Cash Flow ¥17.2B, indicating adequate internal funding. Share buybacks were minor at ¥0.02B, leaving the Total Return Ratio roughly equivalent to the payout ratio. Full-year forecast dividend is ¥25, with a projected payout ratio of 11.4% against forecast Net Income ¥34.0B, signaling normalization; given cash holdings ¥179.0B and low Debt/EBITDA 0.87x, dividend sustainability is assessed as high.
Risk of recurring impairment losses on fixed assets: The company recorded impairment losses of ¥24.7B in the Wires & Processed Products segment this period, representing 19.8% of fixed assets total ¥124.6B. Rapid changes in the business environment or declining equipment utilization rates could trigger further impairments, causing volatility in Net Income. Accumulated depreciation of tangible fixed assets is large (Buildings -¥91.9B, Machinery -¥162.4B, Tools & Fixtures -¥39.8B), suggesting the presence of aging assets.
Liquidity risk from deteriorating working capital efficiency: DIO 141 days, DSO 71 days, and CCC 180 days have lengthened YoY, with inventory increase ¥22.9B and receivables increase ¥1.0B pressuring Operating Cash Flow. If working capital burden continues to grow in a revenue expansion phase, Free Cash Flow may decline, constraining dividend capacity and room for growth investment.
Compression of Net Income due to high effective tax rate: The effective tax rate this period was 46.4%, with income taxes of ¥14.8B on profit before tax ¥31.8B. Deferred tax assets are limited at ¥3.4B against equity ¥436.6B, and if high tax burden persists in future profit plans, the pace of ROE improvement and growth in distributable earnings could be restrained.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.5% | 7.8% (4.6%–12.3%) | +3.7pt |
| Net Margin | 1.3% | 5.2% (2.3%–8.2%) | -3.9pt |
Operating-stage profitability exceeds the industry median by +3.7pt, while final net margin trails the industry median by -3.9pt due to special losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 24.7% | 3.7% (-0.4%–9.3%) | +21.0pt |
Revenue growth substantially outpaces the industry median by +21.0pt, highlighting accelerated growth from consolidation of subsidiaries and demand expansion.
※ Source: Company compilation
Operating-level profitability has markedly improved—gross margin +2.3pt and operating margin +4.1pt—indicating progress in price pass-through and production efficiency. On an industry-comparison basis, operating margin is +3.7pt above the median, confirming strengthened competitiveness in core businesses. Assuming the special loss of ¥24.7B does not recur, Net Income for the year ending March 2027 is expected to recover substantially, normalizing ROE and dividend capacity.
Financial soundness is extremely high, with net cash position ¥126.6B, Debt/EBITDA 0.87x, and Interest Coverage 78.9x, indicating low financial risk. Short-term liquidity is ample (Current Ratio 554.6%, Quick Ratio 507.2%), providing flexibility to respond to CapEx and M&A opportunities. Dividend payments are well-supported by FCF coverage of 2.6x, suggesting high sustainability.
Deterioration in working capital efficiency constrains cash generation—DIO 141 days and CCC 180 days are key areas for improvement. During a revenue expansion phase, OCF/EBITDA remaining at 0.60x is low; inventory optimization and shortening collection periods would materially increase Free Cash Flow. With guidance assuming continued revenue growth of +11.9% for the year ending March 2027, correcting working capital efficiency will be critical to improving ROE and cash returns.
This report is an AI-generated financial analysis document based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from publicly available financial statements. Investment decisions should be made at your own responsibility and, if necessary, in consultation with a professional advisor.