| Metric | This Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6607.1B | ¥6623.8B | -0.3% |
| Operating Income | ¥791.0B | ¥805.1B | -1.8% |
| Ordinary Income | ¥806.5B | ¥840.1B | -4.0% |
| Net Income (attributable to owners of the parent) | ¥433.0B | ¥356.9B | +21.3% |
| ROE | 12.3% | 11.0% | - |
For the fiscal year ended March 2026, Revenue was ¥6,607.1B (YoY -¥16.7B -0.3%), Operating Income was ¥791.0B (YoY -¥14.1B -1.8%), Ordinary Income was ¥806.5B (YoY -¥33.6B -4.0%), and Net Income attributable to owners of the parent was ¥433.0B (YoY +¥76.1B +21.3%). Despite modest declines in Revenue and Operating Income, Net Income rose about 20%, supported by margin improvements in the Japan segment (Operating Income +9.0%). Gross margin improved slightly to 33.1% (up +0.1pt from 33.0%), but SG&A ratio rose to 21.2% (up +0.4pt from 20.8%), resulting in a marginal decline in Operating Margin to 12.0% (down -0.2pt from 12.2%). By region, Japan delivered revenue and profit growth (Operating Margin 13.4%), North America posted declines (Operating Margin down to 15.6%), Europe had slight revenue growth but significant profit decline (Operating Margin deteriorated to 1.9%), and Asia saw material revenue and profit contraction (Operating Margin plunged to 0.8%), with deteriorating profitability in overseas businesses weighing on consolidated margins.
Revenue: Revenue was ¥6,607.1B (YoY -0.3%), a slight decline. By segment, Japan ¥2,913.3B (+1.3%) maintained growth driven by resilient domestic maintenance & services demand and price revisions; North America ¥2,418.6B (-1.5%) declined amid continued adjustment in housing-related demand; Europe ¥1,150.2B (+0.6%) saw marginal growth; Asia ¥130.1B (-15.3%) recorded a sharp decline due to demand slowdown in China and Hong Kong. Consolidated results reflect domestic resilience offsetting overseas adjustments, resulting in roughly flat top-line. Cost of sales ratio improved slightly to 66.9% (down -0.1pt from 67.0%), lifting gross margin to 33.1% (up +0.1pt from 33.0%).
Profitability: Operating Income was ¥791.0B (YoY -1.8%). SG&A increased to ¥1,397.8B (YoY +1.5%), outpacing sales growth and raising the SG&A ratio to 21.2% (up +0.4pt from 20.8%), limiting operating leverage. By segment, Japan Operating Income ¥390.7B (+9.0%) improved to a 13.4% margin driven by higher service mix and price revisions, leading consolidated performance; North America ¥377.5B (-9.0%) saw margin contraction to 15.6% due to inventory adjustments and mix deterioration; Europe ¥21.8B (-36.0%) plunged to a 1.9% margin amid weak demand and cost inflation; Asia ¥1.0B (-72.9%) fell to a 0.8% margin as fixed-cost burden from sharp revenue decline weighed heavily. Ordinary Income was ¥806.5B (YoY -4.0%); non-operating income totaled ¥47.7B (interest income ¥35.5B, dividend income ¥6.7B, etc.) versus non-operating expenses ¥32.2B (interest expense ¥14.1B, FX losses ¥3.4B, etc.), yielding a net +¥15.5B. Income before income taxes was ¥805.1B; income taxes were ¥203.4B (effective tax rate 25.3%), resulting in Net Income attributable to owners of the parent of ¥433.0B (YoY +21.3%). Extraordinary gains were ¥17.2B (gain on sale of fixed assets ¥14.0B, etc.) and extraordinary losses were ¥18.6B (impairment loss ¥11.1B, etc.), largely offsetting and having limited impact on final profit. In summary, modest Revenue and Operating Income declines were offset by lower tax burden and reduced non-controlling interests, resulting in higher Net Income.
Japan (Revenue ¥2,913.3B, Operating Income ¥390.7B, Margin 13.4%) delivered Revenue growth of +1.3% and Operating Income +9.0%. Expansion in maintenance & services and price revisions improved margin by ~0.9pt year-on-year, keeping the segment—which accounts for 49% of consolidated Operating Income—steady. North America (Revenue ¥2,418.6B, Operating Income ¥377.5B, Margin 15.6%) posted Revenue -1.5% and Operating Income -9.0%; continued adjustment in housing-related demand and adverse price/mix compressed margins, though the segment retains scale (~48% of consolidated Operating Income). Europe (Revenue ¥1,150.2B, Operating Income ¥21.8B, Margin 1.9%) had Revenue +0.6% but Operating Income -36.0%; demand weakness and cost inflation drove margin down from 3.0% to 1.9%, substantially weakening profitability. Asia (Revenue ¥130.1B, Operating Income ¥1.0B, Margin 0.8%) saw Revenue -15.3% and Operating Income -72.9%; demand slowdown in China & Hong Kong increased fixed-cost burden and pushed margin down from 2.5% to 0.8%, requiring structural profitability fixes.
Profitability: Operating Margin was 12.0% (down -0.2pt from 12.2%) but remains well above the industry median of 7.8% by +4.2pt. Net Margin improved to 6.6% (up +1.2pt from 5.4%), exceeding the industry median of 5.2% by +1.4pt. ROE is 12.3% (no comparable prior-period data provided), and ROA (Ordinary Income basis) is 14.9%, indicating a highly profitable profile. Gross margin at 33.1% edged up slightly, but higher SG&A ratio (21.2%) limited operating leverage, leading to a slight decline in Operating Margin. By segment, Japan 13.4% and North America 15.6% remain high, while Europe 1.9% and Asia 0.8% drag the consolidated average down.
Cash Quality: Operating Cash Flow (OCF) was ¥614.0B (YoY -20.2%) but covered Net Income ¥433.0B by 1.42x, preserving cash-generation capacity. Free Cash Flow was ¥434.8B (OCF ¥614.0B + Investing CF -¥179.2B), covering total dividends paid ¥258.4B by 1.68x and financing about ¥477B of total shareholder returns (including ¥218.8B share buybacks) to roughly 90%. The OCF/Net Income ratio of 1.42x is healthy; the primary cause of OCF shortfall versus OCF subtotal ¥795.5B was working capital reversal driven by Accounts Payable decrease -¥174.9B and income taxes paid -¥208.4B.
Investment Efficiency: Total Asset Turnover was 1.21x (prior 1.24x), a slight decline, but ROA (Ordinary Income basis) of 14.9% remains high. On capital efficiency, shareholder equity stood at 267,522百万円 versus Net Income attributable to owners of the parent ¥433.0B, implying an estimated ROE of about 16.1% (calculated). Share buybacks (treasury stock YoY -¥69.3B) and dividends compressed capital and improved capital efficiency.
Financial Soundness: Equity Ratio was 64.1% (up +3.9pt from 60.2%), at a very high level. Interest-bearing debt was ¥106.0B (short-term borrowings ¥83.4B, long-term borrowings ¥22.2B, bonds & bonds due within 1 year total ¥0 = matured), at a low level. Debt/EBITDA was approximately 0.11x (Interest-bearing debt ¥106B ÷ EBITDA approx ¥938B), and Interest Coverage was about 56.2x (EBIT ¥791.0B ÷ interest expense ¥14.1B), indicating very strong solvency. Current Ratio 234.0% and Quick Ratio 222.2% are high; Cash and Deposits were ¥1,155.9B plus short-term investment securities ¥95.0B, providing very ample liquidity. Net Cash (Cash + Short-term investments - Interest-bearing debt) is approximately ¥1,144.9B positive, making financial risk very limited.
OCF was ¥614.0B (YoY -20.2%), a decline, but covered Net Income ¥433.0B by 1.42x, sustaining the cash-generation base. OCF subtotal (before working capital changes) was ¥795.5B, reflecting add-backs of non-cash expenses including Depreciation ¥147.3B and core profit generation. In working capital, decrease in trade receivables +¥28.3B contributed positively, inventory decrease +¥3.8B was limited, while decrease in trade payables -¥174.9B was a significant cash outflow. The reduction in payables is presumed due to production adjustments and shortened payment terms and was the main cause of working capital reversal. Income taxes paid -¥208.4B also pressured OCF, interpreted as deferred tax payments following strong prior-period results. Investing CF was -¥179.2B, centered on fixed asset additions -¥142.3B and acquisition of securities, etc. -¥63.8B. Fixed asset investment was roughly in line with Depreciation ¥147.3B, staying within maintenance and replacement investment. Free Cash Flow (OCF ¥614.0B + Investing CF -¥179.2B) was ¥434.8B, ample, covering dividends paid ¥258.4B by 1.68x and roughly 90% of total shareholder returns (~¥477B including share buybacks). Financing CF was -¥527.0B, driven by share buybacks -¥218.8B, dividends paid -¥258.4B, and repayment of long-term borrowings -¥30.6B. Significant reduction in long-term borrowings (prior ¥142.5B → current ¥22.2B) reduced interest burden and improved financial flexibility. Cash and cash equivalents were ¥915.8B at year-end (prior ¥1,031.1B, -¥115.3B), but remain well above interest-bearing debt ¥106.0B, sustaining net cash position. The decline in OCF stems from temporary working capital reversal and tax payments; core cash generation (OCF subtotal ¥795.5B) remains high. OCF is expected to normalize as payables revert and receivables collection days (DSO) shorten.
Earnings quality is high, with recurring Operating Income ¥791.0B comprising the bulk of profits. Extraordinary items netted -¥1.4B (Extraordinary gains ¥17.2B - Extraordinary losses ¥18.6B), with gains on sale of fixed assets ¥14.0B largely offset by impairment losses ¥11.1B. Non-operating income ¥47.7B (0.7% of Revenue) comprised interest income ¥35.5B, dividend income ¥6.7B, FX gains ¥2.9B, etc., representing stable returns from financial assets. Non-operating expenses ¥32.2B included interest expense ¥14.1B and FX losses ¥3.4B, indicating modest financial costs. The gap between Ordinary Income ¥806.5B and Income before income taxes ¥805.1B was -¥1.4B; extraordinary items affected Net Income by about -0.3%, minimal. From Income before income taxes ¥805.1B, deducting income taxes ¥203.4B (effective tax rate 25.3%) and non-controlling interests ¥3.9B yields Net Income attributable to owners of the parent ¥433.0B. OCF ¥614.0B covers Net Income ¥433.0B by 1.42x, indicating accrual-cash divergence is within normal range. OCF/EBITDA ratio is about 0.65x (OCF ¥614.0B ÷ EBITDA approx ¥938B), somewhat low due to temporary working capital reversal (payables decrease -¥174.9B), not a structural deterioration in earnings quality. Comprehensive income ¥752.1B includes Other Comprehensive Income ¥150.4B (foreign currency translation adjustments ¥36.5B, valuation differences on securities ¥95.9B, retirement benefit adjustments ¥19.7B, etc.), exceeding Net Income ¥598.0B by 1.26x. Gains in valuation of securities are temporary valuation effects and not recurring operating income. Overall, recurring Operating Income dominates earnings, with limited impact from extraordinary and non-recurring items, supporting a high-quality earnings assessment.
The company plan for FY2027 (year ending March 2027) forecasts Revenue ¥6,770.0B (YoY +2.5%), Operating Income ¥810.0B (YoY +2.4%), Ordinary Income ¥825.0B (YoY +2.3%), and Net Income attributable to owners of the parent (not disclosed explicitly; estimated about ¥600B from EPS forecast 288.08 yen). Revenue growth assumptions incorporate continued firm demand in Japan, recovery in North America, and progress on profitability recovery in Europe and Asia. Operating Margin is expected to remain around 12.0% (¥810.0B ÷ ¥6,770.0B), implying no major margin improvement is assumed. Progress toward the plan is high: current Revenue ¥6,607.1B represents 97.6% of the full-year plan ¥6,770.0B, and Operating Income ¥791.0B is 97.7% of the full-year plan ¥810.0B, implying only 2.3–2.4% remaining to achieve the full-year target. The plan is conservative, reflecting seasonal Q4 factors and expected recovery in North America and Europe. Dividend guidance is annual ¥73.0 per share (actual this year annual ¥130.0, interim ¥62.0 + year-end ¥68.0), but a note indicates FY2027 dividend forecast is ordinary dividend ¥132.0 + commemorative dividend ¥14.0 = ¥146.0 total, implying an assumed payout ratio of about 50.7% against EPS forecast 288.08 yen. The upward revision in dividend forecast (¥73.0 → ¥146.0) reflects the addition of a commemorative dividend and an increase in ordinary dividend. Achievement of the full-year plan assumes North American inventory adjustment completion and price penetration, profitability recovery in Europe, and normalization of working capital (payables reversion and DSO shortening). Downside risks include further deterioration in European conditions, renewed rise in raw material costs, and abrupt FX movements.
The annual dividend for the period was ¥130.0 per share (interim ¥62.0 + year-end ¥68.0), a substantial increase from prior-year ¥47.0. Total dividends corresponding to Net Income attributable to owners of the parent ¥433.0B amounted to about ¥258.4B (payout ratio approx 59.7%), increased from prior-year total dividends approx ¥229.0B (payout ratio approx 64.1%). The payout ratio decreased YoY due to the enlarged Net Income (YoY +21.3%), expanding the denominator. Coverage of total dividends by Free Cash Flow ¥434.8B was 1.68x, and large cash balances ¥1,155.9B and low interest-bearing debt ¥106.0B support dividend capacity. Share buybacks totaled about ¥218.8B (treasury stock YoY -¥69.3B), and combined with dividends ¥258.4B produced total shareholder returns of about ¥477.2B. Total Return Ratio was about 110.2% (¥477.2B ÷ ¥433.0B), slightly exceeding Free Cash Flow, but the net cash position and low Debt/EBITDA provide a substantial cushion. FY2027 dividend forecast is annual ¥146.0 (ordinary ¥132.0 + commemorative ¥14.0), implying an assumed payout ratio of about 50.7% against EPS forecast 288.08 yen. Excluding the commemorative dividend, ordinary dividend basis implies a payout ratio of about 45.8%, considered sustainable. The dividend policy emphasizes stable dividends while enhancing shareholder returns linked to performance. Should profitability in Europe/Asia recover and working capital efficiency improve, FCF normalization could sustain or expand total shareholder return capacity.
Profitability deterioration risk in Europe & Asia segments: Europe Operating Margin is 1.9% (down -1.1pt from 3.0%), Asia 0.8% (down -1.7pt from 2.5%), showing marked profitability deterioration. Europe is affected by demand weakness and cost inflation; Asia by significant revenue decline (-15.3%) causing fixed-cost burden. Combined Operating Income for both segments is ¥22.8B (prior approx ¥37.3B, -39% YoY), only about 3% of consolidated Operating Income, but segment assets total approx ¥112.1B (about 20% of consolidated assets), raising concerns about significant decline in capital efficiency. Delays in price revisions, cost reductions, or demand recovery could crystallize impairment risk or exit costs.
Working capital efficiency deterioration and cash conversion risk: OCF ¥614.0B (YoY -20.2%) declined and OCF/EBITDA ratio remained low at about 0.65x. The main cause was payables decrease -¥174.9B, a working capital reversal, and DSO is elongated at 66 days (trade receivables ¥1,196.8B ÷ daily sales ¥18.1B). Decrease in payables is presumed due to shortened payment terms and production adjustments; if structural, working capital needs could permanently rise and reduce FCF generation. OCF/Net Income is 1.42x, but EBITDA-based coverage has room for improvement; shortening DSO and normalizing payables are urgent. Delays in working capital normalization could impair funding for dividends and buybacks.
North America demand recovery delay and margin risk: North America Revenue ¥2,418.6B (-1.5%), Operating Income ¥377.5B (-9.0%), margin 15.6% (down from estimated ~17%). Adjustment in housing-related demand, inventory correction, and mix deterioration pressured margins. As North America accounts for ~48% of consolidated Operating Income, prolonged demand weakness or intensified price competition would materially affect consolidated results. FY2027 plan assumes North America recovery, but U.S. interest rate trends and housing market uncertainty pose downside risk. With segment assets ¥215.7B (about 39% of consolidated assets), prolonged ROA decline could harm capital efficiency and shareholder value.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.0% | 7.8% (4.6%–12.3%) | +4.2pt |
| Net Margin | 6.6% | 5.2% (2.3%–8.2%) | +1.4pt |
Profitability substantially exceeds the industry median, positioning the company in the upper tier among manufacturers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.3% | 3.7% (-0.4%–9.3%) | -4.0pt |
Growth lags the industry median, with demand adjustments in North America, Europe, and Asia constraining growth.
※ Source: Company compilation
The Japan segment, accounting for about 49% of consolidated Operating Income and delivering a 13.4% Operating Margin (Operating Income +9.0% YoY), reflects resilient domestic maintenance & services demand and price revision effects, demonstrating stability in the earnings base. North America, contributing about 48% of profit, is in an adjustment phase with a 15.6% margin (Operating Income -9.0% YoY); North American demand recovery and price penetration are key to achieving FY2027 consolidated targets. Profitability recovery in Europe (1.9%) and Asia (0.8%) are medium-term improvement drivers; if both regions’ Operating Margins recover to ~5%, consolidated Operating Margin could be lifted from the low-12% range into the high-12% to 13% range.
Financial soundness is very strong: Equity Ratio 64.1%, Debt/EBITDA ~0.11x, Interest Coverage ~56x, indicating virtually no interest burden risk. Cash and deposits ¥1,155.9B and short-term investments ¥95.0B ensure ample liquidity, and Interest-bearing debt ¥106.0B leaves a net cash position. Payout Ratio about 59.7% (current year) and share buybacks ¥218.8B combined yield a Total Return Ratio of ~110%, slightly exceeding FCF, but ample cash and low leverage provide sufficient cushion. FY2027 dividend forecast ¥146.0 (assumed payout ratio ~50.7%, ~45.8% excluding commemorative dividend) appears sustainable, and FCF normalization could maintain or expand total shareholder return capacity.
A short-term focus is on normalizing working capital efficiency. The OCF decline to ¥614.0B (YoY -20.2%) was mainly driven by payables decrease -¥174.9B and income taxes paid -¥208.4B as temporary reversals; OCF subtotal ¥795.5B indicates core cash generation remains intact. Improving DSO from 66 days and normalizing payables so that OCF/EBITDA improves from 0.65x to above 0.9x would materially strengthen FCF generation. North American demand recovery and profitability improvements in Europe/Asia are prerequisites for achieving the FY2027 plan (Revenue ¥6,770B, Operating Income ¥810B), so quarterly segment performance and cash flow trends will be closely monitored.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; consult professional advisors as needed.