| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥163.9B | ¥154.2B | +6.4% |
| Operating Income | ¥7.8B | ¥6.4B | +21.6% |
| Ordinary Income | ¥7.7B | ¥6.1B | +25.5% |
| Net Income | ¥4.7B | ¥4.0B | +17.4% |
| ROE | 1.4% | 1.2% | - |
FY2026 Q1 revenue was ¥163.9B (vs prior year +¥9.8B +6.4%), Operating Income was ¥7.8B (vs prior year +¥1.4B +21.6%), Ordinary Income was ¥7.7B (vs prior year +¥1.6B +25.5%), and quarterly Net Income attributable to owners of the parent was ¥4.7B (vs prior year +¥0.7B +17.4%). Growth was driven by the core Construction Equipment related business, which recorded revenue +24.4% and segment profit ¥8.4B (prior year ¥4.8B). The Rental related business also showed steady performance with revenue +2.8% and secured profit of ¥2.7B. In contrast, the Housing Equipment related business posted revenue -4.7% and a loss of ¥1.6B, and the Electronic Equipment related business posted revenue -3.1% and a loss of ¥1.2B, widening profit dispersion across segments. Operating margin improved 0.6pt to 4.8% (prior year 4.2%), supported by a 1.0pt reduction in SG&A ratio to 22.6% (prior year 23.6%). Gross profit margin contracted 0.3pt to 27.4% (prior year 27.7%), with changes in product mix and rising procurement costs pressuring gross profit. Total assets increased by ¥20.8B to ¥753.6B (prior year ¥732.8B); inventory was ¥130.7B (prior year ¥130.8B) broadly flat, and receivables increased ¥12.0B to ¥128.1B (prior year ¥116.1B). In summary, the company achieved higher revenue and profit led by core business growth and SG&A control, but deterioration in gross margins and widening losses in unprofitable segments remain challenges.
[Revenue] Revenue of ¥163.9B (YoY +6.4%) was led by the Construction Equipment related business at ¥78.0B (YoY +24.4%). Recovery in construction demand and higher equipment utilization contributed, raising that segment’s share to 47.6% (prior year 39.3%). Rental related business recorded ¥44.5B (YoY +2.8%) sustaining steady growth, supported by Other income (lease income, etc.) of ¥10.4B (prior year ¥9.9B). Meanwhile, Housing Equipment related business fell to ¥38.2B (YoY -4.7%) and Electronic Equipment related business fell to ¥13.1B (YoY -3.1%), impacted by a weak housing market and softer demand for electronic components. Gross profit was ¥44.8B (YoY +¥2.1B +4.9%), and gross profit margin narrowed 0.3pt to 27.4% (prior year 27.7%). The higher weighting of Construction Equipment altered the mix, and rising raw material costs also compressed margins.
[Profitability] Operating Income of ¥7.8B (YoY +21.6%) was primarily driven by SG&A increasing only to ¥37.0B (prior year ¥36.3B), a +1.9% rise, improving SG&A ratio by 1.0pt to 22.6% (prior year 23.6%). Economies of scale and disciplined cost control were effective. Operating margin improved 0.6pt to 4.8% (prior year 4.2%). Ordinary Income of ¥7.7B (YoY +25.5%) faced a net non-operating expense headwind of -¥0.1B (Non-operating income ¥1.1B including dividend income ¥0.3B; Non-operating expenses ¥1.2B including interest expense ¥0.7B and foreign exchange losses ¥0.3B), but operating profit growth absorbed this. Net Income attributable to owners of the parent was ¥4.7B (YoY +17.4%), with income taxes of ¥3.0B (prior year ¥2.4B) increasing tax burden by ¥0.6B and a high effective tax rate of 39.2% limiting bottom-line growth. Extraordinary items were negligible at approximately +¥0.01B net, with ¥0.3B gain on sales of investment securities recorded. Total segment profit was ¥8.3B (prior year ¥6.4B); after corporate expenses of -¥0.6B (prior year -¥0.2B), this reconciles to Ordinary Income of ¥7.7B. In conclusion, revenue and profit growth were achieved driven by core segment expansion and SG&A efficiency, but declining gross margin and expanding losses in unprofitable segments constrain further profitability improvement.
The Construction Equipment related business delivered revenue ¥78.0B (YoY +24.4%) and segment profit ¥8.4B (prior year ¥4.8B), a substantial increase. Recovery in construction demand and higher machine utilization were tailwinds, improving segment margin to 10.8% (prior year 7.9%) (+2.9pt). The Rental related business recorded revenue ¥44.5B (YoY +2.8%) and segment profit ¥2.7B (prior year ¥2.5B), showing steady performance with a margin of 6.0% (prior year 5.7%). Other income (lease income, etc.) of ¥10.4B contributed. The Housing Equipment related business posted revenue ¥38.2B (YoY -4.7%) and a segment loss of ¥1.6B (prior year profit ¥0.1B), turning to a loss due to housing market weakness and intensified competition. The Electronic Equipment related business recorded revenue ¥13.1B (YoY -3.1%) and a segment loss of ¥1.2B (prior year loss ¥1.0B), with softer electronic component demand and insufficient fixed-cost absorption weighing on results. Corporate adjustments were -¥0.6B (prior year -¥0.2B), mainly the net of non-operating income and expenses. Profit dispersion across segments has widened; while Construction Equipment and Rental support group earnings, restoring Housing and Electronic segments is urgent.
[Profitability] Operating margin 4.8% (prior year period 4.2%) improved 0.6pt; gross margin 27.4% (prior year 27.7%) contracted 0.3pt; SG&A ratio 22.6% (prior year 23.6%) improved 1.0pt. SG&A increase was limited to +1.9% against revenue expansion, realizing economies of scale. Net profit margin 2.9% (prior year 2.6%) improved 0.3pt, but a high effective tax rate of 39.2% constrains final profit growth. [Cash Quality] Days sales outstanding (DSO) extended to 285.4 days (prior year 274.5 days) (+10.9 days), while inventory turnover days shortened to 401.0 days (prior year 424.5 days) (-23.5 days). Cash Conversion Cycle (CCC) lengthened by 28.9 days to 731.4 days (prior year 702.5 days), indicating notable deterioration in working capital efficiency. Receivables collection delays and high inventory levels are tightening liquidity and pressuring cash generation. [Investment Efficiency] ROE 1.4% (annualized ~5.6%), total asset turnover 0.22x (annualized ~0.87x), and total capital turnover remain very low, indicating significant room to improve capital efficiency. [Financial Soundness] Equity Ratio 44.3% (prior year 45.8%), Current Ratio 198.9%, Quick Ratio 140.6% maintain solvency, and Interest Coverage 10.5x (EBIT ¥7.8B ÷ interest expense ¥0.7B) shows adequate interest-bearing capacity. Cash and deposits ¥61.9B vs. short-term borrowings ¥20.7B and long-term borrowings ¥178.7B, total interest-bearing debt ¥199.4B, net interest-bearing debt ¥137.5B, Debt/Equity 1.25x, and Debt/Capital 37.4% are within acceptable ranges.
Operating Cash Flow was not disclosed, but the balance sheet suggests cash trends: cash and deposits decreased ¥4.4B to ¥61.9B (prior year ¥66.3B). Receivables increased ¥12.0B to ¥128.1B (prior year ¥116.1B), and DSO extended by 10.9 days to 285.4 days, binding working capital. Inventory was essentially flat at ¥130.7B (prior year ¥130.8B) but inventory turnover days remained high at 401.0 days, indicating sizable potential for efficiency gains. Payables decreased ¥17.5B to ¥57.4B (prior year ¥74.9B), possibly shortening supplier payment terms and pressuring working capital. Interest-bearing debt was nearly unchanged at ¥199.4B (prior year ¥198.9B); short-term borrowings fell ¥12.2B from ¥32.9B to ¥20.7B while long-term borrowings increased ¥21.0B from ¥157.7B to ¥178.7B, lengthening debt maturities and reducing rollover risk. Retained earnings increased ¥0.3B to ¥206.9B (prior year ¥206.6B); from current period Net Income ¥4.7B, approximately ¥4.4B was likely paid as dividends. Non-operating expenses included interest expense ¥0.7B and foreign exchange loss ¥0.3B, cash outflows. Overall, despite higher profits, working capital deterioration from higher receivables and lower payables reduced cash. CCC at 731.4 days is exceptionally long; compressing inventory and receivables to improve cash generation is an urgent priority.
This period’s earnings are primarily operating in nature; extraordinary items were negligible at approximately +¥0.01B net. A ¥0.3B gain on sale of investment securities was recorded as a one-off and does not affect recurring earnings. Non-operating income was ¥1.1B (0.7% of revenue), including dividend income ¥0.3B, but is limited in scale. Non-operating expenses were ¥1.2B (0.7% of revenue), including interest expense ¥0.7B and foreign exchange losses ¥0.3B, making interest and FX volatility contributors to earnings variability. The gap between Ordinary Income ¥7.7B and Net Income ¥4.7B is mainly due to income taxes of ¥3.0B (effective tax rate 39.2%), with structural tax burden compressing final profit. From an accrual perspective, increases in receivables (+¥12.0B) and persistently high inventory (¥130.7B) delay cash conversion and raise risks of future valuation losses or provisions. CCC of 731.4 days is extremely prolonged, widening the gap between accounting profits and cash generation. Comprehensive income was ¥5.1B (Net Income ¥4.7B), affected by foreign currency translation adjustment +¥0.9B, valuation differences on available-for-sale securities -¥0.3B, deferred hedge gains/losses +¥0.2B, and retirement benefit adjustments -¥0.4B; the divergence from Net Income is modest at ¥0.4B and does not materially affect earnings quality.
Full Year guidance remains unchanged at Revenue ¥652.0B (vs prior year +4.1%), Operating Income ¥30.0B (vs prior year +35.6%), Ordinary Income ¥32.0B (vs prior year +15.2%), and Net Income attributable to owners of the parent ¥21.5B. Q1 progress rates are: Revenue 25.1% (¥163.9B ÷ ¥652.0B), Operating Income 26.1% (¥7.8B ÷ ¥30.0B), Ordinary Income 24.1% (¥7.7B ÷ ¥32.0B), Net Income 21.8% (¥4.7B ÷ ¥21.5B). Versus a standard Q1 progress rate (~25%), Operating Income is ahead by +1.1pt, Ordinary Income is roughly on plan at -0.9pt, and Net Income is behind by -3.2pt. Net Income lag is attributable to a higher effective tax rate of 39.2% and possibly larger-than-expected non-operating expenses (FX losses, interest). By segment, Construction Equipment exceeded expectations and could lead to upside for the full year, while Housing Equipment and Electronic Equipment are in loss positions and require turnaround in H2 as a condition for targets. No forecast revisions have been made; the company believes targets are achievable provided tax rate improvement, stabilization of non-operating results, and profitability restoration in unprofitable segments in H2.
The annual dividend forecast is ¥22.00 per share, unchanged from the prior year. Against full year EPS forecast of ¥107.64, the Payout Ratio is 20.4%, a conservative level that supports dividend sustainability. Cash and deposits at Q1 end were ¥61.9B and shareholders’ equity was ¥334.2B, indicating a stable financial base with no issue in dividend funding. Retained earnings stand at ¥206.9B, providing ample dividend capacity. With payout ratio in the 20% range, there is room for future dividend increases, but no policy to raise dividends has been announced at this time. No share buybacks have been disclosed; Total Return Ratio is at the same level as the payout ratio, 20.4%. Should working capital efficiency improve and free cash flow expand, there would be potential for enhanced shareholder returns via dividend increases or share buybacks.
Working Capital Expansion Risk: DSO 285.4 days, inventory turnover days 401.0 days, and CCC 731.4 days are extremely prolonged, and working capital overhang is reducing liquidity and cash generation. High receivables of ¥128.1B (YoY +¥12.0B) and inventory at ¥130.7B raise the risk of future valuation losses or provisions. Failure to shorten CCC could chronically pressure free cash flow and constrain dividends and investment allocations.
Widening Losses in Unprofitable Segments: Housing Equipment recorded revenue ¥38.2B (YoY -4.7%) and segment loss ¥1.6B (prior year profit ¥0.1B); Electronic Equipment recorded revenue ¥13.1B (YoY -3.1%) and segment loss ¥1.2B (prior year loss ¥1.0B). Prolonged housing market weakness and soft electronic component demand could further expand losses through fixed-cost underabsorption and intensified competition, pressuring group earnings. Segment revenue composition is Construction Equipment 47.6%, Rental 27.2%, Housing Equipment 23.3%, Electronic Equipment 8.0%; unprofitable segments account for roughly 31% of revenues.
Interest Rate & FX Risk: Long-term borrowings increased by ¥21.0B to ¥178.7B (prior year ¥157.7B), and total interest-bearing debt is ¥199.4B, a high level. Interest expense ¥0.7B and FX loss ¥0.3B were recorded; in a rising rate environment interest burden could increase and FX volatility could raise non-operating earnings volatility. While Debt/Equity is 1.25x and Debt/Capital 37.4% show financial capacity, interest rate sensitivity is elevated.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.8% | 8.8% (4.4%–14.3%) | -4.1pt |
| Net Profit Margin | 2.9% | 7.3% (3.3%–10.6%) | -4.4pt |
Both operating margin and net profit margin are about 4pt below the industry median, placing profitability in the lower tier of the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.4% | 6.6% (-0.3%–14.8%) | -0.2pt |
Revenue growth is roughly in line with the industry median, indicating standard growth.
※ Source: Company aggregation
Revenue and profit growth driven by core segments and SG&A control: Construction Equipment posted revenue +24.4% and segment profit ¥8.4B; Rental secured profit ¥2.7B. SG&A ratio improved 1.0pt to 22.6% (prior year 23.6%), lifting operating margin to 4.8% (prior year 4.2%) (+0.6pt). Continued recovery in construction demand could provide upside to performance via core segment expansion.
Deterioration in working capital efficiency and weakening cash generation: DSO 285.4 days, inventory turnover days 401.0 days, CCC 731.4 days are extremely prolonged, with receivables +¥12.0B and inventory ¥130.7B tying up funds. If cash generation does not improve, capital allocation to dividends and growth investment may be constrained and capital efficiency may remain depressed. Inventory reduction and stronger receivables collection are top priorities.
Need to restore unprofitable segments and improve gross margins: Housing Equipment and Electronic Equipment recorded combined losses of ¥2.8B, weighing on group earnings. Gross margin also contracted to 27.4% (prior year 27.7%) (-0.3pt) as product mix deterioration and higher raw material costs compressed margins. Without structural reforms in unprofitable segments and a shift to higher value-added products, sustainable profitability improvement is unlikely.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.