| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥620.5B | ¥633.5B | -2.1% |
| Operating Income / Operating Profit | ¥14.7B | ¥23.8B | -38.3% |
| Ordinary Income | ¥14.5B | ¥34.0B | -57.3% |
| Net Income / Net Profit | ¥26.9B | ¥94.8B | -71.6% |
| ROE | 4.1% | 10.3% | - |
For the fiscal year ended March 2025, Revenue was ¥620.5B (YoY -¥13.1B -2.1%), Operating Income was ¥14.7B (YoY -¥9.1B -38.3%), Ordinary Income was ¥14.5B (YoY -¥19.5B -57.3%), and Net Income attributable to owners of the parent was ¥26.9B (YoY -¥67.9B -71.6%), representing declines in both sales and profits. Revenue fell for the second consecutive year; the operating margin was 2.4% (down 1.4pt from 3.8% a year earlier) and the ordinary income margin was 2.3% (down 3.1pt from 5.4%), indicating a significant deterioration in profitability. An extraordinary loss of ¥7.5B (including impairment losses of ¥4.2B) and a tax burden driven by an effective tax rate in excess of 100% compressed bottom-line profit, causing basic EPS to turn negative to -0.85 yen (prior year 52.67 yen). Operating Cash Flow (OCF) remained positive at ¥30.0B (YoY -63.0%), but inventory and accounts receivable increases strained working capital; capital expenditures of ¥95.7B resulted in Free Cash Flow of -¥45.6B. Meanwhile, share buybacks of ¥239.8B were executed, shrinking total equity to ¥661.4B (YoY -¥256.4B) and increasing reliance on short-term borrowings of ¥241.7B.
[Revenue] Revenue was ¥620.5B (YoY -2.1%), marking a second consecutive year of decline. By segment, the Automotive Business and related operations generated ¥567.7B ( -2.4%), with declines in the core business weighing on consolidated sales; Medical Devices produced ¥52.7B (+2.0%) and recorded modest growth but is small in scale and contributed limitedly to consolidated results. The Automotive Business accounts for 91.5% of consolidated revenue; its decline appears driven by weakening external customer demand and a deterioration in product mix. By region, Japan was ¥265.2B (YoY -1.5%), Asia (ex-China) ¥106.3B (+0.2%) nearly flat, China ¥80.3B (-1.5%), and the U.S. ¥90.7B (-1.7%). Sales to major customer Nissan Motor Group totaled ¥68.1B (YoY +1.5%), a slight increase but insufficient to offset overall demand weakness. Gross margin fell to 22.1% (down 0.4pt from 22.5%), suggesting heightened cost pressure and delayed price pass-through.
[Profitability] Operating Income was ¥14.7B (YoY -38.3%), a substantial decline. In addition to a decrease in gross profit in absolute terms, SG&A rose to ¥122.6B (YoY +¥3.7B +3.1%), pushing the SG&A ratio up to 19.8% (up 1.0pt from 18.8%). Drivers of SG&A increases included bonuses ¥4.5B, retirement benefit expenses ¥0.3B, and depreciation ¥9.8B (YoY +¥2.4B), indicating insufficient absorption of fixed costs and worsened operating leverage. Segment operating income: Automotive Business ¥23.7B ( -23.5%) with a margin of 4.2% (about -1.2pt YoY), Medical Devices ¥2.8B ( -15.2%) with a margin of 5.3% (about -1.2pt YoY), both experiencing margin compression. Ordinary Income was ¥14.5B (YoY -57.3%), a larger decline than operating income. Non-operating income was ¥9.2B (including interest income ¥4.0B, dividend income ¥1.6B), offset by non-operating expenses of ¥9.3B (including interest expense ¥2.5B, foreign exchange losses ¥1.4B, and fees ¥2.0B). Profit before tax was ¥7.6B (YoY -77.6%); income taxes ¥7.7B (effective tax rate >100%) were applied, and Net Income attributable to owners of the parent was ¥26.9B (YoY -71.6%). Comprehensive income was ¥12.0B (YoY -76.2%), with foreign currency translation adjustments of ¥10.5B providing a buffer. In conclusion, the combination of lower sales, higher SG&A, currency and interest cost pressures, and the recognition of extraordinary losses produced the marked decline in profitability.
The Automotive Business and related operations recorded Revenue of ¥567.7B (YoY -2.4%), Operating Income ¥23.7B (YoY -23.5%), and an operating margin of 4.2%—despite being the core segment, it suffered revenue and profit declines. The segment accounts for 91.5% of sales and contributes roughly 90% of profits. The segment’s revenue decline was driven by weakening customer demand and deteriorating product mix; the margin decline (about -1.2pt YoY) likely reflects cost increases and insufficient absorption of SG&A. Medical Devices reported Revenue of ¥52.7B (YoY +2.0%), Operating Income ¥2.8B (YoY -15.2%), and an operating margin of 5.3%—growth in sales but profit decline. Though small (8.5% of revenue), the Medical Devices margin exceeds that of the Automotive Business; however, margin declined by about -1.2pt YoY, suggesting higher cost and SG&A burdens. Consolidated operating income was ¥14.7B versus reported segment total of ¥26.5B, with corporate expenses outside reportable segments of ¥11.9B (YoY +¥1.4B) deducted, indicating that increased corporate overheads also contributed to reduced profitability.
[Profitability] Operating margin 2.4% (down 1.4pt from 3.8%), Ordinary Income margin 2.3% (down 3.1pt from 5.4%), Net Income margin attributable to owners of the parent 4.3% (down 10.6pt from 15.0%)—profitability deteriorated significantly across the board. ROE 4.1% (down 6.2pt from 10.3%) indicates reduced capital efficiency, primarily due to compressed net income margin. Gross margin 22.1% (down 0.4pt from 22.5%) reflects increased cost pressure, while SG&A ratio rose to 19.8% (up 1.0pt from 18.8%), highlighting insufficient fixed-cost absorption. [Cash Quality] Cash-based operating profit (Operating CF plus depreciation) of ¥59.1B (depreciation ¥44.4B added to OCF ¥30.0B) approximates EBITDA; the Operating CF/EBITDA ratio is 0.51x, indicating deteriorated working capital efficiency. Inventory increased by ¥9.4B and accounts receivable increased by ¥3.1B, tying up cash and extending the Cash Conversion Cycle (CCC) to 147 days (about +20 days YoY). [Investment Efficiency] Capital expenditures of ¥95.7B were 2.16x depreciation, indicating continued aggressive investment; Construction in Progress totaled ¥33.5B to support future production capacity. However, Free Cash Flow of -¥45.6B shows investment significantly exceeded OCF, and investments are not being funded fully from internal cash. [Financial Soundness] Equity Ratio fell to 65.2% (down 21.8pt from 87.0%), reflecting a sharp deterioration; dependence on short-term borrowings of ¥241.7B increased, and current liabilities surged to ¥335.4B (YoY +174%). Current ratio 173% and quick ratio 153% indicate short-term liquidity is maintained, but 100% of interest-bearing debt is short-term, exposing refi risk. Cash and deposits stood at ¥261.9B, with cash coverage of short-term borrowings at 1.08x—only a slim cushion.
OCF was ¥30.0B (YoY -63.0%) and stayed positive, but adjustments before income taxes of ¥7.6B included depreciation ¥44.4B, impairment losses ¥4.2B, and other non-cash charges. Working capital increases (inventories -¥9.4B, trade receivables -¥3.1B) and corporate tax payments of ¥10.6B absorbed cash. Subtotal OCF was ¥37.7B; after working capital and tax outflows, net operating cash was ¥30.0B, highlighting deterioration in working capital efficiency. Investing cash flow was -¥75.6B, primarily capital expenditures of ¥95.7B and intangible asset acquisitions of ¥3.7B; proceeds from disposals (securities sale ¥0.9B, fixed asset sale ¥1.3B) were limited. As a result, Free Cash Flow was -¥45.6B, indicating OCF could not cover investments. Financing cash flow was -¥31.4B: dividends paid ¥32.0B (interim and year-end) and share buybacks ¥239.8B drove total shareholder returns of ¥272B, while net increases in short-term borrowings of ¥241.7B funded these outflows. Cash and deposits declined from ¥348.8B at the beginning of the period to ¥261.9B at period-end, a decrease of ¥86.9B; after foreign exchange translation adjustments of ¥2.3B, the net cash decrease during the period was ¥74.6B. Normalizing working capital and accelerating investment recovery are key to improving cash generation.
Of Ordinary Income ¥14.5B, Operating Income ¥14.7B represents core business earnings. Net non-operating items were a near-zero net of -¥0.2B, with non-operating income ¥9.2B (interest income ¥4.0B, dividend income ¥1.6B, other ¥3.4B) offset by non-operating expenses ¥9.3B (interest expense ¥2.5B, FX losses ¥1.4B, fees ¥2.0B). Non-operating income accounted for only 1.5% of revenue and core earnings are predominantly business-derived. However, an extraordinary loss of ¥7.5B (including impairment losses ¥4.2B) reduced profit before tax to ¥7.6B, and corporate taxes of ¥7.7B (effective tax rate >100%) compressed Net Income attributable to owners of the parent to ¥26.9B from ordinary levels. Net gains on sale of investment securities of ¥0.2B are included in net income but are immaterial. Comprehensive income of ¥12.0B includes foreign currency translation adjustments of ¥10.5B, valuation gains on securities ¥1.9B, and retirement benefit adjustments of -¥0.4B; the gap between comprehensive income and net income is ¥-14.9B, a sizable divergence. While ordinary income has relatively high sustainability, extraordinary items and FX effects heavily distort the final profit, and accrual quality warrants attention given the Operating CF/EBITDA ratio decline to 0.51x. Working capital stagnation widens the gap between profitability and cash generation.
Full-year guidance projects Revenue ¥630.0B (YoY +1.5%), Operating Income ¥15.0B (YoY +2.0%), Ordinary Income ¥15.0B (YoY +3.2%), Net Income attributable to owners of the parent ¥7.0B, basic EPS 27.45 yen, and year-end dividend 39.0 yen. The operating margin is expected to remain around 2.4%, reflecting a conservative plan with no material profitability improvement anticipated. Revenue growth assumes stabilization in external demand for the core Automotive Business, price and mix improvements, and continued growth in Medical Devices, but the modest +1.5% sales growth reflects a cautious stance. Operating income is expected to edge up modestly through SG&A restraint and productivity improvements. Ordinary income growth (+3.2%) assumes improved operating profit and better non-operating performance, though outcomes remain sensitive to FX and interest-rate movements. Net Income attributable to owners of the parent forecast of ¥7.0B (YoY -74.0%) plans for a significant decline, assuming normalization of extraordinary losses and effective tax rate normalization. Year-end dividend of 39.0 yen (down from prior year year-end 53.0 yen) suggests a dividend policy prioritizing sustainability in light of reduced earnings. Full-year progress will be evaluated against prior-year achievement rates at fiscal year end.
Dividends comprise interim 39.0 yen and year-end 53.0 yen totaling 92.0 yen (same as prior year), with total dividends amounting to ¥32.0B (payout ratio 1.7%). Against Net Income attributable to owners of the parent of ¥26.9B, the payout ratio is formally 1.7%, but this low figure reflects the compression of net income due to extraordinary losses and increased tax burden; sustainability should be assessed relative to OCF ¥30.0B and Free Cash Flow -¥45.6B. Dividend payments were covered by OCF, but Free Cash Flow was negative, so dividends alone were not fully funded by internal cash. Additionally, share buybacks of ¥239.8B (approximately 12.78 million shares) were executed, bringing total shareholder returns to ¥272B. The Total Return Ratio greatly exceeds operating cash (over 9x) and Net Income attributable to owners of the parent (over 10x), and funding was supplemented by short-term borrowings of ¥241.7B. Next period’s forecast dividend is year-end 39.0 yen; interim dividend is undecided, so full-year payout assessment requires normalization of profits. Without earnings improvement and working capital normalization, sustainability is questionable. Treasury stock rose to ¥29,381M at period-end (34.5% of issued shares), contributing to the decline in Equity Ratio.
High dependence on Automotive segment and customer concentration risk: 91.5% of revenue and about 90% of operating income depend on the Automotive Business; sales to the Nissan Motor Group totaled ¥68.1B, representing 11.0% of consolidated revenue. Demand fluctuations in the automotive industry, structural shifts such as electrification and autonomous driving, or deterioration in major customers’ performance would directly impact results. During the period, revenue and margin declines in the Automotive Business were the primary drivers of consolidated profit deterioration, with the segment margin at 4.2% (about -1.2pt YoY) signaling deteriorated profitability. Slowdowns in China and U.S. markets also affected results; if external demand recovery remains uncertain, meeting targets and improving profitability will be challenging.
Short-term borrowing dependence and liquidity risk: 100% of interest-bearing debt is short-term borrowings of ¥241.7B, with short-term borrowings accounting for 72% of current liabilities of ¥335.4B. Equity Ratio fell to 65.2% (down 21.8pt from 87.0%), sharply increasing financial leverage; cash and deposits ¥261.9B provide only a 1.08x coverage of short-term borrowings, leaving little cushion. Refinancing risk is high, and rising interest rates or changes in credit conditions would directly affect funding costs and liquidity. Interest expense rose to ¥2.5B (prior year ¥0.1B), increasing interest burden; prolonged dependence on short-term borrowings will pressure financial health.
Worsening working capital efficiency and weakened cash generation: Inventory ¥66.8B (YoY +¥6.3B +10.4%) and Trade Receivables ¥128.0B (YoY +¥3.5B +2.8%) indicate inventory and receivables stagnation, with CCC extended to 147 days. OCF ¥30.0B (YoY -63.0%) and Free Cash Flow -¥45.6B show a major decline in cash generation; capital expenditures ¥95.7B are not covered by internal funds. Without compression of working capital, the sustainability of future investment and returns will be constrained and reliance on short-term borrowings will persist. Risks include inventory obsolescence and collection delays, which could trigger additional impairment or valuation losses.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.4% | 7.8% (4.6%–12.3%) | -5.4pt |
| Net Income Margin | 4.3% | 5.2% (2.3%–8.2%) | -0.8pt |
Operating margin is well below the industry median of 7.8%, indicating inferior profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -2.1% | 3.7% (-0.4%–9.3%) | -5.8pt |
Revenue growth is -2.1% versus an industry median of +3.7%, placing the company behind peers in growth.
※ Source: Company compilation
Confirming a trough in profitability is the top priority: Operating margin of 2.4% is well below the industry median of 7.8%, with concurrent rises in SG&A ratio and declines in gross margin. Next fiscal year guidance targets Operating Income ¥15.0B (+2.0%) versus Revenue growth +1.5%; the limited gap between revenue and profit growth suggests constrained operating leverage. With depreciation rising (YoY +¥1.9B) and higher interest burden continuing, execution of price pass-through, mix improvement, and productivity enhancements are critical for profit normalization. The recurrence of extraordinary losses and effective tax rate normalization will determine net profit outcomes.
Normalizing working capital and restoring cash generation: Inventory and receivable stagnation extended CCC to 147 days and reduced the Operating CF/EBITDA ratio to 0.51x. Given Free Cash Flow of -¥45.6B, investment and shareholder returns face sustainability constraints. Capex/depreciation 2.16x indicates ongoing aggressive investment and Construction in Progress ¥33.5B supports future capacity, but without improved utilization and compressed working capital, investment recovery will be delayed. Reducing inventory and strengthening collections to shorten CCC and return OCF to sustained positive territory is the highest priority to improve cash generation.
Reducing short-term borrowing dependence and normalizing capital structure: Short-term borrowings ¥241.7B (100% of interest-bearing debt) reliance increases refinancing and interest sensitivity. Share buybacks of ¥239.8B reduced Equity Ratio to 65.2% (down 21.8pt), sharply increasing leverage; cash/short-term liabilities coverage at 1.08x leaves little liquidity buffer. Next period intends to restrain total returns (planned dividend reduction; share buybacks undecided) to restore balance, but extending short-term borrowings or failure to secure repayment sources would challenge medium-term financial soundness. Unless working capital and cash generation improve, continued borrowing dependence and further deterioration in capital efficiency are key concerns.
This report is an analytical summary generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on publicly available financial statements. Investment decisions are your own responsibility; consult professionals as necessary before acting.