| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥8168.8B | ¥8017.0B | +1.9% |
| Operating Income / Operating Profit | ¥457.8B | ¥521.6B | -12.2% |
| Ordinary Income | ¥521.9B | ¥579.6B | -10.0% |
| Net Income / Net Profit | ¥425.9B | ¥320.8B | +32.8% |
| ROE | 9.4% | 7.6% | - |
FY ended March 2026 results: Revenue ¥8,168.8B (YoY +¥151.8B +1.9%), Operating Income ¥457.8B (YoY -¥63.8B -12.2%), Ordinary Income ¥521.9B (YoY -¥57.7B -10.0%), Net Income attributable to owners of the parent ¥425.9B (YoY +¥105.1B +32.8%). Despite revenue growth, operating and ordinary profit declined. Operating margin fell 0.9pp to 5.6% (prior year 6.5%), and gross margin narrowed 0.2pp to 13.9% (prior year 14.1%), pressured by higher raw material and logistics costs and increased SG&A (¥679.5B, YoY +11.6%). Net income increased aided by gain on sale of investment securities ¥52.4B, but impairment losses ¥98.4B and a high effective tax rate of 43.1% were also recorded. By segment, DDS (Disk Drive Suspension) maintained high profitability with Revenue ¥1,267.5B (+14.7%) and Operating Income ¥260.6B (margin 20.6%), accounting for about 57% of company operating profit, while Seats reported Revenue ¥2,942.4B (-3.2%) and Operating Income ¥80.5B (-28.3%, margin 2.7%) with a significant profit decline. Suspension Springs saw slightly lower revenue but Operating Income improved +56.7%, and Industrial Equipment & Others posted revenue growth but profit decline with margin falling to 5.2%. Operating Cash Flow (OCF) reached a record high ¥774.5B (YoY +39.0%); Free Cash Flow (FCF) was ¥358.4B, with capital expenditure ¥398.4B while continuing dividends and share buybacks, raising cash balance to ¥1,084.0B. Guidance for next fiscal year forecasts Revenue ¥8,600.0B (+5.3%) and Operating Income ¥590.0B (+28.9%), expecting significant improvement.
[Revenue] Revenue was ¥8,168.8B (+1.9%) — a slight increase. By segment, DDS (Disk Drive Suspension) recorded ¥1,267.5B (+14.7%) maintaining double-digit growth driven by expanding data center/storage demand; Industrial Equipment & Others posted ¥1,411.3B (+9.6%) supported by steady demand for semiconductor process components. Conversely, Seats declined to ¥2,942.4B (-3.2%) due to lower automobile production volumes and model-mix effects; Suspension Springs were ¥1,692.4B (-1.0%) slightly down. Precision Components were ¥1,083.6B (+3.6%) supported by HDD mechanism parts and fastener demand. Regional breakdowns were undisclosed, but a ¥90.6B increase in foreign exchange translation adjustments suggests yen depreciation boosted overseas revenue when converted to yen.
[Profitability] Gross margin fell 0.2pp to 13.9% (cost of sales ratio 86.1%) as upward pressure from raw materials and logistics continued. SG&A was ¥679.5B (8.3% of sales), up +7.1% YoY, with higher R&D and personnel costs weighing on operating profit. Operating margin declined 0.9pp to 5.6% (prior year 6.5%). By segment, Seats' operating income dropped -28.3% with margin falling to 2.7%. DDS maintained a high margin of 20.6%, though operating profit was slightly down -2.3%. Industrial Equipment & Others experienced a deterioration in profitability (Operating Income -23.3%) despite revenue growth. Suspension Springs improved +56.7% though margin remained thin at 0.4%. Non-operating income included dividend income ¥34.5B and interest income ¥22.1B, supporting results; equity-method income ¥9.3B contributed, totaling non-operating income ¥93.8B. Foreign exchange losses ¥3.2B and interest expense ¥6.1B were minor, with total non-operating expenses ¥29.7B. Ordinary Income was ¥521.9B (-10.0%). In extraordinary items, the company recorded gain on sale of investment securities ¥52.4B but recognized impairment losses ¥98.4B (Industrial Equipment & Others ¥68.1B, Suspension Springs ¥16.4B, Precision Components ¥13.8B), loss on disposal of fixed assets ¥7.2B, and provision for loss on liquidation of subsidiaries ¥8.9B, so special losses exceeded special gains. Profit before income taxes was ¥503.1B; income taxes ¥216.8B (effective tax rate 43.1%) imposed a heavy burden. Net income attributable to non-controlling interests was ¥7.7B; net income attributable to owners of the parent was ¥425.9B (+32.8%). The net income increase was due to gain on sale of investment securities and a low base in the prior year; core profitability deteriorated, yielding revenue up but profit down at operating and ordinary levels.
DDS (Disk Drive Suspension) maintained company-high profitability with Operating Income ¥260.6B (-2.3%) and margin 20.6%. Revenue growth +14.7% aided absorption of fixed costs and expanded sales of high value-added products, though profit amount slightly decreased. Seats had Operating Income ¥80.5B (-28.3%), margin 2.7% (prior year 3.7%), a significant deterioration due to lower vehicle production, higher raw material costs, and increased fixed cost burden. Industrial Equipment & Others reported Operating Income ¥72.9B (-23.3%), margin 5.2% (prior year 7.4%); despite steady demand for semiconductor process parts, cost increases and mix deterioration pressured profitability. Suspension Springs improved Operating Income ¥7.3B (+56.7%), margin 0.4% — still thin but improving due to cost reductions and efficiency gains. Precision Components posted Operating Income ¥36.5B (-14.9%), margin 3.4% with slight profit decline as HDD mechanism parts demand remained firm but price competition intensified. DDS accounted for approximately 57% of company operating income, highlighting profit concentration in DDS and increased sensitivity to HDD/data center demand trends.
[Profitability] Operating margin 5.6%, Ordinary Income margin 6.4%, Net margin 5.2%. ROE 9.4% (Net margin 5.2% × Total asset turnover 1.11 × Financial leverage 1.63x), down from 11.9% in prior year. Decline driven mainly by lower net margin and high tax burden (effective tax rate 43.1%), while total asset turnover remained roughly flat, preserving asset efficiency. ROA (ordinary income basis) 5.8%. Gross margin 13.9%, down 0.2pp, indicating ongoing cost pressure. SG&A ratio 8.3% (up from 7.6%) driven by higher R&D and personnel expenses. EBITDA ¥762.4B (Operating Income ¥457.8B + Depreciation ¥304.5B), EBITDA margin 9.3% — cash generation remains solid. [Cash Quality] OCF / Net Income ratio 1.82x, OCF / EBITDA 1.02x — cash backing is strong. Accrual ratio -6.7% (working capital movements consumed cash but non-cash expenses depressed net income, indicating high quality). FCF / Net Income ratio 0.84x — majority of net income is recovered as FCF. [Investment Efficiency] CAPEX ¥398.4B / Depreciation ¥304.5B = 1.31x, reflecting active growth investment. ROIC not disclosed, but estimated as EBIT ¥457.8B / (Net assets ¥4,530B + Interest-bearing debt ¥638B) = 8.9%. [Financial Soundness] Equity Ratio 61.3%, D/E ratio 0.14x, Debt/EBITDA 0.64x — low leverage and sound. Current ratio 205%, Quick ratio 190% — strong short-term liquidity. Interest coverage (EBITDA / interest expense) 74.8x — ample. Short-term debt ratio 54% indicates relative reliance on CP/short-term borrowings and highlights the need to manage maturity mismatches, but cash ¥1,084.0B is 3.0x short-term borrowings ¥366B, providing ample liquidity buffer.
Operating Cash Flow was ¥774.5B (+39.0%), a record high; OCF / Net Income 1.82x, reflecting strong cash generation including non-cash charges such as impairment loss ¥98.4B. Working capital movements absorbed cash: increase in accounts receivable (-¥31.9B) and decrease in accounts payable (-¥131.1B) consumed funds, while inventory reduction (+¥47.5B) partially offset, resulting in net working capital consumption of roughly ¥115B. Operating cash flow before working capital changes was ¥719.5B, indicating strong core cash generation. Including corporate tax payments ¥116.7B, OCF totaled ¥774.5B. Investing Cash Flow was -¥416.1B, mainly driven by CAPEX ¥398.4B (1.31x depreciation) — aggressive growth/renewal investments. Net from acquisition/sale of investment securities was +¥49.8B (sales ¥58.6B - purchases ¥6.1B). Proceeds from sale of fixed assets ¥5.3B, intangible asset acquisitions -¥20.8B, and changes in loans/time deposits affected investing CF. Financing Cash Flow was -¥269.5B, with dividend payments ¥146.8B and share buybacks ¥19.8B (total shareholder return ¥166.6B). Long-term borrowings raised ¥250.0B and repayments -¥258.3B, lease liability repayments -¥6.2B, dividends to non-controlling interests -¥8.4B, etc. FCF (OCF - Investing CF) was +¥358.4B, comfortably covering dividend payments by 2.4x; even after share buybacks, cash increased (cash and deposits up ¥111.7B; adjusted cash/time deposits up ¥81.4B). Accrual ratio -6.7% indicates strong cash backing, and OCF/EBITDA = 1.02x is high. Cash generation appears sustainable, allowing room to balance CAPEX and shareholder returns.
Recurring earnings are primarily from Operating Income ¥457.8B, with non-operating income (dividends ¥34.5B, interest income ¥22.1B, equity-method income ¥9.3B, etc.) totaling ¥93.8B supporting results. Non-operating income as a percentage of sales is 1.1% — minor, indicating high dependence on core business. One-off items: Special gains ¥96.5B (including gain on sale of investment securities ¥52.4B) and Special losses ¥115.3B (impairment losses ¥98.4B, loss on disposal of fixed assets ¥7.2B, provision for loss on liquidation of subsidiaries ¥8.9B, etc.), resulting in a net negative impact of -¥18.8B on net income (warning: 4.4% of net income are one-off items). Impairment losses reflect reassessment of asset profitability in Industrial Equipment & Others, Suspension Springs, and Precision Components; there is potential for rebound next year but they imply deteriorating asset quality. Gain on sale of investment securities was likely strategic asset replacement with temporary nature. Comprehensive income was ¥477.1B (¥465.7B attributable to owners of the parent), exceeding net income, with positive contributions from foreign currency translation adjustments ¥90.6B, valuation difference on available-for-sale securities ¥69.9B, and adjustments for retirement benefits ¥25.2B. OCF substantially exceeded net income (OCF / Net Income = 1.82x), indicating high accrual quality. The gap between Ordinary Income ¥521.9B and Net Income ¥425.9B is mainly due to net one-off losses and high tax burden (effective tax rate 43.1%, income taxes ¥216.8B); normalization of tax rate (~30% range) and removal of one-off items could improve next year. Quality of earnings is underpinned by core cash generation and, excluding one-offs, sustainability is high.
Full-year guidance: Revenue ¥8,600.0B (+5.3%), Operating Income ¥590.0B (+28.9%), Ordinary Income ¥640.0B (+22.6%), Net Income attributable to owners of the parent ¥450.0B, EPS ¥222.12, Dividend ¥33.0 per share. Operating margin is expected to improve to 6.9%, assuming price pass-through, optimization of fixed costs, and disappearance of one-off items such as impairments. Revenue growth of +5.3% is expected to be driven by continued DDS growth, recovery in Seats production volumes, and steady demand in Industrial Equipment & Others. Operating Income is planned to increase +28.9%, largely contingent on margin recovery in Seats (price pass-through and fixed cost absorption), continued efficiency in Suspension Springs, and maintenance of high profitability in DDS. Ordinary Income growth of +22.6% assumes operating income growth plus stable contributions from equity-method income and dividend income. Full-year dividend of ¥33.0 implies a reduction of ¥33 YoY and yields a payout ratio of 14.9% against forecast EPS ¥222.12 — suggesting prior year dividend of ¥66 (interim and year-end ¥33 each) may have been unusually high and is being normalized. Interim dividend ¥33 is specified, and year-end dividend is inferred to be the same. To achieve guidance, improvement in Seats profitability (≥100bp margin recovery), normalization of effective tax rate (from 43.1% to 30% range), and working capital efficiency (shorter DSO, improved CCC) are required. Downside risks include further cuts to automobile production plans, sudden slowdown in DDS demand, renewed rises in raw material/logistics costs, and higher short-term borrowing rates. Given the company’s strong financial position and cash generation, the guidance is generally realistic, but the pace of profitability recovery in Seats and Industrial Equipment & Others remains the key variable.
Annual dividend for the year was ¥66.0 (interim ¥33.0, year-end ¥33.0), total dividend payout ¥134.1B (excluding non-controlling interests). Payout ratio calculated as 48.0% (dividend total ¥134.1B / net income attributable to owners of the parent ¥278.6B — note this figure is back-calculated from disclosed dividend amount and outstanding shares) — within a sound range. Share buybacks totaled ¥19.8B; total shareholder returns (dividends + buybacks) amounted to ¥153.9B, total return ratio 55.2%. FCF ¥358.4B covered dividends 2.7x and total shareholder returns 2.3x, indicating sustainability. DOE (dividend on equity) estimated at 3.0% (dividend total ¥134.1B / average shareholders’ equity ¥4,380B) — appropriate. Next fiscal year forecast dividend is ¥33.0 per share (assumed interim and year-end), a 50% cut YoY. Against forecast EPS ¥222.12, payout ratio 14.9% is low; forecast net income ¥450.0B (YoY +5.6%) corresponds to total dividend payout ¥66.9B and payout ratio 14.9%, which is consistent. This suggests the current year’s dividend of ¥66 included a special element (e.g., distribution of proceeds from sale of investment securities), and the company is normalizing policy. Dividend policy appears to combine stable dividends with performance linkage; cash generation supports next year’s dividend. Continuation of share buybacks also appears feasible given cash ¥1,084.0B and FCF generation.
DDS concentration risk: DDS accounts for about 57% of operating profit, increasing sensitivity to HDD/data center demand fluctuations. While DDS revenue grew +14.7% YoY, cyclical storage market dynamics, SSD substitution, or temporary reductions in data center investment could severely impact profits. Despite high margin of 20.6%, downside volatility in market contraction could be large; portfolio diversification remains a challenge.
Prolonged low profitability in Seats: Seats’ operating margin is 2.7% (prior year 3.7%) with operating income down -28.3%. With declining vehicle production, delayed price pass-through for higher raw material and logistics costs, and high fixed-cost burden, profitability is thin despite Seats being the largest segment at ¥2,942.4B. Continued delay in price pass-through or slow fixed-cost rationalization would jeopardize achieving next year’s operating income target. Model-mix changes and electrification (EV) altering parts composition could further affect margins.
Short-term debt concentration and interest rate risk: Short-term debt ratio 54% indicates relative dependence on CP and short-term borrowings; maturity mismatch management is important. Short-term borrowings ¥266B, CP ¥100B, and bonds maturing within one year ¥100B total ¥466B face near-term refinancing. While cash ¥1,084B provides ample liquidity, rising interest rates would increase borrowing costs and pressure earnings (current interest expense ¥6.1B is minor and interest coverage 74.8x is comfortable, but short-term rate hikes require monitoring). Delays in shifting to long-term financing or rollover risks could raise financing costs.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.6% | 7.8% (4.6%–12.3%) | -2.1pt |
| Net Margin | 5.2% | 5.2% (2.3%–8.2%) | +0.1pt |
Operating margin is 2.1pp below the industry median, placing the company in the lower group, but net margin is in line with the median due to contribution from gain on sale of investment securities.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.9% | 3.7% (-0.4%–9.3%) | -1.8pt |
Revenue growth is 1.8pp below the industry median and somewhat sluggish. Declines in Seats and Suspension Springs constrained growth, while DDS and Industrial Equipment & Others supported the company but were insufficient to reach the industry average.
※ Source: Company compilation
Continued high DDS profitability and portfolio concentration: DDS boasts an operating margin of 20.6% and accounts for about 57% of operating profit. While continued growth is expected amid structural expansion in data center and storage demand, the increasing profit concentration in DDS raises sensitivity to cycles in HDD/data center investment; this requires monitoring. If Seats and Industrial Equipment & Others fail to improve profitability, reliance on DDS will intensify and portfolio balance will be a concern.
Potential for operating margin recovery and feasibility of next-year V-shaped plan: Operating margin declined to 5.6% (prior year 6.5%) and is 2.1pp below the industry median of 7.8%. Main causes were large profit decline in Seats (-28.3%, margin 2.7%) and deterioration in Industrial Equipment & Others (-23.3%, margin 5.2%). Management forecasts operating income +28.9% and revenue +5.3% next year to achieve 6.9% operating margin, premised on price pass-through, fixed-cost optimization, and disappearance of one-off factors. Seats margin recovery (≥100bp improvement) and mix improvement in Industrial Equipment & Others are key. Suspension Springs showed +56.7% improvement, indicating progress in cost reductions. Controlling SG&A ratio (current 8.3% → target ~7.5%) is also necessary; quarterly monitoring is important.
Sustained cash generation and financial soundness: OCF ¥774.5B (OCF / Net Income 1.82x, OCF / EBITDA 1.02x) at record levels, FCF ¥358.4B secured. CAPEX ¥398.4B (1.31x depreciation) indicates active investment while continuing shareholder returns (total return ¥153.9B, total return ratio 55.2%), increasing cash balance to ¥1,084.0B. Equity Ratio 61.3%, Debt/EBITDA 0.64x, Interest Coverage 74.8x — finances are very healthy, allowing coexistence of CAPEX and shareholder returns. Short-term debt ratio 54% requires maturity concentration management, but liquidity buffer is ample and interest-rate risk is limited. OCF exceeding ¥750B is expected next year, supporting a stable platform for dividends, investment, and financial stability.
This report is an AI-generated financial analysis document created by analyzing 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 based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.