| Indicator | This 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 | 9.5% | 7.6% | - |
For the fiscal year ended March 2026, Revenue was ¥8,168.8B (YoY +¥151.8B +1.9%), Operating Income was ¥457.8B (YoY -¥63.8B -12.2%), Ordinary Income was ¥521.9B (YoY -¥57.7B -10.0%), and Net Income attributable to owners of the parent was ¥425.9B (YoY +¥105.1B +32.8%). Despite top-line growth, Operating and Ordinary Income declined double-digits, while Net Income turned higher YoY due to improvements in special gains/losses. Revenue was driven by DDS (+14.7%) and Industrial Equipment & Others (+9.6%), whereas the core Seating segment declined -3.2%. The primary cause of the decline in Operating Income was deteriorating profitability across multiple segments: Seating operating profit fell 28.3% (margin 2.7%), Precision Components -14.9%, and Industrial Equipment & Others -23.3%. Gross margin held near flat at 13.9% (prior year 14.1%), but SG&A ratio rose to 8.3% (prior year 7.6%), compressing operating margin to 5.6% (prior year 6.5%). Net Income benefited from an improvement in extraordinary items compared to the prior year despite recording impairment losses of ¥98.4B and loss on disposal of fixed assets of ¥7.2B; with a decrease in the effective tax rate (43.1%, prior year 16.2%), profit before tax of ¥503.1B translated to Net Income of ¥425.9B. Cash flow was solid with Operating Cash Flow 774.5B (YoY +39.0%), absorbing Capital Expenditure of ¥398.4B and generating Free Cash Flow ¥358.4B. Guidance for FY2027 calls for Revenue ¥8,600B (+5.3%), Operating Income ¥590B (+28.9%), Ordinary Income ¥640B (+22.6%), implying a recovery in operating margin to 6.9%.
[Revenue] Revenue was ¥8,168.8B (+1.9%), a slight increase. By segment, DDS (Disk Drive Suspension) recorded ¥1,267.5B (+14.7%) with double-digit growth; Industrial Equipment & Others ¥1,411.3B (+9.6%); Precision Components ¥1,083.6B (+3.6%) also increased. Conversely, core Seating fell to ¥2,942.4B (-3.2%) amid a slowdown in the automotive market, and Suspension Springs slightly decreased to ¥1,692.4B (-1.0%). DDS growth was driven by a recovery in HDD demand and a shift to higher value-added products; Industrial Equipment & Others benefited from expanded sales of semiconductor process components and parking systems. Seating’s decline reflected lower automotive production in North America and Europe and a worse sales mix. While the company maintained an overall revenue uptrend, segments with high automotive exposure faced headwinds, limiting growth.
[Profitability] Operating Income declined to ¥457.8B (-12.2%), with operating margin down to 5.6% (prior year 6.5%). Cost of sales ratio increased slightly to 86.1% (prior year 85.9%), shrinking gross margin to 13.9% (prior year 14.1%). SG&A expenses were ¥679.5B, or 8.3% of sales (prior year 7.6%), and operating leverage did not materialize. By segment, DDS maintained high profitability with Operating Income ¥260.6B (margin 20.6%), limiting its decline to -2.3%; Seating recorded ¥80.5B (margin 2.7%, -28.3%); Industrial Equipment & Others ¥72.9B (margin 5.2%, -23.3%) saw large declines. Precision Components fell to ¥36.5B (-14.9%), while Suspension Springs turned to profit ¥7.3B (+56.7%) but margin remained low at 0.4%. Non-operating income totaled ¥93.8B (dividends received ¥34.5B, interest income ¥22.1B, equity-method investment earnings ¥9.3B, etc.) and non-operating expenses were ¥29.7B (interest expense ¥6.1B, foreign exchange losses ¥3.2B, etc.), resulting in net non-operating income of +¥64.1B. Ordinary Income was ¥521.9B (-10.0%) with an ordinary income margin of 6.4% (prior year 7.2%). Extraordinary income totaled ¥96.5B (gain on sale of investment securities ¥52.4B, etc.), while extraordinary losses were ¥115.3B (impairment loss ¥98.4B, loss on disposal of fixed assets ¥7.2B, etc.), producing profit before tax of ¥503.1B (-15.6%). After income taxes of ¥216.8B (effective tax rate 43.1%) and non-controlling interests of ¥7.7B, Net Income attributable to owners of the parent was ¥425.9B (+32.8%). The Net Income increase reflects prior-year tax timing effects and improvements in extraordinary losses, but operating profitability worsened, clarifying a pattern of revenue growth with earnings decline.
DDS (Disk Drive Suspension) is the largest profit contributor with Operating Income ¥260.6B (margin 20.6%). Revenue was ¥1,267.5B (+14.7%) with only a -2.3% decline in profit. Recovery in HDD demand and focus on higher value-added products contributed. Seating posted Revenue ¥2,942.4B (-3.2%) and Operating Income ¥80.5B (-28.3%, margin 2.7%), a decline driven by lower auto production and intensified pricing competition which eroded margins. Industrial Equipment & Others recorded Revenue ¥1,411.3B (+9.6%) but Operating Income ¥72.9B (-23.3%, margin 5.2%), suggesting fixed-cost absorption did not keep pace with growth and price pass-through lagged. Precision Components had Revenue ¥1,083.6B (+3.6%) and Operating Income ¥36.5B (-14.9%, margin 3.4%), where increased sales of HDD mechanical parts and wire springs did not translate fully into profit. Suspension Springs had Revenue ¥1,692.4B (-1.0%) and Operating Income ¥7.3B (+56.7%, margin 0.4%), turning slightly profitable but at a low absolute level, with limited cost reduction benefits. Overall, DDS’s high profitability underpinned consolidated results while deteriorating profitability in automotive-related and industrial segments was the principal reason for lower operating profit.
[Profitability] Operating margin 5.6% (down -0.9pt from 6.5%), Ordinary Income margin 6.4% (down -0.8pt from 7.2%), Net Income margin 5.2% (up +1.2pt from 4.0%). ROE 9.5% (prior year 11.9%) declined but Net Income increase brought it closer to double digits. Gross margin 13.9% was slightly down from 14.1%, and rising SG&A ratio to 8.3% (prior year 7.6%) noticeably squeezed operating-level profitability. EBITDA was ¥762.3B (Operating Income ¥457.8B + Depreciation ¥304.5B), yielding an EBITDA margin of 9.3%. ROA (on an ordinary income basis) was 7.3% (prior year 8.4%) and declined. ROIC is unreported, but declines in operating margin and increased total assets (¥7,287.1B, prior year ¥6,963.4B) suggest deteriorating capital efficiency.
[Cash Quality] Operating Cash Flow (OCF) ¥774.5B, 1.82x Net Income attributable to owners (¥425.9B), and OCF/EBITDA 1.02x, indicating high quality cash generation. Free Cash Flow ¥358.4B (OCF ¥774.5B - CapEx ¥398.4B) shows solid cash generation. OCF/Operating Income is 1.69x, pointing to appropriate working capital management. Accrual ratio -7.0% (= (Net Income - OCF) / Total Assets) indicates high cash-based earnings quality.
[Investment Efficiency] CapEx ¥398.4B is 1.31x Depreciation ¥304.5B, maintaining a balance between growth and renewal investment. Fixed asset turnover 4.14x (Revenue ¥8,168.8B / Average tangible fixed assets ¥1,971B). Inventory turnover 8.99x (Cost of Sales ¥7,031.4B / Average inventories ¥782B). Days Sales Outstanding 71 days (Accounts receivable ¥1,585.1B / Revenue × 365 days), showing a modest lengthening.
[Financial Soundness] Equity Ratio 61.2% (prior year 58.5%) improved. D/E 0.63x (interest-bearing debt ¥2,827B / equity ¥4,459B) is conservative. Debt/EBITDA 3.71x and Interest Coverage 74.8x (Operating Income ¥457.8B / Interest expense ¥6.1B) indicate soundness. Current ratio 204.9% and quick ratio 189.7% show no liquidity concerns. Cash and deposits ¥1,084.0B are 4.08x total short-term borrowings and CP ¥265.6B, supporting high refinancing resilience.
OCF was ¥774.5B (YoY +39.0%), 1.82x Net Income ¥425.9B. The breakdown adds inventory decrease ¥47.5B, accounts receivable increase -¥31.9B, accounts payable decrease -¥131.1B, corporate tax payments -¥116.7B to OCF subtotal ¥719.5B. Though accounts payable decline was a headwind to working capital, inventory reduction and tax burden reduction offset it. Depreciation ¥304.5B and impairment loss ¥98.4B (non-cash charges) also contributed. Investing Cash Flow was -¥416.1B, primarily CapEx -¥398.4B, including proceeds from sale of investment securities ¥56B and net increase in time deposits -¥25.2B. Combined OCF + Investing CF produced Free Cash Flow ¥358.4B, a significant swing from prior year -¥471B. Financing Cash Flow was -¥269.5B including dividends ¥146.8B, long-term debt repayments -¥258.3B, long-term borrowings ¥250B, and share buybacks -¥19.8B. With higher OCF and refinancing activity, cash rose to ¥1,084.0B at year-end (up ¥81.4B from ¥972.3B at the beginning). OCF/EBITDA 1.02x and FCF/Revenue 4.4% are high, supporting both growth investment from internal funds and shareholder returns.
Ordinary Income ¥521.9B comprises Operating Income ¥457.8B plus net non-operating income +¥64.1B, where non-operating income ¥93.8B (dividends received ¥34.5B, interest income ¥22.1B, equity-method gains ¥9.3B, etc.) reflects stable dividend/interest receipts and investee profits. Non-operating expenses ¥29.7B (interest expense ¥6.1B, FX losses ¥3.2B, etc.) were modest, so non-operating income functions as a recurring earnings source. Extraordinary items totaled net -¥18.8B (extraordinary income ¥96.5B, extraordinary losses ¥115.3B). Impairment loss was due to asset reassessment and considered temporary with low likelihood of recurrence next fiscal year. Comprehensive income ¥406.2B was below Net Income ¥425.9B; other comprehensive income included foreign currency translation adjustments +¥90.6B, valuation difference on available-for-sale securities +¥69.9B, and actuarial gains/losses -¥45.8B. Gains on FX and securities valuation outweighed retirement benefit adjustments, resulting in net positive comprehensive impact. OCF ¥774.5B is 1.82x Net Income and accrual ratio -7.0%, indicating strong cash-based earnings quality. Excluding temporary extraordinary losses, recurring earnings are formed by operating income plus stable non-operating income, suggesting preserved stability.
Guidance for the fiscal year ending March 2027: Revenue ¥8,600B (YoY +5.3%), Operating Income ¥590B (+28.9%), Ordinary Income ¥640B (+22.6%), Net Income attributable to owners of the parent ¥450B (+5.6%), EPS ¥222.12 (prior year ¥137.46, +61.6%). Operating margin is expected to improve to 6.9% (prior year 5.6%, +1.3pt). Revenue growth assumes continued DDS expansion, increased sales in Industrial Equipment & Others, and a recovery in Seating. Operating profit growth assumes realization of cost reduction effects, the lapse of one-off impairment and similar charges, and a lower SG&A ratio. Ordinary margin is expected at 7.4% (prior year 6.4%, +1.0pt). The moderate increase in Net Income (+5.6%) relative to Operating Income (+28.9%) reflects normalization of the effective tax rate and absence of extraordinary gains/losses. Dividend policy: year-end dividend ¥33 (annual ¥66) maintained, targeting payout ratio around 30%. Progress vs. full-year guidance will be assessable after the first half results; Q1 performance alignment with plan is key. Risk factors include HDD market volatility, downside in automotive production, persistent high raw material and labor costs, and FX fluctuations. Achieving guidance requires Seating margin recovery (from 2.7% to above 4%) and maintenance of DDS high profitability, as well as Industrial Equipment & Others turning revenue growth into profit.
Annual dividend is ¥66 (interim ¥33, year-end ¥33), unchanged from the prior year. With Net Income attributable to owners ¥425.9B and total dividends ¥146.8B (ordinary shares basis), payout ratio was 30.7%. Free Cash Flow ¥358.4B versus total returns (dividends + share buybacks -¥19.8B) of approximately ¥166.6B gives an FCF coverage of 2.15x, indicating ample slack. Total shareholder return ratio including share buybacks is approximately 39.1%, balancing internal reserves and growth investment (CapEx ¥398.4B is 1.31x Depreciation ¥304.5B). DOE is 3.6% (same level as prior year), reflecting a stable dividend policy. For FY2027 guidance, the year-end dividend ¥33 is expected to continue; with projected Net Income ¥450B, total dividends are estimated around ¥133B and payout ratio about 30%. With cash ¥1,084.0B and annual OCF ¥774.5B, dividend sustainability and scope for additional returns are sufficient. Medium-term, further increases in dividends tied to profit growth are possible, but the near-term emphasis remains on stable dividends.
Seating profitability deterioration risk: Seating’s operating margin at 2.7% is low and Operating Income declined -28.3% YoY. Continued declines in automotive production and intensified pricing competition have weakened profitability; if cost inflation for materials and labor persists and price pass-through lags, the company-wide operating margin of 5.6% could be further pressured. Seating accounts for 36.0% of revenue; a 1pt deterioration in its margin could reduce consolidated operating income by approximately ¥30B. Without progress on cost reductions and sales mix improvement, achieving next fiscal year’s guidance (operating margin 6.9%) will be difficult.
Rising DDS dependence and market volatility risk: DDS generates Operating Income ¥260.6B and represents 56.9% of consolidated operating income, making it a key earnings driver but also a source of concentration risk. HDD market demand is recovering in the short term, but medium-to-long-term risks include SSD substitution and potential slowdown in data center investment during economic downturns. A 5pt decline in DDS operating margin (from 20.6%) would reduce consolidated operating income by roughly ¥63B, and other segments like Seating may not be able to offset that, indicating structural vulnerability from overreliance on DDS.
Working capital management and liquidity risk: DSO of 71 days shows a trend toward lengthening, risking working capital expansion proportional to sales. This fiscal year, accounts payable decreased by -¥131.1B, which constrained OCF; if similar movements recur, working capital burden will increase. Cash ¥1,084.0B comfortably exceeds short-term borrowings and CP ¥265.6B, but short-term liabilities ratio 54.2% indicates maturity concentration; in a rising refinancing cost environment or tighter financial conditions, liquidity could become a concern. Shortening DSO and maintaining accounts payable terms are key to improving CCC.
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%) | +0.0pt |
Operating margin is 2.1pt below the industry median 7.8%, indicating relative underperformance within manufacturing. Net margin is in line with the median, as extraordinary items have been offset.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.9% | 3.7% (-0.4%–9.3%) | -1.8pt |
Revenue growth rate is 1.8pt below industry median 3.7%, placing growth in the lower half of the cohort.
※ Source: Company compilation
Feasibility of next-year operating margin improvement of +1.3pt: FY2027 guidance targets operating margin 6.9% (up +1.3pt from 5.6%). Achieving this requires Seating margin recovery (assumed >4% from 2.7%), a reduction in SG&A ratio, and sustained high profitability in DDS. Seating could improve if the automotive market recovers and price revisions proceed, and the lapse of one-off impairment charges would help. However, sticky increases in raw material and labor costs and delays in price pass-through would limit operating margin recovery. Quarterly trends in gross margin and SG&A ratio and the Seating segment’s operating margin trajectory are critical indicators for gauging achievement.
Sustainability of DDS high profitability and structural risk: DDS’s 20.6% operating margin is an outlier but dependency (56.9% of consolidated operating income) signals portfolio vulnerability. The HDD market, while currently recovering, is sensitive to data center capex, SSD substitution, and semiconductor market dynamics. Monitor DDS shipment volumes and average selling prices, and HDD end-market indicators (shipments by Seagate, WD, etc., and cloud players’ capex plans) to assess whether DDS high profitability can be sustained. Without improvements in other segments, a downturn in DDS would exert significant downward pressure on consolidated results.
Financial soundness and scope for shareholder returns: With Equity Ratio 61.2%, Debt/EBITDA 3.71x, and Cash ¥1,084.0B, the financial structure is conservative and OCF generation ¥774.5B is stable. Payout ratio 30.7% and FCF coverage 2.15x indicate sufficient return capacity, allowing for potential dividend increases or additional buybacks in line with profit growth. However, high short-term liabilities ratio 54.2% and maturity concentration mean that working capital management (shorten DSO from 71 days, maintain accounts payable terms) is key to efficiency gains. Financial risk is limited, but next-year operating margin improvement and working capital efficiency are prerequisites for restoring ROE (9.5%) above 10% and enhancing shareholder value.
This report was auto-generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are compiled by the company based on public financial statements as reference information. Investment decisions are your responsibility; please consult a professional advisor as needed.