| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue | ¥2687.0B | ¥2513.4B | +6.9% |
| Operating Income | ¥309.2B | ¥253.2B | +22.1% |
| Pre-Tax Income | ¥378.5B | ¥292.0B | +29.6% |
| Net Income | ¥275.7B | ¥229.3B | +20.2% |
| ROE | 11.3% | 11.2% | - |
For the fiscal year ended March 2026 (Full Year / FY), Revenue was ¥2687.0B (YoY +¥173.6B +6.9%), Operating Income was ¥309.2B (YoY +¥55.9B +22.1%), Ordinary Income was ¥259.5B (YoY -¥27.5B -9.6%), and Net Income was ¥275.7B (YoY +¥46.3B +20.2%). In addition to continued top-line and bottom-line growth, the operating margin improved to 11.5% from 10.1% a year earlier (up 1.4pt), and gross margin rose to 37.8% (up 0.3pt). Price pass-through and growth in service revenues drove gross margin improvement, and M&A-related expenses remained flat at ¥26.0B versus ¥26.7B in the prior year. The decline in Ordinary Income reflected changes in non-operating income/expense composition, including an increase in equity-method investment income (¥64.9B, YoY +¥22.1B), but at the Net Income level the contribution from equity-method gains secured final year-on-year profit growth. By region, Japan accounted for 51.7% of Revenue and maintained high profitability with an operating margin of 15.5%, while the Americas recorded revenue growth but saw operating margin decline to 11.3%, leaving room for profitability improvement. Cash generation was strong with Operating Cash Flow of ¥424.5B (YoY +¥83.3B +24.4%) and Free Cash Flow of ¥352.1B, providing ample capacity to cover dividends of ¥77.4B.
Revenue: Revenue was ¥2687.0B (YoY +6.9%), driven by domestic equipment replacement demand and expansion of the aftermarket. By segment, Japan was the largest at ¥1388.2B (+7.7%), accounting for 51.7% of the total, supported by capturing maintenance demand and price revisions taking hold. The Americas recorded ¥912.6B (+5.9%) of revenue growth but was impacted by start-up costs and rising costs. Asia & Others was ¥386.2B (+6.3%), reflecting further geographic diversification. Gross margin improved to 37.8% from 37.5% a year earlier (up 0.3pt), with price policy and a higher services mix contributing to the mix improvement.
Profitability: Operating Income was ¥309.2B (+22.1%), aided by gross margin improvement and a large reduction in M&A-related expenses to ¥1.3B from ¥26.3B the prior year. SG&A was ¥721.0B (+2.4%), growing more slowly than revenue (+6.9%), resulting in an operating margin expansion to 11.5% from 10.1% (up 1.4pt). On a segment profit basis, Japan delivered ¥215.3B (+7.8%) of stable growth, while the Americas declined to ¥103.4B (-13.1%), with operating margin falling to 11.3%. Equity-method investment income increased significantly to ¥64.9B (+51.5%), improving non-operating income. Ordinary Income decreased to ¥259.5B (-9.6%), as financial income of ¥21.4B and financial expenses of ¥16.9B left net financials roughly balanced, offsetting some of the equity-method gains. Pre-Tax Income was ¥378.5B (+29.6%); income taxes were ¥102.9B (effective tax rate 27.2%), resulting in Net Income of ¥275.7B (+20.2%). In summary, the company achieved revenue and profit growth, with gross margin improvement and cost discipline driving operating margin expansion.
Japan: Revenue ¥1388.2B (YoY +7.7%), Operating Income ¥215.3B (+7.8%) with an operating margin of 15.5%, maintaining high profitability. Capturing maintenance demand and the implementation of price revisions supported profitability, making the segment the largest contributor to segment profit.
Americas: Revenue ¥912.6B (YoY +5.9%) maintained growth, but Operating Income declined to ¥103.4B (-13.1%), with operating margin down to 11.3%. Start-up costs, rising input costs, and delays in price pass-through pressured profitability, indicating significant scope for improvement.
Asia & Others: Revenue ¥386.2B (YoY +6.3%), Operating Income ¥38.5B (-7.0%), operating margin 10.0%. Despite revenue growth, the segment posted lower profit, and like the Americas, cost management is a key issue.
Consolidated operating income after elimination of intersegment transactions was ¥309.2B, with high profitability in Japan supporting group-level profits.
Profitability: ROE was 12.4%, up 0.5pt from 11.9% the prior year, remaining above the company’s historical record. Operating margin was 11.5% (prior year 10.1%), Net Profit Margin was 10.3% (prior year 9.1%), with improvements driven by price pass-through and growth in service revenues. Gross margin was 37.8% (prior year 37.5%, +0.3pt) and SG&A ratio improved to 26.8% (prior year 27.6%, -0.8pt).
Cash Quality: Operating CF / Net Income was 1.54x, and Operating CF / EBITDA was 1.05x, indicating high cash conversion. Free Cash Flow was ¥352.1B, comfortably covering dividend payments of ¥77.4B, with FCF dividend coverage of 4.55x. Working capital days were long: DSO 101 days, DIO 89 days, DPO 56 days, yielding CCC 134 days, suggesting room to improve working capital efficiency.
Investment Efficiency: Capital expenditures were ¥42.0B versus depreciation of ¥94.9B, giving a CapEx/Depreciation ratio of 0.44x, reflecting restrained investment and smoothing of replacement spending. Investment in intangibles continued at ¥10.7B. Total asset turnover was 0.564x (prior year 0.572x), largely unchanged.
Financial Soundness: Equity Ratio was 51.0% (prior year 46.4%), and debt-to-equity ratio was 0.95x (prior year 1.14x), indicating progress on deleveraging and a strengthened balance sheet. Interest coverage (EBIT / Financial Expense) was about 10.9x, showing interest burden is manageable.
Operating CF was ¥424.5B (YoY +24.4%), 1.54x of Net Income ¥275.7B, demonstrating strong cash generation. Subtotal before working capital changes was ¥480.1B. Net working capital outflow included an accounts receivable increase of ¥639.0B as a cash outflow, partially offset by inventory decrease of ¥522.0B and accounts payable increase of ¥449.0B as cash inflows. After payments of corporate taxes of ¥81.1B and total interest and lease payments of ¥53.9B, Operating CF remained ample. Investing CF was -¥72.3B, with capital expenditures of ¥42.0B, intangible asset acquisitions ¥10.7B, and net time deposit outflows ¥40.7B as main uses, partially offset by proceeds from sales/redemptions of investments of ¥22.9B. Free Cash Flow increased to ¥352.1B from ¥341.2B in the prior year, comfortably covering dividends of ¥77.4B and capex/intangible investments totaling ¥52.7B. Financing CF was -¥242.4B, primarily due to long-term debt repayments of ¥126.9B, dividend payments of ¥77.4B, and lease repayments of ¥38.2B. Cash and cash equivalents at year-end were ¥690.5B, up ¥137.9B from ¥552.5B at the beginning of the period. Foreign exchange translation effects contributed +¥28.3B, with conversion of overseas cash into yen supporting the cash increase.
Earnings quality is high. Of Operating Income ¥309.2B, equity-method investment income of ¥64.9B was recognized as non-operating income, but core operating improvement is pronounced. M&A-related expenses declined sharply to ¥1.3B from ¥26.3B a year earlier, indicating normalization of one-off costs. Amortization of intangible assets recognized on acquisitions was ¥44.2B (prior year ¥75.7B), trending lower and easing PPA amortization burdens, supporting margin improvement. Net financials were positive at ¥4.5B (financial income ¥21.4B less financial expenses ¥16.9B), keeping interest burden limited. Comprehensive income was ¥469.2B, ¥193.6B above Net Income ¥275.7B; translation differences of ¥160.5B and fair value gains of ¥29.4B in Other Comprehensive Income contributed to capital enhancement. From an accrual perspective, Operating CF of ¥424.5B significantly exceeded Net Income of ¥275.7B, reinforcing the cash backing of profit. Net working capital outflow was limited, with movements in receivables, inventory, and payables within normal ranges.
Full-year guidance projects Revenue ¥2845.0B (YoY +5.9%), Operating Income ¥326.0B (+5.4%), and Net Income ¥285.0B (+3.4%), expecting continued profit growth. Progress rates are high at Revenue 94.4%, Operating Income 94.8%, and Net Income 96.7%, suggesting high probability of meeting guidance. The plan assumes maintaining an operating margin of 11.5%, underpinned by continued gross margin improvement and cost discipline. EPS is projected at ¥246.30, up +3.2% from the current period result of ¥238.72. Dividend forecast is ¥31.00 (including year-end dividend), implying a Payout Ratio of approximately 12.6%, a conservative level. Improvement in Americas segment profitability and accelerated growth in Asia & Others are key to achieving the guidance. Detailed assumptions on FX and cost trends are not disclosed, but continued price pass-through and growth in service revenues are presumed.
Annual dividend is ¥72 (interim ¥30, year-end ¥42), up ¥48 from the prior year dividend of ¥24, with a Payout Ratio of 30.1%. The year-end dividend was raised from an initial forecast of ¥37 to ¥42, reflecting strengthened shareholder returns amid solid results. Total dividends amounted to ¥77.8B (dividend cash outflow recorded in CF was ¥77.4B), representing a dividend burden of 22.0% relative to Free Cash Flow ¥352.1B, indicating high sustainability. No share buybacks were executed in the period; returns were delivered solely via dividends. DOE (dividend on equity) was 3.6%, a standard level relative to equity accumulation. The company expects a dividend policy targeting a Payout Ratio around 30%, leaving scope for further increases in line with profit growth. Treasury stock at year-end totaled 957.9万株, preserving flexibility in capital policy.
Underperformance in Americas segment profitability: The Americas operating margin declined to 11.3% from 13.8% a year earlier (down 2.5pt), with operating income decreasing -13.1% YoY. Start-up costs, cost inflation, and delays in price pass-through have pressured profitability, offsetting the pace of group-level margin improvement. As the Americas represent 34.0% of revenue (¥912.6B), delayed improvement in this region could cap consolidated margins.
Low working capital efficiency: With DSO 101 days, DIO 89 days, and CCC 134 days, working capital days are long and offer substantial room for improvement. Receivables of ¥743.7B and inventory of ¥408.9B against payables of ¥257.5B indicate a heavy working capital burden. If working capital growth accelerates amid revenue expansion, Operating CF growth could slow and constrain Free Cash Flow expansion.
Rising dependence on intangibles and goodwill: Goodwill and intangible assets total ¥1249.0B, representing 26.2% of total assets and rising from ¥1208.8B the prior year. While investment in intangibles continues, if future cash generation forecasts are revised downward, impairment risk may materialize. In particular, delayed returns on M&A investments amid weaker profitability in the Americas and Asia & Others are a concern.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 12.4% | 6.3% (3.2%–9.9%) | +6.1pt |
| Operating Margin | 11.5% | 7.8% (4.6%–12.3%) | +3.8pt |
| Net Profit Margin | 10.3% | 5.2% (2.3%–8.2%) | +5.1pt |
Profitability substantially exceeds industry medians, with ROE, operating margin, and net profit margin all in the upper range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.9% | 3.7% (-0.4%–9.3%) | +3.2pt |
Revenue growth outpaces the industry median, indicating a stronger-than-average top-line expansion.
※Source: Company aggregation
Gross margin improvement and reduced M&A-related expenses lifted the operating margin to 11.5%, with price pass-through and rising service revenues strengthening the earnings structure. Japan’s operating margin of 15.5% is high and sustainable, forming a basis for earnings stability. Conversely, the decline in the Americas to 11.3% highlights significant improvement opportunity, making recovery in that region a near-term focus.
Cash generation quality is strong, with Operating CF / Net Income at 1.54x and Operating CF / EBITDA at 1.05x, providing robust cash backing for profits. Free Cash Flow of ¥352.1B comfortably covers dividends of ¥77.4B and capex/intangible investment of ¥52.7B, supporting high flexibility in capital policy. Improving working capital efficiency (CCC 134 days) would further leverage cash generation against revenue growth.
With CapEx/Depreciation at 0.44x and continued restraint on investment, intangible investment of ¥10.7B persists, and dependence on intangibles and goodwill has risen to 26.2% of total assets. While this supports short-term cash flow, medium- to long-term competitiveness requires smoothing replacement investment and monitoring the cash-generating capacity of intangibles.
This report is a financial analysis document automatically generated by AI based on XBRL earnings summary data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary before acting.