| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1328.2B | ¥1681.9B | -21.0% |
| Operating Income | ¥43.7B | ¥140.9B | -69.0% |
| Ordinary Income | ¥50.0B | ¥140.8B | -64.5% |
| Net Income | ¥24.5B | ¥117.5B | -79.1% |
| ROE | 2.1% | 10.0% | - |
For the fiscal year ended March 2026, Revenue was ¥1,328.2B (YoY -¥353.8B, -21.0%), Operating Income was ¥43.7B (YoY -¥97.2B, -69.0%), Ordinary Income was ¥50.0B (YoY -¥90.8B, -64.5%), and Net Income attributable to owners of the parent was ¥24.5B (YoY -¥93.0B, -79.1%), representing a significant decline in both sales and profits. The primary cause was a rapid demand adjustment in the Molding Machines business, with sales to China plunging from ¥883.1B to ¥462.5B (-47.7%), which weighed heavily on consolidated results. Operating margin deteriorated by 5.1pp from 8.4% to 3.3%, and gross margin fell by 0.7pp from 31.8% to 31.1%. In extraordinary items, the Company recorded Investment Securities Sale Gain of ¥23.8B and negative goodwill recognition of ¥1.2B, while booking Special Losses of ¥40.0B including an impairment loss on fixed assets of ¥21.8B in the Molding Machines segment, resulting in a net special loss of ¥14.5B. The effective tax rate was high at 71.0%, producing a heavy tax burden; ROE plunged from 10.0% to 2.1%, indicating a significant deterioration in capital efficiency. Operating Cash Flow (OCF) turned negative to -¥84.6B (prior year +¥83.3B → -¥167.9B), driven mainly by a release of contract liabilities of -¥262.5B, leading to notable cash outflow.
[Revenue] Revenue declined sharply to ¥1,328.2B (YoY -21.0%). By segment, the core Molding Machines business fell sharply to ¥988.5B (-27.9%), accounting for 74.4% of sales, and its weakness drove the overall decline. In particular, sales to China decreased 47.7% from ¥883.1B to ¥462.5B, hit directly by an adjustment in battery-related capital expenditures. Conversely, the Machine Tools business recovered to ¥254.0B (+19.2%), supported by price revisions and cost optimization. Control Machinery sales were ¥83.3B (-16.4%), and Other Businesses were ¥26.1B (+28.7%). By region, Japan was ¥401.9B (+4.5%), the U.S. ¥143.0B (+6.9%), and Other Asia ¥244.8B (+6.4%) — all stable except China, but the decline in China could not be offset. Contract liabilities fell from ¥363.5B to ¥104.6B (-71.2%), indicating a large drawdown of advance receipts and suggesting deterioration in order conditions.
[Profitability] Gross profit was ¥413.5B (gross margin 31.1%, prior year 31.8%); gross margin declined 0.7pp due to higher fixed-cost burden and adverse mix. SG&A was ¥369.9B (SG&A ratio 27.8%), reduced by ¥24.7B YoY, but fixed costs showed low elasticity relative to the revenue decline, resulting in Operating Income of ¥43.7B (Operating margin 3.3%, prior year 8.4%), a deterioration of 5.1pp. Segment profit margins were: Molding Machines 2.8% (prior 10.3%), Machine Tools 8.1% (prior 2.7%), Control Machinery -5.9% (prior 1.1%), showing divergent performance. Non-operating income included dividend income ¥5.5B and interest income ¥3.1B, totaling non-operating income ¥13.3B; non-operating expenses were ¥6.9B (interest expense ¥1.6B, foreign exchange losses ¥1.9B, etc.), resulting in Ordinary Income of ¥50.0B (-64.5%). Extraordinary items comprised special gains of ¥25.5B (Investment Securities Sale Gain ¥23.8B, negative goodwill ¥1.2B) against special losses of ¥40.0B including impairment losses of ¥21.8B, yielding a net special loss of -¥14.5B and compressing profit before tax to ¥35.5B. Corporate taxes and others were ¥25.2B (effective tax rate 71.0%), leading to Net Income attributable to owners of the parent of ¥24.5B (-79.1%), concluding the year with substantial declines in both revenue and profit.
The Molding Machines business recorded Revenue ¥988.5B (-27.9%), Operating Income ¥27.4B (-80.6%), and margin 2.8%, showing a pronounced slowdown in the core business. The largest factor was the collapse in demand from China, with a sharp reaction from large projects for lithium battery-related customers. This term included ¥175.4B for Chongqing Shenpeng Industrial Development, but that was a large decline from the prior-year total of ¥418.4B (SINOMA LITHIUM BATTERY SEPARATOR ¥228.0B and HEFEI GELLEC ¥190.4B). Intensified price competition and adverse mix reduced margins by 7.5pp, and structural issues emerged, including a fixed asset impairment of ¥21.8B. The Machine Tools business achieved significant improvement with Revenue ¥254.0B (+19.2%), Operating Income ¥20.7B (+253.2%), and margin 8.1%, driven by order selection eliminating unprofitable projects, price revisions, and manufacturing cost optimization, improving margin by 5.4pp. The Control Machinery business posted Revenue ¥83.3B (-16.4%), Operating loss ¥4.9B (prior-year profit ¥0.1B), and margin -5.9%, falling into loss due to demand decline and heavy fixed-cost burden; restructuring of its earnings base is urgent. Other Businesses recorded Revenue ¥26.1B (+28.7%) and Operating Income ¥0.2B (+103.3%), a small-scale improvement.
[Profitability] Operating margin was 3.3%, down 5.1pp from 8.4%, primarily due to deteriorating profitability in Molding Machines. Gross margin was 31.1% (prior 31.8%), down 0.7pp; SG&A ratio was 27.8% (prior 23.5%), up 4.3pp, reflecting heavy fixed-cost burden that pressured margins. ROE was 2.1% (prior 10.0%), ROA was 2.7% (prior 6.2%), indicating a significant deterioration in capital efficiency. Components of ROE: Net profit margin 1.8% (prior 7.0%) × Total asset turnover 0.77x (prior 0.84x) × Financial leverage 1.46x (prior 1.70x), with margin decline and turnover deterioration as primary drivers. [Cash Quality] OCF was -¥84.6B (prior +¥83.3B), turning negative; OCF/Net Income was -3.45x, indicating a reversal in profit-to-cash conversion. The main cause was a large release of contract liabilities of -¥262.5B, offsetting inventory decreases of +¥139.6B. Corporate tax payments of -¥53.2B also contributed to cash outflow. EBITDA (Operating Income ¥43.7B + Depreciation ¥32.4B) was ¥76.1B, with an EBITDA margin of 5.7%, and OCF/EBITDA was -1.11x, showing a substantial deterioration in cash conversion. [Investment Efficiency] ROIC (NOPAT / Invested capital) was 2.4%, below cost of capital. Capital expenditures were ¥25.0B (CapEx / Revenue 1.9%), restrained and below depreciation of ¥32.4B. R&D expense was ¥12.6B (R&D / Revenue 0.9%), low and leaving room for reinforcement to secure medium-term competitiveness. [Financial Soundness] Equity Ratio improved to 68.3% (prior 58.7%). Debt/Equity ratio was 9.4% (prior 9.5%), remaining low. Current ratio was 279.8% (prior 211.5%), and quick ratio 248.0% (prior 161.5%), indicating ample short-term liquidity. Cash and deposits ¥378.9B plus short-term investment securities ¥50.0B total ¥428.9B against short-term borrowings ¥107.3B, yielding a cash / short-term debt ratio of 4.00x, indicating ample liquidity. Interest-bearing debt totaled ¥107.9B (short-term borrowings ¥107.3B and long-term borrowings ¥0.6B); Debt/EBITDA was 1.42x, a healthy level, but the short-term debt ratio is 99.5%, so attention is needed for concentration of maturities.
Operating Cash Flow was -¥84.6B (prior +¥83.3B), a deterioration of -¥167.9B and a turn to negative. Profit before working capital changes was -¥38.7B, derived from profit before tax ¥35.5B, and even after adding non-cash expenses such as Depreciation ¥32.4B and impairment loss ¥21.8B, cash generation was low after adjustments including interest and dividend receipts -¥8.7B and negative goodwill -¥1.2B. In working capital, the drawdown of contract liabilities of -¥262.5B was the largest cash outflow factor, with a large reduction in advance receipts directly hitting OCF. Conversely, inventory decrease of +¥139.6B was a cash inflow, indicating progress in shipments and inventory compression. Decrease in trade receivables +¥16.1B and increase in trade payables +¥1.3B also contributed positively, but were insufficient to offset the contract liabilities impact. Corporate tax payments -¥53.2B accelerated cash outflow. Investing Cash Flow was -¥18.2B: CapEx -¥25.0B and acquisition of intangible assets -¥1.8B were partially offset by sales of investment securities +¥24.5B and sales of subsidiary shares +¥0.7B. Free Cash Flow was -¥102.8B, a substantial negative. Financing Cash Flow was -¥35.1B, mainly dividend payments -¥33.1B and net decrease/increase in short-term borrowings -¥7.5B. Consequently, cash and cash equivalents decreased by ¥116.2B from beginning balance ¥543.4B to ending balance ¥427.2B after factoring in foreign exchange impact +¥17.8B.
Breaking down earnings into recurring and one-off items, Operating Income ¥43.7B plus non-operating income ¥13.3B (dividend income ¥5.5B, interest income ¥3.1B, foreign exchange gains ¥0.4B, etc.) yielded Ordinary Income ¥50.0B as the core of recurring earnings. Non-operating income as a percentage of Revenue was 1.0%, below 5%, indicating limited reliance on non-core activities. Conversely, extraordinary items comprised special gains of ¥25.5B (Investment Securities Sale Gain ¥23.8B, negative goodwill ¥1.2B) and special losses of ¥40.0B (impairment loss ¥21.8B, loss on retirement of fixed assets ¥3.6B, valuation loss on investment securities ¥0.1B, etc.), resulting in a net special loss of -¥14.5B. The net extraordinary items represented -40.9% of profit before tax ¥35.5B, significantly amplifying earnings volatility. The fact that Operating Cash Flow (-¥84.6B) was far below Net Income ¥24.5B is concerning from an accrual quality perspective. Although the main cause was the large release of contract liabilities, the widening timing gap between profit recognition and cash collection indicates a need to improve cash conversion of earnings. Comprehensive income was ¥42.2B, ¥17.7B higher than Net Income ¥24.5B; other comprehensive income comprised foreign currency translation adjustments ¥18.5B, valuation difference on available-for-sale securities ¥3.2B, and retirement benefit adjustments ¥10.3B, with valuation gains boosting comprehensive income.
For the fiscal year ending March 2027, the Company forecasts Revenue ¥1,370.0B (YoY +3.2%), Operating Income ¥42.0B (YoY -3.8%), Ordinary Income ¥31.0B (YoY -38.0%), Net Income attributable to owners of the parent ¥20.0B (YoY -18.4%), EPS ¥84.58, and annual dividend ¥70. Although Revenue is expected to edge up, Operating Income is projected to be roughly flat and Ordinary Income is expected to decline significantly due to a reversal in non-operating income. Compared with prior-year results, Revenue progress rate is 96.9% (¥1,328.2B / ¥1,370.0B), Operating Income progress rate is 104.0% (¥43.7B / ¥42.0B), and Ordinary Income progress rate is 161.4% (¥50.0B / ¥31.0B), meaning Operating Income and Ordinary Income have already exceeded full-year forecasts and the company plan appears conservative. The forecast assumes slow recovery in Molding Machines demand, continued strength in Machine Tools, and corrective action in Control Machinery. Contract liabilities have shrunk to ¥104.6B, so the pace of backlog recovery is key to the outlook. The Company appears to factor in steady demand outside China and price revision effects while taking a cautious view that a full recovery in the China market is not expected.
The Company maintained an annual dividend of ¥140 (interim ¥70, year-end ¥70), with total dividends of ¥33.1B. Against Net Income attributable to owners of the parent ¥24.5B, the payout ratio was 135.1%, representing dividends in excess of profits and a sharp rise from 26.4% in the prior year. Free Cash Flow was -¥102.8B, making dividend coverage by FCF -3.11x, indicating dividends are not covered by internal funds. However, cash and deposits ¥378.9B plus short-term investment securities ¥50.0B (total ¥428.9B), Equity Ratio 68.3%, and Debt/Equity ratio 9.4% imply sufficient financial capacity, so short-term ability to maintain dividends is not problematic. Should profit levels and cash generation not recover, a persistently high payout ratio and depletion of retained earnings could continue, potentially necessitating revision of dividend policy or a re-evaluation of total return policy. The dividend outlook for FY2027 is annual ¥70 (payout ratio 82.8%), indicating a planned cut and adjustment toward an appropriate level aligned with earnings. No share buybacks are planned; total shareholder returns consist solely of dividends.
Dependence on China market and demand fluctuation risk: Prior year China sales were ¥883.1B (share 52.5%), but in the current period fell sharply to ¥462.5B (share 34.8%), a decline of 47.7%, forcing a large revenue drop amid adjustments in battery-related capital spending. With the Molding Machines segment accounting for 74.4% of sales and contributing 62.7% of profits, high dependence of the core business on China creates structural risk where China economic slowdown or cycles in capital investment directly impact performance. Contract liabilities fell from ¥363.5B to ¥104.6B (-71.2%), highlighting deteriorated order conditions; delayed demand recovery poses downside risk to results.
Profitability deterioration and structural issues in Molding Machines: The Molding Machines operating margin plunged from 10.3% to 2.8% (a 7.5pp drop) and an impairment loss of ¥21.8B was recorded. Price competition, adverse product mix, and heavy fixed-cost burden are driving factors, requiring fundamental business restructuring. R&D expenditure is low at 0.9% of Revenue, posing a medium-term challenge to maintain and improve product competitiveness. With gross margin at 31.1% and SG&A ratio at 27.8%, margin room is limited, and profitability may not improve quickly even if demand recovers.
Decline in cash generation and liquidity risk: OCF turned negative at -¥84.6B, driven by a release of contract liabilities of -¥262.5B, revealing working capital management challenges. Free Cash Flow was -¥102.8B while dividends paid were ¥33.1B, forcing use of cash balances. Short-term borrowings of ¥107.3B (short-term debt ratio 99.5%) present concentration risk in maturities; if OCF improvement is delayed, refinancing costs may rise or additional funding may be required to secure liquidity. Although cash and deposits ¥378.9B provide ample headroom, early recovery in cash generation is essential.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.3% | 7.8% (4.6%–12.3%) | -4.5pp |
| Net Profit Margin | 1.8% | 5.2% (2.3%–8.2%) | -3.3pp |
Profitability is substantially below the industry median, with deteriorating profitability in the Molding Machines segment being the primary reason for a marked loss of competitiveness within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -21.0% | 3.7% (-0.4%–9.3%) | -24.7pp |
Revenue growth rate is -24.7pp below the industry median, reflecting a sharp decline in demand to China and resulting in growth well below the industry average.
※ Source: Company compilation
Room for business portfolio restructuring: The gap between Molding Machines operating margin (2.8%) and Machine Tools (8.1%) is 5.3pp. The impairment provides an opportunity to optimize product and customer portfolios in Molding Machines, withdraw or scale back unprofitable areas, and shift management resources to Machine Tools, with progress in structural reform being noteworthy. Strengthening R&D (currently 0.9% of Revenue) to restore product competitiveness and rebuilding pricing power are keys to medium-term margin improvement.
Working capital management and normalization of cash flow: Contract liabilities declined by -71.2% and OCF turned negative, but inventory fell by -60.4%, indicating inventory normalization. Signs of order stabilization and resumption of advance receipts would be signals for CF improvement. Shortening of CCC to 211 days, maintenance of DSO at 63 days, and a halt and reversal in the decline of contract liabilities are important leading indicators of a recovery in cash generation. Continued strength in Machine Tools and timing of order reversal in Molding Machines are prerequisites for returning FCF to positive territory and restoring dividend sustainability.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions are your responsibility; please consult a professional if necessary before making such decisions.