| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2611.8B | ¥2342.2B | +11.5% |
| Operating Income / Operating Profit | ¥250.3B | ¥185.2B | +35.2% |
| Ordinary Income | ¥273.0B | ¥200.9B | +35.9% |
| Net Income / Net Profit | ¥114.6B | ¥90.6B | +26.5% |
| ROE | 4.4% | 4.0% | - |
For the fiscal year ended March 2026, revenue was ¥2,611.8B (YoY +¥269.6B +11.5%), Operating Income was ¥250.3B (YoY +¥65.1B +35.2%), Ordinary Income was ¥273.0B (YoY +¥72.1B +35.9%), and Net Income attributable to owners of the parent was ¥114.6B (YoY +¥24.0B +26.5%), delivering higher revenue and profit. Operating margin rose to 9.6% (prior year 7.9% → +1.7pt), supported by an improvement in gross margin to 31.5% and containment of SG&A to 21.9%. The Asia region (Segment II) led companywide profit growth with Revenue +26.7% and Operating Income +99.7%. Non-operating items included Special Income of ¥22.3B, mainly gain on sale of investment securities ¥19.2B, while foreign exchange losses of ¥6.8B were recorded in non-operating expenses. Operating Cash Flow (OCF) reached ¥332.3B (YoY +144.8%), 1.6x Net Income, enabling Free Cash Flow of ¥170.8B while executing capital expenditures of ¥183.0B. Financial position remains solid with Equity Ratio 61.8% and Cash ¥751.4B, although build-up of working capital (Inventories +¥40.6B, Trade Receivables +¥3.3B) weighed on cash conversion.
[Revenue] Revenue ¥2,611.8B (+11.5%) was primarily driven by capturing investment demand in Asia and the Americas. By segment, Asia (II) recorded high growth at ¥1,327.2B (+26.7%), accounting for 50.8% of sales and leading company growth. Americas (III) was ¥754.8B (+7.8%), Japan & Others (I) was ¥1,367.1B (+3.1%), while Europe (IV) declined to ¥180.3B (-4.0%). Gross margin improved to 31.5% (prior year 30.9% → +0.6pt), aided by better product mix and pricing measures.
[Profitability] Operating Income was ¥250.3B (+35.2%), raising Operating Margin to 9.6% (prior year 7.9% → +1.7pt). The profit increase was driven by an increase in Gross Profit to ¥823.2B (prior year ¥724.4B → +¥98.8B) and restrained SG&A of ¥572.9B (prior year ¥539.2B → +¥33.7B). SG&A ratio improved to 21.9% (prior year 23.0% → -1.1pt), limiting SG&A growth relative to sales. Ordinary Income ¥273.0B (+35.9%) reflected net non-operating income of +¥22.7B (Non-operating income ¥30.1B: dividend income ¥6.5B, interest income ¥6.4B, subsidy income ¥6.6B, etc.; Non-operating expenses ¥7.4B: interest expense ¥5.5B, foreign exchange loss ¥6.8B). Extraordinary items comprised Extraordinary Gains ¥22.3B (gain on sale of investment securities ¥19.2B, gain on sale of fixed assets ¥3.1B) less Extraordinary Losses ¥13.0B, netting to +¥9.3B which boosted final profit. Income before income taxes ¥282.2B less Income Taxes ¥72.2B (effective tax rate 25.6%), and after deducting non-controlling interests ¥0.1B, Net Income attributable to owners of the parent was ¥114.6B (+26.5%). In conclusion, revenue-led growth driven by Asia, gross margin improvement and SG&A efficiencies produced higher revenue and profit.
Segment I (Japan & Others): Revenue ¥1,367.1B (+3.1%), Operating Income ¥120.6B (+0.7%), Margin 8.8% — a stable core earnings source. Segment II (Asia): Revenue ¥1,327.2B (+26.7%), Operating Income ¥87.4B (+99.7%), Margin 6.6% — high growth and major contributor to company profit growth. Segment III (Americas): Revenue ¥754.8B (+7.8%), Operating Income ¥33.2B (+21.8%), Margin 4.4% — solid. Segment IV (Europe): Revenue ¥180.3B (-4.0%), Operating Income ¥0.9B (-69.9%), Margin 0.5% — revenue and profit decline with significant margin deterioration. Margins rank I 8.8%, II 6.6%, III 4.4%, IV 0.5%, highlighting inter-regional margin disparities. Asia contributed 34.9% of company Operating Income and is positioned as a future growth driver.
[Profitability] Operating Margin 9.6% improved 1.7pt from 7.9%, driven by Gross Margin 31.5% (prior year 30.9% → +0.6pt) and SG&A ratio 21.9% (prior year 23.0% → -1.1pt). ROE 4.4% is consistent with Net Income Margin 4.4% (Net Income attributable to owners ¥114.6B ÷ Revenue ¥2,611.8B), Total Asset Turnover 0.62x (Revenue ÷ Total Assets ¥4,230.3B), and Financial Leverage 1.62x (Total Assets ÷ Equity ¥2,614.3B). ROA on an Ordinary Income basis was 6.5% (Ordinary Income ¥273.0B ÷ Total Assets ¥4,230.3B), up from 5.5% last year. [Cash Quality] OCF/Net Income was 1.58x (OCF ¥332.3B ÷ Net Income ¥114.6B), indicating high cash quality and good conversion of profit to cash. FCF ¥170.8B exceeded Dividends ¥42.1B and Capital Expenditures ¥183.0B was executed. [Investment Efficiency] Total Asset Turnover 0.62x remained roughly stable due to asset increases (Tangible Fixed Assets +¥165.8B, Construction in Progress ¥244.1B). Working capital metrics: DSO 85 days (Trade Receivables ¥609.3B ÷ Revenue ¥2,611.8B × 365 days), DIO 222 days (Inventories ¥373.2B ÷ Cost of Goods Sold ¥1,788.6B × 365 days), CCC 262 days — long cash conversion cycle, indicating room to improve receivables and inventory management. [Financial Soundness] Equity Ratio 61.8%, Current Ratio 198.5% (Current Assets ¥2,592.3B ÷ Current Liabilities ¥1,306.0B), Quick Ratio 169.9% (Quick Assets ¥2,219.1B ÷ Current Liabilities ¥1,306.0B) — ample liquidity. Interest-bearing debt totaled ¥387.6B (Short-term Borrowings ¥167.6B, Bonds Payable maturing within 1 year ¥100.0B, Bonds ¥50.0B, Long-term Borrowings ¥70.0B), Debt/Equity 14.8%, Interest Coverage 45.9x (Operating Income ¥250.3B ÷ Interest Expense ¥5.5B) — high safety.
OCF was ¥332.3B (YoY +144.8%), generated by adding back non-cash expenses such as Depreciation ¥82.6B to Income before Income Taxes ¥282.2B, adjusting for working capital movements (Inventories -¥40.6B, Trade Receivables -¥3.3B, Accounts Payable +¥26.0B) and Income Taxes paid -¥62.9B. From OCF subtotal ¥406.4B, after working capital changes and other adjustments, ¥332.3B was produced, and OCF/Net Income 1.58x indicates good cash conversion. Investing Cash Flow was -¥161.5B, mainly due to Capital Expenditures -¥183.0B, partially offset by proceeds from sale of investment securities ¥22.6B. Free Cash Flow was ¥170.8B (OCF ¥332.3B + Investing CF -¥161.5B), which covered Dividends ¥42.1B and Financing CF outflows -¥91.8B. Financing CF was -¥91.8B: net increase in short-term borrowings ¥80.2B was offset by repayment of long-term borrowings -¥115.0B, bond redemptions -¥50.0B, dividends -¥23.4B, and share buybacks -¥0.1B. Cash & Cash Equivalents rose to ¥751.4B (prior year ¥640.6B → +¥110.8B), strengthening liquidity. Build-up in working capital (Inventories +¥40.6B, Trade Receivables +¥3.3B) has burdened cash cycles; shortening DIO and DSO will be key to improving cash generation.
Recurring income centers on Operating Income ¥250.3B. Non-operating income ¥30.1B (1.2% of revenue) comprises dividend income ¥6.5B, interest income ¥6.4B, subsidy income ¥6.6B, etc., and dependence on non-operating income is limited (<5% of revenue). Non-operating expenses ¥7.4B were mainly interest expense ¥5.5B and foreign exchange loss ¥6.8B, with FX volatility being a factor. Extraordinary items produced net +¥9.3B (Extraordinary Gains ¥22.3B: gain on sale of investment securities ¥19.2B, gain on sale of fixed assets ¥3.1B; less Extraordinary Losses ¥13.0B), but are considered temporary. Accrual quality metrics: OCF/Net Income 1.58x and Accrual Ratio ((Net Income - OCF) ÷ Total Assets) = -2.9% indicate healthy accruals and high earnings quality. The gap between Ordinary Income ¥273.0B and Net Income ¥114.6B is accounted for by Income Taxes ¥72.2B and net Extraordinary items +¥9.3B; the effective tax rate 25.6% is standard. Comprehensive Income ¥370.9B equals Net Income ¥209.9B plus Other Comprehensive Income ¥161.0B (Foreign Currency Translation Adjustments ¥106.5B, Valuation Difference on Available-for-sale Securities ¥38.2B, Remeasurements of Defined Benefit Plans ¥16.2B), with FX and securities valuation gains boosting total equity.
Company guidance for the fiscal year ending March 2027: Revenue ¥2,760.0B (+5.7%), Operating Income ¥276.0B (+10.2%), Ordinary Income ¥284.0B (+4.0%), Net Income attributable to owners of the parent ¥221.0B (+93.0%), EPS ¥944.78, Year-end Dividend ¥160. Operating Margin projected at 10.0% (calculated) — slight improvement from current 9.6% — assuming maintenance of gross margin and continued SG&A efficiencies. Forecasted Ordinary Income growth lagging Operating Income likely reflects anticipated lower non-operating income. The large projected increase in Net Income (+93.0%) likely assumes normalization of Extraordinary items. Although progress rate at the end of the first half is not specified, the full-year target Operating Income ¥276.0B appears achievable from current Operating Income ¥250.3B, contingent on improvements in inventory/receivables turnover and capitalization of Construction in Progress to dilute fixed costs. Forecast Year-end Dividend ¥160 is lower than current ¥270 (FY2026 year-end), possibly reflecting changes in interim dividend policy or payout ratio approach.
FY2026 dividend was Year-end ¥270 (Interim ¥0). Based on Net Income attributable to owners ¥114.6B and outstanding shares after treasury stock 23,391 thousand shares, the calculated payout ratio is 29.4%. Total dividends amounted to ¥23.4B (¥270 × 23,391 thousand shares), consistent with dividend payments in the cash flow statement, representing 13.7% of FCF ¥170.8B — indicating high sustainability. Share buybacks were limited at ¥0.1B, and Total Return Ratio was 29.5%, reflecting a dividend-centric return stance. Payout Ratio 29.4% is a sustainable medium-term level, and given Cash ¥751.4B and OCF ¥332.3B there is some room for performance-linked dividend increases. Forecast Dividend for FY2027 ¥160 is lower, but introduction of an interim dividend or maintaining full-year dividend amount remains possible; further disclosure on dividend policy is awaited.
Prolonged working capital risk: DIO 222 days, DSO 85 days, CCC 262 days indicate long inventory and receivables retention; if sales slow or collections are delayed, cash generation could weaken and additional working capital funding may be required. Inventories consist of Finished Goods ¥373.2B, Raw Materials ¥510.7B, and Work-in-Progress ¥206.2B; WIP ratio 19% suggests long production lead times and inventory valuation loss risk under demand fluctuations.
High short-term liabilities ratio and maturity mismatch risk: Short-term liabilities ratio 70.5% (Current Liabilities ¥1,306.0B ÷ Total Liabilities ¥1,616.0B) and increase in short-term borrowings to ¥167.6B (prior year ¥81.4B → +105.8%) indicate short-termization of debt. While Cash ¥751.4B and Current Ratio 198.5% provide liquidity, refinancing deterioration or credit tightening could crystallize refinancing risk.
Prolonged Construction in Progress and capital efficiency risk: Construction in Progress ¥244.1B accounts for 22.0% of Tangible Fixed Assets ¥1,108.0B; delays in CAPEX progress or put-in-service timing could limit depreciation-related expense recognition, thereby constraining the benefit of fixed cost absorption and depressing Total Asset Turnover and ROE. Disclosure of Construction in Progress breakdown and commissioning schedule will be a monitoring focus.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.6% | 7.8% (4.6%–12.3%) | +1.8pt |
| Net Income Margin | 4.4% | 5.2% (2.3%–8.2%) | -0.8pt |
Operating Margin exceeds the industry median 7.8% by 1.8pt, placing the company among the higher-profitability peers. Net Income Margin 4.4% is 0.8pt below the median 5.2%, and tax burden / extraordinary items keep final margin near the industry median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 11.5% | 3.7% (-0.4%–9.3%) | +7.8pt |
Revenue growth 11.5% outpaces the industry median 3.7% by 7.8pt, highlighting high growth driven by capturing demand in Asia.
※Source: Company compilation
Margin improvement and strengthened cash generation: Rise to Operating Margin 9.6% and OCF/Net Income 1.58x indicate simultaneous progress in gross margin, SG&A efficiency, and asset efficiency. Generation of FCF ¥170.8B while funding dividends and CAPEX suggests a reinforced earnings base enabling continued growth investment. If Operating Margin rises to 10.0% in FY2027, further improvements in ROE and ROA are expected.
Room to improve working capital efficiency: DIO 222 days, DSO 85 days, CCC 262 days exceed industry medians and point to potential cash generation through better inventory and receivables management. A hypothetical 30-day reduction in DIO could release approximately ¥14.7B of cash, and a 10-day reduction in DSO could yield about ¥7.2B in additional cash. Progress in working capital efficiency would boost both capital efficiency and Free Cash Flow.
Commissioning of Construction in Progress and effectiveness of growth CAPEX: If Construction in Progress ¥244.1B is commissioned, increased depreciation will enable fixed-cost dilution, contributing to further Operating Margin improvement and expanded production capacity. Continued CAPEX ¥183.0B and planned commissioning of Construction in Progress could balance capturing Asian demand and improving production efficiency, forming a base for medium-term profitability enhancement.
This report is an AI-generated earnings 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 should be made at your own responsibility; consult a professional advisor as necessary.