| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥272.9B | ¥272.6B | +0.1% |
| Operating Income / Operating Profit | ¥11.8B | ¥23.4B | -49.5% |
| Ordinary Income | ¥14.7B | ¥25.1B | -41.6% |
| Net Income / Net Profit | ¥30.8B | ¥17.6B | +75.3% |
| ROE | 5.0% | 3.0% | - |
For the fiscal year ended March 2026, Revenue was ¥272.9B (YoY +¥0.3B +0.1%) and broadly flat, while Operating Income was ¥11.8B (YoY -¥11.6B -49.5%) and Ordinary Income was ¥14.7B (YoY -¥10.4B -41.6%), marking substantial profit deterioration. Conversely, Net Income rose sharply to ¥30.8B (YoY +¥13.2B +75.3%), driven by the recognition of Special Gains of ¥23.7B (primarily subsidy income), indicating weakened recurring earning power. Operating margin deteriorated to 4.3% (down -4.3pt from 8.6% a year earlier), with gross margin falling to 42.0% (down -2.6pt) and SG&A ratio rising to 37.6% (up +1.7pt), compressing profitability. The core Rapid Fluid Fittings segment delivered revenue growth but lower profit, while the Machine Tools, Linear Drive Pumps, and Construction Equipment segments slid into operating losses, weakening portfolio-wide profitability. Operating Cash Flow was solid at ¥41.7B (YoY +54.1%), but investment Cash Flow outflows of ¥48.0B, including Capital Expenditure of ¥63.0B, resulted in Free Cash Flow of -¥6.2B.
[Revenue] Revenue was ¥272.9B (YoY +0.1%), largely unchanged. By segment, Rapid Fluid Fittings led with ¥124.4B (+3.7%, composition 45.6%) and Linear Drive Pumps grew to ¥45.1B (+3.4%, composition 16.5%). Machine Tools declined to ¥82.6B (-4.0%, composition 30.3%) and Construction Equipment fell to ¥20.8B (-9.3%, composition 7.6%). By region, Japan was weaker at ¥176.4B (-2.0%, composition 64.6%), while Americas ¥25.2B (+2.8%), Europe ¥21.0B (+4.5%), and East Asia ¥24.7B (+6.1%) supported overseas growth. R&D spending was maintained at ¥9.3B (as a percentage of sales 3.4%), continuing investment for the future.
[Profit & Loss] Cost of goods sold was ¥158.3B (cost ratio 58.0%), producing gross profit of ¥114.6B (gross margin 42.0%), a deterioration of -2.6pt YoY. SG&A was ¥102.7B (SG&A ratio 37.6%), up ¥4.7B YoY (+4.9%), with expense growth outpacing sales and compressing Operating Income to ¥11.8B (Operating margin 4.3%), a YoY decline of -49.5%. By segment, Rapid Fluid Fittings generated Operating Income of ¥19.6B (margin 15.8%, YoY -5.0%) and was the only segment in profit. Machine Tools swung to a loss of -¥6.0B (margin -7.3%, from prior year +¥4.2B), Linear Drive Pumps posted -¥1.2B (margin -2.7%), and Construction Equipment -¥0.6B (margin -2.8%), with three segments in aggregate significantly eroding corporate profitability. Non-operating income totaled ¥3.6B (dividend income ¥1.0B, interest income ¥0.9B, etc.) against non-operating expenses of ¥0.8B (interest expense ¥0.4B, foreign exchange losses ¥0.5B, etc.), resulting in Ordinary Income of ¥14.7B. After Special Gains of ¥23.7B (primarily subsidy income) and Special Losses of ¥5.9B (impairment losses ¥1.4B, etc.), Pre-tax Income was ¥32.5B. Deducting income taxes of ¥11.0B resulted in Net Income of ¥30.8B. Excluding Special Gains, underlying Net Profit margin remains in the 3% range, indicating a structure of revenue increase but operating profit decline.
Rapid Fluid Fittings: Revenue ¥124.4B (YoY +3.7%), Operating Income ¥19.6B (YoY -5.0%), margin 15.8%. Despite revenue growth, profit declined due to higher cost ratios and increased SG&A. Machine Tools: Revenue ¥82.6B (YoY -4.0%), Operating Income -¥6.0B (from prior year +¥4.2B, -244.6%), margin -7.3%. Declining sales and fixed cost burden led to a substantial loss. Linear Drive Pumps: Revenue ¥45.1B (YoY +3.4%), Operating Income -¥1.2B (improved from prior year -¥1.4B, +15.4%), margin -2.7%. Revenue rose but the segment remains unprofitable. Construction Equipment: Revenue ¥20.8B (YoY -9.3%), Operating Income -¥0.6B (from prior year +¥0.02B, -3000.0%), margin -2.8%. A significant drop in sales rapidly worsened profitability. Of the company-wide Operating Income of ¥11.8B, Rapid Fluid Fittings was the sole profit source; the combined losses of the other three segments (-¥7.8B) substantially depressed corporate earnings.
[Profitability] Operating margin 4.3% (prior year 8.6%), Net Profit Margin 11.3% (prior year 6.4%), ROE 5.0% (prior year 3.0%). Operating margin deteriorated by -4.3pt YoY, driven by a gross margin decline to 42.0% (-2.6pt) and SG&A ratio increase to 37.6% (+1.7pt). Net margin appears improved due to Special Gains (subsidy ¥23.7B), but on an Ordinary Income basis the margin is 5.4% (prior year 9.2%), reflecting weakened underlying performance. ROE improved with higher Net Income but, excluding one-off items, remains in the 3% range. [Cash Quality] Operating Cash Flow / Net Income is 1.36x (prior year 1.54x), and Operating Cash Flow / EBITDA is 1.33x, indicating stable cash conversion of earnings. The accrual ratio is -3.0%, maintaining a cash-backed profit structure. [Investment Efficiency] Total Asset Turnover 0.40x (prior year 0.41x), ROA (on Ordinary Income basis) 2.2% (prior year 3.8%), showing deterioration in asset efficiency. Tangible fixed assets increased materially to ¥242.0B (+¥44.1B, +22.3%), and front-loaded investment has suppressed short-term efficiency. [Financial Soundness] Equity Ratio 88.7% (prior year 87.3%), Current Ratio 849.5% (prior year 926.8%), D/E ratio 0.13x (prior year 0.15x), reflecting an extremely healthy balance sheet. Cash and deposits stand at ¥162.2B, providing ample liquidity.
Operating Cash Flow was ¥41.7B (YoY +54.1%), driven from Pre-tax Income ¥32.5B plus non-cash expenses such as Depreciation ¥19.5B, changes in working capital (inventory decrease ¥3.4B, trade receivables decrease ¥0.6B, accounts payable decrease -¥2.3B, etc.), and tax payments of -¥8.9B. Operating CF / Net Income is 1.36x and Operating CF / EBITDA is 1.33x, indicating solid cash generation. Investing Cash Flow was -¥48.0B, primarily due to Capital Expenditure of -¥63.0B (about 3.2x Depreciation ¥19.5B), net increase in time deposits +¥12.7B, intangible asset acquisitions -¥9.5B, etc. As a result, Free Cash Flow was negative at -¥6.2B, reflecting an investment-led phase. Financing Cash Flow was -¥10.4B, including dividend payments -¥7.1B and share buybacks -¥4.2B for shareholder returns. Cash and cash equivalents decreased from ¥134.3B at the beginning of the period to ¥117.5B at the end, a decline of -¥16.8B, influenced by active investment and shareholder returns. Given robust Operating CF and substantial cash balances, short-term liquidity risk is very low.
Of Net Income ¥30.8B, Special Gains of ¥23.7B (mainly subsidy income) account for 77%, indicating a large divergence from recurring earning power. On an Ordinary Income base of ¥14.7B, estimated after-tax profit is about ¥9.7B (assuming an effective tax rate of 34%), implying a Net Profit margin around 3.5%. Non-operating income was ¥3.6B (1.3% of sales), comprised of dividend income ¥1.0B, interest income ¥0.9B, foreign exchange gains ¥0.2B, etc., with limited dependency. Non-operating expenses of ¥0.8B included foreign exchange losses ¥0.5B, showing some FX impact on results. Comprehensive Income was ¥34.0B, with Other Comprehensive Income of ¥3.2B (foreign currency translation adjustments ¥2.9B, valuation differences on securities ¥4.0B, retirement benefit adjustments ¥5.3B, etc.) added to Net Income ¥30.8B. Operating CF of ¥41.7B is 1.36x Net Income ¥30.8B, indicating good cash backing and no accrual quality issues. However, reliance of most Net Income on Special Gains undermines sustainability, and improving Ordinary-based earning power is a key challenge going forward.
The company’s plan for the next fiscal year (FY March 2027) assumes Revenue ¥291.9B (YoY +7.0%), Operating Income ¥17.5B (YoY +48.1%), Ordinary Income ¥18.9B (YoY +28.9%), and EPS ¥78.36. Operating margin is expected to improve to approximately 6.0%, a recovery of +1.7pt from this period’s 4.3%. Progress rates as of the end of the current period correspond to 93.5% for Revenue (¥272.9B/¥291.9B) and 67.5% for Operating Income (¥11.8B/¥17.5B). Achieving next year’s plan requires profitability improvement in the three loss-making segments (Machine Tools, Linear Drive Pumps, Construction Equipment), inventory efficiency gains, and realization of benefits from Capital Expenditure. Productivity improvements, cost reductions, and SG&A control enabled by the large CapEx (¥63.0B) executed this period are key. EPS is forecast to decline from ¥114.57 to ¥78.36, reflecting normalization after the one-off Special Gains (subsidy ¥23.7B) drop out. Dividend guidance is ¥16 per year (down from ¥40 this period), consistent with prioritizing investment while normalizing profits.
Dividends for the period were ¥40 per year (interim ¥20, year-end ¥20), total payout ¥7.3B, implying a Payout Ratio of 23.5% relative to Net Income ¥30.8B. Using Parent Company Shareholders’ Net Income ¥21.4B as the base, the effective payout ratio is approximately 34.1%. Share buybacks of ¥4.2B were conducted, and combined with dividends total shareholder returns were ¥11.5B. Total Return Ratio is 37.3% (based on Net Income) or 53.7% (based on Parent Company Shareholders’ Net Income). Dividend payments of ¥7.3B were not covered by Free Cash Flow of -¥6.2B, meaning shareholder returns in this investment-led phase were funded from the existing cash buffer. Next period dividend guidance of ¥16 (down ¥24 from this period’s ¥40) reflects profit normalization post one-offs and investment-first policy, representing an adjustment toward a sustainable dividend level. DOE (Dividends / Net Assets) is 1.3%, and given strong financial soundness the capacity for shareholder returns is retained.
Segment profitability structure risk: Non-core three segments (Machine Tools -¥6.0B, Linear Drive Pumps -¥1.2B, Construction Equipment -¥0.6B) recorded a combined operating loss of -¥7.8B, largely offsetting the core Rapid Fluid Fittings profit of ¥19.6B. Segment margins diverge widely—Rapid Fluid Fittings 15.8% vs. Machine Tools -7.3%, Linear Drive Pumps -2.7%, Construction Equipment -2.8%—and delays in portfolio-wide profitability recovery could impede corporate operating margin restoration.
Inventory efficiency and working capital risk: Inventories are ¥61.2B (down ¥4.2B from ¥65.4B), but with flat sales there is significant room to improve inventory turnover. Although working capital movements had limited impact on Operating CF this period, a demand slowdown could lead to inventory write-downs or stagnation risks, pressuring both cash flow and profitability. With trade receivables ¥35.0B and inventories ¥61.2B versus accounts payable ¥7.8B, working capital is highly tied up, and a prolonged Cash Conversion Cycle (CCC) would hinder capital efficiency.
Investment recovery and capital efficiency risk: Capital Expenditure of ¥63.0B (about 3.2x Depreciation ¥19.5B) was made, and tangible fixed assets rose to ¥242.0B (+22.3%). Front-loaded investment has reduced short-term ROA to 2.2% (prior year 3.8%) and Total Asset Turnover to 0.40x (prior year 0.41x). If new equipment ramp-up is delayed and expected productivity or cost reduction benefits do not materialize, investment payback will be prolonged, and ROIC/ROE may persist at depressed levels.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.3% | 7.8% (4.6%–12.3%) | -3.4pt |
| Net Profit Margin | 11.3% | 5.2% (2.3%–8.2%) | +6.1pt |
Operating margin trails the industry median by 3.4pt, with profitability significantly lagging due to loss-making segments. Net Profit Margin outperforms the median by 6.1pt due to Special Gains, but underlying performance excluding one-offs is roughly in line with the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.1% | 3.7% (-0.4%–9.3%) | -3.6pt |
Revenue growth lags the industry median by 3.6pt and is in a stagnation phase. The company plans +7% growth next year to return toward the industry average.
※ Source: Company compilation
A sharp decline in Operating Margin (4.3% vs. 8.6% prior year) and expansion of loss-making segments are the most critical issues for the earnings structure. The core Rapid Fluid Fittings segment remains solid with a 15.8% margin, but three loss-making segments (Machine Tools, Linear Drive Pumps, Construction Equipment) with combined losses of -¥7.8B materially erode corporate profit. Early profitability of non-core businesses is a prerequisite for achieving next year’s Operating Margin target of 6%. Progress in segment P&L improvement, especially a turnaround in Machine Tools, warrants close monitoring.
The company is in an investment-led phase, having executed Capital Expenditure of ¥63.0B (about 3.2x Depreciation), raising tangible fixed assets to ¥242.0B (+22.3%). Short-term impacts include Free Cash Flow -¥6.2B and ROA decline to 2.2% (prior year 3.8%), but productivity gains and expanded supply capacity are expected in subsequent periods. Timing of investment payback, capacity utilization, and fixed cost absorption will be key to restoring capital efficiency. With cash and deposits ¥162.2B and Current Ratio 849.5%, the financial buffer against delayed investment recovery is strong.
The increase in Net Income to ¥30.8B is largely dependent on Special Gains of ¥23.7B (subsidy income), while recurring earning power declined YoY. Next fiscal year is expected to see EPS of ¥78.36 (from ¥114.57, -31.5%) as one-off items drop out, and dividends are to be reduced to ¥16 (from ¥40). Monitoring should focus on core earning power metrics (Ordinary Income, Operating CF), valuation consistency, and structural profitability improvements (gross margin recovery, SG&A control) excluding one-time gains.
This report was auto-generated by AI analyzing XBRL financial statement data to produce a financial analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.