| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥174.5B | ¥165.9B | +5.1% |
| Operating Income / Operating Profit | ¥8.2B | ¥4.9B | +68.5% |
| Ordinary Income | ¥8.8B | ¥6.0B | +46.5% |
| Net Income | ¥7.0B | ¥3.7B | +90.6% |
| ROE | 3.4% | 1.8% | - |
For the fiscal year ended March 2026, Revenue was ¥174.5B (YoY +¥8.5B +5.1%), Operating Income was ¥8.2B (YoY +¥3.3B +68.5%), Ordinary Income was ¥8.8B (YoY +¥2.8B +46.5%), and Net Income attributable to owners of parent was ¥7.0B (YoY +¥3.3B +90.6%), delivering both revenue and profit growth. Gross margin improved to 26.5% (+1.9pt YoY), SG&A ratio was controlled at 21.8% (prior year 22.0%), and Operating Margin rose to 4.7% (+1.8pt). By region, Asia sales expanded from ¥29.8B to ¥36.8B (+23.4%), with external demand driving growth. Operating Cash Flow (OCF) was ¥11.6B, 1.66x Net Income, but inventory increase of ¥6.8B pressured cash conversion and the OCF/EBITDA ratio fell to 0.61x. Dividends were ¥40 at year-end (payout ratio 139.5%), share buybacks amounted to ¥3.1B, and total shareholder returns exceeded FCF of ¥4.4B.
[Revenue] Revenue totaled ¥174.5B (YoY +5.1%) achieving steady growth. By region, Japan was ¥134.9B (prior year ¥133.5B, +1.0%) remaining broadly flat, while Asia expanded to ¥36.8B (prior year ¥29.8B, +23.4%) leading the increase. Other regions also rose to ¥2.8B (prior year ¥2.6B, +7.7%), with external demand expansion the main driver of top-line growth. As a single segment company (wear-resistant tooling related business), product-level breakdown is not disclosed, but orders from manufacturers in automotive, electronic components, and mold-related industries are inferred to have been firm. Contract liabilities (advance receipts) were ¥0.7B, down ▲77% from ¥3.1B the prior year, suggesting initial backlog was digested. Cost of sales was ¥128.3B (prior year ¥124.6B, +3.0%), rising less than revenue; Gross Profit expanded to ¥46.2B (prior year ¥41.3B, +11.9%), and Gross Margin improved to 26.5% from 24.9% (+1.9pt), aided by stabilized raw material prices, improved product mix, and production efficiency gains.
[Profitability] SG&A was ¥38.0B (prior year ¥36.4B, +4.3%), controlled below the revenue growth rate, bringing the SG&A ratio to 21.8% (prior year 22.0%) down ▲0.2pt and realizing operating leverage. As a result, Operating Income surged to ¥8.2B (prior year ¥4.9B, +68.5%), with Operating Margin improving to 4.7% (prior year 2.9%) +1.8pt. Non-operating income totaled ¥0.8B (interest income ¥0.2B, dividend income ¥0.1B, foreign exchange gains ¥0.2B, etc.), non-operating expenses were ¥0.2B (interest expense ¥0.0B, commission expense ¥0.1B, etc.), producing net non-operating income of ¥0.6B. Ordinary Income was ¥8.8B (prior year ¥6.0B, +46.5%). Extraordinary gains/losses were essentially zero, leaving Pretax Income at ¥8.8B. After deducting corporate taxes of ¥3.1B (effective tax rate 35.6%), Net Income attributable to owners of parent was ¥7.0B (prior year ¥3.7B, +90.6%). Comprehensive Income was ¥7.7B, comprised of Net Income ¥7.0B plus foreign currency translation adjustments ¥0.8B, unrealized gains on securities ¥0.5B, and pension adjustment ¥0.6B. In conclusion, revenue and profit increased and profitability improved notably, but the absolute Operating Margin of 4.7% remains low and further efficiency gains are needed.
[Profitability] Operating Margin improved to 4.7% (prior year 2.9%) +1.8pt, supported by Gross Margin 26.5% (+1.9pt) and SG&A ratio 21.8% (▲0.2pt). Net Margin rose to 4.0% (prior year 2.2%), ROE was 3.4% (prior year 1.8%), and ROA (on Ordinary Income basis) was 3.4% (prior year 2.3%), indicating broad improvement across profitability metrics. Nevertheless, Operating Margin 4.7% lags the industry median of 7.8% by ▲3.0pt, and Net Margin 4.0% is below the median 5.2% by ▲1.2pt, placing the company in the lower half of the industry on an absolute basis.
[Cash Quality] OCF was ¥11.6B, 1.66x Net Income ¥7.0B, and adding Depreciation ¥10.7B yields subtotal OCF ¥12.0B, from which working capital adjustments were ▲¥0.4B (inventory increase ▲¥6.8B partially offset by accounts payable increase +¥4.6B, etc.). While OCF is solid, OCF/EBITDA (EBITDA = Operating Income ¥8.2B + Depreciation ¥10.7B = ¥18.9B) stands at 0.61x, depressed by inventory build. FCF was positive at ¥4.4B (OCF ¥11.6B − Investing CF ¥7.2B).
[Investment Efficiency] Asset turnover (sales to assets) was 0.68x (prior year 0.65x) marginally higher, with Total Asset Turnover roughly stable. Days Inventory Outstanding (DIO) extended from 103 days to 113 days (+10 days); Work-in-Process ratio is high at 47.6% (Work-in-Process ¥19.0B / Inventories ¥39.9B), indicating lengthened production processes and reduced efficiency. Days Sales Outstanding (DSO) extended to 57 days (prior year 52 days) +5 days; Days Payable Outstanding (DPO) shortened to 20 days (prior year 47 days) ▲27 days; Cash Conversion Cycle (CCC) extended to 150 days (prior year 108 days) +42 days. Deterioration in working capital efficiency is evident, requiring improvements in inventory management and payment terms.
[Financial Soundness] Equity Ratio was 79.6% (prior year 81.0%), very high. Interest-bearing debt was ¥0.2B (short-term borrowings ¥0.2B, lease liabilities ¥0.3B), effectively net-debt free. Debt/EBITDA ratio was 0.01x; interest coverage (OCF ¥11.6B / Interest Paid ¥0.0B) is several hundred times, indicating no liquidity concern. Current Ratio was 388%, with Cash and Deposits ¥71.3B versus current liabilities ¥38.9B, reflecting robust short-term liquidity.
OCF was ¥11.6B: OCF subtotal ¥12.0B less corporate tax payments ¥1.3B plus interest/dividend received ¥0.3B. Within working capital, inventory increase ▲¥6.8B (raw materials +¥5.5B, work-in-process +¥1.6B, etc.) was the largest cash outflow, while accounts receivable increase ▲¥0.6B also modestly absorbed cash. Offsetting items included accounts payable increase +¥4.6B (electronically recorded payables decreased from ¥16.2B to ¥13.9B, effectively ▲¥2.3B), accrued expenses decrease ▲¥0.3B, and accrued bonuses increase +¥0.6B, resulting in net working capital outflow of ▲¥0.4B. Investing CF was ▲¥7.2B, driven mainly by capital expenditures ¥8.3B (tangible fixed assets ¥8.3B, intangible fixed assets ¥0.9B). The CapEx to Depreciation ratio was 0.77x (Depreciation ¥10.7B), indicating restrained investment. Acquisition of investment securities was ▲¥0.0B, and net increase in time deposits was ▲¥1.9B (deposits placed ¥9.8B − withdrawals ¥7.9B). Financing CF was ▲¥11.3B, primarily dividend payments ¥7.9B and treasury stock purchases ¥3.1B, with total shareholder returns ¥11.0B materially exceeding FCF ¥4.4B. Net short-term borrowings were ¥0.0B, lease liability repayments ▲¥0.2B; the company effectively did not rely on external funding and funded returns from cash on hand. Consequently, Cash and Cash Equivalents decreased from ¥73.6B at the beginning of the period to ¥67.2B at year-end ▲¥6.4B. While OCF was solid, inventory increases lowered cash conversion, and aggressive shareholder returns reduced cash balances.
Of Net Income ¥7.0B, core earnings were Operating Income ¥8.2B, and net non-operating income +¥0.6B lifted Ordinary Income to ¥8.8B. Non-operating income ¥0.8B comprised interest income ¥0.2B, dividend income ¥0.1B, foreign exchange gains ¥0.2B, subsidy income ¥0.0B, and other ¥0.1B — items of a recurring nature indicating high persistence. Extraordinary items were effectively zero, so earnings quality is assessed as high. Comprehensive Income ¥7.7B exceeded Net Income by ¥0.7B, with unrealized gains on other securities ¥0.5B, foreign currency translation adjustments ¥0.8B, and pension-related adjustments ¥0.6B. These are non-cash items but reflect improvement in the capital base via expanded unrealized gains on securities and pension remeasurement gains. OCF ¥11.6B is 1.66x Net Income ¥7.0B, giving good cash backing; accruals (Net Income − OCF = ▲¥4.6B) are small, indicating strong cash realization of profits. However, OCF/EBITDA ratio of 0.61x due to inventory build is low, and compressing working capital could further expand OCF. Payout Ratio is 139.5% with dividends materially exceeding Net Income; nevertheless, ample cash ¥71.3B and net-debt-free balance sheet support short-term sustainability. Over the medium-to-long term, continued profit growth or improved cash efficiency will be key to maintain this dividend level.
For FY ending March 2027, the company projects Revenue ¥260.0B (YoY +49.0%), Operating Income ¥7.0B (YoY ▲14.9%), Ordinary Income ¥7.8B (YoY ▲11.7%), and Net Income attributable to owners of parent ¥5.2B (YoY ▲25.7%), implying large revenue growth but lower profits. The +49.0% revenue increase likely factors in large orders and ramp-up of new projects, but Operating Margin is projected to deteriorate to 2.7% (from 4.7% this period, ▲2.0pt). Progress through the first half versus full-year guidance is: Revenue 67.1% (¥174.5B/¥260.0B), Operating Income 117.4% (¥8.2B/¥7.0B), Ordinary Income 113.1% (¥8.8B/¥7.8B), indicating that Operating Income already exceeds the full-year plan. This divergence suggests the company expects substantial revenue expansion in H2 alongside rising costs, intensified price competition, and ramp-up costs. EPS forecast is ¥26.56, below current EPS ¥29.03, and dividend forecast is ¥0.00 indicating a shift to no dividend. The company notes that the outlook may vary significantly due to many factors; order situation, raw material prices, and exchange rates are key drivers. The assumption of rapid profit margin deterioration in H2 may include initial costs for capacity expansion, front-loaded SG&A investment, and pricing policy changes; quarterly progress and company disclosures should be monitored.
Dividends were consolidated at year-end ¥40 (prior year year-end ¥40) totaling ¥7.9B, yielding a payout ratio relative to Net Income attributable to owners of parent of 113.8% (dividend per share vs EPS 29.03 yields payout ratio 137.8%; on average shares basis 139.5%), exceeding earnings. Share buybacks totaled ¥3.1B, bringing total shareholder returns to ¥11.0B. Coverage of total returns by FCF ¥4.4B was 2.51x, indicating returns were funded by drawdown of cash on hand. However, with cash ¥71.3B and a net-debt-free balance sheet, short-term sustainability is ensured. For the next fiscal year the company plans a dividend of ¥0, indicating a move to no dividend, suggesting a reassessment of capital policy given the profit decline forecast. Historical payout ratios are not disclosed, but the current payout ratio of 139.5% is excessive relative to earnings and would require adjustment if profit growth does not materialize. Treasury stock at year-end increased to ¥3.44B (prior year ¥0.65B), representing 2.1% of issued shares (421,356 shares / 20,000,000 shares). Total Return Ratio (dividend + buybacks) was 157.1%, very high, reflecting an aggressive shareholder return stance backed by a cash-rich balance sheet.
Working Capital Expansion Risk: Days Inventory Outstanding extended to 113 days (prior year 103 days, +10 days), with Work-in-Process at ¥19.0B representing 47.6% of Inventories ¥39.9B, indicating lengthened production processes. DPO shortened from 47 days to 20 days (▲27 days), and CCC deteriorated to 150 days (prior year 108 days, +42 days). As a result, OCF/EBITDA is low at 0.61x and revenue growth may not readily translate into cash generation. If next fiscal year’s large revenue plan (+49.0%) materializes, inventories may further increase and delayed improvement in working capital efficiency could pressure liquidity and sustained low ROIC.
Next Fiscal Year Profit Margin Sharp Decline Risk: FY2027 guidance assumes Revenue +49.0% but Operating Income −14.9%, with Operating Margin falling to 2.7% (from 4.7% this period). Given that first-half Operating Income already exceeds the full-year plan (117%), the company apparently anticipates a sharp rise in costs, tougher price competition, and ramp-up burdens in the second half. The company cites order levels, raw material prices, and exchange rates as drivers, but specific assumptions and mitigation plans are unclear, increasing the risk of missed targets or additional costs.
Continuity of High Returns Risk: With a payout ratio of 139.5% and Total Return Ratio of 157.1%, shareholder returns this period materially exceeded profits and FCF, and Cash and Deposits declined from ¥73.6B to ¥71.3B (▲¥2.3B). While the company plans no dividend next fiscal year, the elevated returns historically suggest capital policy volatility. Short-term sustainability is supported by cash and net-debt-free status, but without profit growth or with continued working capital increases, sustaining dividends and buybacks will be difficult. Greater transparency in shareholder return policy and realization of profit/CF improvements are necessary to maintain investor trust.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.7% | 7.8% (4.6%–12.3%) | -3.0pt |
| Net Margin | 4.0% | 5.2% (2.3%–8.2%) | -1.2pt |
Profitability trails industry medians, placing the company in the lower tier on Operating and Net Margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 5.1% | 3.7% (-0.4%–9.3%) | +1.4pt |
Revenue growth exceeds the industry median, indicating relatively favorable top-line expansion among peers.
※ Source: Company compilation
Sustainability of Margin Improvement: Gross Margin +1.9pt and Operating Margin +1.8pt improvements likely reflect combined effects of price revisions, product mix improvement, and fixed cost containment, which is positive in the short term. However, the absolute Operating Margin of 4.7% lags the industry median 7.8% by ▲3.0pt, and the company guidance projects a decline to 2.7% next fiscal year. With the first-half strength assumed to reverse in H2, the effectiveness of cost control, pricing policy, and productivity improvements will be critical. Monitor quarterly gross margin and SG&A ratio trends and company measures.
Working Capital Efficiency and Cash Generation: DIO 113 days and CCC 150 days show materially worsened working capital efficiency, and OCF/EBITDA remains low at 0.61x. The high Work-in-Process ratio (47.6%) suggests production lead times have lengthened, and if the next fiscal year’s +49.0% revenue plan is realized, inventories may grow further. Improvements in inventory turns, WIP reduction, and payables optimization could restore OCF/EBITDA toward ~0.9x and materially expand FCF. Progress in production efficiency and working capital management is a key value driver to monitor.
Sustainability of Shareholder Returns and Capital Policy: With payout ratio 139.5% and Total Return Ratio 157.1%, returns are very high, but the company plans no dividend next fiscal year. While cash ¥71.3B and a net-debt-free position secure short-term continuity, absent profit growth or if working capital continues to rise, sustaining such high returns is unlikely. Clarity on dividend and buyback policy and realization of earnings and FCF growth will be central to investor confidence. Stability of dividend policy and FCF coverage improvement are important evaluation metrics going forward.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm from public financial statements. Investment decisions are your own responsibility; consult a professional as needed.