| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥43695.1B | ¥40849.8B | +7.0% |
| Operating Income | ¥1370.2B | ¥2216.9B | -38.2% |
| Profit Before Tax | ¥2791.9B | ¥3514.6B | -20.6% |
| Net Income | ¥2274.8B | ¥2712.5B | -16.1% |
| ROE | 3.3% | 5.4% | - |
For the fiscal year ended March 2026, Revenue was ¥4兆3,695B (YoY +¥2,847B, +7.0%), Operating Income was ¥1,370B (YoY -¥847B, -38.2%), Ordinary Income was ¥2,792B (YoY -¥722B, -20.6%), and Net Income was ¥2,275B (YoY -¥438B, -16.1%), resulting in a year of higher sales but lower profits. The core Industrial Vehicles business expanded solidly to ¥3兆431B (+9.2%), while its Operating Income fell to ¥1,135B (-31.9%). Operating margin deteriorated to 3.1% (down 2.3pt from 5.4% a year earlier), as a decline in gross margin to 22.4% (prior year 23.3%, -0.9pt) and an increase in SG&A ratio to 18.0% (prior year 17.7%, +0.3pt) compressed profitability. Financial income of ¥1,533B supported Ordinary Income, but the deterioration in core business profitability became apparent.
[Revenue] Revenue expanded solidly to ¥4兆3,695B (+7.0%). By segment, Industrial Vehicles accounted for ¥3兆431B (+9.2%), representing 69.6% of total and driven by increased demand for forklifts and logistics solutions. Automotive was ¥1兆1,903B (+2.6%) with marginal growth, Textile Machinery contracted to ¥747B (-6.6%), and Other was ¥614B (+5.1%) and remained resilient. Growth in Industrial Vehicles and Automotive lifted the top line overall, while Textile Machinery continued to decline due to weaker demand.
[Profitability] Operating Income fell substantially to ¥1,370B (-38.2%). Cost of sales increased to ¥3兆3,909B (prior year ¥3兆1,334B), up +8.2%, and gross margin deteriorated to 22.4% (prior year 23.3%, -0.9pt). The primary drivers were higher raw materials, labor, and logistics costs and a worse price mix in Industrial Vehicles and Automotive. SG&A increased to ¥7,856B (prior year ¥7,239B, +8.5%), raising the SG&A ratio to 18.0% (+0.3pt). Operating margin fell to 3.1% (prior year 5.4%, -2.3pt). By segment, Industrial Vehicles Operating Income was ¥1,135B (-31.9%), margin down to 3.7%; Automotive Operating Income was ¥171B (-62.0%), margin 1.4%; Textile Machinery swung to an operating loss of ¥9B. Financial income of ¥1,533B (prior year ¥1,430B, +7.2%) underpinned Ordinary Income, resulting in Profit Before Tax of ¥2,792B (-20.6%) and Net Income of ¥2,275B (-16.1%). Overall, the result clearly shows revenue growth with declining profits, driven by cost increases and delayed price pass-through.
[Profitability] ROE 3.8% (prior year 4.8%, -1.0pt) is below the company’s historical performance, mainly due to a decline in Net Margin to 5.2% (prior year 6.4%, -1.2pt). Operating margin of 3.1% (prior year 5.4%, -2.3pt) fell sharply due to gross margin deterioration and higher SG&A ratio. EBITDA margin was 11.2% (EBITDA ¥4,901B = Operating Income ¥1,370B + Depreciation ¥3,531B), indicating maintained cash generation capacity.
[Cash Quality] The Operating Cash Flow to Net Income ratio was 1.78x (Operating Cash Flow ¥3,988B / Net Income ¥2,238B), a high level indicating good cash backing for profits. Working capital efficiency is elongated with DSO 168 days, DIO 71 days, and CCC 127 days, driven in particular by an expansion in receivables (+¥2,913B), which ties up liquidity.
[Investment Efficiency] CapEx ¥2,049B is only 0.58x depreciation of ¥3,531B, indicating restrained investment. Free Cash Flow was ¥2,017B, ample enough to cover dividends of ¥422B and share repurchases of ¥120B.
[Financial Soundness] Equity Ratio 60.5% (prior year 52.2%, +8.3pt) and D/E ratio 0.63x (interest-bearing debt ¥1.83T / Equity ¥6.85T) are conservative. Current ratio is 308%, showing strong resilience against increased short-term borrowings (¥705.9B). Interest coverage is approximately 10.2x (EBIT ¥1,370B / Financial Expenses ¥134B), indicating solid coverage.
Operating Cash Flow was ¥3,988B (YoY +132.4%), a large increase and 1.43x Profit Before Tax of ¥2,792B, indicating high-quality cash generation. Subtotal (before working capital changes) was ¥2,950B, boosted by non-cash charges led by Depreciation ¥3,531B. In working capital, trade receivables increased by ¥1,172B, extending collections and tying up funds; inventories rose slightly by ¥52B; and trade payables increased by ¥592B, partially offsetting outflows. After interest and dividend receipts of ¥152B and corporate tax payments of ¥409B, Operating Cash Flow reached ¥3,988B. Investing Cash Flow was an outflow of ¥1,971B, primarily CapEx ¥2,049B (CapEx/Depreciation 0.58x). Net changes in time deposits provided ¥666B inflow, reflecting a clear posture of investment restraint. Financing Cash Flow was a ¥815B outflow: short-term borrowings net increase of ¥1,929B and long-term borrowings ¥70B provided funding, partly offset by long-term borrowings repayments of ¥2,424B, dividends ¥422B, and share buybacks ¥120B. Free Cash Flow was ample at ¥2,017B, supporting sustainable returns. Cash and cash equivalents increased by ¥1,174B to ¥4,958B, maintaining strong liquidity.
Of Ordinary Income ¥2,792B, Operating Income ¥1,370B (49.1%) and Financial Income ¥1,533B (54.9%) compose the total, showing a high dependence on financial income. Financial income mainly consists of interest income and dividend income from sales finance, meaning non-operating gains are supplementing declines in core-business earnings. The difference between Net Income ¥2,275B and Comprehensive Income ¥19,307B is ¥17,032B, mainly due to valuation differences on FVTOCI financial assets of ¥15,416B and foreign currency translation adjustments of ¥1,591B. These are non-cash and sensitive to market and FX movements: while they materially increased equity, they are not sustainable recurring earnings. Operating Cash Flow substantially exceeds Net Income (1.78x), indicating good cash backing of profits, but the expansion of working capital (receivables +¥2,913B) reflects accrual increases; normalization of receivables collection is essential to maintain cash quality.
Dividends paid were ¥422B and share buybacks ¥120B, totaling ¥542B returned. The payout ratio was 18.5% relative to Net Income ¥2,275B; total return ratio including buybacks was 23.8%, a conservative level. Returns relative to FCF ¥2,017B were 26.9%, with dividends and buybacks well covered by FCF and sustainable. As the company is scheduled to be delisted on June 1, 2026, the dividend forecast for the period is undisclosed; however, given strong cash generation, financial flexibility is maintained.
Concentration risk to Industrial Vehicles: Industrial Vehicles account for 69.6% of revenue; cyclical demand changes in this segment directly affect consolidated performance. In downturns, Operating Income margin may deteriorate significantly. Growth in sales finance balances (38.6% of assets) also embeds credit cost and collection delay risks, worsening working capital efficiency.
Risk of sustained margin pressure: Gross margin declined -0.9pt and SG&A ratio rose +0.3pt, lowering Operating Income margin by -2.3pt. If raw material, labor, and logistics costs continue to rise and price pass-through lags, margin decline may persist and ROIC could stagnate below cost of capital.
Working capital expansion risk: DSO 168 days and prolonged receivables have tied up funds, with receivables increasing by ¥2,913B. Expansion of sales finance and leasing receivables raises collection delay and impairment risk; CCC 127 days and deteriorating working capital efficiency cap cash conversion improvements.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 3.8% | 6.3% (3.2%–9.9%) | -2.5pt |
| Operating Margin | 3.1% | 7.8% (4.6%–12.3%) | -4.6pt |
| Net Margin | 5.2% | 5.2% (2.3%–8.2%) | +0.0pt |
Profitability is below industry median; Operating Margin 3.1% is -4.6pt below the median of 7.8%. Net Margin is in line with the median, but reliance on non-operating income is relatively high.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.0% | 3.7% (-0.4%–9.3%) | +3.3pt |
Revenue growth outperformed the industry median by +3.3pt, signaling relatively strong topline expansion within the peer group. However, the quality of growth (margins) lags.
※ Source: Company compilation based on public financial statements
Restoring margins in core businesses is the top priority. Operating Margin at 3.1% is well below the industry median of 7.8%; urgent priorities include price pass-through and cost efficiency in Industrial Vehicles and product mix renewal in Automotive. Continued structural deterioration (gross margin -0.9pt; SG&A +0.3pt) would entrench dependence on non-operating income and risk prolonged ROE weakness.
Normalize working capital and improve cash conversion. Receivables increased by ¥2,913B and DSO extended to 168 days, with expanded sales finance balances tying up liquidity. Reviewing collection processes and accelerating inventory turns can shorten CCC and enhance FCF generation capacity. While investment is restrained (CapEx/Depreciation 0.58x), normalizing investment for mid-term competitiveness—particularly in equipment and digital investment—will be necessary; timing of such investments will be a key focus.
This report is an AI-generated financial analysis document based on XBRL earnings disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as appropriate.