| Metrics | Current Period | Same period last year | YoY |
|---|---|---|---|
| Revenue | ¥165.1B | ¥160.3B | +3.0% |
| Operating Income | ¥8.9B | ¥12.7B | -29.9% |
| Ordinary Income | ¥10.5B | ¥14.4B | -27.2% |
| Net Income | ¥7.3B | ¥11.1B | -36.5% |
| ROE | 2.3% | 3.3% | - |
In FY2026 Q3 consolidated results, revenue was ¥165.1B (YoY +¥4.8B +3.0%), maintaining top-line growth, while operating income was ¥8.9B (YoY -¥3.8B -29.9%), ordinary income ¥10.5B (YoY -¥3.9B -27.2%), and net income attributable to owners of the parent ¥7.3B (YoY -¥3.8B -34.2%), resulting in a substantial profit decline. The primary driver of lower operating profit was an increase in SG&A expenses to ¥44.6B, up +6.4%, outpacing sales growth (+3.0%). The operating margin fell to 5.4% (down -2.5pt from 7.9% a year earlier). The gross margin was flat at 32.4%, but higher SG&A pressured profitability. At the ordinary income level, non-operating income of ¥2.7B, including interest income and gains on sales of marketable securities, provided some support, but was insufficient to offset deterioration in core earnings.
[Profitability] ROE 2.0% (down from 3.8% a year earlier), operating margin 5.4% (down -2.5pt from 7.9%), net margin 3.8% (vs. 6.5% a year earlier). A DuPont breakdown yields ROE of approximately 2.0% with a net margin of 3.8%, total asset turnover of 0.378, and financial leverage of 1.37. ROIC at 2.3% remains low. [Cash Quality] Cash and deposits ¥97.4B, short-term liability coverage 1.3x (cash ¥97.4B / short-term liabilities ¥74.9B). Cash is ample, but details of Operating Cash Flow (OCF) are undisclosed. [Investment Efficiency] Total asset turnover 0.378x; inventory turnover shows room for improvement with inventories at ¥67.9B and working capital at ¥217.1B. [Financial Soundness] Current ratio 389.6%; against interest-bearing debt of ¥53.3B, cash of ¥97.4B results in a net cash position of approximately ¥44.1B; Debt/Capital 14.3%, indicating a conservative capital structure. However, the short-term liabilities ratio of 44.1% (short-term liabilities/total liabilities) is at an alert level, implying short-term refinancing risk.
While details of operating, investing, and financing cash flows are not disclosed, we analyze fund flows from BS trends. Cash and deposits increased by ¥0.8B YoY to ¥97.4B, suggesting that higher revenue contributed to cash accumulation to some extent. Working capital stood at ¥217.1B (up +¥4.0B from ¥213.1B a year earlier), with receivables at ¥72.2B and inventories at ¥67.9B, indicating persistently elevated inventory levels. Accounts payable of ¥14.7B (down -¥3.3B from ¥18.0B a year earlier) suggests a decrease in trade payables, slightly worsening working capital efficiency. Treasury stock increased from -¥0.05B to -¥8.3B (expansion of the negative balance on the books), implying cash outflows for share repurchases during the period. Cash coverage of short-term liabilities is 1.3x against ¥74.9B of short-term liabilities, securing liquidity; however, given a high reliance on short-term liabilities at 44%, continued tight cash management is important.
Ordinary income was ¥10.5B versus operating income of ¥8.9B, implying a net non-operating positive of approximately ¥1.6B. Components include non-operating income of ¥2.7B (interest income ¥0.2B, gain on sale of marketable securities ¥1.0B, etc.), while non-operating expenses were limited to ¥1.1B. Non-operating income accounts for 1.6% of revenue, with financial income outside core operations supporting ordinary income. On the other hand, comprehensive income turned negative at -¥2.7B, as other comprehensive loss (such as foreign currency translation adjustments) of -¥9.9B largely offset net income of ¥6.3B for the period. Although OCF details are undisclosed, the increase in cash balance suggests OCF was positive to some extent. However, higher inventories and receivables are pressuring working capital, warranting attention to the sustainability of cash generation. The decline in profitability at the operating income level is pronounced, and improving the quality of core earnings remains a challenge.
[Positioning within the industry] (Reference information; our survey) Compared with the industry median for manufacturing (N=65) in FY2025 Q3, profitability ranks in the lower tier. The operating margin of 5.4% is below the industry median of 7.3% (IQR: 4.6%–12.0%), indicating cost efficiency challenges versus peers. The net margin of 3.8% is also below the industry median of 5.4% (IQR: 3.5%–8.9%), reflecting below-average profitability. ROE 2.0% is well below the industry median of 4.9% (IQR: 2.8%–8.2%), making improvement in capital efficiency an urgent task. On the other hand, financial soundness is solid, with a current ratio of 389.6% (3.9x) exceeding the industry median of 2.67x (IQR: 2.00–3.56x), placing liquidity at an upper-tier level in the industry. Sales growth of +3.0% is roughly in line with the industry median of +2.8% (IQR: -0.9%–+7.9%), maintaining an industry-standard pace for top-line expansion. In the company’s historical trend, the operating margin of 5.4% (2026) is on a declining trajectory versus past levels, making profitability recovery the top priority. Industry: Manufacturing (N=65), Comparison target: FY2025 Q3, Source: Our compilation.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statement data. Investment decisions are your own responsibility; consult a professional as needed before proceeding.