| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥420.1B | ¥392.1B | +7.1% |
| Operating Income / Operating Profit | ¥51.7B | ¥53.0B | -2.3% |
| Ordinary Income | ¥55.9B | ¥54.1B | +3.2% |
| Net Income / Net Profit | ¥29.5B | ¥22.7B | +29.9% |
| ROE | 6.8% | 5.9% | - |
The fiscal year ended March 2026 results show Revenue ¥420.1B (YoY +¥28.0B +7.1%), Operating Income ¥51.7B (YoY -¥1.2B -2.3%), Ordinary Income ¥55.9B (YoY +¥1.8B +3.2%), and Net Income attributable to parent company shareholders ¥39.0B (YoY +¥16.2B +71.4%; the Net Income in the financial database of ¥29.5B reflects consolidation scope differences). Despite higher sales and lower operating profit, non-operating foreign exchange gains of ¥2.4B contributed to higher Ordinary Income, and Net Income rose substantially due to a reduction in corporate taxes, etc. Revenue growth continued for the third consecutive year; however, gross margin declined to 43.4% (prior year 45.4%, down ~200bp), and operating margin narrowed to 12.3% (prior year 13.5%, down ~120bp), indicating deteriorating profitability.
[Revenue] Revenue ¥420.1B (YoY +7.1%) was driven by increases in both the Food Processing Machinery Manufacturing & Sales business and the Food Manufacturing & Sales business. By segment, external sales for Food Processing Machinery Manufacturing & Sales were ¥259.7B (Japan ¥114.8B, North & South America ¥58.6B, Europe ¥54.2B, Asia ¥32.0B), up ¥27.4B YoY with expansion across all regions. In particular, Asia grew strongly by ¥11.5B YoY (+56.0%), Europe by +¥8.0B (+17.4%), and North & South America by +¥10.4B (+21.5%). The Food Manufacturing & Sales business recorded ¥160.5B (North & South America ¥155.9B, Japan ¥4.6B), a slight decrease of ¥1.4B YoY (-0.6%) but remained at a high level. Regional diversification and product line expansion drove revenue growth; however, cost of sales ratio rose to 56.6% (prior year 54.6%, up ~200bp) due to product mix changes, higher raw material & logistics costs, and insufficient absorption of fixed costs during start-up phases.
[Profitability] Gross profit was ¥182.5B (gross margin 43.4%), up ¥4.6B YoY but gross margin fell ~200bp. Selling, general & administrative expenses were ¥130.8B (31.1% of sales), up ¥5.8B YoY (+4.6%), which trailed sales growth (+7.1%), producing some operating leverage. Advertising expenses increased to ¥5.1B (prior year ¥3.1B) reflecting stronger promotion; salaries & allowances were ¥37.5B (prior year ¥36.8B) slightly higher; depreciation (SG&A) fell to ¥5.2B (prior year ¥6.2B). R&D expenses decreased to ¥6.2B (1.5% of sales) from ¥7.4B, raising concerns over restrained investment for medium- to long-term product competitiveness. Operating Income was ¥51.7B (operating margin 12.3%), down ¥1.2B YoY (-2.3%). Non-operating income totaled ¥4.6B, primarily foreign exchange gains ¥2.4B (none recorded in prior year) and interest income ¥0.7B; non-operating expenses were ¥0.4B, with interest expense ¥0.2B being minor. Ordinary Income was ¥55.9B (ordinary income margin 13.3%), up ¥1.8B YoY (+3.2%) due to non-operating improvements. Extraordinary losses were ¥1.0B (loss on disposal of fixed assets, etc.) and minimal. Income taxes were ¥16.9B (effective tax rate 30.2%), up from ¥14.2B, as the prior year benefit from reversal of deferred tax assets dissipated; Net Income was ¥29.5B (prior year ¥22.7B), up ¥6.8B (+29.9%). In summary, while revenue increased, deteriorating gross margin led to lower operating profit; however, foreign exchange gains and normalization of tax burden resulted in higher Ordinary Income and a large increase in Net Income.
Segment profit for the Food Processing Machinery Manufacturing & Sales business was ¥60.3B (prior year ¥56.5B), up ¥3.9B. Breakdown: Japan ¥46.2B (prior year ¥43.8B, +¥2.4B), North & South America ¥3.8B (prior year ¥3.8B, flat), Europe ¥3.5B (prior year ¥3.9B, -¥0.4B), Asia ¥6.8B (prior year ¥5.0B, +¥1.8B); Japan and Asia drove the profit increases. Segment profit for the Food Manufacturing & Sales business was ¥15.5B (prior year ¥18.6B), down ¥3.1B. Breakdown: North & South America ¥15.2B (prior year ¥18.0B, -¥2.8B), Japan ¥0.3B (prior year ¥0.7B, -¥0.4B), with North America’s profit decline notable. Eliminations of inter-segment transactions and goodwill adjustments reconciled consolidated Operating Income to ¥51.7B. Regionally, Japan and Asia’s processing machinery business were the main profit drivers, while the Food Manufacturing & Sales business in North America maintained sales but experienced margin compression likely from higher raw material and labor costs.
[Profitability] Operating margin 12.3% (prior year 13.5%) contracted ~120bp, while Net margin 7.0% (prior year 5.8%) improved due to tax normalization. ROE 6.8% (prior year 7.5%) declined, reflecting an increase in shareholders’ equity of ¥430.6B and weaker profitability. ROA (on Ordinary Income basis) 10.8% (prior year 11.5%) remains high but slightly decreased. EBITDA margin is approximately 15.9% (Operating Income ¥51.7B + Depreciation ¥15.0B = ¥66.7B ÷ Revenue ¥420.1B), solid though impacted YoY by lower gross margin.
[Cash Quality] Operating Cash Flow (OCF) was ¥45.2B, exceeding consolidated Net Income ¥38.98B (parent basis) with an OCF/NI ratio of 1.16x, indicating good performance; however, OCF/EBITDA ratio is 0.68x showing weak cash conversion efficiency mainly due to working capital buildup. Inventories ¥67.5B (prior year ¥61.0B, +10.7%) and accounts receivable ¥46.6B (prior year ¥41.0B, +13.7%) increased, resulting in DIO 139 days and CCC 157 days, evidencing elongation. The accrual ratio ((Net Income - OCF)/Total Assets) is -1.1%, nominally healthy, but working capital pressure has degraded cash quality.
[Investment Efficiency] Capital expenditure ¥79.9B is 5.3x depreciation ¥15.0B, indicating an aggressive investment phase; construction in progress ¥51.6B (22.7% of tangible fixed assets) has accumulated, implying project start-up delay risk. Total asset turnover 0.772x (prior year 0.797x) declined, indicating worsening asset efficiency.
[Financial Soundness] Equity Ratio 79.2% (prior year 78.6%) is extremely solid. Debt/EBITDA ratio 0.26x, interest-bearing debt ¥17.3B (short-term borrowings ¥11.5B + long-term borrowings ¥5.7B) is minor. Interest Coverage 223x (EBIT ¥51.7B ÷ interest expense ¥0.23B) shows limited interest burden. Current ratio 266.7% and quick ratio 196.5% indicate ample liquidity. Cash ¥111.2B is 9.6x short-term borrowings, implying negligible funding risk.
Operating Cash Flow was ¥45.2B (prior year ¥57.5B, -21.5%), where subtotal ¥62.2B was reduced by increases in working capital (inventories -¥1.9B, accounts receivable -¥4.4B, accounts payable -¥1.3B) and corporate tax payments -¥18.2B. OCF/EBITDA ratio 0.68x reflects working capital retention; DIO 139 days and CCC 157 days indicate slowing inventory and receivables turnover and significant room to improve cash generation. Investing Cash Flow was -¥84.7B (prior year -¥20.0B), primarily due to capital expenditures -¥79.9B (prior year -¥17.1B), substantially increasing tangible fixed assets. With investment at 5.3x depreciation, growth/renewal investment accelerated. Financing Cash Flow was -¥10.5B (prior year -¥13.7B), consisting of dividend payments -¥13.4B, net increase in short-term borrowings +¥5.0B, and net repayment of long-term borrowings -¥2.0B. Free Cash Flow was -¥39.6B (OCF ¥45.2B - Investing CF ¥84.7B), a substantial deficit absorbed by cash on hand ¥111.2B. Cash position decreased by ¥46.6B, mainly due to investment execution and working capital increases; financial capacity remains ample to continue mid-term investments.
Earnings are largely recurring, with Operating Income ¥51.7B as the primary source. Of non-operating income ¥4.6B, foreign exchange gains ¥2.4B are market-dependent, while interest income ¥0.7B and dividend income ¥0.5B are stable. Non-operating expenses ¥0.4B are minor, and extraordinary losses ¥1.0B (loss on disposal of fixed assets, etc.) represent about 3.4% of Net Income, small in scale. The difference between Comprehensive Income ¥55.9B and Net Income ¥29.5B (¥26.4B) stems from other comprehensive income such as foreign currency translation adjustments ¥11.7B, valuation differences on securities ¥2.9B, and retirement benefit adjustments ¥2.3B, indicating stable Net Income quality. However, the low OCF/EBITDA ratio of 0.68x and working capital increases weaken cash backing, raising accrual-quality concerns. If gross margin decline and prolonged DIO persist, delayed cash realization of profits may continue; improving inventory valuation and turnover is essential to enhance earnings quality.
Full-year guidance: Revenue ¥429.0B (YoY +2.1%), Operating Income ¥56.2B (YoY +8.6%), Ordinary Income ¥56.9B (YoY +1.8%), Net Income attributable to parent company shareholders ¥40.2B (EPS forecast ¥149.14). Versus actuals (consolidated Net Income ¥29.5B adjusted to parent-basis ¥38.98B), achievement rates are: Revenue 98.0%, Operating Income 92.1%, Ordinary Income 98.2%, Net Income 97.0%. Shortfall at the operating level is notable, suggesting assumptions for gross margin recovery and start-up cost absorption were not met. Dividend forecast is annual ¥30, while actual dividend was ¥58 (year-end ¥31, interim ¥27), exceeded by an increased year-end payout. This fiscal year shows revenue growth but continued margin pressure; achieving guidance will hinge on gross margin recovery and controlling SG&A.
Annual dividend was ¥58 (interim ¥27, year-end ¥31), with total dividends ¥13.4B. Dividend payout ratio relative to Net Income ¥38.98B (parent-basis) was 34.4%, a sustainable level. Prior year dividend was ¥21, so this year’s dividend rose ~2.8x, strengthening shareholder returns. Share buybacks were effectively zero (CF -¥0.0B), so Total Return Ratio equals the payout ratio. Free Cash Flow was -¥39.6B, below dividend payments, implying dividends were funded from cash on hand ¥111.2B and retained earnings. Financial capacity is ample and the risk of dividend reduction is low, but future dividend policy will be linked to the start-up and monetization of large investments and recovery of Free Cash Flow. The actual dividend of ¥58 against forecast ¥30 can be interpreted as a signal of management’s intent to bolster shareholder returns amid expectations for year-end performance recovery.
Working capital retention risk: DIO 139 days and CCC 157 days indicate prolonged inventory and receivables turnover, increasing discount pressure and impairment risk when demand fluctuates. Inventories ¥67.5B (YoY +10.7%) are growing faster than sales (+7.1%), sustaining inventory buildup. Deteriorating working capital efficiency, exemplified by OCF/EBITDA ratio 0.68x, compresses cash generation and reduces financial flexibility.
Risk of delays in commissioning large investments: Construction in progress ¥51.6B (22.7% of PPE) is high; project start-up delays or underperformance could lead to insufficient absorption of depreciation and increased fixed-cost burden. Aggressive capex ¥79.9B (5.3x depreciation) lays the foundation for future capacity and efficiency improvements, but if ramp-up and monetization lag, recovery of EBITDA margin may stall and Free Cash Flow deficits could persist.
R&D underinvestment and product competitiveness risk: R&D expense ¥6.2B (1.5% of sales) declined from ¥7.4B, low relative to industry averages and growth companies. Delays in product innovation and value-added enhancements may weaken pricing power and structurally erode gross margins. With increasing reliance on FX effects (non-operating foreign exchange gains ¥2.4B), strengthening core business competitiveness is urgent.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.3% | 7.8% (4.6%–12.3%) | +4.6pt |
| Net Margin | 7.0% | 5.2% (2.3%–8.2%) | +1.8pt |
Both operating margin and net margin exceed the industry median, indicating relative profitability advantage.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.1% | 3.7% (-0.4%–9.3%) | +3.4pt |
Revenue growth rate is 3.4pt above the industry median, signaling solid growth.
※ Source: Company compilation
Execution to restore gross margin and improve working capital efficiency: The decline in gross margin to 43.4% (prior year 45.4%, -200bp) was mainly due to product mix, raw material inflation, and insufficient absorption of start-up fixed costs. Inventory optimization (shortening DIO 139 days), price adjustments, and yield improvements are catalysts for margin recovery. Shortening CCC 157 days requires better receivables collection and optimization of payment terms; managerial execution will be tested. Improving OCF/EBITDA from 0.68x to above 0.9x is a medium-term challenge.
Timing of large investment commissioning and monetization: Capitalizing construction in progress ¥51.6B (22.7% of PPE) and operationalizing assets will be key to lifting EBITDA margin and restoring Free Cash Flow from next fiscal year onward. The active capex ¥79.9B (5.3x depreciation) is essential for future competitiveness, but failure to start-up and absorb costs as planned could perpetuate fixed-cost pressure on margins. Disclosure on investment recovery and operational progress will be a focus.
This report was auto-generated by AI analyzing XBRL financial statement brief data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.