| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥264.6B | ¥230.4B | +14.8% |
| Operating Income / Operating Profit | ¥13.2B | ¥13.5B | -2.6% |
| Ordinary Income | ¥12.2B | ¥11.2B | +8.6% |
| Net Income / Net Profit | ¥13.4B | ¥5.7B | +135.5% |
| ROE | 7.9% | 3.3% | - |
For the fiscal year ended March 2026, Revenue was ¥264.6B (YoY +¥34.2B +14.8%), Operating Income was ¥13.2B (YoY -¥0.4B -2.6%), Ordinary Income was ¥12.2B (YoY +¥1.0B +8.6%), and Net Income attributable to owners of the parent was ¥13.3B (YoY +¥7.7B +137.1%). Environmental & Social Infrastructure related businesses led sales with ¥105.2B (+27.3%), and Semiconductor & Mechatronics related businesses also performed steadily. At the operating stage, gross margin declined to 26.5% (prior year 28.4%) due to an increase in cost of sales, down 1.9pt, while SG&A ratio improved to 21.5% (prior year 22.6%) improving by 1.1pt, resulting in an operating margin of 5.0% (prior year 5.9%). At the ordinary income level, foreign exchange gains of ¥1.6B contributed to increased profit. Net income rose significantly due to recording special gains of ¥9.4B including a negative goodwill gain of ¥9.4B. Operating Cash Flow was ¥30.0B (YoY +12.2%), Free Cash Flow was ¥8.0B, and total shareholder returns included dividends of ¥7.4B and share buybacks of ¥7.6B.
[Revenue] Revenue was ¥264.6B, an increase of ¥34.2B YoY (+14.8%). Environmental & Social Infrastructure related business drove significant growth to ¥105.2B (+27.3%), with increases in cleaning finishing equipment, automatic packaging machines, and flat panel manufacturing equipment. Semiconductor & Mechatronics related business was ¥105.6B (+7.8%), supported by steady demand for hard disk related and semiconductor related equipment. Medical & Healthcare related business rose modestly to ¥55.2B (+5.2%). Company-wide project progress and digestion of backlog supported double-digit growth. Segment mix was balanced at Semiconductor & Mechatronics 40%, Environmental & Infrastructure 40%, Medical 20%.
[Profitability] Cost of sales was ¥194.5B (73.5% of sales), with gross margin of 26.5%, down 1.9pt from the prior year. Rising raw material prices and changes in product mix pressured gross margins. SG&A was ¥56.9B (21.5% of sales), including rental expenses of ¥2.6B and depreciation of ¥2.9B. R&D expenses were ¥4.1B (1.6% of sales), restrained relative to sales growth. Operating Income was ¥13.2B (operating margin 5.0%), down ¥0.4B YoY, with higher cost ratios compressing profits. At the ordinary income level, non-operating income of ¥2.8B including foreign exchange gains of ¥1.6B contributed, offset by non-operating expenses of ¥3.8B including interest expense of ¥2.1B, resulting in Ordinary Income of ¥12.2B (+8.6%). Special gains were ¥9.4B including a negative goodwill gain of ¥9.4B, and special losses were ¥3.2B including inventory disposal losses of ¥1.9B, leading to Net Income of ¥13.3B (+137.1%). Overall, the company achieved revenue and ordinary/net income growth, while Operating Income slightly declined.
Semiconductor & Mechatronics related: Revenue ¥105.6B (+7.8%), Operating Income ¥14.4B (+2.9%), margin 13.6% — the most profitable segment. Demand for hard disk related and semiconductor manufacturing equipment remained firm, contributing stable profit. Environmental & Social Infrastructure related: Revenue ¥105.2B (+27.3%), Operating Income ¥7.2B (+51.8%), margin 6.9% — growth driven by expanded orders for cleaning equipment and automatic packaging machines. Medical & Healthcare related: Revenue ¥55.2B (+5.2%) increased, but Operating Income ¥0.6B (-82.1%), margin 1.1% — significant deterioration in profitability. Corporate adjustments were -¥9.0B (prior year -¥8.6B) reflecting increased management division costs.
[Profitability] Operating margin 5.0% (prior year 5.9%), Net Profit Margin 5.0% (prior year 2.5%). Operating-level margins contracted due to lower gross margins, while net margin improved due to recognition of negative goodwill. ROE was 7.9% (prior year 3.3%), substantially improved with higher net income. ROA rose to 3.1% (prior year 1.4%). Gross margin was 26.5% (prior year 28.4%), down 1.9pt due to higher raw material costs and product mix changes. [Cash Quality] Operating Cash Flow was ¥30.0B versus Net Income ¥13.3B, yielding a cash conversion ratio (OCF/Net Income) of 2.26x, indicating high quality. The accrual ratio shows OCF generation substantially exceeds Net Income, maintaining a good level. [Investment Efficiency] Total asset turnover was 0.60x (prior year 0.56x); although low due to inventory/work-in-process heaviness, it is improving. Work-in-process of ¥76.1B represented 17.4% of total assets, reflecting a make-to-order business model. [Financial Soundness] Equity Ratio was 38.8% (prior year 41.1%), declining due to increased borrowings and goodwill. Current ratio 189.3%, quick ratio 179.7% indicate good short-term liquidity. Debt to Equity (leverage) is 1.58x, Debt/Equity ratio 117% indicating somewhat high leverage. Cash & deposits ¥87.5B cover 56% of short-term liabilities ¥156.4B, maintaining liquidity.
Operating CF was ¥30.0B (YoY +¥3.3B +12.2%). Pre-tax income was ¥18.4B, depreciation ¥6.7B, goodwill amortization ¥1.4B, and negative goodwill gain -¥9.4B were adjusted, resulting in subtotals for operating CF of ¥37.0B. In working capital, decreases in inventories of ¥15.1B and receivables of ¥8.7B increased CF, while decrease in payables of -¥9.2B reduced CF. After payment of corporate taxes ¥5.9B, Operating CF was ¥30.0B. Investing CF was -¥21.9B, primarily capital expenditures -¥4.2B, acquisition of subsidiary shares -¥10.6B, and acquisition of investment securities -¥4.4B. FCF was ¥8.0B (Operating CF - Investing CF), covering dividend payments ¥7.4B at 1.09x. Financing CF was ¥4.8B, with long-term borrowings procured ¥46.0B, net increase in short-term borrowings ¥17.3B, offset by long-term borrowings repayments -¥31.9B, share buybacks -¥7.6B, and dividend payments -¥7.4B. Cash & deposits increased from ¥71.8B at the beginning of the period to ¥87.5B at the end, a ¥15.7B increase, equivalent to 3.3 months of annual sales.
Recurring earnings comprise Operating Income ¥13.2B and non-operating income ¥2.8B (foreign exchange gains ¥1.6B, dividend income ¥0.1B, etc.). One-off items comprise special gains ¥9.4B (negative goodwill gain ¥9.4B) and special losses ¥3.2B (inventory disposal losses ¥1.9B, losses on disposal of fixed assets ¥0.4B, etc.). Net special gains ¥6.2B account for 47% of Net Income ¥13.3B. The negative goodwill gain arose from acquisition of subsidiary shares as part of M&A activities and is expected to lapse next fiscal year. The inventory disposal loss ¥1.9B indicates issues in inventory quality management. Foreign exchange gains ¥1.6B in non-operating income represent 0.6% of Revenue, indicating limited dependence but introducing volatility from FX movements. Operating CF is 2.26x Net Income, indicating strong accrual quality, aided by working capital drawdowns (inventory decrease and receivables decrease). However, removing one-off special gains, core Net Income is estimated at approximately ¥7B, so evaluation of sustainable earnings should consider the lapse of special items.
For the fiscal year ending March 2027, guidance forecasts Revenue ¥350.0B (YoY +¥85.4B +32.3%), Operating Income ¥33.0B (YoY +¥19.8B +150.0%), Ordinary Income ¥30.0B (YoY +¥17.8B +145.6%), and Net Income attributable to owners of the parent ¥20.0B (YoY +¥6.7B +50.6%). The company plans >30% top-line growth and a bullish outlook of 2.5x operating income. As of the first half, sales progress rate is 75.6% (¥264.6B/¥350.0B) and operating income progress rate is 40.0% (¥13.2B/¥33.0B), implying significant profit accumulation in the second half. Achievement assumes recovery of gross margin, profitability improvement in Medical & Healthcare related business, steady digestion of backlog, and efficient management of inventory and work-in-process. EPS forecast is 112.66円, and annual dividend forecast is ¥22 (payout ratio 19.5%), maintaining shareholder returns. Catalysts for plan realization include price pass-through, continued cost efficiency, and full-scale effects from M&A.
Annual dividend was ¥40 (interim ¥20, year-end ¥20), with payout ratio 55.2%. Total dividend payouts were ¥7.4B, representing 24.6% of Operating CF ¥30.0B and 92.3% of FCF ¥8.0B. Additionally, share buybacks of ¥7.6B were executed, bringing total returns to shareholders to ¥15.0B (dividends + buybacks). Total return ratio was 113.0% (total returns ¥15.0B / Net Income ¥13.3B), exceeding FCF and supplemented by increased borrowings in the period. Dividend forecast for FY2027 is ¥22; considering the stock split effective January 1, 2025 (1 share → 2 shares), the effective dividend level is maintained. Forecast payout ratio falls to 19.5% as normalized Net Income excludes special gains. Share buybacks of -¥7.6B were executed, and treasury stock increased to -¥12.1B at year-end (prior year -¥4.7B). Sustainability of the total return policy depends on expanding FCF and reducing borrowing dependence; improving operating CF generation and optimizing capital expenditures next fiscal year will be key.
Risk of rising cost ratios and declining gross margins: Gross margin is 26.5%, down 1.9pt YoY, and operating margin contracted to 5.0% (prior year 5.9%). Rising raw material prices and delayed price pass-through are causes, with product mix changes also impacting. Recovery of operating margin next fiscal year requires price revisions to take hold and strengthened cost control. The inventory disposal loss of ¥1.9B indicates inventory quality management issues that warrant continued attention.
Low working capital efficiency and liquidity risk: Work-in-process ¥76.1B is 17.4% of total assets, and inventory turnover days (DIO) reached 215 days; as a make-to-order model, working capital is large. Receivable days (DSO) are 111 days and cash conversion cycle (CCC) is 287 days, prolonged. Without inventory/work-in-process compression and stronger credit management, additional working capital needs may increase and borrowing dependence will persist. Short-term borrowings ¥71.8B and long-term borrowings ¥65.8B bring interest-bearing debt to ¥137.6B, posing risk of higher interest payments in a rising rate environment.
High leverage and refinancing risk due to concentration of short-term liabilities: Debt/EBITDA is 6.92x and equity ratio declined to 38.8% (prior year 41.1%). Short-term liabilities ratio is 52.2%, with high proportions of short-term borrowings and bond maturities, increasing refinancing sensitivity. Cash & deposits ¥87.5B cover 56% of short-term liabilities ¥156.4B, but unless short-term liabilities are extended or committed lines established, changes in financial markets or business deterioration could strain liquidity. Increase in goodwill ¥6.1B from subsidiary acquisitions (prior year ¥4.2B) includes potential future impairment risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.0% | 7.8% (4.6%–12.3%) | -2.8pt |
| Net Profit Margin | 5.1% | 5.2% (2.3%–8.2%) | -0.1pt |
Profitability is below the industry median; operating margin is 2.8pt lower, indicating room to improve gross margin.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.8% | 3.7% (-0.4%–9.3%) | +11.1pt |
Revenue growth rate exceeds the industry median by 11.1pt, indicating a relatively strong top-line expansion pace.
※ Source: Company aggregation
Special gains including a negative goodwill gain of ¥9.4B account for approximately 47% of Net Income ¥13.3B, and core sustainable earnings are estimated at approximately ¥7B. Next fiscal year, normalization of Net Income is expected as special items lapse; recovery of operating margin and profitability improvement in Medical & Healthcare related business will be key to performance.
Significant room for working capital efficiency improvement exists: compression of work-in-process ¥76.1B and CCC 287 days is the top priority to improve capital efficiency. Optimizing inventory/work-in-process and strengthening credit management to expand FCF could reduce borrowing dependence and improve ROIC. If price pass-through and strict cost management restore gross margin, approaching the industry median operating margin of 7.8% would be feasible.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your own responsibility; please consult a professional as necessary before making investment decisions.