| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥14054.9B | ¥13712.9B | +2.5% |
| Operating Income | ¥1329.5B | ¥1449.9B | -8.3% |
| Profit Before Tax | ¥1242.3B | ¥1341.7B | -7.4% |
| Net Income | ¥826.9B | ¥917.9B | -9.9% |
| ROE | 8.7% | 10.7% | - |
For the fiscal year ended March 2026, Revenue was ¥14054.9B (YoY +¥342.0B +2.5%), Operating Income was ¥1329.5B (YoY ▲¥120.4B ▲8.3%), Ordinary Income was ¥727.0B (YoY +¥44.3B +6.4%), and Net income attributable to owners of parent was ¥731.9B (YoY ▲¥82.4B ▲9.9%). Revenue recorded a second consecutive year of growth, but Operating Margin declined to 9.5% (10.6% prior year), resulting in higher revenue but lower profit. The primary driver of the profit decline was a deterioration in gross margin to 29.7% (31.3% prior year), with higher cost of sales and one-time charges including business restructuring losses of ¥127.8B and structural reform costs of ¥55.2B compressing operating profitability. Ordinary Income rose due to a large reduction in financial expenses (¥299.9B prior year → ¥159.2B), but Net Income fell below the prior year due to lower Profit Before Tax. Operating Cash Flow was ¥1642.2B (YoY +¥143.9B) and Free Cash Flow was ¥1175.0B, indicating strong cash-generating ability. Comprehensive income, driven by other comprehensive income (foreign currency translation adjustments +¥549.7B, etc.), increased shareholders’ equity attributable to owners of the parent to ¥1300.5B from ¥737.7B a year earlier.
Revenue of ¥14054.9B was up ¥342.0B (+2.5% YoY). By segment, the Construction Machinery Business was ¥12685.2B (+2.0%, sales composition 90.3%) and Specialized Parts & Services Business was ¥1369.7B (+7.5%, composition 9.7%). By product, Mining Machinery decreased to ¥2720.3B (▲4.8%) while Other Construction Machinery was robust at ¥11334.6B (+4.4%). Growth in the specialized segment including after-sales services supported consolidated top-line; geographic breakdown was not disclosed, but the foreign currency translation gain of +¥549.7B suggests overseas revenue translated into yen increased. Contract liabilities related to orders were ¥139.2B (prior year ¥146.5B), slightly down, and contract assets were ¥9.4B (prior year ¥6.2B), slightly up.
Cost of sales was ¥9880.8B (70.3% of sales), up from ¥9426.4B (68.7%) prior year, a 1.6pt increase, leading gross profit to ¥4174.2B (gross margin 29.7%) down ¥112.2B from ¥4286.4B (31.3%). SG&A was ¥2844.7B (20.2% of sales), roughly flat with prior year ¥2836.6B (20.7%), and Operating Income was ¥1329.5B (Operating margin 9.5%) versus ¥1449.9B (10.6%) prior year, a decline of ▲8.3%. Temporary factors included business restructuring losses of ¥72.5B and structural reform costs of ¥55.2B recorded in Other expenses of ¥236.9B and Other income of ¥208.8B. Non-operating items saw financial expenses fall significantly to ¥159.2B from ¥299.9B (▲¥140.7B), partly due to improved valuation on foreign exchange derivatives, and equity-method investment income rose slightly to ¥35.8B (prior year ¥32.4B), resulting in Ordinary Income of ¥727.0B, up 6.4% from ¥682.7B. Profit Before Tax was ¥1242.3B (prior year ¥1341.7B); after deducting income taxes of ¥415.4B (effective tax rate 33.4%), Net Income was ¥826.9B (▲9.9%), and Net income attributable to owners of parent was ¥731.9B (▲10.1%). In conclusion, higher cost ratios and one-time charges weighed on operating profit, partially offset by lower financial expenses, resulting in revenue up but profit down.
The Construction Machinery Business posted Revenue of ¥12685.2B (+2.0%) and Operating Income of ¥1192.9B (▲15.2%, Operating margin 9.4%). Operating margin fell 1.0pt from 10.4% the prior year, with business restructuring losses of ¥72.5B and structural reform costs of ¥49.7B weighing on profit. The Specialized Parts & Services Business showed solid Revenue of ¥1369.7B (+7.5%) but Operating Income declined to ¥108.6B (▲23.2%, Operating margin 7.9%) from prior year ¥141.0B, impacted by structural reform costs of ¥5.5B, etc. Of consolidated Operating Income ¥1329.5B, Construction Machinery accounted for 89.7% and Specialized Parts for 8.2%, making the decline in Construction Machinery margins the primary driver of consolidated profit decline.
Profitability: Operating margin of 9.5% declined 1.1pt from 10.6% prior year. ROE 8.6% declined 1.8pt from 10.4%. The deterioration in gross margin to 29.7% (31.3% prior year) was the main driver, with cost of sales ratio rising 1.6pt to 70.3%. SG&A ratio remained roughly flat at 20.2%. Ordinary Income margin improved 0.2pt to 5.2% from 5.0% due to lower financial expenses, but Net Income margin was 5.2% (EPS basis 344.06 yen), down 0.7pt from 5.9% (382.83 yen) prior year. Cash quality: Operating Cash Flow (OCF) was ¥1642.2B, 1.99x Net Income ¥826.9B, indicating solid cash generation. From OCF subtotal ¥1978.7B, working capital changes (inventory increase ¥518.2B, receivables increase ¥82.2B, etc.) were absorbed, and after corporate tax payments ¥414.8B and interest payments ¥160.4B the company remained positive. Investment efficiency: Capital expenditures ¥409.7B were 0.53x depreciation ¥778.5B, restrained and within maintenance/replacement range. Free Cash Flow ¥1175.0B covered dividends ¥393.4B by 2.99x, indicating ample dividend capacity. Financial soundness: Equity Ratio 48.5% (prior year 45.2%), interest-bearing debt (bonds & borrowings) ¥4975.7B, net interest-bearing debt ¥3561.1B, Debt/EBITDA 2.36x, Interest Coverage (EBIT/interest) approx. 8.3x, placing financial resilience in the investment-grade range. Cash and cash equivalents ¥1414.6B, current ratio 171% indicating solid short-term liquidity.
OCF of ¥1642.2B (prior year ¥1439.3B) was 1.99x Net Income ¥826.9B, absorbing depreciation ¥778.5B and working capital changes including inventory increase ¥518.2B and receivables increase ¥82.2B. From OCF subtotal ¥1978.7B, after corporate tax payments ¥414.8B, interest payments ¥160.4B, and lease payments ¥134.8B, strong cash generation was maintained. Investing cash flow was ▲¥467.3B (capital expenditures ¥409.7B, intangible asset acquisitions ¥80.7B), and Free Cash Flow ¥1175.0B covered dividends ¥393.4B by 2.99x. Financing cash flow was ▲¥1363.2B, driven by short-term borrowings repayments ¥520.2B, long-term borrowings & bond repayments ¥398.0B, and dividend payments ¥393.4B. Including foreign exchange translation effects +¥131.5B, cash decreased by ▲¥56.8B from beginning cash ¥1471.4B to ending cash ¥1414.6B, while net interest-bearing debt was reduced to ¥3561.1B. Operating working capital accumulated with trade receivables up ¥261.7B to ¥2964.2B and inventories up ¥100.4B to result in a Cash Conversion Cycle estimated at 191 days (DSO 77 days, DIO 200 days), a heavy level where inventory reduction and quicker collections present opportunities to improve cash conversion next fiscal year.
Recurring income is largely driven by core Revenue ¥14054.9B, while Non-operating income ¥208.8B (1.5% of sales) is primarily compensation income with limited sustainability. Temporary items include business restructuring losses of ¥72.5B and structural reform costs of ¥55.2B included in Other expenses, which together depressed Operating Income by roughly ¥12.8B0 (note: stated as 128億円 in original). Net financial result (financial income ¥64.2B less financial expenses ¥159.2B) was a net expense of ▲¥95.0B, improved from ▲¥236.8B prior year, aided by improved FX derivative valuations. OCF ¥1642.2B substantially exceeds Net Income ¥826.9B, and the accrual ratio of ▲4.9% indicates earnings are strongly cash-backed. Comprehensive income ¥1437.9B (attributable to owners of parent ¥1300.5B) exceeded Net Income ¥826.9B by over ¥610B, mainly due to Other Comprehensive Income (foreign currency translation adjustments +¥549.7B, remeasurements of defined benefit plans +¥6.4B, etc.), with FX valuation gains contributing to equity growth. The divergence between Ordinary Income ¥727.0B and Net Income ¥731.9B is within the scope of non-continuing business results, 33.4% tax rate, and non-controlling interests ¥94.9B, with limited accounting anomalies.
The full-year company plan calls for Revenue ¥14300.0B, Operating Income ¥1400.0B, Net Income ¥800.0B, EPS 376.06 yen, and dividend ¥90 (interim dividend actual ¥75, year-end forecast not disclosed). Versus current-year results, the plan implies Revenue +1.7%, Operating Income +5.3%, and Net Income +9.3% — i.e., growth in both top and bottom lines. Operating margin is assumed to improve to 9.8%, premised on the reversal of prior cost increases and one-time charges, as well as price revisions and product mix improvement. Payout Ratio is around 24% and is conservative, with Full Year FCF coverage expected to provide sufficient capacity. Progress rates are Revenue 97.2%, Operating Income 94.4%, Net Income 101.4%, with Net Income already exceeding the year-end plan, indicating the full-year plan is within a realistic range.
Dividends are annual ¥175 (interim ¥75, year-end ¥100), with Payout Ratio 45.7% (based on EPS 382.83 yen). Total dividend payments ¥393.4B represent 33.5% of Free Cash Flow ¥1175.0B, and FCF coverage 2.99x indicates high sustainability. Share buybacks were minimal at ¥6 million, leaving Total Return Ratio roughly equal to Payout Ratio at 45.7%. The large increase in dividend from prior year ¥65 to current ¥175 (+¥110) largely reflects the prior year’s special case of paying only a year-end dividend (no interim), so the substantive increase is limited. The company plan’s dividend of ¥90 (EPS 376.06 yen assumption) implies a payout ratio around 24% and is conservative. While detailed dividend policy is not disclosed, stable dividends and gradual expansion of returns with profit growth are inferred. With cash and cash equivalents ¥1414.6B and OCF ¥1642.2B, dividend sustainability is assessed as high.
Cost ratio increases and inventory turnover risk: Gross margin deterioration to 29.7% from 31.3% (▲1.6pt) and cost of sales ratio rising to 70.3%. Inventories ¥5412.2B represent 38.5% of Revenue, with inventory days at 200 days, a heavy level. If product mix fluctuations and sticky component/logistics costs persist, margin compression and inventory write-down risk may materialize. Contract liabilities ¥139.2B down from ¥146.5B suggest a reduction in advance receipts, indicating changes in order/shipment balance.
Working capital cash tie-up and prolonged collections: Trade receivables ¥2964.2B increased ¥261.7B from ¥2702.6B, with receivables days 77 and a tendency toward lengthening. Together with inventory increases ¥518.2B, working capital absorbed over ¥336B from OCF subtotal ¥1978.7B. If Cash Conversion Cycle improvement is delayed, increased working capital needs and reduced financial flexibility pose risks.
Business concentration and segment profitability vulnerability: Construction Machinery accounts for 90.3% of Revenue and 89.7% of Operating Income, indicating high portfolio concentration. Its Operating margin of 9.4% declined 1.0pt from 10.4% and was impacted by restructuring losses ¥72.5B. Continued adjustment in Mining Machinery (¥2720.3B, ▲4.8%) could have substantial impact on consolidated results. Although the Specialized segment grew +7.5%, its Operating margin fell to 7.9% (prior year 11.2%), and progress in strengthening the business base remains a risk factor.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 8.6% | 6.3% (3.2%–9.9%) | +2.3pt |
| Operating Margin | 9.5% | 7.8% (4.6%–12.3%) | +1.7pt |
| Net Margin | 5.9% | 5.2% (2.3%–8.2%) | +0.7pt |
Profitability metrics exceed industry medians across all items, with ROE and Operating Margin in the upper range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.5% | 3.7% (-0.4%–9.3%) | -1.2pt |
Revenue growth trails the median by 1.2pt, indicating a somewhat slower growth pace relative to peers.
※ Source: Company compilation
Progress in cost ratio improvement and margin recovery: The 1.6pt deterioration in gross margin to 29.7% (31.3% prior) was the main cause of profit decline; correcting cost ratios via price revisions and product mix improvements is essential to achieve the full-year plan. Compressing inventory days from 200 and optimizing inventories of ¥5412.2B are keys to improving OCF and ROE. The one-time charges of ¥127.8B for business restructuring and an increase in after-sales ratio (Specialized segment +7.5% growth) should be monitored as potential drivers to restore Operating Margin into the 10% range.
Strength of cash generation and financial soundness: OCF ¥1642.2B is 1.99x Net Income, and Free Cash Flow ¥1175.0B covers dividends 2.99x, demonstrating strong cash generation. Equity Ratio 48.5%, Debt/EBITDA 2.36x, and Interest Coverage 8.3x place financial resilience in investment-grade territory, and dividend sustainability (Payout Ratio 45.7%, FCF coverage 3.0x) is sufficient. The boost to comprehensive income from foreign currency translation +¥549.7B is temporary, but financial stability suggests room for medium-term investment and shareholder returns.
Balancing working capital management and growth strategy: Trade receivables +¥261.7B and inventories +¥100.4B increased working capital, and improving the Cash Conversion Cycle of 191 days is a near-term focus. Given the 90.3% concentration in Construction Machinery and the adjustment in Mining Machinery (▲4.8%), growth in the Specialized segment (+7.5%) and strengthening after-sales are expected to provide structural diversification and margin improvement. With CapEx/Depreciation at 0.53x, choices between M&A, R&D investment, and maintaining competitive positioning will be a key evaluative factor.
This report was automatically generated by AI analyzing XBRL financial statement data and constitutes a financial analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary before making investment decisions.
---End of Report---