| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥290.9B | ¥305.5B | -4.8% |
| Operating Income / Operating Profit | ¥49.8B | ¥60.5B | -17.7% |
| Ordinary Income | ¥54.4B | ¥63.0B | -13.5% |
| Net Income / Net Profit | ¥43.2B | ¥41.3B | +4.6% |
| ROE | 13.4% | 12.3% | - |
For the fiscal year ended March 2026, Revenue was ¥290.9B (YoY -¥14.5B -4.8%), Operating Income was ¥49.8B (YoY -¥10.7B -17.7%), Ordinary Income was ¥54.4B (YoY -¥8.6B -13.5%), and Net Income was ¥43.2B (YoY +¥1.9B +4.6%). While revenue decline and operating profit contraction progressed, Net Income edged up due to recognition of Special Gains of ¥10.1B including ¥8.7B gain on sale of marketable securities. Operating margin remained high at 17.1% (down 2.8pt from 19.8% a year earlier), but profitability deteriorated due to the fixed-cost nature of SG&A. The increase in Net Income depends on one-off items, and the company’s recurring earning power is in a decelerating phase.
[Revenue] Revenue was ¥290.9B, down ¥14.5B (−4.8%) year-on-year. The Company changed from a three-segment structure ("Pump Business", "Electronic Components Business", and "Others") to a single Pump Business segment this period following suspension of operations at the electronic components subsidiary. By region, Japan was ¥71.8B (prior ¥83.3B) and China ¥79.6B (prior ¥89.4B), showing declines in core markets, while Other Asia & Oceania ¥57.6B (prior ¥47.4B) and the U.S. ¥58.2B (prior ¥65.1B) were relatively resilient. Product/service breakdowns are omitted due to single-segment reporting, but demand weakness and project delays in the core pump business are inferred as primary causes of revenue pressure. Contract liabilities (advance receipts) stood at ¥17.1B, indicating a certain backlog of orders but not yet recognized as short-term revenue.
[Profitability] Gross profit was ¥124.1B (gross margin 42.7%), down from ¥138.9B (45.5%) a year earlier, a decrease of 10.6%. While gross margin improved by 2.8pt, this mainly reflects changes in sales composition due to suspension of the electronic components business; improvement at the standalone pump business appears limited. SG&A was ¥74.2B (SG&A ratio 25.5%), down from ¥78.3B (25.6%) a year earlier (−¥5.2B), but the reduction did not offset the larger decline in gross profit, resulting in Operating Income of ¥49.8B (Operating margin 17.1%), a YoY decline of 17.7%. Non-operating income included interest income ¥1.1B and foreign exchange gains ¥1.8B, totaling ¥4.8B, yielding Ordinary Income of ¥54.4B (Ordinary margin 18.7%), down 13.5% YoY. Special gains comprised ¥8.7B gain on sale of marketable securities and ¥1.4B gain on sale of fixed assets for a total of ¥10.1B; after deducting special losses of ¥0.3B, Pre-tax Income was ¥64.3B (+8.6%). After income taxes of ¥17.6B and non-controlling interests of ¥3.2B, Net Income attributable to owners of the parent was ¥43.2B (+4.6%). Approximately 23% of Net Income is attributable to one-off gains. In conclusion, the company is on a trend of lower revenue and profit, but Special Gains enabled a slight increase in final profit.
From this period the Company reports a single Pump Business segment; the former Electronic Components Business ceased operations effective 2024-12-31, and Others is immaterial, so segmental operating profit disclosure is omitted. In the prior year, Electronic Components revenue was ¥10.0B (3.3% of total) and Others ¥2.5B (0.8%), but the Company is effectively unified under the Pump Business this period. Tangible fixed assets by region: Japan ¥55.3B, China ¥14.2B, Other Asia ¥1.8B, Americas ¥8.0B, Other ¥0.2B; manufacturing bases are concentrated in Japan and China.
[Profitability] Operating margin of 17.1% declined 2.8pt from 19.8% but remains high for a manufacturer. Net profit margin was 14.9% (up 2.4pt from 12.5%), boosted by Special Gains of ¥10.1B, while Ordinary margin was 18.7% (down 1.9pt from 20.6%), indicating declining operating profitability. Gross margin of 42.7% fell from 45.5%, and SG&A ratio of 25.5% was roughly flat, implying weak operating leverage. ROE improved to 13.4% from 11.8%, reflecting temporary Net Income uplift and capital reduction from share buybacks (−¥5.6B). ROA (based on Ordinary Income) was 13.2%, down from 14.9%. [Cash Quality] Operating Cash Flow (OCF) was ¥27.0B, equivalent to 62.5% of Net Income ¥43.2B, indicating issues in cash realization. Main drivers were deterioration in working capital: Inventory increase −¥9.6B, Trade receivables increase −¥0.4B, Trade payables decrease −¥4.3B. OCF/EBITDA (EBITDA = Operating Income ¥49.8B + Depreciation ¥9.5B = ¥59.3B) was 45.5%, low, pointing to fragile earnings quality. Free Cash Flow was positive at ¥35.3B (OCF ¥27.0B + Investing CF ¥8.3B) but supported by one-off proceeds from sale of marketable securities ¥9.9B and fixed assets ¥8.2B, limiting sustainability. [Investment Efficiency] Total asset turnover was 0.72x (unchanged from prior year). Inventory days increased to 183 days (prior 157, +26 days), receivables days 115 (prior 112, +3 days), and CCC extended to 259 days. Capital expenditures ¥7.2B were below depreciation ¥9.5B (ratio 0.76x), indicating mainly maintenance capex with limited capacity expansion. [Financial Soundness] Equity Ratio was 80.2% (up 3.0pt from 77.2%), Current Ratio 433.6%, Quick Ratio 433.6%, reflecting extremely sound liquidity. Interest-bearing debt is effectively zero (only lease liabilities: current ¥1.6B, non-current ¥2.3B), net cash ¥113.3B (cash and deposits ¥117.2B − interest-bearing debt ¥3.9B), i.e., debt-free operations. Interest Coverage is extremely high at OCF ¥27.0B / Interest paid ¥0.1B = 270x, implying minimal financial risk.
OCF was ¥27.0B, down 31.6% from ¥39.4B a year earlier. Starting from Pre-tax Income ¥64.3B and adding back depreciation ¥9.5B etc., subtotal was ¥44.7B, but working capital deterioration significantly consumed cash. Specifically, inventory increase −¥9.6B (finished goods +¥3.2B, raw materials +¥2.9B, work-in-progress +¥4.0B), trade receivables increase −¥0.4B, and trade payables decrease −¥4.3B were primary factors. Income tax payments −¥18.9B also weighed on cash, leaving OCF at ¥27.0B. Investing CF was net inflow of ¥8.3B, comprised of proceeds from sale of marketable securities ¥9.9B, proceeds from sale of fixed assets ¥8.2B, net change in time deposits +¥1.9B (withdrawals ¥18.8B − deposits ¥20.7B) as positive contributions, offset by capital expenditures −¥7.2B and intangible asset acquisitions −¥0.7B. Free Cash Flow was positive at ¥35.3B (OCF ¥27.0B + Investing CF ¥8.3B) but supported by one-off proceeds from securities and asset sales. Financing CF was −¥59.0B, with dividend payments −¥20.6B (to owners of parent −¥18.7B, to non-controlling interests −¥1.8B), share buybacks −¥34.6B, and lease liability repayments −¥2.1B as main outflows. Total shareholder returns (dividends + share buybacks) were approximately ¥55.2B, exceeding Net Income ¥43.2B; Total Return Ratio was about 128%, indicating an aggressive distribution policy funded by cash. Cash and cash equivalents decreased from ¥119.9B at the beginning of the period to ¥98.0B at period-end (−¥22.0B), driven by net CF total −¥23.3B and foreign exchange translation +¥1.7B. Going forward, normalization of working capital and recovery of OCF will determine sustainability of capital allocation.
Of Net Income ¥43.2B this period, Special Gains ¥10.1B (gain on sale of marketable securities ¥8.7B, gain on sale of fixed assets ¥1.4B) account for about 23%, indicating high dependence on one-off items. On an Ordinary Income base of ¥54.4B the company recorded a YoY decline of −13.5%, showing weakening core profitability. Non-operating income ¥4.8B includes interest income ¥1.1B, dividend income ¥0.2B, and foreign exchange gains ¥1.8B, with FX-related items comprising about 38% of non-operating income. Comprehensive income was ¥44.1B, ¥0.9B higher than Net Income ¥43.2B; other comprehensive income totaled −¥2.5B (foreign currency translation adjustments +¥1.1B, valuation difference on securities −¥4.5B, retirement benefit adjustments +¥0.9B). Carrying value of marketable securities declined from ¥11.5B in the prior period to ¥3.7B, reducing future volatility from securities valuation. From an accrual perspective, OCF ¥27.0B versus Net Income ¥43.2B yields a gap of −¥16.2B, suggesting non-cash components in profits and deterioration in earnings quality. Main causes are working capital increases (Inventory +¥9.6B, Receivables +¥0.4B) and timing differences in cash receipts from Special Gains. Sustainable earning power should be evaluated using operating-level Operating Income ¥49.8B as the baseline.
The full-year company plan forecasts Revenue ¥310.1B (YoY +6.6%), Operating Income ¥50.2B (YoY +0.7%), Ordinary Income ¥52.3B (YoY −3.9%), Net Income ¥37.5B (YoY −13.4%), EPS ¥244.53, and Dividend ¥66. Operating margin is assumed to decline to 16.2%, with Ordinary Income reduction reflecting normalization of non-operating items (decline in prior-period FX gains and interest income) and Net Income decline incorporating the disappearance of Special Gains. Revenue recovery assumes inventory and contract liabilities are digested and project progress resumes; the plan is conservative with only modest increase in Operating Income. Compared with this period’s results, guidance implies Operating Income up ¥0.4B (+0.7%) but Revenue up ¥19.2B (+6.6%), suggesting limited margin expansion and expectations of persistent SG&A fixed cost nature and pressure on gross margins. Forecasted Dividend ¥66 is about half of this period’s actual ¥133 and appears to represent an interim-dividend-equivalent. Progress rates are high: Revenue 94% (this period ¥290.9B / full-year plan ¥310.1B), Operating Income 99% (¥49.8B / ¥50.2B), so full-year plan attainment is in sight. Upside will depend on normalization of inventory/receivables and improvement in order environment.
This period’s total dividend was ¥133 (interim ¥55, year-end ¥78), with Payout Ratio 50.2% (total dividends ¥21.7B against Net Income attributable to owners of parent ¥43.2B), a sound level. Prior-year dividend was ¥41, so the Company implemented a large increase of +¥92 (+224%) this period. Evaluated against Free Cash Flow ¥35.3B, dividend payments ¥20.6B represent 58% of FCF, indicating some headroom, but FCF includes one-off proceeds from sale of marketable securities ¥9.9B and fixed assets ¥8.2B; on an OCF ¥27.0B basis dividend coverage is only 1.3x, limited. Additionally, share buybacks ¥34.6B were executed, and total returns (dividends + buybacks) of approximately ¥55.2B exceeded Net Income ¥43.2B by ¥12B. Total Return Ratio is about 128%, an aggressive posture funded by depletion of cash reserves. The company’s full-year forecast dividend ¥66 (equivalent to interim) makes continuity of such a high payout unclear. Future capacity to maintain or increase dividends depends on recovery of OCF and normalization of working capital. Share buybacks have been executed flexibly to improve capital efficiency but balancing this with cash generation remains a challenge.
Working Capital Management Risk: Inventory totaled ¥83.7B (finished goods ¥31.8B, raw materials ¥24.5B, work-in-progress ¥27.4B), up 11.0% from ¥75.4B a year earlier, and inventory days worsened to 183 days (prior 157, +26 days). Trade receivables were ¥91.4B (115 days), and trade payables ¥17.6B (payable days 38), resulting in a CCC of 259 days, extended significantly. Accumulation of inventory increases obsolescence and valuation loss risk, and prolonged receivables collection increases credit risk. OCF ¥27.0B is only 62.5% of Net Income ¥43.2B, indicating substantial delay in cash realization. If demand recovery lags or projects are cancelled, risks of inventory valuation losses and receivable write-offs may materialize.
Profitability Decline Risk: Although Operating margin is high at 17.1%, it fell 2.8pt from 19.8% a year earlier, and the full-year plan foresees further decline to 16.2%. Gross margin of 42.7% is down 2.8pt from 45.5%, driven by product mix shifts and intensifying price competition. SG&A ¥74.2B decreased ¥5.2B from ¥78.3B but did not offset revenue declines, reflecting high fixed-cost characteristics. R&D expense ¥5.5B (1.9% of sales) is restrained, raising concerns about mid- to long-term product competitiveness. If demand deteriorates further or raw material costs rise, Operating margin may decline further, weakening ROE and cash generation.
Sustainability of Capital Returns Risk: This period’s total returns (dividends ¥20.6B + share buybacks ¥34.6B = ~¥55.2B) exceeded Net Income ¥43.2B by ¥12B, with a Total Return Ratio of about 128%, arguably excessive. OCF is only ¥27.0B, so dividend coverage on an OCF basis is 1.3x, and when including buybacks OCF cannot cover total returns. FCF ¥35.3B was supported by one-off proceeds from sale of marketable securities ¥9.9B and fixed assets ¥8.2B, making sustainability into future periods unclear. Cash and cash equivalents have declined to ¥98.0B; continued high-level returns could deplete liquidity, constraining nimble investments and dividend maintenance. Normalization of working capital and recovery of OCF are prerequisites for sustainable capital allocation.
Profitability / Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 17.1% | 7.8% (4.6%–12.3%) | +9.4pt |
| Net Profit Margin | 14.9% | 5.2% (2.3%–8.2%) | +9.7pt |
The Company’s Operating margin 17.1% and Net margin 14.9% exceed the manufacturing median by a wide margin, placing it in the upper ranks of the industry in terms of profitability.
Growth / Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -4.8% | 3.7% (-0.4%–9.3%) | -8.5pt |
Revenue growth was −4.8%, below the industry median of +3.7%, placing the Company in the lower ranks for growth. Demand slowdown and project delays were key factors.
※ Source: Company compilation
Breaking free from dependence on one-off gains is key to valuation: Of Net Income ¥43.2B, Special Gains ¥10.1B (~23%) contributed, and on an Ordinary Income base of ¥54.4B the Company posted YoY −13.5% decline. The ¥8.7B gain on sale of marketable securities resulted from divestment of held shares and has low reproducibility. The full-year plan assumes Operating Income ¥50.2B (+0.7%) and a decline in Operating margin to 16.2%. Sustainable profitability should be assessed at the operating level, with focus on whether Operating margin stabilizes and recovers.
Normalization of working capital is the top priority: Inventory rose to ¥83.7B (+11.0% YoY) and inventory days worsened to 183 days (+26 days). Receivables days 115 and CCC 259 indicate prolonged cash conversion, and OCF ¥27.0B is only 62.5% of Net Income ¥43.2B. Cash realization is significantly delayed; inventory reduction and accelerated receivables collection are urgent. The full-year plan’s Revenue +6.6% assumes digestion of inventory and contract liabilities (¥17.1B), so working capital normalization will determine plan attainment and OCF recovery.
Sustainability of capital returns depends on OCF recovery: With dividends ¥133 and share buybacks ¥34.6B, total returns were ~¥55.2B, exceeding Net Income by ¥12B, an aggressive stance. FCF ¥35.3B was supported by one-off proceeds from sale of securities and fixed assets, and OCF ¥27.0B does not cover total returns. Cash and cash equivalents declined to ¥98.0B; future continuation of dividends and buybacks requires OCF recovery. Improvements in working capital efficiency and cash generation are decisive for sustainability of shareholder returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. 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 should be made at your own responsibility; consult a professional advisor if necessary.