| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥194.8B | ¥181.1B | +7.5% |
| Operating Income | ¥28.5B | ¥30.0B | -5.0% |
| Ordinary Income | ¥36.8B | ¥23.4B | +57.0% |
| Net Income | ¥27.1B | ¥13.6B | +99.5% |
| ROE | 2.6% | 1.3% | - |
The company posted mixed results, with higher revenue but lower operating income, while ordinary income and net income increased substantially due to non-operating factors. Revenue rose to ¥194.8B (+7.5% YoY), while operating income declined to ¥28.5B (-5.0%), as higher SG&A expenses offset the benefit of increased revenue. Meanwhile, ordinary income rose substantially to ¥36.8B (+57.0%), and net income to ¥27.1B (+99.5%), primarily due to foreign exchange gains of ¥4.0B and improved interest income and expense. However, attention should be paid to the fact that operating income, which reflects the earning power of the core business, weakened from the previous year.
【Revenue】Revenue was ¥194.8B, representing a +7.5% increase YoY. By region, North America (+38.1%) and Asia (+20.8%) continued to achieve strong growth, while Japan, the core market, remained solid at +12.0%. Europe posted a +12.5% increase in revenue but remained loss-making. Japan accounted for 53.2% of the revenue mix, indicating that regional concentration remains high.
【Profit and Loss】Operating income was ¥28.5B, down -5.0% YoY. The gross margin was 38.4%, broadly flat compared with approximately 38.7% in the previous year, but SG&A expenses increased to ¥46.3B, equivalent to an SG&A ratio of 23.8%, and could not be fully absorbed by the increase in revenue. Meanwhile, ordinary income increased substantially to ¥36.8B (+57.0%), supported by ¥8.8B in non-operating income, comprising foreign exchange gains of ¥4.0B, dividend income of ¥2.7B, and interest income of ¥1.4B. Net income was ¥27.1B (consolidated net income, +99.5%), also benefiting from extraordinary income of ¥1.2B and the convergence of the tax burden within the expected range. Net income attributable to owners of the parent was ¥26.4B (+114.5%). In summary, the results exhibited a structure in which higher revenue accompanied lower operating income, while higher revenue accompanied higher ordinary income and net income. Although the profitability of the core business softened somewhat, non-operating factors boosted final earnings.
By segment, Japan remained the largest source of earnings, with revenue of ¥147.7B (+12.0%), operating income of ¥24.5B (+8.7%), and a profit margin of 16.6%. North America achieved strong revenue growth of ¥48.6B (+38.1%), but operating income was ¥4.3B (+6.2%) and the profit margin was 8.9%, indicating that profitability has not kept pace with growth. Asia achieved both expansion and improved profitability, with revenue of ¥47.7B (+20.8%), operating income of ¥6.1B (+44.9%), and a profit margin of 12.9%. Europe posted revenue of ¥15.8B (+12.5%) and remained loss-making with an operating loss of ¥0.8B, although the size of the loss narrowed from the previous year (+26.7%). A notable feature is the widening profitability gap among regions: Japan and Asia maintain double-digit margins, North America remains in the single digits, and Europe remains loss-making.
【Profitability】The operating margin was 14.6%, down from 16.6% in the same period of the previous year, primarily because SG&A expenses increased by +11.5% YoY, outpacing revenue growth of +7.5%. Meanwhile, the net margin rose significantly from the previous year to approximately 13.9% (net income of ¥27.1B ÷ revenue of ¥194.8B), supported by foreign exchange gains and improved interest income and expense. 【Cash Flow Quality】Extraordinary income of ¥1.2B accounted for only approximately 4.5% of net income, indicating that the impact of one-off factors was limited. 【Investment Efficiency】ROE was 2.6% on a quarterly basis, with the improvement in net margin partially offsetting the low asset turnover. 【Financial Soundness】The equity ratio improved to 76.9% from 73.8% in the previous year. With cash and deposits of ¥360.9B against long-term borrowings of ¥78.3B, the company maintains a net cash position and a solid financial foundation.
As the cash flow statement has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits totaled ¥360.9B, an increase of +¥8.0B from the previous year, indicating that liquidity is being accumulated. Accounts receivable and notes receivable totaled ¥235.3B, a decrease of -¥23.8B from the previous year, suggesting that collections may have progressed. Meanwhile, inventories increased by +¥4.8B to ¥238.5B, indicating continued accumulation. Accounts payable and notes payable decreased by -¥10.5B to ¥63.9B, potentially representing a short-term cash outflow factor due to shorter payment terms. Overall, although operating assets have shifted, the funding base remains stable, supported by an equity ratio of 76.9% and a balance sheet with substantial cash holdings.
Against operating income of ¥28.5B, non-operating income was ¥8.8B, equivalent to 4.5% of revenue. This primarily comprised foreign exchange gains of ¥4.0B, dividend income of ¥2.7B, and interest income of ¥1.4B, incorporating both recurring asset-management income and market-dependent foreign exchange factors. The approximately 26% gap between ordinary income of ¥36.8B and net income of ¥27.1B is largely explained by income taxes of ¥10.9B, representing an effective tax rate of approximately 28.6%, and ¥0.8B attributable to non-controlling interests. Extraordinary income of ¥1.2B accounted for approximately 4.5% of net income, so the impact of one-off factors was limited. However, foreign exchange gains made a considerable contribution to the +57.0% growth in ordinary income. Since repeatability for the full year will depend on market conditions, the quality of this earnings growth relied more heavily on the non-operating environment than on improvement in the core business.
Progress against the full-year forecast was 25.0% for revenue (¥194.8B/¥778.0B), 30.3% for operating income (¥28.5B/¥94.0B), and 35.1% for ordinary income (¥36.8B/¥105.0B), indicating that the profit metrics are progressing ahead of revenue. The full-year forecasts are somewhat conservative, with revenue forecast to increase +0.7% YoY, operating income to decrease -12.3%, and ordinary income to decrease -22.8%. No revisions were made to the earnings or dividend forecasts during the current quarter. The particularly strong progress in ordinary income was attributable to non-operating factors, such as foreign exchange gains recorded in Q1, and repeatability for the full year will depend on future foreign exchange trends.
The company’s full-year dividend forecast is ¥36, implying a payout ratio of approximately 23.4% against forecast EPS of ¥153.84. No revision was made to the dividend forecast during the current quarter. Taking into account the stock split effective October 2025 (1 share → 2 shares), the annual dividend for FY2026 ended March is ¥29. The company holds treasury shares equivalent to approximately 6.0% of issued shares (3,049 thousand shares). Supported by substantial liquidity, including cash and deposits of ¥360.9B, dividend sustainability is considered to be secured.
Increased foreign exchange sensitivity: Foreign exchange gains of ¥4.0B contributed to the increase in ordinary income to ¥36.8B, meaning that a certain portion of the +57.0% growth in ordinary income depends on foreign exchange market conditions. A reversal could become a source of volatility in ordinary income.
Profitability of the European business: The Europe segment remains loss-making, with revenue of ¥15.8B (+12.5%) against an operating loss of ¥0.8B, representing a profit margin of -4.9%. Although the loss narrowed YoY, the delay in achieving profitability remains a structural issue.
Lower operating leverage due to higher costs: SG&A expenses increased by approximately +11.5% from the previous year to ¥46.3B, exceeding the revenue growth rate of +7.5%. Continued structural increases in personnel, logistics, and other costs could lead to a further decline in the operating margin.
The defining feature of the results was the combination of higher revenue but lower operating income, while ordinary income and net income increased substantially due to non-operating factors such as foreign exchange gains. The difference between the earning power of the core business and the growth in final earnings is an important point when assessing the quality of the results.
The operating margin declined by approximately 2pt from the previous year to 14.6%. If the structure in which SG&A expense growth outpaces revenue growth continues, higher revenue may continue to translate less effectively into operating income.
By region, Japan and Asia maintained double-digit margins, while North America achieved a high growth rate but remained at a single-digit margin, and Europe continued to report losses. The impact of changes in the business mix on the overall profit margin will therefore remain an area of focus.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation to undertake any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥2,039 |
| base | ¥2,089 |
| bull | ¥2,132 |
| Calculation Assumption | Value |
|---|---|
| Book value per share (BPS) | ¥2,225 |
| Adjusted forecast EPS | ¥169.2 |
| Cost of equity r | 9.77% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Residual income persistence coefficient ω / Explicit forecast period | 0.62 / 5 years |
| Assumed payout ratio | 23.4% |
| Forecast EPS confidence adjustment | ×1.100 (based on progress ahead of the full-year forecast) |
| implied PBR / PER | 0.94x / 12.3x |
Sensitivity: ¥2,030〜¥2,150 at cost of equity ±1%, and ¥2,084〜¥2,092 at ω±0.1.
Notes:
(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee future share prices)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmark is reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional.
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.