| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥275.4B | ¥278.5B | -1.1% |
| Operating Income | ¥15.9B | ¥15.8B | +0.3% |
| Ordinary Income | ¥15.8B | ¥14.9B | +5.8% |
| Net Income | ¥9.5B | ¥8.0B | +18.2% |
| ROE | 3.0% | 2.7% | - |
For the fiscal year ended March 2026, Revenue was ¥275.4B (YoY -¥3.1B -1.1%), Operating Income was ¥15.9B (YoY +¥0.1B +0.3%), Ordinary Income was ¥15.8B (YoY +¥0.9B +5.8%), and Net Income attributable to owners of the parent was ¥17.6B (YoY +¥3.3B +22.8%). Despite a slight decline in sales, improvement in gross margin (27.9%, up +0.3pt from 27.6% a year ago) supported a modest increase in Operating Income. The significant increase in bottom-line profit was driven by Special Gains of ¥9.5B, primarily a ¥9.4B gain on sale of available-for-sale securities. By region, Indonesia was the largest contributor with Operating Income of ¥7.4B (margin 12.6%), followed by the U.S. at ¥6.7B (9.1%); Japan generated ¥1.9B (1.0%) with low profitability, and China swung to an operating loss of ¥0.5B. Operating Cash Flow (OCF) improved to ¥8.8B (YoY +120.1%) but fell well short of Net Income ¥17.6B due to increases in accounts receivable and decreases in accounts payable, leaving cash conversion challenges. Dividends were interim ¥45 and year-end forecast ¥62, resulting in a payout ratio of 61.1%. The plan for the year ending March 2027 projects Revenue ¥305.0B (+10.7%), Operating Income ¥16.5B (+3.9%), Ordinary Income ¥16.5B (+4.3%); top-line recovery is expected while profit improvement is projected in a cautious range.
Revenue was ¥275.4B (YoY -1.1%), a slight decrease. By region, Japan remained resilient at ¥199.7B (+0.6%), while the U.S. was ¥72.7B (-4.1%), Indonesia ¥58.9B (-4.2%), and China ¥9.8B (-31.6%), with the three overseas regions in an adjustment phase. China contracted significantly by ¥4.5B YoY, reflecting demand deterioration in a core market. Consolidated external customer sales were slightly down, while intersegment internal transactions shrank from ¥71.6B to ¥65.8B, indicating group-level adjustments and efficiency gains. Gross margin improved to 27.9% (up +0.3pt from 27.6%), aided by product mix improvement and cost reduction effects.
Profitability: Operating Income was ¥15.9B (YoY +0.3%) — a slight increase. Selling, general and administrative expenses were ¥61.0B (SG&A ratio 22.1%), up from ¥60.9B (21.9%) a year ago (+0.2pt), but absorbed by the gross margin improvement. Operating margin improved to 5.8% (up +0.1pt from 5.7%). Non-operating items included dividend income ¥2.5B supporting results, while interest expense ¥2.2B (up ¥0.2B from ¥2.0B) and foreign exchange losses ¥0.6B (same as prior year) were burdens. Non-operating balance was a loss of ¥0.1B (improved from a loss of ¥0.9B). Ordinary Income rose to ¥15.8B (YoY +5.8%), outpacing Operating Income due to improved non-operating balance. Extraordinary items included Special Gains of ¥9.5B centered on a ¥9.4B gain on sale of available-for-sale securities, expanding Profit Before Tax to ¥25.3B (from ¥18.6B, +35.8%). After corporate taxes of ¥7.6B (effective tax rate 30.0%), Net Income attributable to owners of the parent was ¥17.6B (from ¥14.4B, +22.8%). Net profit margin improved to 6.4% (up +1.2pt from 5.2%), though much of the improvement reflects Special Gains; recurring earning power is closer to the Operating margin of 5.8%. In conclusion, the company achieved a higher final profit thanks to Special Gains despite slight revenue decline and marginal Operating Income growth.
Japan: Revenue ¥199.7B (YoY +0.6%), Operating Income ¥1.9B (YoY +14.7%), margin 1.0%. Domestic sales remained stable, but fixed-cost burden keeps profitability lowest. U.S.: Revenue ¥72.7B (-4.1%), Operating Income ¥6.7B (-19.5%), margin 9.1%. Profit declined with sales, but profitability remains near double digits. Indonesia: Revenue ¥58.9B (-4.2%), Operating Income ¥7.4B (+33.6%), margin 12.6% — the highest among segments. Although sales decreased, profitability improved significantly, making it the largest profit contributor. China: Revenue ¥9.8B (-31.6%), Operating Loss ¥0.5B (previously ¥0.7B profit), margin -4.7%. Market contraction and intensified price competition led to a swing to loss, revealing structural issues. Of consolidated Operating Income ¥15.9B, Indonesia contributed ¥7.4B (46.5%), U.S. ¥6.7B (42.1%), and Japan ¥1.9B (11.9%), indicating increasing reliance on high-profit overseas businesses.
Profitability: Operating margin 5.8% (up +0.1pt from 5.7%), Net margin 6.4% (up +1.2pt from 5.2%, though including Special Gains), ROE 3.0% (down from 4.9%). The ROE decline is mainly due to an increase in shareholders’ equity (¥316.8B, up +5.1% from ¥301.3B) while Net Income on a parent-company basis was ¥9.5B (prior year ¥8.0B), which lagged the growth in equity. Gross margin 27.9% (up +0.3pt from 27.6%) reflects product mix improvements.
Cash Quality: OCF ¥8.8B vs. Net Income ¥17.6B gives CF/Net Income ratio of 0.50x, and OCF/EBITDA ratio 0.38x (EBITDA ¥23.2B = Operating Income ¥15.9B + Depreciation ¥7.3B), indicating weak cash conversion efficiency. Working capital increases (Accounts receivable +¥15.2B, Accounts payable -¥9.8B) were primary drivers, while inventory decreased by ¥8.2B freeing up some cash.
Investment Efficiency: Total asset turnover 0.63x (down from 0.65x), ROIC estimated at 3.7% (NOPAT approximated as Operating Income ¥15.9B × 0.7 ÷ Invested capital ≈ ¥298B), showing low capital efficiency.
Financial Soundness: Equity ratio 72.1% (up +1.6pt from 70.5%), current ratio 275.9%, quick ratio 227.8% — the balance sheet is robust. Interest-bearing debt ¥46.9B (short-term borrowings ¥46.1B + long-term borrowings ¥0.8B) yields Debt/EBITDA 2.02x and interest coverage 10.4x (EBITDA ¥23.2B ÷ interest expense ¥2.2B), maintaining healthy levels. However, 98.3% of interest-bearing debt is short-term, warranting attention to refinancing risk.
OCF improved to ¥8.8B (from ¥4.0B, +120.1%) but remains substantially below Profit Before Tax ¥25.3B and Net Income ¥17.6B, indicating cash conversion issues. Operating cash flow before working capital changes was ¥13.4B; working capital movements included accounts receivable increase -¥15.2B (indicative of extended DSO) and accounts payable decrease -¥9.8B, which were cash outflows, partially offset by inventory decrease +¥8.2B. Corporate tax payments ¥4.8B and interest payments ¥2.1B were also burdens. Investing cash flow was -¥5.6B, mostly capital expenditure -¥5.6B. CapEx was 0.76x depreciation (Depreciation ¥7.3B), a modest level slightly below maintenance replacement, with limited growth investment. Intangible investment was small at ¥0.6B. Free Cash Flow (OCF + Investing CF) was ¥3.2B, far below dividend payments ¥9.0B (actual outflow shown in financing CF -¥9.0B). Financing CF was -¥15.2B, driven by dividend payments -¥9.0B, net decrease in short-term borrowings -¥3.7B, and long-term borrowings repayment -¥1.4B. Cash and cash equivalents decreased from ¥75.9B at the beginning of the period to ¥64.9B at year-end, a decline of ¥11.1B; however, liquidity remains adequate with cash/short-term liabilities ratio of 1.4x.
Recurring earnings consist of Operating Income ¥15.9B and non-operating income ¥3.1B (dividend income ¥2.5B, interest income ¥0.1B, other ¥0.5B), less non-operating expenses ¥3.2B (interest expense ¥2.2B, FX losses ¥0.6B, other ¥0.2B), resulting in Ordinary Income ¥15.8B that reflects core earning power. One-off factors include Special Gains ¥9.5B (mostly ¥9.4B gain on sale of available-for-sale securities), meaning Special Gains accounted for 37.5% of Profit Before Tax ¥25.3B, and the large increase in Net Income largely stems from these one-time gains. Special Losses were minimal at ¥0.0B. The divergence between Ordinary Income ¥15.8B and Net Income ¥17.6B is +11.4%, indicating Special Gains lifted Net Income, and there is a possibility of reversal next period. Dividend income ¥2.5B from available-for-sale securities holdings totaling ¥6,117B (prior year ¥5,662B) is a stable income source. The fact that OCF lags Net Income substantially (OCF ¥8.8B ÷ Net Income ¥17.6B = 0.50x) suggests increases in receivables and changes in payables are delaying cash realization, leaving some quality-of-earnings concerns. Comprehensive income was ¥23.6B, above Net Income ¥17.6B, with Other Comprehensive Income ¥6.0B (mainly valuation difference on securities ¥4.2B and foreign currency translation adjustments ¥1.8B) contributing positively and indicating improving financial position trends.
For the fiscal year ending March 2027, the full-year forecast is Revenue ¥305.0B (YoY +10.7%), Operating Income ¥16.5B (YoY +3.9%), Ordinary Income ¥16.5B (YoY +4.3%), Net Income attributable to owners of the parent ¥11.0B (YoY -37.6%, due to absence of Special Gains), EPS ¥128.48, and annual dividend ¥45.00. Compared to first-half results (current period), the second half is projected to add ¥29.6B in Revenue and ¥0.6B in Operating Income. Revenue progress ratio is 90.3% (¥275.4B ÷ ¥305.0B) and Operating Income progress ratio is 96.4% (¥15.9B ÷ ¥16.5B), both close to achievement. Net Income for the first half was ¥17.6B, already above the full-year plan of ¥11.0B, reflecting the Special Gains of ¥9.5B recorded in the first half. The company’s plan assumes the reversal of Special Gains in the second half and steady growth on an ordinary basis. The discrepancy of Sales +10.7% vs. Operating Income +3.9% likely reflects cautious assumptions about cost pressures and price competition. Expansion of high-margin Indonesia and U.S. businesses and profitability improvement in Japan and China are key to achieving the plan.
An interim dividend of ¥45.00 has been paid, with a year-end forecast of ¥62.00, totaling ¥107.00 for the year (prior year, adjusted for share split, was interim ¥42.50 + year-end ¥62.00 = ¥104.50 equivalent). The payout ratio is 61.1% (annual dividend ¥107 ÷ EPS ¥205.93 on a period-average shares basis), a high level, but on the full-year forecast basis the payout ratio falls to 35.0% (¥45.00 ÷ forecast EPS ¥128.48). No share buybacks were executed (financing CF shows ¥0.0B), so returns are dividend-focused. Therefore, total return ratio equals payout ratio at 61.1% on a period basis. Free Cash Flow ¥3.2B covers dividend payments ¥9.0B at 0.35x, so dividend sustainability depends on improvements in working capital efficiency and stabilization of earnings (reducing reliance on Special Gains). However, cash & deposits ¥65.5B, current ratio 275.9%, and equity ratio 72.1% indicate a solid financial base and secure short-term dividend stability. A 2-for-1 share split was implemented in October 2024, signaling a commitment to maintain shareholder return stance.
Weakness in OCF generation: With OCF ¥8.8B vs. Net Income ¥17.6B (CF/Net Income 0.50x, OCF/EBITDA 0.38x), cash conversion is weak. Accounts receivable increase ¥15.2B and accounts payable decrease ¥9.8B caused working capital outflow of ¥24.8B, lengthening the cash conversion cycle (CCC). Inventory days (DIO) 202 days and receivables days (DSO) 85 days indicate slow cash turnover, constraining cash generation potential during growth phases. Free Cash Flow ¥3.2B is far below dividend payments ¥9.0B, making dividend sustainability contingent on improvement in working capital efficiency.
Regional profitability disparities and China business turning loss-making: While Indonesia (margin 12.6%) and U.S. (9.1%) maintain high profitability, Japan (1.0%) bears heavy fixed costs and low profitability, and China turned to an operating loss of ¥0.5B (from ¥0.7B profit). China’s Revenue ¥9.8B (-31.6%) shows significant contraction, and structural risk of continued losses exists due to market shrinkage and intensified price competition. With 89% of consolidated Operating Income dependent on Indonesia and the U.S., performance fluctuations in these regions directly impact consolidated profits.
Refinancing risk from concentration of short-term borrowings: 98.3% (¥46.1B) of interest-bearing debt ¥46.9B is short-term and maturing within one year. Although Debt/EBITDA 2.02x and interest coverage 10.4x are healthy, rising interest rates or financial market changes could raise refinancing costs and squeeze profits. Cash/short-term liabilities ratio is 1.4x and liquidity is available, but continued OCF shortfalls versus Net Income could increase reliance on short-term borrowings during working capital build-outs and reduce financial flexibility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.8% | 7.8% (4.6%–12.3%) | -2.0pt |
| Net Margin | 3.4% | 5.2% (2.3%–8.2%) | -1.8pt |
Profitability is below the industry median, with room to improve both Operating and Net margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.1% | 3.7% (-0.4%–9.3%) | -4.8pt |
Revenue growth trails the industry median by 4.8pt; top-line recovery is a challenge.
※Source: Company compilation
Focus on shifting away from reliance on Special Gains and improving recurring earnings power. This fiscal year’s large increase in Net Income was driven by a ¥9.4B gain on sale of available-for-sale securities, while Ordinary Income growth was only +5.8%. Operating margin 5.8% is 2.0pt below the industry median of 7.8%, and Japan’s low-margin segment (1.0%) drags down consolidated profitability. In the March 2027 plan, Sales +10.7% vs. Operating Income +3.9% shows slower profit growth, implying substantial scope to improve cost structure. Allocation of resources to high-margin Indonesia and U.S. operations (margins 12.6% and 9.1%) and fixed-cost reduction and price pass-through in Japan are key to margin improvement.
Urgent need to improve working capital efficiency and strengthen cash generation. OCF ¥8.8B is only 0.50x of Net Income ¥17.6B, driven by Accounts receivable increase ¥15.2B and Accounts payable decrease ¥9.8B, causing working capital outflow of ¥24.8B. DIO 202 days and DSO 85 days indicate slow cash turnover; shortening the CCC is critical. Free Cash Flow ¥3.2B is well below dividend payments ¥9.0B, so dividend sustainability depends on OCF improvement. In a sales recovery scenario, working capital demand may rise further; achieving structural improvements in DSO and DIO (target: DSO ≤ 60 days, DIO ≤ 90 days) and shortening collection terms are essential to balance growth and cash generation.
Mid-to-long-term priorities include optimizing the regional portfolio and restructuring the China business. China’s Revenue ¥9.8B (-31.6%) and Operating Loss ¥0.5B highlight structural issues from market contraction and intensified price competition. The fact that 89% of consolidated Operating Income ¥15.9B depends on Indonesia and the U.S. increases sensitivity to performance swings in those regions. Decisions on monetizing or downsizing the China business, improving Japan’s profitability, and sustaining growth in high-margin regions are necessary to raise portfolio ROE and ROIC (current ROE 3.0%, ROIC 3.7%). Achieving the March 2027 Sales plan +10.7% requires regionally differentiated strategies and improved capital efficiency.
This report is an earnings analysis document auto-generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company using public financial statement data. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.
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