| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2958.8B | ¥2791.9B | +6.0% |
| Operating Income / Operating Profit | ¥215.8B | ¥228.5B | -5.6% |
| Ordinary Income | ¥248.0B | ¥253.3B | -2.1% |
| Net Income / Net Profit | ¥209.7B | ¥164.5B | +27.5% |
| ROE | 6.9% | 6.3% | - |
For the fiscal year ending March 2026, Revenue was ¥2,958.8B (YoY +¥166.9B, +6.0%), Operating Income was ¥215.8B (YoY -¥12.7B, -5.6%), Ordinary Income was ¥248.0B (YoY -¥5.3B, -2.1%), and Net Income attributable to owners of the parent was ¥209.7B (YoY +¥45.2B, +27.5%). The result was higher revenue but lower operating profit: revenues were solid across all segments, but increased SG&A led to lower operating-stage profits. Net income was substantially supported by special gains of ¥183.5B, led by a negative goodwill gain of ¥116.4B. Operating margin declined to 7.3% (-0.9pt YoY), while net profit margin rose to 7.1% boosted by non-recurring items.
[Revenue] Revenue amounted to ¥2,958.8B, up +6.0% YoY. By segment, Chain was ¥1,017.96B (+5.7%) accounting for 34.4% of total, Mobility was ¥974.03B (+6.8%) 32.9%, Matehan (Material Handling) was ¥707.70B (+3.6%) 23.9%, and Motion Control was ¥245.39B (+4.9%) 8.3%. By region, Japan increased to ¥1,085.65B (YoY +¥119.0B), the U.S. was ¥781.79B (YoY +¥△7.04B), Europe ¥381.98B (YoY +¥39.73B), and the Indian Ocean & surrounding region ¥264.20B (YoY +¥53.64B), with growth in Japan, Europe, and the Indian Ocean region. Gross profit was ¥872.9B with a gross margin of 29.5%, a slight increase of +0.5pt YoY.
[Profit & Loss] Operating Income was ¥215.8B, down ¥12.7B (-5.6%) YoY. While gross margin was flat, SG&A rose to ¥657.1B from ¥593.3B last year, an increase of ¥63.8B (+10.7%), pushing SG&A ratio up to 22.2% (prior year 21.2%). As a result, operating margin fell 0.9pt to 7.3% from 8.2% last year. By segment, Chain produced Operating Income of ¥153.5B (margin 15.1%), essentially flat; Mobility delivered ¥100.4B (margin 10.3%), up +21.1% driving performance; Matehan posted ¥9.6B (margin 1.4%), down -22.8%; Motion Control had ¥10.0B (margin 4.1%), up +29.4%. Other segments recorded an operating loss of ¥-11.8B. Non-operating items included interest income ¥15.9B, dividend income ¥13.4B, and foreign exchange gains ¥8.2B; after deducting interest expense ¥3.8B, non-operating income yielded a net positive ¥32.2B, bringing Ordinary Income to ¥248.0B (YoY -2.1%). Extraordinary items included special gains of ¥183.5B (negative goodwill gain ¥116.4B related to consolidation of Daido Kogyo, gain on sale of investment securities ¥50.3B, gain on sale of fixed assets ¥6.7B) and special losses of ¥66.1B (impairment losses ¥46.4B including ¥42.1B in Matehan, business structure reform costs ¥12.0B). Pre-tax income was ¥365.4B; after income taxes of ¥67.1B (effective tax rate 18.4%) and non-controlling interests ¥1.2B, Net Income attributable to owners of the parent was ¥209.7B, up +27.5% YoY. However, the increase in net income is largely due to one-off items; underlying recurring profitability shows the higher revenue but lower operating profit profile.
Chain: Revenue ¥1,017.96B (+5.7%), Operating Income ¥153.5B (-1.5%), margin 15.1% — maintained stable margins. Mobility: Revenue ¥974.03B (+6.8%), Operating Income ¥100.4B (+21.1%), margin 10.3% — increased revenue and profit, serving as a primary growth driver. Matehan: Revenue ¥707.70B (+3.6%) but Operating Income ¥9.6B (-22.8%), margin 1.4% — continued low profitability with a large impairment loss of ¥42.1B as business restructuring progresses. Motion Control: Revenue ¥245.39B (+4.9%), Operating Income ¥10.0B (+29.4%), margin 4.1% — small scale but on recovery trend. Other businesses: Revenue ¥50.4B (+42.1%) but operating loss ¥-11.8B persists. Priority for raising companywide margins remains improving Matehan profitability.
[Profitability] Operating margin was 7.3%, down 0.9pt from 8.2% last year; gross margin 29.5% was flat, but SG&A ratio rose to 22.2%, compressing operating-stage profit. Net margin rose to 7.1% from 5.9% (+1.2pt) but largely due to special gains (negative goodwill, etc.), so not indicative of recurring improvement. ROE was 6.9%, slightly up from prior year; DuPont decomposition: net margin 10.0% (including special gains) × total asset turnover 0.644x × financial leverage 1.07x. A decline in total asset turnover (prior year 0.751x) constrained profitability improvement. [Cash Quality] Operating Cash Flow (OCF) was ¥318.9B, 1.52x of Net Income, indicating sound cash backing. Accrual ratio was -0.5% ((OCF - Net Income)/Total Assets) in a healthy range. DSO was 75.2 days, DIO 134.4 days, CCC 164.4 days — all worsening YoY, highlighting working capital expansion. [Investment Efficiency] Total asset turnover declined to 0.644x from 0.751x, driven by increases in accounts receivable +¥141.1B (+30.0%) and inventories +¥77.6B (+32.7%), expanding total assets to ¥4,597.8B. Capital expenditures were ¥157.6B (5.3% of sales), with depreciation ¥148.3B representing 106.3% coverage, indicating continued growth investment. [Financial Soundness] Equity Ratio was 66.1%, down from 70.6% but still high. Interest-bearing debt was ¥296.6B, up ¥169.4B YoY; Debt/EBITDA was 0.81x, Interest Coverage 56.9x, indicating ample financial capacity. Current Ratio was 295.7%, Quick Ratio 257.9%, showing very strong short-term payment ability. Cash and deposits ¥814.5B plus short-term securities ¥14.8B yielded cash & equivalents ¥829.3B, roughly covering current liabilities ¥835.1B.
OCF was ¥318.9B, up ¥97.6B (+49.7%) YoY. Subtotal (before tax adjustments) was ¥363.3B; after income taxes paid -¥69.3B, interest/dividend received +¥29.1B, and interest paid -¥4.2B, final OCF was achieved. Working capital movements: inventories -¥14.6B (inventory increase), accounts receivable +¥4.0B (improved collection), accounts payable -¥9.4B (increased payments), resulting in a small negative contribution overall; the increase in the subtotal was the main driver of OCF growth. Investment Cash Flow was -¥89.8B, centered on property, plant and equipment and intangible assets acquisitions -¥157.6B, with investment securities acquisitions -¥0.3B, proceeds +¥42.5B, and subsidies received +¥8.9B netting out. Financing Cash Flow was -¥202.4B: long-term borrowings +¥64.5B, short-term borrowings -¥0.7B, corporate bond redemption -¥50.0B, long-term borrowings repayment -¥17.9B, dividends paid -¥87.3B (including non-controlling interests), and share buybacks -¥100.0B. Free Cash Flow (OCF + Investment CF) was ¥229.2B, exceeding dividends + buybacks totaling ¥187.3B, securing surplus cash. Cash and cash equivalents increased by +¥61.2B from ¥785.3B, including +¥6.8B from new consolidation and +¥34.5B from FX, ending the period at ¥785.3B. OCF/EBITDA was 0.88x, slightly below the benchmark 0.9x, indicating room to improve working capital efficiency.
Against Ordinary Income of ¥248.0B, special gains of ¥183.5B (negative goodwill ¥116.4B, gain on sale of investment securities ¥50.3B, gain on sale of fixed assets ¥6.7B, etc.) were recognized, significantly lifting Net Income. After special losses of ¥66.1B (impairment losses ¥46.4B, business restructuring costs ¥12.0B, etc.), net special items totaled +¥117.4B, equivalent to about 56% of Net Income ¥209.7B, indicating high reliance on one-off factors. Non-operating income ¥48.8B equals 1.7% of sales and is low; led by interest income ¥15.9B, dividend income ¥13.4B, and FX gains ¥8.2B. Non-operating expenses ¥16.6B are mainly interest expense ¥3.8B, leaving stable non-operating results. Accrual quality is strong with OCF ¥318.9B / Net Income ¥209.7B = 1.52x, indicating solid cash backing for profits. However, recurring earning power is at the level of Operating Income ¥215.8B + non-operating net +¥32.2B = ¥248.0B; with special items dropping out, net income is expected to normalize in the next fiscal year.
Full-year forecast: Revenue ¥3,500.0B (YoY +18.3%), Operating Income ¥255.0B (YoY +18.2%), Ordinary Income ¥260.0B (YoY +4.8%), Net Income attributable to owners of the parent ¥220.0B (note: calculated on a baseline profit basis excluding negative goodwill and similar items), EPS forecast ¥218.17, and annual dividend planned ¥40. Revenue and Operating Income are targeted for double-digit growth, reflecting consolidation effects from Daido Kogyo, expansion of Mobility, and resilient domestic demand. Ordinary Income growth lagging Operating Income is likely due to limited expected expansion in non-operating income. Net Income is conservatively set excluding special items, and the dividend forecast ¥40 reflects a payout ratio of 35.0% (on a baseline profit basis). As the full-year results are finalized, progress rate evaluation is not applicable; next-year guidance targets revenue and profit growth, contingent on realizing integration synergies and restoring core operating profitability.
Annual dividend is ¥80 (interim ¥40, year-end ¥40), with a payout ratio of 37.6% against Net Income ¥209.7B. Total dividends amount to ¥82.2B, sustainable relative to OCF ¥318.9B and FCF ¥229.2B. Share buybacks of ¥100.0B were executed, bringing total shareholder returns to ¥182.2B and Total Return Ratio to 86.9% (net income basis). FCF coverage of total returns is 1.26x (FCF ¥229.2B / total returns ¥182.2B), indicating flexibility to strengthen shareholder returns without compromising financial soundness. The company notes a target payout ratio of 35.0% based on baseline profit excluding negative goodwill, aiming for steady dividends not driven by special items. Next-year dividend forecast is ¥40 (annual), and given a prior stock split (1 share → 3 shares), this is interpreted as intending to maintain effective dividend continuity.
Working capital expansion risk: Accounts receivable +¥141.1B (+30.0%), inventories +¥77.6B (+32.7%) have increased, with DSO 75.2 days, DIO 134.4 days, CCC 164.4 days indicating deteriorating efficiency. Continued delays in inventory normalization or extended receivables collection could increase cash flow volatility and raise the risk of financial strain from additional working capital needs.
Matehan business profitability risk: Matehan’s operating margin is extremely low at 1.4%, with an impairment loss of ¥42.1B recorded. Weak project profitability and heavy fixed-cost burdens mean that without successful restructuring, it will remain a drag on companywide margins.
Risk of net income decline from disappearance of special gains: Of Net Income ¥209.7B, net special items were +¥117.4B (~56%). With these items likely to drop out next year, Net Income is forecasted at ¥220.0B on a conservative basis; if operating profitability does not improve, sustainability of ROE and shareholder returns could be questioned.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.3% | 7.8% (4.6%–12.3%) | -0.5pt |
| Net Margin | 7.1% | 5.2% (2.3%–8.2%) | +1.9pt |
Operating margin is slightly below the industry median 7.8%, attributable to higher SG&A. Net margin exceeds the median due to special gains, but excluding one-offs is likely at or below the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.0% | 3.7% (-0.4%–9.3%) | +2.3pt |
Revenue growth outperformed the industry median 3.7% by 2.3pt and sits in the upper quartile. Mobility expansion and consolidation scope increase contributed, giving relatively strong growth momentum.
※Source: Company compilation
The key near-term focus is shifting away from reliance on special gains toward recovery of core operating profitability. The negative goodwill gain of ¥116.4B is non-recurring; next year, operating-stage profit growth (plan +18.2%) is expected to support net income. Controlling SG&A ratio and improving Matehan profitability are essential to lift operating margins, so progress monitoring is critical.
Significant room exists to improve working capital efficiency; effective measures that shorten DSO, DIO, and CCC could restore OCF/EBITDA to above 0.9x and increase FCF. Inventory rationalization and strengthened receivables management are key to re-accelerating ROE and enhancing cash generation.
Financial soundness remains high (Debt/EBITDA 0.81x, Equity Ratio 66.1%), and with Total Return Ratio 86.9% FCF coverage 1.26x, there is capacity to balance ongoing shareholder returns with growth investment. If next-year revenue and profit targets are met, dividend sustainability and potential for higher dividends would both improve.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from publicly available financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.