| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥559.1B | ¥544.1B | +2.8% |
| Operating Income | ¥55.6B | ¥59.0B | -5.8% |
| Ordinary Income | ¥77.2B | ¥71.4B | +8.1% |
| Net Income | ¥51.2B | ¥54.4B | -5.8% |
| ROE | 8.9% | 10.2% | - |
For the fiscal year ended March 2026, Revenue was ¥559.1B (YoY +¥15.0B +2.8%), achieving top-line growth, while Operating Income decreased to ¥55.6B (YoY -¥3.4B -5.8%). Ordinary Income was ¥77.2B (YoY +¥5.8B +8.1%) and Net Income was ¥51.2B (YoY -¥3.2B -5.8%). On the operating side, SG&A ratio rose to 36.8% (prior 35.7%) (+1.1pt), compressing the operating margin to 10.0% (prior 10.8%) (-0.8pt). However, non-operating items—equity-method investment income of ¥10.6B (prior ¥9.4B) and foreign exchange gains of ¥4.7B (prior ¥0.2B)—contributed, securing an increase in Ordinary Income. Net Income could have turned positive YoY given higher Ordinary Income, but a decline in prior-year special gains led to a slight YoY decrease. Net income attributable to parent company shareholders was ¥53.6B (prior ¥42.8B +25.2%), a substantial increase, and EPS rose to ¥136.04 (prior ¥108.21 +25.7%). By region, Japan led with Revenue ¥271.8B (+9.4%) and Operating Income ¥29.1B (+11.2%), Europe improved margins, the Americas maintained high margins, while China deteriorated significantly with Revenue ¥122.7B (-2.3%) and Operating Income ¥5.2B (-41.4%).
[Revenue] Revenue was ¥559.1B (prior ¥544.1B), an increase of ¥15.0B (+2.8%). By region, Japan ¥271.8B (+9.4%) was the main driver, supported by steady demand and price revisions for compressors, vacuum equipment, and painting equipment for domestic manufacturers. Europe was ¥101.8B (+0.4%) largely flat, the Americas ¥72.7B (-2.3%) slightly down, China ¥122.7B (-2.3%) impacted by demand slowdown. Other regions (Taiwan, India, etc.) were ¥85.5B (+4.3%) and remained firm. Segment revenue composition: Japan 48.6%, China 22.0%, Europe 18.2%, Americas 13.0%, Others 15.3% (includes inter-segment transactions, consolidated totals), with Japan the primary driver. Growth was moderate, but domestic price pass-through and improved product mix offset weak volume growth, supporting the top line.
[Profitability] Cost of sales was ¥297.7B (prior ¥290.9B +2.3%), improving gross margin to 46.8% (prior 46.5%) +0.3pt. SG&A increased substantially to ¥205.8B (prior ¥194.2B +6.0%), raising SG&A ratio to 36.8% (prior 35.7%) +1.1pt. SG&A increases were driven by executive compensation ¥70.1B (prior ¥66.8B), provision for doubtful accounts ¥4.1B (prior ¥1.6B), and fees ¥23.8B (prior ¥21.4B), with higher administrative costs and risk provisions pressuring Operating Income. Operating Income was ¥55.6B (prior ¥59.0B -5.8%), and operating margin compressed to 10.0% (prior 10.8%) -0.8pt. Non-operating income totaled ¥22.5B, led by equity-method investment income ¥10.6B (prior ¥9.4B), foreign exchange gains ¥4.7B (prior ¥0.2B), and interest income ¥2.4B (prior ¥2.2B), far exceeding non-operating expenses ¥0.9B (prior ¥1.8B). As a result, Ordinary Income rose to ¥77.2B (prior ¥71.4B +8.1%). Extraordinary items contributed net special profits of ¥7.6B (special gains ¥8.1B consisting of fixed asset sale gains ¥7.8B and securities sale gains ¥5.2B; special losses ¥0.5B consisting of fixed asset retirement loss ¥0.4B and valuation loss on securities ¥3.0B), exceeding prior-year net special items of ¥1.3B (special gains ¥5.4B - special losses ¥4.0B). Profit before tax was ¥84.7B (prior ¥72.7B +16.5%); after corporate taxes ¥21.6B (prior ¥19.0B) and non-controlling interests ¥9.6B (prior ¥10.9B), Net income attributable to parent company shareholders was ¥53.6B (prior ¥42.8B +25.2%). Ultimately, net margin on Revenue improved to 9.6% (parent company basis, prior 7.9%) +1.7pt, driven mainly by increases in non-operating and special gains; core operating profitability slightly deteriorated due to higher SG&A ratio. Segment Operating Income: Japan ¥29.1B (+11.2%) led, Europe ¥10.2B (+22.6%), Americas ¥8.6B (-3.9%) remained solid, while China ¥5.2B (-41.4%) was the primary cause of consolidated operating decline. In conclusion, the company delivered revenue growth while Operating Income fell due to higher SG&A and weaker China profitability, but Ordinary and Net Income increased due to non-operating and one-off factors—resulting in mixed results: revenue up, operating down; ordinary and net up.
Japan segment: Revenue ¥271.8B (prior ¥248.5B +9.4%), Operating Income ¥29.1B (prior ¥26.2B +11.2%), operating margin improved to 10.7% (prior 10.5%) +0.2pt. CapEx demand from domestic manufacturers and price revisions contributed, maintaining stable growth as the core business, accounting for 52.3% of consolidated Operating Income. Europe: Revenue ¥101.8B (prior ¥101.4B +0.4%), Operating Income ¥10.2B (prior ¥8.3B +22.6%), operating margin improved materially to 10.0% (prior 8.2%) +1.8pt. Despite flat revenue, cost efficiencies and improved product mix enhanced profitability. Americas: Revenue ¥72.7B (prior ¥74.5B -2.3%), Operating Income ¥8.6B (prior ¥9.0B -3.9%), operating margin slightly contracted to 11.9% (prior 12.1%) but remains the highest among segments. China: Revenue ¥122.7B (prior ¥125.7B -2.3%), Operating Income ¥5.2B (prior ¥8.8B -41.4%), operating margin plunged to 4.2% (prior 7.0%) -2.8pt. Demand slowdown and intensified price competition in China drove the significant deterioration, the main reason for consolidated operating decline. Others (Taiwan, India, etc.): Revenue ¥85.5B (prior ¥81.9B +4.3%), Operating Income ¥14.8B (prior ¥15.5B -4.3%) roughly flat, but operating margin fell to 14.4% (prior 18.9%). After central costs (head office SG&A, etc.) of ¥14.2B and intercompany eliminations, consolidated Operating Income was ¥55.6B.
[Profitability] Operating margin 10.0% (prior 10.8%), Net margin 9.6% (parent company basis, prior 7.9%). Gross margin improved to 46.8% (prior 46.5%) +0.3pt, but SG&A ratio rose to 36.8% (prior 35.7%) +1.1pt, compressing operating margin by -0.8pt. Net margin improvement was driven by higher non-operating and special gains; core operating profitability is flat to slightly declining. ROE was 8.9% (Net Income ¥51.2B ÷ Equity ¥575.4B), down -0.5pt from prior 9.4% (Net Income ¥54.4B ÷ Equity ¥535.6B). ROE decomposition: Net margin 9.2% (51.2 ÷ 559.1) × Total Asset Turnover 0.75x (559.1 ÷ 746.4) × Financial Leverage 1.30x (746.4 ÷ 575.4) = 8.9%; declines in Asset Turnover (prior 0.79x → 0.75x) and flat Net margin drove ROE down. ROA was 6.9% (Net Income ¥51.2B ÷ Total Assets ¥746.4B), down -1.0pt from prior 7.9% (¥54.4B ÷ ¥692.0B). [Cash Quality] Operating Cash Flow (OCF) was ¥81.5B, 1.59x Net Income ¥51.2B; OCF ÷ (Operating Income + Depreciation) = 81.5 ÷ (55.6 + 23.0) = 1.04x, maintaining good cash conversion. Free Cash Flow was ¥38.2B (OCF ¥81.5B - Investing CF ¥43.3B), exceeding total dividends and buybacks of about ¥34.5B (dividends ¥26.6B + buybacks ¥7.7B), yielding FCF coverage 1.11x and enabling shareholder returns from internal funds. Accrual ratio (Net Income - OCF) ÷ Total Assets = (51.2 - 81.5) ÷ 746.4 = -4.1%, negative, indicating strong cash backing of profits. Working capital increased: accounts receivable ¥119.1B (prior ¥104.4B +14.1%), inventories ¥71.7B (prior ¥69.3B +3.5%), resulting in DSO 78 days (119.1 ÷ 559.1 × 365), DIO 88 days (71.7 ÷ 297.7 × 365), DPO 75 days (61.5 ÷ 297.7 × 365), and CCC 91 days—extended YoY, indicating deterioration in working capital efficiency. [Investment Efficiency] Capital expenditure ¥32.0B was 1.39x depreciation ¥23.0B, indicating ongoing capacity expansion and renewal. R&D spending ¥12.0B rose to 2.2% of Revenue (prior ¥1.0B 1.9%) +0.3pt, but remains at a relatively low level. Investment securities ¥51.8B (prior ¥31.7B +63.3%) increased significantly due to surplus asset management and market appreciation, raising risk of P/L and OCI volatility from unrealized gains and sale gains. [Financial Soundness] Equity Ratio 77.1% (Net Assets ¥575.4B ÷ Total Assets ¥746.4B), interest-bearing debt ¥18.8B (short-term borrowings ¥9.0B + long-term borrowings ¥1.4B + lease liabilities ¥8.4B), Debt/EBITDA 0.24x ((55.6 + 23.0) ÷ 18.8), Debt/Equity 3.3%, cash ¥207.5B (11.0x interest-bearing debt), indicating an extremely healthy balance sheet. Current ratio 347% (current assets ¥475.1B ÷ current liabilities ¥136.8B), quick ratio 295%, showing ample liquidity. Short-term liability ratio is relatively high at current liabilities ¥136.8B ÷ total liabilities ¥171.0B = 80%, but cash is 23x short-term borrowings ¥9.0B, making refinancing risk practically negligible. Interest coverage ratio is OCF ¥81.5B ÷ interest paid ¥0.7B = 116x, indicating no issue servicing interest.
OCF was ¥81.5B (prior ¥97.5B -16.4%). Starting from profit before tax ¥84.7B, add depreciation ¥23.0B and goodwill amortization ¥1.9B, subtract equity-method investment income ¥10.6B and foreign exchange gains ¥4.7B, adjust for special items, and reflect working capital changes: accounts receivable increase -¥10.3B, inventories increase -¥3.0B, accounts payable increase +¥3.9B, net working capital outflow -¥9.4B. Subtract taxes paid -¥15.2B from OCF subtotal ¥94.1B to arrive at ¥81.5B. YoY decline was due to increased taxes and working capital offsetting profit increases. Investing CF was -¥43.3B (prior -¥32.6B): CapEx -¥32.0B, intangible asset acquisitions -¥2.6B, investment securities acquisitions -¥21.3B, partly offset by investment securities sales ¥10.1B, net change in time deposits ¥2.0B, fixed asset sales ¥10.6B, etc. Free Cash Flow was ¥38.2B (prior ¥64.9B -41.1%), a substantial decline but still positive. Financing CF was -¥38.6B (prior -¥39.3B): dividend payments -¥26.6B (parent shareholders -¥17.8B, non-controlling interests -¥8.7B), share buybacks -¥7.7B, lease liability repayments -¥3.6B; borrowings net effect was long-term borrowings +¥0.9B, short-term borrowings -¥2.1B repaid, long-term borrowings repaid -¥0.7B, net roughly flat. Ending cash balance ¥207.5B (prior ¥213.4B) decreased ¥5.9B, but from beginning cash ¥180.9B, interim net change was +¥4.1B (OCF ¥81.5B + Investing CF -¥43.3B + Financing CF -¥38.6B + FX impact +¥4.5B); considering cash equivalents adjustments, cash remained effectively stable. Cash generation capacity metrics: OCF/Net Income 1.59x, OCF/EBITDA 1.04x; accrual ratio -4.1% demonstrates strong cash backing of profits. Working capital increases (accounts receivable +¥14.1B, inventory +¥2.4B) restrained OCF; compressing inventory and receivables will be key to expanding FCF. Fixed asset sale gains ¥10.6B were one-off; investing CF is likely to revert to normal levels in coming periods.
Earnings quality is generally good but dependence on one-off items is rising. Recurring income centers on Operating Income ¥55.6B plus equity-method investment income ¥10.6B (stable contribution from associates). Of non-operating income ¥22.5B, foreign exchange gains ¥4.7B are highly volatile market-driven items. Special gains ¥8.1B (fixed asset sale gains ¥7.8B, securities sale gains ¥5.2B) account for roughly 15% of Net Income and are proceeds from asset disposals, not indicative of recurring earning power. Prior-year net special items were ¥1.3B vs. current +¥7.6B, so final profits somewhat relied on one-off gains. Of non-operating income, interest income ¥2.4B and dividend income ¥0.5B are stable returns from investment assets, but the surge in forex gains to ¥4.7B (prior ¥0.2B) appears to be a temporary boost from yen weakness. The gap between Ordinary Income ¥77.2B and Net Income attributable to parent ¥53.6B is explained by taxes ¥21.6B, non-controlling interests ¥9.6B, and net special items ¥7.6B; without special gains, Net Income would be around ¥46B, reducing the YoY improvement versus prior ¥42.8B. Accrual quality is solid: OCF/Net Income 1.59x and accrual ratio -4.1%, with OCF substantially exceeding Net Income. Comprehensive income was ¥74.9B (Net Income ¥51.2B + Other Comprehensive Income ¥23.7B); OCI breakdown: foreign currency translation adjustments ¥9.4B, valuation difference on securities ¥1.9B, retirement benefit adjustments ¥1.1B, equity-method associates OCI -¥0.5B, etc., indicating significant volatility from currency and securities market factors. Comprehensive income attributable to parent ¥63.8B vs. Net Income ¥53.6B difference ¥10.2B is mainly due to FX and valuation changes and does not directly reflect core operating performance. Overall, recurring core earnings are roughly Operating Income + equity-method income ≈ ¥66B; adding stable non-operating income (interest/dividends) yields an underlying capability around ¥69B. Net Income ¥51.2B (after deducting special gains ≈ ¥46B) is explained by taxes and non-controlling interests. Next fiscal year risks include reversal of special gains and forex swings, which could reduce Ordinary and Net Income; sustainable strengthening of earnings requires margin improvements in core operations and working capital efficiency.
The company’s disclosed full-year forecast for the fiscal year ending March 2027 is: Revenue ¥600.0B (vs. prior +7.3%), Operating Income ¥52.0B (vs. prior -6.5%), Ordinary Income ¥64.6B (vs. prior -16.3%), Net income attributable to parent ¥39.5B (vs. prior -26.3%), EPS ¥100.29, dividend ¥43 (includes interim centennial commemorative dividend). The outlook is conservative, projecting revenue growth but declines in operating, ordinary, and net income. Drivers of the projected declines likely include the reversal of current-period non-operating gains (FX and equity-method income) and special gains (fixed asset and securities sales), sustained high SG&A ratio, and slower profitability recovery in China. Revenue guidance of ¥600.0B implies +¥40.9B (+7.3%) over this period’s ¥559.1B, assuming resilient domestic and European demand and price penetration, while China recovery is expected to be limited. Operating Income guidance ¥52.0B is down ¥3.6B (-6.5%) from ¥55.6B this period, implying an operating margin of 8.7% (-1.3pt), suggesting limited improvement in SG&A ratio. Ordinary Income guidance ¥64.6B is down ¥12.6B (-16.3%) from ¥77.2B, reflecting expected reversals in forex and equity-method benefits. Net income attributable to parent guidance ¥39.5B is down ¥14.1B (-26.3%) from ¥53.6B, largely due to the expected reduction in special gains. Progress evaluation is not applicable as this is a full-year forecast, but given current-period results, a continuation of the downward profit trend from Q1 onward is likely. Dividend guidance ¥43 (¥43 × 2 interim/ final, including centennial dividend) appears to be a significant cut from this period’s annual ¥87 (year-end ¥46 + interim ¥41) by ¥44, but the note indicates inclusion of the centennial dividend; on a normal dividend basis, it may be broadly in line with this period. Dividend payout ratio on EPS will be about 43%, a sharp decline from this period’s 67.8%, indicating dividend adjustment aligned with profit decline. Forecast assumptions include exchange rates, raw material prices, and pace of China recovery—factors with high uncertainty—so achievement depends heavily on external conditions. Strengthening core operations (SG&A control, China profitability) and working capital efficiency are key to meeting targets.
This period’s dividend was year-end ¥46 + interim ¥41, annual ¥87 (prior year only interim ¥22 announced; direct comparison is difficult as prior year year-end was not disclosed). Total dividends attributable to parent company shareholders including year-end are approximately ¥17.8B (EPS ¥136.04 × payout-calculated value). Payout ratio is calculated at 67.8% (total dividends ÷ Net Income), which is somewhat high, but FCF ¥38.2B covers dividends + buybacks totaling about ¥34.5B (dividends ¥26.6B consolidated: parent ¥17.8B + non-controlling interests ¥8.7B, buybacks ¥7.7B), yielding FCF coverage 1.11x, indicating shareholder returns are funded from internal cash. Share buybacks continued at ¥7.7B (prior ¥7.7B). Total Return Ratio is approximately (¥17.8B + ¥7.7B) ÷ ¥53.6B = 47.6%. Next period dividend forecast ¥43 (including centennial dividend) is effectively similar to normal dividend levels of this period; payout ratio based on forecast EPS ¥100.29 is about 43%, down from 67.8% this period, reflecting adjustment to lower profits. Dividend sustainability is supported by cash ¥207.5B, OCF ¥81.5B, and FCF ¥38.2B, enabling maintenance of dividends during short-term profit declines. Share buybacks continue, demonstrating an active shareholder return stance. However, working capital growth and volatility in investing CF could reduce FCF next period, and if payout ratio remains high while working capital compression lags, there is some risk of drawing on reserves to sustain dividends. Total Return Ratio around 50% is at a moderate level, and the balance between growth investment (CapEx/Depreciation = 1.39x) and returns is maintainable now, but in a profit downturn prioritization between returns and investment will be important.
Continued deterioration in China profitability: China segment Operating Income plunged from ¥8.8B to ¥5.2B (-41.4%), with margin down from 7.0% to 4.2% (-2.8pt). Demand slowdown and intensified price competition in China are primary causes, accounting for roughly half of the consolidated operating decline. Lack of signs of recovery next period could further pressure consolidated operating margins. Failure to implement local cost reductions and product mix improvements could make maintaining a 10% operating margin difficult.
Working capital efficiency deterioration and liquidity risk: Accounts receivable increased to ¥119.1B (prior ¥104.4B +14.1%), inventories to ¥71.7B (prior ¥69.3B +3.5%), extending DSO 78 days, DIO 88 days, CCC 91 days. Receivables aging raises credit risk; inventory accumulation carries discounting and impairment risk. If working capital compression does not progress, OCF could decline and FCF may no longer cover dividends and buybacks. Collection delays or inventory obsolescence could trigger additional provisions or impairments hitting P/L.
Dependence on FX, non-operating, and special items: Ordinary Income increase was driven by foreign exchange gains ¥4.7B (prior ¥0.2B) and equity-method investment income ¥10.6B (prior ¥9.4B), and special gains ¥8.1B (fixed asset sale gains ¥7.8B, securities sale gains ¥5.2B) boosted Net Income by about 15%. These are temporary or market-driven; reversal of exchange rates or disappearance of asset sale gains could cause a large decline in Ordinary and Net Income next period. With core Operating Income in a downtrend, reliance on non-operating and one-off gains reduces sustainability and warrants discounting in investment judgments.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.0% | 7.8% (4.6%–12.3%) | +2.2pt |
| Net Margin | 9.2% | 5.2% (2.3%–8.2%) | +4.0pt |
Profitability exceeds the manufacturing median; operating and net margins are strong within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.8% | 3.7% (-0.4%–9.3%) | -0.9pt |
Revenue growth slightly lags the industry median; growth is around the industry average.
※ Source: Company aggregation
Focus on improving core profitability: Operating margin contracted to 10.0% (prior 10.8%) -0.8pt due to higher SG&A ratio and China profitability deterioration. Next period forecast implies further decline to 8.7%, so controlling SG&A and restoring China profitability are critical. Whether domestic and European price penetration and product mix improvements can restore margins toward ~10% is a key watching point. Working capital efficiency deterioration (DSO 78 days, DIO 88 days, CCC 91 days) also requires urgent improvement; compressing inventory and receivables will directly expand FCF.
Be mindful of reliance on non-operating and one-off gains and next-period profit risk: This period’s Ordinary Income growth and Net Income increase relied heavily on FX gains, equity-method income, and special gains (fixed asset and securities sales). Next-period guidance forecasts declines across operating, ordinary, and net income, implying a reversal of these one-off effects. With core Operating Income weakening, recovery depends on operational turnaround rather than non-recurring gains.
Strong balance sheet and shareholder return stance: Equity Ratio 77.1%, Debt/EBITDA 0.24x, cash ¥207.5B (11x interest-bearing debt) reflects extremely healthy finances, providing capacity to maintain dividends during short-term profit dips. Although payout ratio this period was 67.8% and somewhat high, FCF coverage 1.11x shows internal funding supports shareholder returns; buybacks continue. If working capital compresses and core profitability improves, there is scope for stable dividend growth mid-to-long term. Strong financials enhance resilience in downside scenarios and are positive from a risk tolerance perspective.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by our firm from publicly available financial statements for reference only. Investment decisions are your responsibility; please consult a professional advisor as needed.