| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥563.4B | ¥529.3B | +6.4% |
| Operating Income | ¥-23.2B | ¥9.0B | -45.4% |
| Ordinary Income | ¥-18.4B | ¥14.0B | -45.6% |
| Net Income | ¥-0.1B | ¥-4.6B | +98.7% |
| ROE | -0.0% | -1.0% | - |
For the fiscal year ended March 2026, Revenue was ¥563.4B (YoY +¥34.0B, +6.4%), Operating Income was ¥-23.2B (YoY -¥32.2B, -357.0%), Ordinary Income was ¥-18.4B (YoY -¥32.4B, -231.5%), and Net Income attributable to owners of the parent was ¥-0.1B (YoY +¥4.5B, +98.7%). Domestic demand for construction cranes remained firm and supported revenue growth; however, gross profit margin deteriorated materially to 10.3% (down ~590bp from 16.2% a year earlier), and selling, general and administrative expenses (SG&A) of ¥81.5B (14.5% of sales) could not be absorbed, resulting in an operating loss of ¥23.2B. At the ordinary level, non-operating income of ¥19.2B, including foreign exchange gains of ¥6.2B and equity-method investment income of ¥1.6B, was offset by non-operating expenses of ¥14.5B, including interest expense of ¥6.7B, producing an ordinary loss of ¥18.4B. Extraordinary income totaled ¥72.2B, mainly from gains on sale of subsidiary shares, while extraordinary losses were ¥6.8B (including impairment losses of ¥5.7B), resulting in profit before tax of ¥47.0B and Net Income of ¥-0.1B — an improvement to near breakeven from ¥-4.6B a year earlier. Nonetheless, core business profitability has materially deteriorated.
[Revenue] Revenue was ¥563.4B (+6.4%), achieving top-line growth. By segment, Japan was ¥519.0B (+11.2%), accounting for 92.2% of total sales, with robust domestic demand for construction cranes driving growth. Europe declined to ¥43.8B (-8.5%) due to demand slowdown. By product, construction cranes accounted for ¥388.5B (69.0% of company sales), hydraulic excavators and others ¥162.7B, and other ¥12.2B. Trade receivables increased to ¥164.8B (from ¥147.3B, +11.9%) alongside higher sales, and DSO (days sales outstanding) extended to 107 days.
[Profitability] Cost of sales was ¥505.1B (89.7% of sales), up ¥61.8B from ¥443.3B a year earlier, leaving gross profit of ¥58.2B (gross margin 10.3%). Gross margin declined by ~590bp from 16.2% a year earlier, primarily due to higher raw materials and logistics costs, delayed price pass-through, adverse product mix, and discounts/inability to absorb fixed manufacturing costs related to inventory adjustments. SG&A was ¥81.5B (14.5% of sales, roughly flat vs. prior year 14.5%), up ¥4.5B in absolute terms from ¥76.9B, but could not offset the deterioration in gross margin, resulting in Operating Income of ¥-23.2B (operating margin -4.1%, prior year ¥+9.0B / +1.7%), a swing to loss. Non-operating income included interest income ¥0.1B, foreign exchange gains ¥6.2B, equity-method investment income ¥1.6B, totaling ¥19.2B, while non-operating expenses included interest expense ¥6.7B, fees ¥0.6B, and other non-operating expenses ¥2.6B, totaling ¥14.5B, producing Ordinary Income of ¥-18.4B (ordinary margin -3.3%, prior year +¥14.0B / +2.6%). Extraordinary income of ¥72.2B (including ¥1.6B gain on sale of fixed assets and mainly gains on sale of subsidiary shares) less extraordinary losses of ¥6.8B (impairment losses ¥5.7B, loss on disposal of fixed assets ¥0.5B, etc.) resulted in Profit Before Tax of ¥47.0B. After income taxes of ¥2.0B and non-controlling interests of ¥-0.3B, Net Income attributable to owners of the parent was ¥-0.1B (net margin -0.0%, improved ¥4.5B from ¥-4.6B prior), nearly breaking even; however, this was largely driven by one-off extraordinary income and core profitability deteriorated substantially year-on-year.
The Japan segment reported Revenue ¥519.0B (+11.2%) and Operating Loss ¥22.3B (operating margin -4.3%, deteriorated from +¥6.2B a year earlier), and was the primary cause of the company-wide operating loss. Although domestic demand for construction cranes was firm and drove sales, profitability deteriorated significantly due to gross margin compression and insufficient fixed cost absorption. The Europe segment recorded Revenue ¥43.8B (-8.5%) and Operating Loss ¥2.4B (operating margin -5.5%, widened from ¥-0.1B), suffering from weaker demand. Japan accounted for 92.2% of company sales while Europe was only 7.8%, indicating limited geographic diversification and high dependency on the domestic market.
[Profitability] Operating margin was -4.1% (deteriorated ~580bp from +1.7% prior), gross margin was 10.3% (down ~590bp from 16.2%), and SG&A ratio was 14.5% (virtually unchanged from 14.5%), with gross margin deterioration being the primary cause of the operating loss. Ordinary margin was -3.3% (prior +2.6%), and net margin was -0.0% (prior -0.9%); excluding extraordinary income, core earning power is very weak. ROE was -0.0% (prior -1.2%), ROA was -0.0% (prior -0.4%). Operating margin trails the industry median 7.8% by 11.9pt, and net margin trails the industry median 5.2% by 5.2pt.
[Cash Quality] Operating Cash Flow / Net Income was -0.06x, indicating OCF materially lagging Net Income and raising concerns about earnings quality. Operating CF margin was -0.5% (Operating CF -¥2.6B / Revenue ¥563.4B), with working capital tie-up weighing on cash flow. EBITDA (adding back depreciation ¥17.5B) was ¥-5.7B, and EBITDA/interest coverage was -0.85x, indicating interest burden exceeds earnings.
[Investment Efficiency] Total asset turnover improved to 0.61x (prior 0.52x), inventory days shortened to 289 days (from 331 days), but receivables days extended to 107 days (from 102 days) and payables days shortened to 29 days (from 35 days), leaving a cash conversion cycle of 366 days (down from 398 days) and continued long working capital tie-up.
[Financial Soundness] Equity Ratio was 46.0% (up 2.6pt from 43.4%), and debt-to-equity ratio was 1.17x (down from 1.30x), showing modest deleveraging. Current ratio was 194.8% and quick ratio 127.3%, indicating ample liquidity, but short-term debt proportion is high at 60.2% and Cash / Short-term Debt was 0.55x, leaving some refinancing vulnerability. Interest coverage was -3.46x (Operating Income / Interest Expense), and EBITDA/interest was -0.85x, indicating weak interest-paying capacity.
Operating CF was ¥-2.6B (improved ¥130.6B from ¥-133.2B prior), materially lagging profit before tax of ¥47.0B. Operating CF subtotal (before working capital changes) was ¥2.5B (improved from ¥-129.2B prior), but inflows from inventory reduction of +¥53.6B were offset by receivables increase -¥12.0B and payables decrease -¥44.5B, producing net working capital outflow of -¥5.1B. Investing CF turned positive at ¥+20.2B (from ¥-9.3B prior), driven by proceeds from sale of subsidiary shares of ¥27.17B which far exceeded capital expenditures of -¥5.4B and intangible asset purchases of -¥3.9B; this is a one-off factor. Financing CF was ¥-58.7B (from ¥+66.4B prior), reflecting repayment of long-term borrowings -¥59.7B, bond redemption -¥5.2B, dividend payments -¥8.1B, and share buybacks -¥8.0B, as the company pursued deleveraging and shareholder returns. Free Cash Flow (Operating CF + Investing CF) was ¥17.6B (from ¥-142.5B prior) turning positive, but this largely reflects proceeds from sale of subsidiary shares covering the operating cash deficit; core business cash generation remains weak. Cash and deposits were ¥110.7B (down ¥36.9B from ¥147.6B), reducing the liquidity buffer.
Net Income of ¥-0.1B (prior ¥-4.6B) is nearly zero, but materially dependent on extraordinary income of ¥72.2B (mainly gains on sale of subsidiary shares). Operating loss was ¥-23.2B and ordinary loss was ¥-18.4B, indicating very weak core business profitability. Of non-operating income ¥19.2B, foreign exchange gains ¥6.2B, equity-method income ¥1.6B, and reversal of allowance for doubtful accounts ¥3.8B were included; foreign exchange gains depend on market movements and allowance reversals are adjustments to past provisions, so neither is a stable recurring income source. Extraordinary income of ¥72.2B from sale of subsidiary shares has low reproducibility, and impairment loss ¥5.7B is also a one-off. Operating CF / Net Income is -0.06x, showing that earnings are not being converted into cash and indicating weak accrual quality. Comprehensive income was ¥-5.9B (attributable to owners of the parent ¥-5.6B), with translation adjustments of ¥-51.9B significantly depressing equity and creating a large gap between Net Income and comprehensive income. Overall, earnings quality depends on one-off extraordinary items, and core recurring profitability and cash generation are extremely fragile.
Full-year guidance projects Revenue ¥610.0B (YoY +8.3%), Operating Income ¥6.0B, Ordinary Income ¥1.2B, and Net Income attributable to owners of the parent ¥0.0B. Actuals of Revenue ¥563.4B show 92.4% progress toward plan, but Operating Income of ¥-23.2B fell short of the plan ¥+6.0B by about ¥29.2B at the operating level. The primary cause appears to be gross margin deterioration; progress on cost correction and price adjustments will be key. Ordinary Income missed the plan ¥+1.2B by ¥19.6B (actual ¥-18.4B), while at the Net Income level, extraordinary income brought Net Income to ¥-0.1B, close to plan in appearance, but fundamentally core earnings severely underperformed and were covered by one-off gains. Achieving next fiscal year’s targets requires recovery in gross margin (price revisions and cost reductions), improved fixed-cost absorption via inventory compression, reduced interest burden, and normalization of working capital efficiency.
Annual dividend is ¥70 (interim ¥35, year-end ¥35). Based on 11,186 thousand shares outstanding (excluding treasury stock), total dividends amount to approximately ¥0.78B. Payout ratio is negative and not directly computable against Net Income attributable to owners of the parent of ¥-0.1B, but using EPS of ¥398.71 (improved from ¥-514.48 prior) implies roughly 17.6%. Share buybacks of ¥8.0B were executed, making total return approximately ¥15.8B. Coverage of total returns by Free Cash Flow (¥17.6B) is 0.90x, suggesting near coverage, but Operating CF was a deficit of ¥-2.6B and the funding was effectively supported by proceeds from sale of subsidiary shares. Because Net Income depends on extraordinary income while core business is operating at a loss, dividend sustainability depends heavily on recovery of gross margin and return to operating profitability. Cash and deposits of ¥110.7B (down from ¥147.6B) reduce the liquidity buffer and warrant attention; sustainable dividends in coming periods require restoration of core earnings and operating CF via improved working capital efficiency.
Material gross margin deterioration (~590bp decline): Driven by higher raw material and logistics costs, delayed price pass-through, adverse product mix, and discounts/inability to absorb manufacturing fixed costs due to inventory adjustments. Gross margin remains depressed at 10.3% (prior 16.2%). If price revisions and cost reductions do not progress, operating losses may persist and ROE/ROA deterioration may become prolonged. Inventory days remain long at 289 days (despite shortening from 331 days), maintaining working capital tie-up and heightening discounting/obsolescence risk.
Increased interest burden and refinancing risk: Interest expense rose to ¥6.7B (up 36.7% from ¥4.9B), weakening interest coverage to -3.46x (Operating Income / Interest Expense) and EBITDA/interest to -0.85x. Short-term debt ratio is high at 60.2% and Cash / Short-term Debt is 0.55x, leaving some refinancing vulnerability. In a rising interest rate environment, financial costs could further increase and expand ordinary losses. Long-term borrowings were ¥132.2B (down from ¥167.9B), indicating deleveraging, but short-term bias remains.
Deterioration in working capital efficiency and funding pressure: Receivables days 107, inventory days 289, payables days 29 yielding a cash conversion cycle of 366 days with prolonged capital tie-up. Operating CF was ¥-2.6B (Operating CF margin -0.5%), and working capital tie-up pressures operating cash flow. Receivables increase -¥12.0B and payables decrease -¥44.5B were cash outflow drivers, with concurrent collection delays and payment pressure. If working capital efficiency does not improve, operating cash deficits may persist, increasing reliance on external financing and elevating interest burden.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | -4.1% | 7.8% (4.6%–12.3%) | -11.9pt |
| Net Margin | -0.0% | 5.2% (2.3%–8.2%) | -5.2pt |
Profitability metrics are well below industry medians; gross margin deterioration led to an operating-level loss, placing the company in the lower tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.4% | 3.7% (-0.4%–9.3%) | +2.7pt |
Revenue growth outperformed the industry median by +2.7pt, supported by firm domestic demand for construction cranes.
※ Source: Company compilation
Revenue growth but gross margin deterioration of ~590bp led to operating loss; bottom line nearly zero due to extraordinary income: Revenue was ¥563.4B (+6.4%) driven by robust domestic construction crane demand, but gross margin dropped to 10.3% (from 16.2%, down ~590bp), and Operating Income swung to ¥-23.2B (from +¥9.0B). Ordinary level also recorded a loss of ¥-18.4B, and Net Income landed at ¥-0.1B due to extraordinary income of ¥72.2B (mainly gains on sale of subsidiary shares); this is largely one-off. ROE was -0.0%, Operating CF / Net Income was -0.06x, indicating very low earnings quality, and core business profitability deteriorated substantially. Operating margin of -4.1% trails industry median 7.8% by 11.9pt.
Working capital inefficiency and fragile cash generation: Inventory days 289, receivables days 107, payables days 29, cash conversion cycle 366 days with prolonged capital tie-up. Operating CF was a deficit of ¥-2.6B; inventory reduction inflow +¥53.6B was offset by receivables increase -¥12.0B and payables decrease -¥44.5B, producing working capital outflow of -¥5.1B. Free Cash Flow was positive ¥17.6B, but mainly due to one-off proceeds from sale of subsidiary shares of ¥27.2B, leaving core cash generation weak. Interest burden is heavy (interest expense ¥6.7B, interest coverage -3.46x), and short-term debt ratio at 60.2% raises refinancing and rate-rise vulnerability.
Domestic market concentration and progress on price/cost correction are key to recovery: Japan accounts for 92.2% of sales and reported Operating Loss ¥22.3B (operating margin -4.3%), being the primary cause of the company-wide loss, indicating high domestic market dependence and limited geographic diversification. Europe also underperformed with Revenue ¥43.8B (-8.5%) and Operating Loss ¥2.4B (operating margin -5.5%). While full-year guidance assumes Operating Income ¥6.0B, actuals missed by a wide margin (actual ¥-23.2B), and achieving operating profitability next year requires gross margin recovery via price revisions and cost reductions (product mix correction, procurement efficiencies, improved fixed-cost absorption), inventory compression and stronger collections to normalize working capital, and reduced interest burden through further deleveraging and lengthening debt maturities. Dividend policy of ¥70 per annum (payout ratio ~18% on a headline basis) appears conservative in isolation, but given core operating losses and reliance on extraordinary income, sustainability depends heavily on return to operating profits.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific 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 as needed.