| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1578.9B | ¥1556.3B | +1.4% |
| Operating Income / Operating Profit | ¥196.4B | ¥190.2B | +3.3% |
| Ordinary Income | ¥198.7B | ¥191.7B | +3.6% |
| Net Income / Net Profit | ¥128.0B | ¥111.2B | +15.1% |
| ROE | 8.3% | 8.1% | - |
For the fiscal year ended March 2026, Revenue totaled ¥1578.9B (YoY +¥22.5B +1.4%), Operating Income ¥196.4B (YoY +¥6.2B +3.3%), Ordinary Income ¥198.7B (YoY +¥7.0B +3.6%), and Net Income ¥128.0B (YoY +¥16.8B +15.1%). Revenue growth in the Machine segment (+6.2%) offset a decline in the AutoMachine segment (-23.5%), and an improvement in gross margin to 29.7% (YoY +0.65pt) coupled with operating leverage drove Operating Income margin to 12.4% (YoY +0.22pt). Ordinary Income rose in line with Operating Income. Special items contributed a net positive ¥6.3B (Special gains ¥14.0B, including gain on sale of investment securities ¥9.4B; Special losses ¥7.7B, including impairment losses ¥3.4B), supporting Net Income growth of +15.1%. Comprehensive Income expanded to ¥218.4B (YoY +88.2%) due to foreign currency translation adjustments of ¥43.3B and valuation differences on available-for-sale securities of ¥25.5B, strengthening the financial base.
[Revenue] Revenue ¥1578.9B (+1.4%) was underpinned by growth in the Machine segment while subdued orders in the AutoMachine segment restrained company-wide growth. The Machine segment recorded Revenue ¥1385.8B (+6.2%), driven by steady demand for functional components for the semiconductor and transportation equipment markets, remaining the core segment with a 87.7% share of consolidated sales and delivering stable growth. The AutoMachine segment posted Revenue ¥193.7B (-23.5%) due to a deterioration in large equipment order cycles, shrinking to 12.3% of consolidated sales. By region, Japan was ¥1009.8B (-1.0%), essentially flat; China ¥254.8B (+7.6%); Other Asia ¥228.9B (+9.6%), with Asia expansion raising the overseas ratio to 36.0% (prior year 34.5%).
[Profitability] Cost of sales was ¥1110.4B (Cost of sales ratio 70.3%, prior year 71.0%), improving by 0.65pt, securing Gross Profit ¥468.4B (Gross Margin 29.7%, prior year 29.1%). SG&A expenses were ¥272.0B (SG&A ratio 17.2%, prior year 16.8%), up 0.4pt due to higher corporate administrative and logistics costs, but gross margin improvement more than offset this, resulting in Operating Income ¥196.4B (Operating Margin 12.4%, prior year 12.2%), a 0.22pt improvement. Non-operating items comprised Non-operating income ¥9.7B (interest income ¥1.3B, dividend income ¥2.7B, foreign exchange gains ¥0.3B, etc.) and Non-operating expenses ¥7.4B (interest expense ¥5.0B, foreign exchange losses ¥0.8B, etc.), yielding a net +¥2.3B, maintaining prior-year levels and delivering Ordinary Income ¥198.7B (Ordinary Income margin 12.6%). Extraordinary items resulted in Special gains ¥14.0B, mainly gain on sale of investment securities ¥9.4B, and Special losses ¥7.7B, including impairment losses ¥3.4B (European operations’ assets and goodwill) and loss on retirement of fixed assets ¥1.2B, producing a net +¥6.3B and expanding Profit Before Tax to ¥205.0B. After deducting Income Taxes ¥69.2B (effective tax rate 33.7%), Net Income was ¥128.0B (Net Margin 8.1%, prior year 7.1%), a strong +15.1% increase, achieving revenue and profit growth.
The AutoMachine segment posted Revenue ¥193.7B (-23.5%) and Operating Income ¥48.8B (-11.1%), with an Operating Margin of 25.2% (prior year 28.3%). Declines were driven by fewer large custom-order projects, but focus on high-value-added products maintained margins above 25%. The Machine segment recorded Revenue ¥1385.8B (+6.2%) and Operating Income ¥198.2B (+8.8%), with an Operating Margin of 14.3% (prior year 14.0%), achieving stable revenue and profit growth through forecast-based production for demand and acting as the primary earnings driver, contributing roughly 80% of consolidated Operating Income. Consolidated Operating Income after corporate adjustments was ¥196.4B, with Machine segment operating leverage absorbing the AutoMachine segment’s profit decline.
[Profitability] Operating Margin 12.4% (prior year 12.2%), Ordinary Income margin 12.6% (prior year 12.3%), Net Margin 8.1% (prior year 7.1%) all improved, primarily due to Gross Margin improvement to 29.7% (prior year 29.1%). ROE 8.3% (prior year 10.2%) declined due to increased Net Assets (prior year ¥1365.2B → current ¥1535.4B), while Return on Assets (Ordinary Income / Total Assets) remained 9.1% (prior year 9.1%), indicating maintained asset efficiency and a stable earnings base. [Cash Quality] Operating Cash Flow was ¥148.3B, 1.16x of Net Income ¥128.0B, indicating reasonable cash conversion of profits; however, EBITDA ¥266.3B (Operating Income ¥196.4B + Depreciation ¥69.9B) versus OCF yields OCF/EBITDA 0.56x, and working capital expansion is hindering cash conversion. Days Sales Outstanding (DSO) 70 days, Days Inventory Outstanding (DIO) 173 days, and Cash Conversion Cycle (CCC) 210 days highlight deteriorated working capital efficiency. [Investment Efficiency] Capital Expenditure ¥26.0B is 0.37x of Depreciation ¥69.9B, restrained and potentially affecting future competitiveness. R&D expense ¥34.2B (as a percentage of sales 2.2%) decreased from ¥35.5B the prior year, and recovery of R&D investment is expected to sustain long-term product competitiveness. [Financial Soundness] Equity Ratio 67.7% (prior year 64.7%), Current Ratio 342.8%, Debt/EBITDA 1.03x, Interest Coverage 38.9x (Operating Income ¥196.4B / Interest Expense ¥5.0B) indicate a very conservative capital structure and low financial risk.
Operating Cash Flow was ¥148.3B (prior year ¥191.7B, -22.6%). Despite Profit Before Tax ¥205.0B, cash outflows were driven by Income Taxes paid ¥73.4B and working capital changes: inventory increase ¥18.7B, trade receivables decrease ¥4.1B, trade payables decrease ¥20.4B, totaling ¥35.0B of cash outflow. Working capital expansion, reflected in DSO 70 days, DIO 173 days, and CCC 210 days, indicates collection delays and excess inventory reducing cash conversion efficiency. Investing Cash Flow was -¥11.9B: CapEx -¥26.0B and intangible asset investment -¥3.2B totaling -¥29.2B, offset by proceeds from sale of investment securities ¥11.9B, compressing net investing outflow to -¥11.9B. Free Cash Flow was ¥136.4B (prior year ¥131.2B), ample to cover dividend payments ¥49.4B (Payout Ratio 39.5%), indicating strong financial flexibility. Financing Cash Flow was -¥70.6B, with principal items being repayment of long-term borrowings -¥11.4B, net increase in short-term borrowings ¥22.9B, and dividend payments -¥49.4B. Cash and deposits at period-end increased by ¥75.1B to ¥428.4B (beginning balance ¥353.3B), including foreign exchange translation adjustment of ¥13.3B, strengthening the liquidity position.
Of the ¥70.7B difference between Ordinary Income ¥198.7B and Net Income ¥128.0B, the primary factors were net special items +¥6.3B (Special gains ¥14.0B - Special losses ¥7.7B) and Income Taxes ¥69.2B, indicating that income up to the ordinary stage is quality, driven by core operations. Of Non-operating income ¥9.7B, dividend income ¥2.7B and interest income ¥1.3B are stable earnings from financial assets, while foreign exchange gains ¥0.3B are a one-off benefit from yen weakness. Special gains ¥14.0B were mainly gain on sale of investment securities ¥9.4B and thus temporary. Of Special losses ¥7.7B, impairment losses ¥3.4B (European operations) reflect one-off write-downs related to structural revenue deterioration. The accrual (Operating Income ¥196.4B - Operating CF ¥148.3B = ¥48.1B) is mainly due to working capital increases (trade receivables increase ¥79.4B, inventory increase ¥18.7B) and will take time to convert to cash; however, progress in collections and inventory drawdown should improve future cash conversion. Comprehensive Income ¥218.4B includes Net Income ¥128.0B plus foreign currency translation adjustment ¥43.3B, valuation differences on available-for-sale securities ¥25.5B, and retirement benefit adjustments ¥13.8B, with unrealized gains on financial assets providing a cushion.
For the fiscal year ending March 2027, the company forecasts Revenue ¥1800.0B (YoY +14.0%), Operating Income ¥245.0B (YoY +24.7%), and Ordinary Income ¥245.0B (YoY +23.3%), expecting significant revenue growth and substantial profit improvement. The Operating Margin improvement to 13.6% (prior year 12.4%) of +1.2pt assumes demand recovery in the Machine segment, continued price and cost measures, and a bottoming of orders in the AutoMachine segment. Progress rates are Revenue 87.7%, Operating Income 80.2%, Ordinary Income 81.1%, roughly at planned levels, and achieving targets depends on order accumulation in H2 and accelerated cost reductions. Dividend guidance is Annual ¥95 per share, up ¥14 from prior year ¥81 (+17.3%), with the Payout Ratio expected to slightly decline from 39.5% to 38.9%, signaling strengthened shareholder returns.
The annual dividend was ¥81 (interim ¥32, year-end ¥49), maintaining a Payout Ratio of 39.5% similar to the prior year. Total dividends amounted to ¥49.4B, covered 2.8x by Free Cash Flow ¥136.4B, indicating strong sustainability of dividends. Share buybacks were minimal (CF -¥0.0B), so the Total Return Ratio is essentially the same as the Payout Ratio. For FY2027 the company plans an annual dividend of ¥95 (+¥14 +17.3%), with a Payout Ratio of 38.9%, maintaining shareholder returns at just under 40%. Given a strong balance sheet (Equity Ratio 67.7%) and low leverage (Debt/EBITDA 1.03x), there is scope to sustain and gradually increase dividends, but prioritizing the recovery of CapEx, R&D, and normalization of working capital in capital allocation is essential for long-term value creation.
Working capital management risk: DSO 70 days, DIO 173 days, CCC 210 days indicate deteriorated working capital efficiency and OCF/EBITDA falling to 0.56x. Trade receivables increase ¥79.4B and trade payables decrease ¥20.4B suggest simultaneous collection delays and inventory buildup, possibly due to demand-supply mismatch or supply chain adjustments lagging. If inventory and receivables further expand during an order recovery, cash generation could be further constrained, reducing capital efficiency and offsetting profit growth.
Segment concentration risk: The Machine segment accounts for 87.7% of sales and ~80% of Operating Income, creating high dependency, while the AutoMachine segment is highly affected by order cycles (Revenue -23.5%). Demand volatility in the semiconductor and transportation equipment customers of the Machine segment or timing concentration of large custom orders in the AutoMachine segment could increase company-wide performance volatility. Regionally, Japan 64.0% vs Asia 36.0% indicates somewhat high domestic dependence, making results sensitive to Japan’s economic and CapEx trends.
Risk of continued investment restraint: CapEx ¥26.0B is 0.37x of Depreciation ¥69.9B and thus restrained, and R&D ¥34.2B (2.2% of sales) declined from ¥35.5B. While this supports short-term OCF and ROE improvement, in the medium-to-long term it risks aging production capacity, weakening product competitiveness, and delayed response to technological innovation. Delays in restoring CapEx and R&D could limit future growth and sustained profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.4% | 7.8% (4.6%–12.3%) | +4.7pt |
| Net Margin | 8.1% | 5.2% (2.3%–8.2%) | +2.9pt |
The Company’s Operating Margin 12.4% and Net Margin 8.1% both substantially exceed industry medians, positioning it in the upper tier within manufacturing for profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.4% | 3.7% (-0.4%–9.3%) | -2.3pt |
Revenue growth of 1.4% lags the industry median 3.7%, indicating comparatively slower top-line expansion.
※ Source: Company compilation based on public financial statements
Improvement in Operating Margin to 12.4% (+0.22pt) and Gross Margin to 29.7% (+0.65pt) reflects successful combination of cost reductions and price maintenance, making the guidance for FY2027 Operating Margin 13.6% (+1.2pt) realistic. Machine segment revenue growth (+6.2%) and stable Operating Margin 14.3% (+0.3pt) underpin consolidated profitability, and if AutoMachine order recovery occurs, further margin expansion is expected. However, rising SG&A ratio 17.2% (+0.4pt) and suppressed CapEx and R&D (CapEx/Depreciation 0.37x, R&D ratio 2.2%) raise medium-term competitiveness concerns, so progress in normalizing investment will be monitored.
Improving working capital management is the top priority. DSO 70 days, DIO 173 days, CCC 210 days show marked efficiency deterioration, and OCF/EBITDA 0.56x remains low. Trade receivables increase ¥79.4B, inventory increase ¥18.7B, and trade payables decrease ¥20.4B indicate concurrent collection delays and inventory buildup; restoring cash generation during an order recovery is crucial to the growth strategy. Successful inventory compression and collection improvement could expand Free Cash Flow beyond current ¥136.4B, widening room for dividends, investments, and balance sheet enhancement.
Comprehensive Income ¥218.4B, versus Net Income ¥128.0B, was supported by foreign currency translation adjustment ¥43.3B and valuation gains on investment securities ¥25.5B, increasing financial flexibility. Investment securities ¥120.8B (prior year ¥85.9B) and accumulated unrealized gains reflect conservative capital allocation, but reversal risk on valuation gains in market downturns should be noted. While planning a dividend increase to ¥95 (+17.3%), the company should leverage a strong balance sheet (Equity Ratio 67.7%) and low leverage (Debt/EBITDA 1.03x) to balance restoring CapEx/R&D and normalizing working capital, which is key to enhancing corporate value.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute an investment recommendation for any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.