| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1792.1B | ¥1918.2B | -6.6% |
| Operating Income / Operating Profit | ¥624.8B | ¥736.0B | -15.1% |
| Ordinary Income | ¥639.9B | ¥745.9B | -14.2% |
| Net Income / Net Profit | ¥449.9B | ¥591.4B | -23.9% |
| ROE | 18.0% | 20.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1792.1B (YoY -¥126.1B, -6.6%), Operating Income was ¥624.8B (YoY -¥111.2B, -15.1%), Ordinary Income was ¥639.9B (YoY -¥106.0B, -14.2%), and Net Income was ¥449.9B (YoY -¥141.5B, -23.9%), representing a decline in both top and bottom lines. A sharp slowdown in the Pachislot Machines-related business (Revenue -31.6%, Operating Income -47.0%) depressed consolidated performance, while the Pachinko Machines-related business remained robust with Revenue of ¥1198.1B (+11.2%) and Operating Income of ¥493.9B (+12.7%). Operating margin remained high at 34.9% but narrowed by 3.5pt from 38.4% a year earlier; increases in R&D expenditure (¥215.6B, 12.0% of sales) and selling, general & administrative expenses (SG&A) (¥421.9B, +8.9%) pressured profitability. Operating Cash Flow (OCF) was ¥518.3B (YoY -10.7%), a healthy 1.15x of Net Income, aided by reductions in receivables and inventories. Free Cash Flow (FCF) of ¥347.4B was secured; dividends of ¥221B plus share buybacks of ¥600B were executed, resulting in a drawdown of cash on hand to ¥1324.6B.
[Revenue] Top-line declined to ¥1792.1B (-6.6%). By segment, the Pachinko Machines business recorded ¥1198.1B (+11.2%, 66.9% of consolidated sales), maintaining double-digit growth as the core segment, partially offsetting a substantial decline in the Pachislot Machines business to ¥434.4B (-31.6%, 24.2% of consolidated sales). The Support Equipment business contracted to ¥155.4B (-22.9%, 8.7%), and Other businesses were ¥4.3B (-9.3%) with minor impact. Weak Pachislot sales are attributed to reduced market installation appetite and a trough in the product life cycle. Support equipment was affected by curtailed capital expenditure. The consolidated revenue decline was primarily due to underperformance in Pachislot and Support Equipment, and the strength in core Pachinko machines was insufficient to fully offset this.
[Profitability] Cost of sales was ¥745.4B (41.6% of sales), yielding a gross margin of 58.4%, a 0.1pt improvement YoY. Price discipline and cost control were maintained despite product mix changes. SG&A rose to ¥421.9B (23.5% of sales, +8.9% YoY), driven by advertising expenses of ¥24.0B and R&D of ¥215.6B (12.0% of sales, +¥3.1B YoY). The R&D increase represents upfront investment to strengthen the new model pipeline and is intended to improve mid-to-long-term competitiveness. Operating Income declined to ¥624.8B (Operating margin 34.9%), down from ¥736.0B (38.4%) prior year (-15.1%), with margin contraction of 3.5pt. Non-operating income included interest income of ¥5.3B and dividend income of ¥5.9B, totaling non-operating income of ¥16.1B against non-operating expenses of ¥1.1B, contributing +¥15.1B. Ordinary Income was ¥639.9B (-14.2%). Extraordinary items were negligible, with special gains of ¥0.01B (including ¥5.4B gain on sale of investment securities) and special losses of ¥0.7B (including impairment losses of ¥1.1B), netting -¥0.7B. Pre-tax income was ¥639.2B, less corporate taxes ¥171.7B (effective tax rate 26.9%), resulting in Net Income of ¥449.9B (Net margin 25.1%, -23.9%). In summary, while Pachinko machine revenue contributed positively, the large fall in Pachislot revenue and higher SG&A weakened operating leverage, causing declines in revenue and profit.
The Pachinko Machines-related business generated Revenue of ¥1198.1B (+11.2%), Operating Income of ¥493.9B (+12.7%), and a margin of 41.2%, serving as the core of consolidated profit. Segment margin slightly declined from 43.8% last year but remains highly profitable. The Pachislot Machines-related business reported Revenue of ¥434.4B (-31.6%), Operating Income of ¥189.2B (-47.0%), and a margin of 43.6%, a substantial profit decline and a primary drag on consolidated results. Margin fell 12.6pt from 56.2% the prior year, weakening fixed-cost coverage. The Support Equipment-related business recorded Revenue of ¥155.4B (-22.9%), Operating Income of ¥11.1B (-24.4%), and margin of 7.1%, remaining low-margin. Margin slightly down from 7.3% prior year, indicating substantial upside for margin improvement. Other businesses (e.g., real estate leasing) had Revenue of ¥4.3B (-9.3%), Operating Income of ¥1.9B (+6.1%), and margin of 44.9%, small-scale but highly profitable. Significant margin dispersion exists across segments; Pachinko and Pachislot gaming machine businesses form the earnings base, and raising Support Equipment margins is key to improving consolidated profitability.
[Profitability] Operating margin of 34.9% narrowed 3.5pt from 38.4% a year ago but remains among the top levels in the domestic gaming machine industry. Net margin of 25.1% (prior year 30.8%) also indicates high profitability. ROE of 18.0% is healthy, achieved by Net margin 25.1% × Total Asset Turnover 0.623 × Financial Leverage 1.15x. ROA (on Ordinary Income basis) of 20.5% fell from 23.7% but still indicates efficient asset utilization. [Cash Quality] Operating Cash Flow of ¥518.3B is 1.15x Net Income (¥449.9B), demonstrating good cash generation. OCF/EBITDA (EBITDA = Operating Income ¥624.8B + Depreciation ¥30.3B = ¥655.1B) is 0.79x, and attention is needed for sustainability after inventory and receivables compression. Accrual ratio ((Net Income - OCF)/Total Assets) is -2.4%, negative, indicating earnings supported by cash. [Investment Efficiency] Total Asset Turnover improved to 0.623x from 0.57x, reflecting better asset efficiency. Inventories were ¥15.2B (prior ¥34.4B, -55.9%), Receivables were ¥21.0B (prior ¥103.3B, -79.7%), substantially compressed, showing marked improvement in working capital management. Tangible fixed assets increased to ¥412.8B (prior ¥274.8B, +50.2%), with increases in land (¥286.1B) and tooling/equipment, indicating investment to strengthen future production and development capacity. [Financial Soundness] Equity Ratio 87.0%, Current Ratio 826.7%, Quick Ratio 821.2%—extremely strong financial position. D/E ratio approximately 0.15x indicates very low leverage and limited financial risk. Cash and deposits of ¥1324.6B plus short-term securities of ¥599.8B sum to ¥1924.4B in liquid assets, providing sufficient resources for dividends, investments, and shareholder returns.
OCF was ¥518.3B (YoY -10.7%), a healthy cash generation at 1.15x Net Income of ¥449.9B. Major increases included subtotal before working capital changes of ¥760.1B (including depreciation ¥30.3B), decreases in trade receivables of ¥104.1B (significant collection of receivables), and inventory reductions of ¥39.5B (inventory compression). Major decreases in cash were corporate tax payments of ¥251.2B and decrease in trade payables of ¥48.5B (payments progress on accounts payable). Investing Cash Flow was -¥170.8B, centered on acquisitions of tangible and intangible fixed assets of ¥168.9B, reflecting active capex and development investment. Proceeds from sale of investment securities ¥8.1B and recoveries of long-term loans ¥0.3B were minor inflows. FCF (OCF + Investing CF) was ¥347.4B, covering dividends of ¥221B by 1.6x. Financing Cash Flow was -¥823.5B, mainly due to share buybacks of ¥600.0B and dividend payments of ¥224.5B; proceeds from sale of treasury stock ¥0.9B were a small inflow. Total shareholder returns (dividends + buybacks) substantially exceeded FCF, resulting in drawdown of cash on hand. Ending cash balance was ¥1924.4B (Cash and deposits ¥1324.6B + short-term securities ¥599.8B), down from ¥2400.5B prior year but still ample liquidity. Working capital compression was conducted within a healthy range, with no sign of excessive tightening at the fiscal year end.
Ordinary Income of ¥639.9B versus Net Income of ¥449.9B shows most of the difference attributable to corporate taxes of ¥171.7B (effective tax rate 26.9%), indicating limited structural divergence. Non-operating income of ¥16.1B equals 0.9% of Revenue ¥1792.1B and is minor, indicating low reliance on non-operating income. Breakdown of non-operating income: interest income ¥5.3B, dividend income ¥5.9B, other ¥2.9B—results of financial asset management with recurring characteristics. Extraordinary items were minimal: special gains ¥0.01B (gain on sale of investment securities ¥5.4B, fixed asset sale ¥0.0B), special losses ¥0.7B (impairment loss ¥1.1B, losses on retirement of fixed assets ¥0.7B), net -¥0.7B, negligible and ignorable as one-offs. OCF ¥518.3B is 1.15x Net Income ¥449.9B, showing earnings backed by cash. Accrual ratio ((Net Income - OCF)/Total Assets) of -2.4% negative suggests “high-quality earnings” where accounting profit is backed by cash. However, OCF/EBITDA 0.79x is somewhat weak, reflecting dependence on receivables and inventory compression; monitoring sustainability into next periods is necessary. Comprehensive Income ¥475.2B was ¥25.3B above Net Income ¥449.9B, driven by increases in accumulated OCI including valuation differences on securities ¥3.8B and actuarial adjustments for retirement benefits ¥3.9B; these are valuation items with minor short-term impact. Overall, ordinary business generates the bulk of earnings, dependency on one-offs or non-operating items is limited, and earnings quality is high.
Full-year (FY2027) guidance: Revenue ¥1740.0B (vs. current period -2.9%), Operating Income ¥560.0B (-10.4%), Ordinary Income ¥580.0B (-9.4%), Net Income ¥400.0B (-11.1%), EPS ¥202.52. This conservative plan assumes lower revenue and profit versus current results and likely incorporates uncertainty around Pachislot recovery, a trough in the model refresh cycle, and continued investment in R&D. Dividend guidance is ¥80 annually (payout ratio approx. 39.5%), down from ¥90 this period, but still implying sufficient dividend capacity relative to forecast Net Income ¥400.0B. Progress rate cannot be calculated at the fiscal year end, but achievement will hinge on the recovery pace in Pachislot and Support Equipment, timing of new product market entries, and the quality of backlog. Company guidance is assessed as cautious with upside potential.
Dividends were ¥45 interim and ¥45 year-end (annual ¥90), payout ratio 40.7%; total dividends against Net Income ¥449.9B are estimated at approximately ¥184B (reported ¥221B includes prior period amounts). Dividends are covered 1.6x by FCF ¥347.4B, indicating sustainability. Additionally, ¥600B share buybacks were conducted during the period, making total shareholder returns (dividends + buybacks) approximately ¥821B, substantially exceeding FCF. Total Return Ratio equates to approximately 236% of FCF, viewed as a capital efficiency measure utilizing abundant cash balance (ending ¥1924.4B). Next-year dividend forecast is ¥80 annually (payout ratio ~39.5%), a reduction but still supported by forecast Net Income ¥400.0B. Continuation of share buybacks was not specified; future return policy will likely be judged on OCF sustainability, growth investment opportunities, and optimal liquidity. Dividend policy appears to emphasize stable dividends while using opportunistic buybacks to adjust total return.
Product mix deterioration risk: Pachislot Machines business declined sharply (Revenue -31.6%, Operating Income -47.0%), driving consolidated profit decline. Pachislot, despite high margin (43.6%), if recovery is delayed, will continue to pressure consolidated margins. Given Pachislot accounts for 24.2% of consolidated sales, monitoring timing of new model introductions and order trends is critical.
SG&A increases and deterioration in operating leverage: SG&A ¥421.9B rose +8.9% YoY, creating a reverse spread versus Revenue growth -6.6%. R&D ¥215.6B (12.0% of sales, +¥3.1B YoY) supports mid-to-long-term competitiveness but acts as a fixed-cost burden in the short term, compressing operating margin by 3.5pt. The next-year guidance expecting Operating Income -10.4% reflects assumptions of persistent SG&A levels and reduced fixed-cost absorption due to lower sales. If revenue recovery lags, further deterioration of operating leverage is a risk.
Sustainability of cash conversion ratio: OCF ¥518.3B decreased YoY -10.7%, and OCF/EBITDA 0.79x is below a strong threshold (≥0.9x). Large receivables decrease of ¥104.1B and inventory decrease of ¥39.5B supported this period’s OCF, but limited remaining compression implies potential rebound in working capital in a recovery scenario. Total returns (dividends + buybacks ~¥821B) far exceeded FCF ¥347.4B, reducing cash on hand by ¥47.6B YoY. While liquidity remains ample (¥1924B), continuation of large returns depends on recovery in OCF.
Profitability / Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 34.9% | 7.8% (4.6%–12.3%) | +27.1pt |
| Net Margin | 25.1% | 5.2% (2.3%–8.2%) | +19.9pt |
The company’s profitability substantially exceeds the manufacturing sector median, indicating a top-tier high-profit structure.
Growth / Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -6.6% | 3.7% (-0.4%–9.3%) | -10.3pt |
Revenue growth trails the manufacturing median by 10.3pt, impacted by Pachislot weakness and the trough in the product life cycle.
※ Source: Company compilation
Strength and high profitability of core Pachinko machines: Pachinko Machines business achieved Revenue ¥1198.1B (+11.2%), Operating Income ¥493.9B (+12.7%), and margin 41.2%, serving as the profit core. Operating margin 34.9%, Net margin 25.1%, and ROE 18.0% all materially exceed manufacturing medians, sustaining high profitability in the domestic gaming machine industry. Financial soundness (Equity Ratio 87.0%, Current Ratio 826.7%) is very strong, providing downside resilience. Despite conservative next-year guidance, the strengthened new model pipeline (R&D 12.0% of sales) and abundant liquidity (¥1924B) secure mid-term growth investment capacity and business continuity.
Recovery of Pachislot and opportunity to improve segment margins: The sharp slowdown in Pachislot (Revenue -31.6%, Operating Income -47.0%) was the main driver of this year’s profit decline; guidance for next year remains conservative. Conversely, new model introductions following the product life-cycle trough and market recovery could be upside. Support Equipment’s low margin (7.1%) suggests significant room for improvement. Given segment margin dispersion (Pachinko 41.2%, Pachislot 43.6%, Support Equipment 7.1%), Pachislot recovery and lifting Support Equipment margins are keys to sustaining consolidated profitability.
Balance of capital allocation and shareholder returns: Dividend payout ratio 40.7% and FCF coverage 1.6x are at sustainable levels; next-year dividend of ¥80 is supported by forecast Net Income ¥400.0B. The ¥600B buyback contributed to capital efficiency but total returns substantially exceeded FCF, reducing cash on hand YoY. Continuation of returns will depend on OCF recovery (particularly after any working capital rebound), balance with growth investments, and optimal liquidity targets. Given the one-off working capital compression and OCF/EBITDA 0.79x, sustainability of cash generation and prioritization in capital allocation will be key to shareholder value going forward.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial statement analysis document. 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 are your responsibility; consult a professional advisor as needed.