| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥322.8B | ¥422.5B | -23.6% |
| Operating Income / Operating Profit | ¥88.0B | ¥123.3B | -28.7% |
| Ordinary Income | ¥96.9B | ¥130.9B | -25.9% |
| Net Income / Net Profit | ¥66.4B | ¥87.2B | -23.8% |
| ROE | 7.7% | 11.1% | - |
For the fiscal year ended March 2026, Revenue was ¥322.8B (YoY -¥99.7B -23.6%), Operating Income was ¥88.0B (YoY -¥35.3B -28.7%), Ordinary Income was ¥96.9B (YoY -¥33.9B -25.9%), and Net Income was ¥66.4B (YoY -¥20.8B -23.8%), representing declines in both sales and profits. The primary cause of the revenue decline was demand adjustment and timing delays in deliveries for the core Amusement-related business. Conversely, the gross margin of 53.3% and operating margin of 27.2% indicate maintained high profitability, reflecting pricing power and fixed-cost control. Stable contribution from dividend income received of ¥7.4B resulted in Ordinary Income exceeding Operating Income. Comprehensive income expanded to ¥102.2B due to valuation gains on investment securities, bolstering equity. Versus full-year guidance, results were broadly on plan at 95.8% of Revenue, 98.3% of Operating Income, and 100.0% of Ordinary Income. Cash of ¥389.6B and an Equity Ratio of 91.0% indicate very strong financial health, supporting the sustainability of the dividend of ¥150 (Payout Ratio 51.3%).
[Revenue] Revenue of ¥322.8B (YoY -23.6%) marked a substantial decline. By segment, Amusement-related was ¥239.4B (-29.5%), the largest contributor to the decline. This core business accounts for 74.2% of consolidated sales and was impacted by the trough in the market replacement demand cycle and delays in delivery timing. Smart Solutions-related revenue was ¥61.1B (-2.0%), only slightly down, with continued projects in RFID and automatic identification systems demonstrating resilience. Hotel-related revenue grew to ¥27.9B (+4.7%), supported by improvements in occupancy and ADR. Cost of sales was ¥150.8B, yielding Gross Profit of ¥172.0B (Gross Margin 53.3%), a 4.0pt improvement from 49.3% in the prior year. The expansion of gross margin despite revenue decline suggests maintenance of a high-value product mix and effective price pass-through.
[Profitability] SG&A was ¥84.1B (SG&A ratio 26.0%), slightly down from ¥85.2B a year earlier; weaker fixed-cost absorption led to a contraction of the operating margin from 29.2% to 27.2% (-2.0pt). Nevertheless, Operating Income remained high at ¥88.0B (-28.7%). Non-operating income of ¥9.5B (including dividend income received of ¥7.4B) contributed to Ordinary Income of ¥96.9B (-25.9%), maintaining an Ordinary Income margin of 30.0%. Extraordinary items largely offset (gain on sale of investment securities ¥1.8B vs. valuation loss ¥9.9B), with limited net impact on Net Income. Pre-tax profit was ¥98.6B, with Income Taxes of ¥32.2B (effective tax rate 32.6%), resulting in Net Income of ¥66.4B (-23.8%) and a Net Income margin of 20.6%, remaining at a high level. In summary, revenue and profit declined due to demand adjustments, but improvements in gross margin and control of fixed costs preserved a high-profit profile.
The Amusement-related business posted Revenue of ¥239.4B (-29.5%), Operating Income of ¥84.9B (-28.9%), and a margin of 35.5%. As the core business accounting for 96.4% of consolidated Operating Income, the decline was driven by the trough in the market replacement cycle and delivery timing delays. The margin improved by 0.4pt from 35.1% a year earlier, suggesting price maintenance and improved product mix. Smart Solutions-related revenue was ¥61.1B (-2.0%), Operating Income ¥7.3B (+2.0%), margin 11.9%. Profit growth despite revenue decline resulted from fixed-cost efficiencies and a higher share of high-value projects. Hotel-related revenue was ¥27.9B (+4.7%), Operating Income ¥0.9B (+16.4%), margin 3.1%, supported by occupancy and ADR improvements and recovery in restaurant operations. Significant margin dispersion across segments (Amusement 35.5% vs Hotel 3.1%) increases earnings volatility due to heavy reliance on the core segment.
[Profitability] Operating margin 27.2% (prior year 29.2%), Net Income margin 20.6% (prior year 20.6%), both remaining at high levels. Gross Margin improved to 53.3% (prior year 49.3%), up 4.0pt, underscoring pricing power and a high proportion of high-value products. EBITDA margin is 29.1% (Operating Income ¥88.0B + Depreciation ¥5.9B = ¥93.9B / Revenue ¥322.8B), reflecting solid cash-generation under a low-depreciation asset base. ROE is 7.7% (down from an estimated 11.7% prior year), which can be explained by Net Income margin 20.6% × Total Asset Turnover 0.342 × Financial Leverage 1.10x. The decline in ROE is mainly due to deterioration in Total Asset Turnover (Revenue -23.6% vs Total Assets +8.3%); recovery in Revenue is the leverage for improvement.
[Cash Quality] Operating Cash Flow (OCF) was ¥78.1B, 1.18x Net Income of ¥66.4B, indicating high-quality earnings. OCF/EBITDA ratio was 0.83x (¥78.1B/¥93.9B), constrained by working capital efficiency. Inventory turnover days are 40 days (Inventories ¥35.2B ÷ Cost of Sales ¥150.8B × 365 days), Accounts Receivable turnover days 46 days, Accounts Payable turnover days 30 days, yielding a CCC of 56 days—standard for manufacturing.
[Investment Efficiency] Capital expenditures were ¥22.4B, 3.8x depreciation expense of ¥5.9B, indicating ongoing growth investments. Against Total Assets of ¥942.6B, Net Income of ¥66.4B implies ROA of 7.0%.
[Financial Strength] Equity Ratio 91.0% (prior year 89.9%), D/E ratio 0.10x (interest-bearing debt ¥8.5B / Equity ¥857.3B), demonstrating très strong balance sheet. Current ratio 1,199%, Quick ratio 1,119%, indicating robust short-term liquidity.
OCF was ¥78.1B (YoY -26.6%), structured as Operating Cash Flow subtotal of ¥106.5B less working capital changes of -¥28.4B. Within working capital, a decrease in inventories of +¥19.1B supported cash, indicating progress in inventory correction, while an increase in accounts receivable of +¥0.9B and a decrease in accounts payable of -¥3.9B slightly offset gains. Corporate tax payments of -¥35.9B compressed OCF. Investing Cash Flow was -¥24.8B, comprising CapEx -¥22.4B and acquisition of investment securities -¥4.9B, offset by partial proceeds +¥4.1B, netting -¥24.8B. Financing Cash Flow was -¥27.6B, primarily due to dividend payments of -¥27.7B. Share buybacks were effectively zero (-¥0.0B), and net change in interest-bearing debt was minimal. Free Cash Flow was ¥53.3B (OCF ¥78.1B + Investing CF -¥24.8B), covering dividends of ¥27.7B by 1.9x, supporting dividend sustainability. Cash and cash equivalents at year-end increased to ¥389.6B (prior year ¥363.7B +¥25.9B), further strengthening liquidity.
Operating Income of ¥88.0B versus Ordinary Income of ¥96.9B reflects an upward deviation of ¥8.9B, primarily due to stable dividend income received of ¥7.4B. Non-operating income of ¥9.5B is 2.9% of sales, not indicating excessive reliance on non-core income nor distortion of core earnings. Extraordinary items (gain on sale ¥1.8B vs valuation loss ¥9.9B) largely offset, so one-off impacts on Net Income are limited (approximately -1.2% of Net Income). A similar valuation loss of ¥9.9B occurred in the prior year, so market valuation risk persists. The gap between Ordinary Income ¥96.9B and Net Income ¥66.4B is consistent with tax burden (effective tax rate 32.6%), with limited distortion from special factors. OCF ¥78.1B exceeds Net Income ¥66.4B (OCF/NI = 1.18x), indicating solid cash backing of profits. However, OCF/EBITDA = 0.83x highlights working capital inefficiency, with inventory retention and extended CCC constraining cash conversion—areas for improvement. From an accrual perspective, Comprehensive Income of ¥102.2B substantially exceeds Net Income ¥66.4B, driven by valuation differences on investment securities of ¥31.3B and pension-related adjustments of ¥4.5B, which have boosted equity.
Versus full-year guidance (Revenue ¥337.0B, Operating Income ¥89.5B, Ordinary Income ¥97.0B, Net Income ¥67.0B), actuals were Revenue ¥322.8B (achievement 95.8%), Operating Income ¥88.0B (98.3%), Ordinary Income ¥96.9B (100.0%), Net Income ¥66.4B (99.1%). Revenue slightly missed plan, but profits were maintained through high gross margins and SG&A containment. The main cause of revenue shortfall was delivery timing delays in the Amusement-related segment; gross margin improvements enabled post-operating-stage profits to land on plan. Next fiscal year revenue recovery is forecast at +4.4%, conservatively, and depends on the pace of demand recovery in the Amusement market.
Annual dividend ¥150 (Interim ¥75, Final ¥75), an increase of ¥30 from prior year dividend ¥120. However, the prior year included a ¥50 commemorative dividend for the 50th anniversary in the interim, so the base dividend increase is modest. Payout Ratio is 51.3% (total dividends ¥27.7B / Net Income ¥66.4B), relatively high, but with cash ¥389.6B, Equity Ratio 91.0%, and FCF ¥53.3B, dividends are covered 1.9x, supporting high sustainability. Share buybacks were effectively zero (-¥0.0B), concentrating returns on dividends. If the next fiscal year's EPS forecast of 363.18 yen and a Final dividend forecast of ¥75 are maintained, payout ratio would be approximately 20.7%, indicating remaining room for returns. Total Return Ratio equals the Payout Ratio at 51.3%, and given the cash-rich balance sheet, scope for further increases in dividends is significant.
Segment concentration risk: The Amusement-related business accounts for 74.2% of Revenue and 96.4% of Operating Income, meaning demand variability, regulatory developments, and cyclical sensitivity in the core market materially affect consolidated results. In troughs of the replacement demand cycle, sales can swing significantly (YoY -29.5%), and insufficient portfolio diversification increases earnings volatility.
Market value risk of investment securities: Investment securities of ¥208.5B (22.1% of Total Assets) are held, with valuation differences boosting Accumulated Other Comprehensive Income to ¥91.1B. Deferred tax liabilities of ¥24.4B (+172% YoY) reflect increased valuation gains; a reversal in equity markets could materialize unrealized gains shrinkage and capital erosion. Market price volatility directly affects the Equity Ratio and ROE.
Working capital efficiency: While CCC is 56 days (standard for manufacturing), OCF/EBITDA = 0.83x indicates inventory and working capital retention. Inventory turnover days of 40 days and Inventories of ¥35.2B improved from ¥46.3B prior year but still leave room for efficiency gains. Delivery timing delays and long order-to-production lead times constrain cash generation and may reduce CF efficiency during growth phases.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 27.2% | 7.8% (4.6%–12.3%) | +19.5pt |
| Net Income Margin | 20.6% | 5.2% (2.3%–8.2%) | +15.4pt |
Profitability significantly exceeds the manufacturing median, driven by high-value products and pricing power.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -23.6% | 3.7% (-0.4%–9.3%) | -27.3pt |
Revenue growth is well below the industry median, reflecting demand adjustments in the core market.
※ Source: Company compilation
Sustainability of high profitability: Operating Margin 27.2% and Net Income Margin 20.6% place the company among the top-tier manufacturers, maintained even amid revenue declines. The 4.0pt improvement in Gross Margin to 53.3% demonstrates pricing power and a high share of high-value products; upon demand recovery, operating leverage could accelerate profit growth. Stabilization of the Amusement market replacement cycle and normalization of delivery timing are catalysts for revenue recovery, and the high gross-margin structure has the potential to drive earnings expansion.
Financial strength and dividend capacity: Cash ¥389.6B, Equity Ratio 91.0%, and FCF ¥53.3B cover dividends of ¥27.7B by 1.9x, indicating very high dividend sustainability. Although the Payout Ratio of 51.3% is relatively high, the cash-rich balance sheet suggests scope for further dividend increases; valuation gains on investment securities of ¥31.3B also provide a potential source for shareholder returns upon realization.
Room to improve working capital efficiency: OCF/EBITDA = 0.83x indicates inventory and working capital retention constraining cash generation, although inventories have been corrected by -24.1% YoY. Normalization of delivery timing and further inventory compression could raise OCF/EBITDA above 0.9x, expanding FCF and return capacity. Improving ROE (currently 7.7%) requires higher asset turnover via revenue recovery, making monitoring of demand in the core Amusement market a key focus.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are compiled by the Company based on publicly available financial statements and are provided for reference only. Investment decisions should be made at your own responsibility and, where appropriate, after consulting a professional advisor.