| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2252.8B | ¥2132.3B | +5.7% |
| Operating Income / Operating Profit | ¥376.9B | ¥371.4B | +1.5% |
| Ordinary Income | ¥391.9B | ¥356.1B | +10.1% |
| Net Income / Net Profit | ¥210.5B | ¥207.5B | +1.4% |
| ROE | 11.3% | 12.4% | - |
For the fiscal year ending February 2026, the company achieved revenue of ¥2,252.8B (YoY +¥120.5B, +5.7%), Operating Income of ¥376.9B (YoY +¥5.5B, +1.5%), Ordinary Income of ¥391.9B (YoY +¥35.8B, +10.1%), and Net Income of ¥210.5B (YoY +¥3.0B, +1.4%), resulting in both top-line and bottom-line growth. Gross profit margin remained at 24.9% year-on-year, and SG&A ratio improved to 8.2% from 8.8% (-0.6pt), producing an operating margin of 16.7% (down 0.7pt from 17.4% a year earlier). At the ordinary income level, recognition of foreign exchange gains of ¥10.8B improved non-operating income/expense versus the prior year, lifting the ordinary income margin to 17.4% (up 0.7pt from 16.7%). After a tax burden rate of 27.9%, Net Income was ¥210.5B, yielding a net margin of 9.3%. Operating Cash Flow was ¥228.9B (YoY +176.3%), markedly improved, generating Free Cash Flow of ¥191.3B, sufficient to cover dividends of ¥92.6B. Total assets were ¥2,251.3B, total equity ¥1,869.3B, and Equity Ratio was 83.0%, indicating an exceptionally strong financial base.
[Revenue] Top-line expanded to ¥2,252.8B, up 5.7% YoY. By region, the U.S. was ¥1,287.2B (+7.2%), the U.K. ¥179.8B (+23.5%) driving overseas growth, while Japan was ¥1,875.1B (-6.5%) down and China ¥41.5B (-13.4%) sluggish. Revenue composition was Japan 83.2% (segment sales including inter-segment internal sales ¥1,875.1B), U.S. 57.1%, U.K. 8.0%, France 4.8%, China 1.8%; on an external sales basis Japan ¥678.1B and U.S. ¥1,287.2B showed a regional divergence. A foreign-exchange translation adjustment of ¥8.5B suggests a contribution from yen depreciation. Cost of sales was ¥1,691.0B (75.1% of sales); gross margin of 24.9% declined 1.4pt from 26.3% but remained at a high level.
[Profitability] At the operating level, SG&A was ¥185.0B (8.2% of sales), improved 0.6pt from ¥188.7B (8.8%) a year earlier; major cost items included salaries and allowances ¥39.0B, freight ¥55.6B, and product warranty costs ¥18.6B. As a result, Operating Income was ¥376.9B, with an operating margin of 16.7%, down 0.7pt from 17.4% the prior year. The main driver of margin compression was a substantial decline in U.S. segment Operating Income to ¥67.3B (-38.3%), reducing its margin to 5.2%. Conversely, the U.K. showed a sharp increase in Operating Income to ¥12.4B (+148.1%), improving its margin to 6.9%. Non-operating income totaled ¥15.9B, composed of interest income ¥3.9B, foreign exchange gains ¥10.8B, and other ¥1.1B; non-operating expenses were ¥0.9B (other ¥0.9B; apparent overlap with foreign exchange losses of ¥22.5B is presumed a disclosure classification discrepancy), resulting in net non-operating income of +¥15.0B and lifting Ordinary Income to ¥391.9B (+10.1%). Extraordinary items were minimal, limited to loss on retirement of fixed assets ¥0.04B. After deducting corporate taxes and others of ¥109.2B (effective tax rate 27.9%), Net Income was ¥210.5B (+1.4%), with a net margin of 9.3%. Comprehensive income was ¥292.6B, substantially above Net Income due to OCI items including foreign currency translation adjustment ¥8.5B and valuation differences on available-for-sale securities ¥1.4B. In conclusion, while both revenue and profit increased, operating-level margin compression was observed and the ordinary-stage profit margin recovered due to foreign exchange gains.
Reportable segments are Japan, U.S., U.K., France, and China. Japan reported external sales of ¥678.1B (prior ¥671.3B, +1.0%), segment sales including inter-segment internal sales ¥1,875.1B (-6.5%), Operating Income ¥313.6B (-8.6%), and a margin of 16.7%; it remains the core high-profit business though profit declined. The U.S. had external sales ¥1,287.2B (+7.2%), Operating Income ¥67.3B (-38.3%), margin 5.2% — sales expanded but profit fell sharply and margin halved from 10.9% the prior year, likely due to price competition, rising costs, and product mix changes. The U.K. recorded external sales ¥179.8B (+23.5%), Operating Income ¥12.4B (+148.1%), margin 6.9% — showing the most marked improvement. France posted external sales ¥108.1B (-4.6%), Operating Income ¥5.8B (-29.2%), margin 5.3%. China had external sales ¥41.5B (-13.4%), Operating Income ¥2.5B (-14.5%), margin 6.1%; both experienced revenue and profit declines in a challenging environment. Margin disparity across regions is large: Japan’s high profitability at 16.7% versus overseas at 5–7% range. Of the company-wide Operating Income ¥376.9B, Japan accounted for ¥313.6B (83.2%), indicating limited geographic diversification. Recovery of U.S. profitability is key to expanding company-wide margins.
[Profitability] Operating margin of 16.7% declined 0.7pt from 17.4% but remains well above the industry median of 7.8%. Net margin of 9.3% also exceeds the industry median 5.2% by 4.1pt, indicating sustained high profitability. ROE is 11.3% (disclosed financial metric), exceeding the industry median 6.3% by 5.0pt. Note a discrepancy in computed net margin (12.6% using Net Income ¥282.7B ÷ Sales ¥2,252.8B) versus disclosed 9.3%; the disclosed figure is taken as authoritative. Total asset turnover is 1.00x (Sales ¥2,252.8B ÷ Total Assets ¥2,251.3B), and financial leverage is 1.20x (Total Assets ¥2,251.3B ÷ Equity ¥1,869.3B). EBITDA is ¥408.5B (Operating Income ¥376.9B + Depreciation ¥31.7B), with an EBITDA margin of 18.1%, a high level.
[Cash Quality] Operating Cash Flow ¥228.9B versus Net Income ¥210.5B yields an Operating CF/Net Income ratio of 1.09x, favorable. OCF/EBITDA ratio is 0.56x, somewhat low. Free Cash Flow ¥191.3B (OCF ¥228.9B - Investing CF ¥37.6B) covers dividends ¥92.6B by 2.07x, providing ample dividend coverage. Accrual ratio ((Net Income ¥210.5B - OCF ¥228.9B) ÷ Total Assets ¥2,251.3B) = -0.8%, indicating cash generation exceeds accounting profit. [Investment Efficiency] Total asset turnover 1.00x exceeds industry median 0.76x. Capital expenditures ¥28.5B versus depreciation ¥31.7B results in an investment/depreciation ratio of 0.90x (industry median 1.08x), suggesting maintenance-focused capex. [Financial Soundness] Equity Ratio 83.0% exceeds industry median 60.9% by 22.1pt, demonstrating a very strong balance sheet. Current ratio 491.8% (Current Assets ¥1,839.5B ÷ Current Liabilities ¥374.1B) and Quick ratio 360.7% (Quick Assets ¥1,349.1B ÷ Current Liabilities ¥374.1B) show ample liquidity. Net cash is ¥571.7B (cash & deposits) with no interest-bearing debt; D/E ratio is 0.00x. Working capital days (CCC): Accounts receivable days 73 days (industry median 72.7 days), Inventory days 106 days (38 days above industry median 67.8 days), Accounts payable days 55 days (17 days above industry median 38.3 days), yielding CCC = 73 + 106 - 55 = 124 days, with high inventory levels depressing capital efficiency.
Operating Cash Flow improved substantially to ¥228.9B (prior ¥82.8B, +176.3%). Breakdown: pre-tax profit ¥391.9B and non-cash adjustments including depreciation ¥31.7B produced operating cash subtotal ¥351.1B; changes in working capital were inventory decrease +¥24.3B (cash realized from inventory compression), accounts receivable decrease +¥16.8B, and accounts payable decrease -¥108.7B (cash outflow due to lower payables), yielding a net working capital contribution of -¥67.6B. After corporate tax payments -¥126.2B, Operating CF totaled ¥228.9B. In the prior year, accounts payable outflow was -¥35.5B; this year it expanded to -¥108.7B, indicating shortened payment terms or adjustment in purchase volumes as cash outflow drivers. Investing CF was -¥37.6B, mainly capital expenditure -¥28.5B, intangible asset acquisition -¥4.2B, and securities redemption +¥6.0B. Free Cash Flow was ¥191.3B (OCF ¥228.9B - Investing CF ¥37.6B), significantly up from ¥58.3B in the prior year. Financing CF was -¥93.3B, comprised mainly of dividend payments -¥92.2B, treasury stock acquisition -¥0.7B, and lease liability repayments -¥0.4B. Net change in cash was +¥101.9B (OCF ¥228.9B + Investing CF -¥37.6B + Financing CF -¥93.3B + FX adjustments +¥3.8B), raising cash from opening balance ¥462.5B to closing balance ¥571.7B. In working capital management, inventory compression progressed but a large reduction in payables was a cash outflow; optimizing payment terms will be a priority next period. Cash generation capacity has materially improved YoY, and FCF coverage of dividends at 2.07x indicates high sustainability.
Overall quality of earnings is good. Non-operating income ¥15.9B (0.7% of sales) centered on interest income ¥3.9B and foreign exchange gains ¥10.8B, and does not constitute a one-off exceeding 5% of sales. Non-operating expenses ¥0.9B are minor; Ordinary Income ¥391.9B is only +4.0% above Operating Income ¥376.9B. Extraordinary losses are minimal (loss on retirement of fixed assets ¥0.04B), so one-time distortions are limited. Comprehensive income ¥292.6B exceeds Net Income ¥210.5B by ¥82.1B due to OCI such as foreign currency translation adjustment ¥8.5B and valuation differences on available-for-sale securities ¥1.4B; most valuation differences are unrealized. Accrual ratio -0.8% ((Net Income ¥210.5B - OCF ¥228.9B) ÷ Total Assets ¥2,251.3B) indicates cash generation exceeds accounting profit and accruals are at a healthy level. OCF/Net Income ratio 1.09x is favorable, showing appropriate cash realization of profits. The ¥181.4B gap between Ordinary Income and Net Income is mainly explained by corporate taxes ¥109.2B; the effective tax rate 27.9% is standard. Therefore, earnings are driven by recurring operating activities with low risk of distortive one-offs or accounting manipulations, and overall quality of earnings is high.
The company’s guidance for FY2027 (ending February 2027) is Revenue ¥2,440.0B (YoY +8.3%), Operating Income ¥373.0B (YoY -1.0%), Ordinary Income ¥365.0B (YoY -6.9%), EPS forecast ¥560.69, and dividend forecast ¥110. Revenue is expected to increase by ¥187.2B (+8.3%), while Operating Income is projected at ¥373.0B, down ¥3.9B (-1.0%) from ¥376.9B, implying an operating margin compression to 15.3% (down 1.4pt from 16.7%). Ordinary Income is forecast at ¥365.0B, down ¥26.9B (-6.9%) from ¥391.9B, with an ordinary margin of 15.0% (down 2.4pt from 17.4%). This cautious guidance likely factors in cost increases, price competition, and a worsening regional mix (continued U.S. margin weakness). The dividend forecast ¥110 is half the prior-year disclosed ¥210, but this may reflect a shift from a single year-end dividend to semi-annual dividends (interim and year-end ¥110 each, implying total ¥220). Payout ratio is disclosed at 36.2% (forecast), similar to prior year 36.4%, indicating a policy to maintain payout. The outlook of revenue growth with flat-to-declining profits suggests continued bottom-line pressure despite top-line expansion; inventory and receivables compression and strengthened cost control will be key to achieving guidance.
A year-end dividend of ¥210 was paid (disclosure showed ¥0 but actual payout was ¥92.6B which equates to an annual per-share amount equivalent to ¥200 on a shares basis). Disclosed payout ratio is 36.2%, with total dividends ¥92.6B against Net Income ¥210.5B, representing 48.4% of Free Cash Flow ¥191.3B. Dividend coverage on an FCF basis is 2.07x, and given the strong financial base (Equity Ratio 83.0%, cash ¥571.7B), dividend sustainability is high. Share buybacks totaled ¥0.7B, modest, and total return ratio is (Dividends ¥92.6B + Buybacks ¥0.7B) ÷ Net Income ¥210.5B = 44.3%. The company has announced introduction of an interim dividend from FY2027, moving to biannual dividends (interim and year-end), which should improve predictability and convenience for shareholders. The next-period dividend forecast of ¥110 can be interpreted as the interim portion, implying an annual dividend around ¥220 (payout ratio ~39%) may be expected. Historical data is limited, but the stated policy to maintain payout ratio in the mid-30% range indicates a clear preference for stable dividends.
U.S. segment profitability deterioration risk: The U.S. is the largest market with external sales ¥1,287.2B (57.1% of consolidated sales), but Operating Income decreased to ¥67.3B (-38.3%) with a margin of 5.2% (half of prior 10.9%). Causes likely include intensified price competition, cost increases, and product mix changes. If U.S. profitability does not recover, company-wide operating margin pressure will continue and the next-period guidance (Operating Income -1.0%) may not be met. Quantitatively, a 1pt decline in U.S. margin from 5.2% would reduce consolidated Operating Income by approximately ¥13B (¥1,287B × 1%).
Elevated inventory levels and obsolescence risk: Inventory ¥490.4B (21.8% of sales) and inventory days 106 days (38 days above industry median 67.8 days) indicate high inventory. Breakdown: finished goods ¥490.4B, work-in-progress ¥128.3B, raw materials ¥160.9B, with finished goods particularly large. Demand fluctuations or product obsolescence could trigger valuation losses; inventory-related cash realization was only +¥24.3B versus OCF ¥228.9B. If inventory further accumulates, working capital will be strained, increasing the risk of reduced cash generation and valuation losses in subsequent periods.
Continued cash outflow due to reduction in accounts payable: Accounts payable fell to ¥253.0B from ¥360.2B, a decrease of ¥107.2B (-29.8%), causing a -¥108.7B impact on Operating CF. This suggests shortened payment terms or purchase volume adjustments. If payables continue to decline at a similar pace next period, Operating CF could be pressured on the order of ¥100B. Although accounts payable days are relatively long at 55 days (industry median 38.3 days), changes in supplier terms or procurement policy could materially affect liquidity.
[Industry Position] (reference — company research) Compared to the manufacturing industry median (FY2025, n=244), profitability metrics are outstanding. Operating margin 16.7% exceeds industry median 7.8% by 8.9pt; net margin 9.3% exceeds industry median 5.2% by 4.1pt. ROE 11.3% exceeds industry median 6.3% by 5.0pt, and return on assets also surpasses the industry median 4.0%. Financial soundness is strong: Equity Ratio 83.0% exceeds industry median 60.9% by 22.1pt, and current ratio 491.8% far exceeds industry median 266%. Net Debt/EBITDA is negative owing to zero interest-bearing debt, stronger than the industry median -0.59x. However, working capital efficiency is an issue: inventory days 106 days exceed industry median 67.8 days by 38 days, highlighting high inventory levels. Accounts receivable days 73 days are roughly in line with industry median 72.7 days; accounts payable days 55 days are 17 days above industry median 38.3 days. OCF/Net Income 1.09x is favorable, but OCF/EBITDA 0.56x lags the industry median 1.46x, indicating scope to improve cash conversion efficiency. Total asset turnover 1.00x exceeds industry median 0.76x, showing solid asset efficiency. Payout ratio 36.2% is close to the industry median 33%, representing a standard shareholder return stance. Revenue growth +5.7% outperforms industry median +3.7% by 2.0pt. Overall, the company ranks near the top in profitability and financial soundness within the industry, while inventory management and cash conversion efficiency are key areas for improvement to reach the next growth stage.
Three key points stand out in the results. First, the company maintains a high-profit business model with an operating margin of 16.7%, but regional profitability disparities are apparent. The Japan segment sustains a high margin of 16.7%, whereas the U.S. has deteriorated to 5.2% (from 10.9%), putting downward pressure on consolidated margins. Next-period guidance is conservative (Operating Income -1.0%), making margin recovery in the U.S. critical. Second, while Operating CF improved markedly to ¥228.9B (+176.3%), working capital management remains a challenge: inventory days 106 (industry +38 days) are high and accounts payable reduction -¥108.7B was a cash outflow. If inventory compression and payable optimization proceed, Operating CF could improve by about ¥100B. Third, with Equity Ratio 83.0%, cash ¥571.7B, and D/E 0.00x, the company has a very robust financial base supporting a payout ratio of 36.2% and dividend coverage 2.07x, enabling stable dividends. The move to semi-annual dividends from FY2027 enhances predictability of shareholder returns. Guidance for the next fiscal year assumes Revenue +8.3% but Operating Income -1.0%; if inventory/receivables compression and U.S. margin recovery materialize, upside to guidance is possible.
This report was automatically generated by AI analyzing XBRL financial statement disclosure 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 disclosures. Investment decisions are your responsibility; consult a professional advisor if necessary.