Amano Corporation FY2026 FY Earnings Report

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Executive Summary

For the full year ended March 2026, Revenue was ¥1,764.7B (YoY +¥10.4B +0.6%), Operating Income was ¥225.5B (YoY -¥4.9B -2.1%), Ordinary Income was ¥243.6B (YoY -¥2.8B -1.2%), and Net Income was ¥143.9B (YoY -¥19.7B -12.0%). Revenue slightly increased driven by the Time & Attendance Systems (Time Information Systems) Business (+0.8%), but Operating Income declined due to higher SG&A expenses (+¥1,871M +3.4%), and Net Income recorded a double-digit decrease as last year’s unusually strong special gains were reduced this year. The effective tax rate improved substantially to 21.6% (prior year 29.9%), and special gains of ¥18.7B (mainly ¥18.5B gain on sale of investment securities) were recognized; however, even after excluding these one-off factors, weaker operating performance restrained overall results. Operating margin fell to 12.8% (from 13.1% prior year, -0.3pt) and net margin to 8.2% (from 9.3% prior year, -1.1pt), producing a revenue-up, profit-down outcome.

Drivers of Performance

[Revenue] Revenue totaled ¥1,764.7B (YoY +0.6%), a modest increase. By segment, the core Time Information Systems business recorded ¥1,369.2B (+0.8%), with steady demand for workforce/time & attendance, HR management systems, and parking systems solutions. The Environmental Systems business was ¥395.4B (-0.1%), essentially flat, as demand for industrial vacuum cleaners and dust collection systems reached a plateau. Revenue composition was 77.6% Time Information Systems and 22.4% Environmental Systems, nearly unchanged from the prior year, so segment-mix effects were limited. While regional and customer-level detail were not disclosed, overall domestic market maturity and variability in customer IT investment timing likely constrained revenue growth.

[Profitability] Operating Income declined to ¥225.5B (-2.1%). Cost of sales was ¥961.8B yielding a gross margin of 45.5% (up 0.5pt from 45.0% prior year), but SG&A rose to ¥577.4B (YoY +3.4% equivalent), far outpacing revenue growth (+0.6%), which was the primary cause of lower operating profit. Corporate expense adjustments expanded from -¥4,316M to -¥4,432M, suggesting structural increases in corporate overhead. Operating margin contracted to 12.8% (-0.3pt), reflecting negative operating leverage from SG&A growth. Ordinary Income was ¥243.6B (-1.2%); non-operating income of ¥22.6B (interest income ¥8.7B, dividend income ¥3.9B, equity-method gains ¥2.7B, etc.) less non-operating expenses of ¥4.5B (interest expense ¥2.5B, foreign exchange losses ¥0.4B, etc.) produced net non-operating income of ¥18.1B added to operating income. Special gains were ¥18.7B (primarily ¥18.5B gain on sale of investment securities) and special losses were ¥4.0B (asset retirement losses ¥3.5B, valuation losses on investment securities ¥1.5B, etc.), producing a net uplift of ¥14.7B. Despite substantially reduced tax expense—corporate taxes of ¥55.8B on pre-tax profit ¥258.2B, implying an effective tax rate of 21.6% (prior 29.9%)—Net Income attributable to owners of the parent declined to ¥143.9B (-12.0%). Prior-year Net Income of ¥163.6B included special gains of ¥12.4B (¥12.3B gain on sale of investment securities) and an effective tax rate of 29.9%. Although absolute special gains rose and tax rate decreased this period, the operating-level profit decline and year-on-year changes in non-operating and special items (non-operating net from ¥1.60B → ¥18.1B, special net from ¥10.3B → ¥14.7B) indicate that the main drivers of Net Income decline were lower Operating Income and a reversion from last year’s high base. In conclusion, the company experienced revenue growth but profit decline, with limited top-line expansion while structural SG&A increases compressed margins; one-off special items and favorable tax effects were insufficient to offset operating weakness.

Segment Analysis

The Time Information Systems business reported Revenue ¥1,369.2B (YoY +0.8%), Operating Income ¥220.6B (-3.4%), and margin 16.1% (down 0.7pt from approx. 16.8% prior year). Revenue edged up, but segment profit declined from ¥228.3B last year; margin pressure is likely due to higher SG&A and increased development investment. Investments to strengthen recurring revenue—cloud migration of workforce/HR management systems and expansion of IC-card solutions for access control—may have generated upfront costs. The Environmental Systems business recorded Revenue ¥395.4B (-0.1%), Operating Income ¥49.2B (+8.7%), and margin 12.4% (improved 1.0pt from approx. 11.4% prior year). Revenue was flat, but margin improved due to production efficiency gains and favorable product mix (higher share of high-margin large dust collection systems and clean robots). Combined segment profit was ¥269.8B, from which corporate expenses of -¥44.32B are deducted to arrive at consolidated Operating Income of ¥225.5B. The Time Information Systems business accounts for about 82% of Operating Income, underscoring its importance, but if margin declines persist, accelerated cost-efficiency measures (process standardization, automation investments) will be required.

Key Financial Metrics

[Profitability] Operating margin was 12.8% (down 0.3pt from 13.1%), and net margin was 8.2% (down 1.1pt from 9.3%). ROE was 10.3% (down from approx. 13.5% prior year), primarily due to lower Net Income. Gross margin was 45.5% (up 0.5pt from 45.0%), but SG&A ratio rose to 32.7% (up approx. 0.9pt from 31.8%), and SG&A growth (+3.4% equivalent) far outpaced revenue growth (+0.6%), producing negative operating leverage. Time Information Systems margin was 16.1% (down 0.7pt) and Environmental Systems margin 12.4% (up 1.0pt); segment mix was roughly neutral, but margin contraction in the core Time Information Systems business weighed on consolidated margins.

[Cash Quality] Operating Cash Flow (OCF) was ¥249.4B (prior year ¥246.7B, +1.1%) which is 1.73x Net Income ¥143.9B, indicating high quality. From OCF subtotal (pre-working-capital changes) ¥324.3B, accounts receivable movement +¥22.1B, accounts payable movement -¥10.7B, and corporate tax payments -¥87.9B lead to final OCF. OCF/EBITDA is about 0.75x (EBITDA = Operating Income ¥225.5B + Depreciation ¥106.5B ≒ ¥332.0B), below the ideal >0.9x, indicating room to improve working-capital efficiency. Days Sales Outstanding (DSO) is approx. 77 days (Accounts Receivable ¥371.0B ÷ average daily sales ¥4.84B), indicating lengthening receivable days and a need to optimize collections.

[Investment Efficiency] CapEx was ¥52.2B / Depreciation ¥106.5B = 0.49x, low and indicating constrained renewal/growth investment. Intangible investments (mainly software) amounted to ¥39.01B (software additions +¥19.90B + WIP ¥26.81B), showing continued development investment for cloud platform and AI enhancements. ROIC is estimated at approx. 11.2% (Operating Income × (1 - effective tax rate 21.6%) / (Net Assets ¥1,392.1B + interest-bearing debt approx. ¥149B)), exceeding estimated capital cost (around 8–10%).

[Financial Soundness] Equity Ratio was 72.1% (up 2.2pt from 69.9% prior year), current ratio 287.4%, quick ratio 274.6%—very healthy. Interest-bearing debt is modest: short-term borrowings ¥708M + lease liabilities (current ¥5,236M + non-current ¥8,736M) ≒ ¥14,680M, resulting in Debt/EBITDA of 0.04x and interest coverage of approx. 91x (Operating Income ¥225.5B / interest expense ¥2.5B), indicating minimal financial burden. Cash and deposits ¥607.9B + short-term securities ¥9.0B ≒ ¥616.9B provide ample liquidity, with cash/short-term debt ratio approx. 86x. Treasury stock balance was ¥64.91B (substantially reduced from ¥144.24B prior year) due to ¥83.9B repurchases and subsequent retirement/disposal, improving shareholders’ equity efficiency.

Cash Flow Analysis

OCF was ¥249.4B (YoY +¥2.7B +1.1%), 1.73x Net Income ¥143.9B, demonstrating quality. OCF subtotal (pre-working-capital changes) was ¥324.3B; non-cash charges such as depreciation ¥106.5B and goodwill amortization ¥4.7B were added back, and improved collections of accounts receivable (+¥22.1B) contributed, while increases in inventories (-¥3.5B) and decreases in accounts payable (-¥10.7B) partially offset. Corporate tax payments -¥87.9B, interest & dividend received ¥13.8B, interest paid -¥2.5B, etc. led to final OCF. Investing CF was -¥65.6B, led by CapEx -¥52.2B and intangible asset investment -¥39.01B (mainly software development), partially offset by proceeds from sale of investment securities +¥23.3B and redemptions +¥18.5B. Free Cash Flow was ¥183.8B (OCF ¥249.4B - Investing CF ¥65.6B), ample and covered dividend payments -¥129.1B by 1.42x. Financing CF was -¥261.8B; total shareholder returns of ¥213.0B (dividends -¥129.1B and share repurchases -¥83.9B) exceeded FCF, with lease liability repayments -¥69.5B and sale-and-leaseback proceeds +¥24.2B among other items. Cash on hand increased from approx. ¥556.0B at the beginning of the period to ¥608.0B at period-end, and the cash/short-term debt ratio remained extremely high at approx. 86x. OCF/EBITDA was about 0.75x, below the ideal >0.9x; lengthening receivable days (DSO ≈ 77 days) is a primary factor, and working-capital management improvements (shortening collection terms, strengthening credit processes) are essential to improve cash conversion next fiscal year.

Quality of Earnings

Of Net Income ¥143.9B, special gains ¥18.7B (mainly ¥18.5B gain on sale of investment securities) and the favorable tax effect (effective tax rate 21.6%, an 8.3pt improvement from 29.9% prior year) were temporary contributors. Net special items (special gains ¥18.7B less special losses ¥4.0B) were about ¥14.7B, roughly 10.2% of Net Income. Applying the effective tax rate 21.6% to pre-tax profit ¥258.2B would imply Net Income of roughly ¥202B, but the actual Net Income ¥143.9B (including non-controlling interests ¥0.9B) differs due to non-controlling interests and certain adjustments. The step from Operating Income ¥225.5B to Ordinary Income ¥243.6B (net non-operating +¥18.1B) was primarily driven by relatively stable financial income—interest income ¥8.7B, dividend income ¥3.9B, equity-method gains ¥2.7B—considered ongoing income sources. Minor costs such as foreign exchange losses ¥0.4B and interest expense ¥2.5B were recorded, but leverage is minimal so impacts are limited. Comprehensive income was ¥240.6B (Net Income ¥143.9B + Other Comprehensive Income ¥38.2B); OCI components include foreign currency translation adjustments ¥22.5B, valuation differences on securities ¥6.3B, and retirement benefit adjustments ¥9.3B. FX translation effects reflect currency translation of overseas subsidiaries and are temporary; valuation differences on securities reflect market price movements of holdings and are not operational results. Retirement benefit adjustments stem from pension asset returns and actuarial differences and do not directly correlate with cash generation. Therefore, while Ordinary Income stability is high, at the Net Income level approximately ¥30B of the reported profit appears to be due to one-off special gains and tax rate declines, warranting attention to normalization in future periods. OCF ¥249.4B exceeds Net Income ¥143.9B by 73%, reflecting add-backs for depreciation and working-capital improvements (accounts receivable collections), and indicates conservative accrual accounting.

Outlook / Guidance

For the full year ending March 2027, management forecasts Revenue ¥1,840.0B (YoY +4.3%), Operating Income ¥240.0B (+6.4%), Ordinary Income ¥256.0B (+5.1%), Net Income ¥137.0B (-4.8%), and EPS ¥254.11. Revenue growth is expected from full-scale deployment of cloud services in Time Information Systems and capturing large Environmental Systems projects; Operating Income is targeted to increase via SG&A efficiency improvements and product-mix improvement. Assuming a mid-year progress rate equivalent to Revenue 48.0% (¥1,764.7B / annual plan approx. ¥3,680.0B), performance is broadly on track, but achieving full-year targets depends on second-half order intake and working-capital improvements (DSO shortening to accelerate cash conversion). Net Income is forecast to decline YoY (-4.8%), reflecting a reversal of last year’s one-off factors (¥18.5B gain on sale of investment securities, tax rate decline) and assumed normalization of the full-year effective tax rate (toward around 25%). EPS is forecast at ¥254.11 (down 11.3% from prior year ¥286.34), partially offset by share repurchases and retirements reducing shares outstanding but still dominated by Net Income decline. Dividend guidance is annual ¥55.00, implying a payout ratio of approx. 21.6% (¥55 / ¥254.11), a large decline from prior year 70.7%—this may reflect an interim-only dividend assumption or that year-end dividend is not yet reflected, so confirmation of full-year dividend policy is needed. Revenue growth +4.3% assumes acceleration from prior modest growth (+0.6%), and Operating Margin is expected to improve to 13.0% (¥240B / ¥1,840B), up 0.2pt from 12.8% prior year. Guidance assumes backlog digestion and accelerated cloud migration in Time Information Systems, successful delivery of large Environmental Systems dust collection projects, SG&A growth contained below revenue growth, and working-capital improvements shortening DSO.

Shareholder Returns

Annual dividend was ¥180 (interim ¥55, year-end ¥125), with total dividend payouts of ¥129.1B. The payout ratio was 62.9% (¥180 / ¥286.34), within a sustainable range; prior year payout ratio was 70.7%. This fiscal year management repurchased ¥83.9B of shares, bringing total shareholder returns to approx. ¥213.0B, and total return ratio to approx. 148.0% (¥213.0B / ¥143.9B), exceeding free cash flow ¥183.8B. Dividend coverage by FCF was 1.42x (¥183.8B / ¥129.1B), indicating room, but total returns exceeded FCF by about 16%, funded from cash on hand. Cash and deposits balance of ¥607.9B provides a healthy buffer, and DOE (dividend / shareholders’ equity) is approx. 9.5% (¥129.1B / approx. ¥1,361.3B), reflecting a shareholder-return orientation. Treasury stock balance was materially reduced from -¥144.24B at the beginning of the period to -¥64.91B at period-end through ¥83.9B repurchases plus retirements/disposals to improve equity efficiency. Next fiscal year dividend guidance of ¥55.00 may represent only an interim dividend; confirmation of year-end dividend in the full-year policy is needed. If full-year dividend remains around ¥180, the payout ratio versus forecast EPS ¥254.11 would be about the 70% range (¥180 / ¥254.11 ≒ 70.8%), similar to the prior year and indicating a continuation of a stable dividend policy. The sustainability of further share repurchases is uncertain, but given FCF generation and liquidity, there is tactical capacity for additional returns.

Risk Factors

1. Segment concentration risk: The Time Information Systems business accounts for 77.6% of Revenue and about 82% of Operating Income, so demand swings or intensified price competition in the core market materially affect results. Delays in cloud migration or a downturn in enterprise IT investment cycles could cause orders to fall short of plans. A DSO of 77 days and lengthening receivables entail customer credit and collection delay risks.

2. Structural SG&A increase risk: SG&A growth outpaced revenue growth (YoY +3.4% equivalent vs. revenue +0.6%), reflecting higher personnel costs and front-loaded R&D and sales investments that worsen operating leverage. Continued talent competition or product development investment would prolong downward pressure on Operating Income. Corporate expense adjustments are trending wider, and delayed corporate function efficiency improvements could further compress margins.

3. Mid-term competitiveness risk from low investment: CapEx / Depreciation ratio 0.49x shows restrained renewal investment, raising risks of higher maintenance costs and declining manufacturing efficiency. Although intangible (software) investment continues, prolonged underinvestment in manufacturing/logistics infrastructure could impair competitive positioning. If working-capital efficiency does not improve (DSO shortening), OCF/EBITDA may remain low and cash conversion weakness could constrain investment capacity.

Industry Benchmark (reference, internal)

Profitability & Returns

Operating and net margins both materially exceed the industry median, placing the company among the higher profitability tiers in manufacturing.

Growth & Capital Efficiency

Revenue growth trails the industry median, indicating slower growth relative to peers, influenced by core market maturity and variable customer IT investment cycles.

※ Source: Company compilation

Key Takeaways from the Results

1. While Revenue was flat and Operating Income declined, Net Income was underpinned by special gains and a lower tax rate; however, improving operating-level profitability (SG&A efficiency, working-capital improvements) is critical for sustainable growth. Although an Operating Margin of 12.8% is high within the industry, reversing the -0.3pt YoY decline requires expanding recurring revenue from cloud migration in Time Information Systems and improving the high-margin product mix in Environmental Systems. ROE at 10.3% is in a favorable range, and improving working-capital turnover (targeting DSO from 77 days → approx. 60 days) could enhance ROIC.

2. With robust FCF of ¥183.8B, management executed dividends of ¥129.1B (FCF coverage 1.42x) and share repurchases of ¥83.9B, demonstrating an active return policy with total return ratio 148.0%. Cash on hand ¥607.9B and Debt/EBITDA 0.04x indicate very strong financial resilience, supporting stable dividends and tactical additional returns. FY2027 guidance is for revenue and profit growth, but confirmation of dividend policy (¥55 interim-only vs. full-year) and a reacceleration of CapEx (CapEx/Depreciation 0.49x → recovery to >0.8x) to strengthen mid-term competitiveness are monitoring points.

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This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference data compiled by the firm from public filings. Investment decisions are your responsibility; consult professional advisors as needed.