| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1905.5B | ¥1924.9B | -1.0% |
| Operating Income / Operating Profit | ¥102.8B | ¥112.1B | -8.3% |
| Ordinary Income | ¥161.6B | ¥157.9B | +2.4% |
| Net Income / Net Profit | ¥113.0B | ¥76.5B | +47.7% |
| ROE | 5.3% | 3.9% | - |
For the full year ended March 2026, Revenue was ¥1905.5B (YoY -¥19.4B, -1.0%), Operating Income was ¥102.8B (YoY -¥9.3B, -8.3%), Ordinary Income was ¥161.6B (YoY +¥3.7B, +2.4%), and Net Income attributable to owners of the parent was ¥113.0B (YoY +¥36.5B, +47.7%). Revenue declined slightly, but an increase in equity-method investment income of ¥35.3B (YoY +¥18.8B) and higher dividend/interest income drove higher income at the ordinary level; additional special gains and reduced tax burden resulted in a substantial increase in final profit. At the operating level gross margin improved to 21.9% (YoY +0.7pt) while SG&A ratio rose to 16.5% (YoY +1.1pt), leading Operating Margin to decline to 5.4% (YoY -0.4pt). Asia contributed as the primary profit driver with Operating Income of ¥80.3B and a margin of 15.1%, whereas the Japan segment saw a significant decline to ¥4.0B and 0.7%, and FALTEC struggled at ¥14.0B and 1.9% (YoY -36.1%). Net income attributable to owners of the parent was ¥113.0B after non-controlling interests, reflecting uplift from non-operating income and one-off gains.
[Revenue] Revenue was ¥1905.5B (YoY -1.0%), a slight decrease. By segment, the TPR Group (excluding FALTEC) recorded ¥1315.9B (+2.5%), with Asia ¥530.9B (+2.5%), Japan ¥600.5B (+2.3%), North America ¥157.8B (+3.7%), and Other ¥26.7B (+0.6%) all exceeding prior year. Conversely, the FALTEC Group declined sharply to ¥731.8B (-7.5%), weighing on consolidated results. Regionally, Asia and North America showed solid growth, but FALTEC's slowdown dragged on consolidated revenue. Although FX effects and price adjustments are not specified, the improvement in gross margin suggests lower costs or improved product mix.
[Profitability] Cost of sales was ¥1488.6B, yielding gross profit of ¥416.9B and a gross margin of 21.9% (YoY +0.7pt). SG&A expenses were ¥314.1B (YoY +¥17.4B, +5.9%), increasing the SG&A ratio to 16.5% (YoY +1.1pt), revealing weaker fixed-cost control. Operating Income was ¥102.8B (-8.3%), Operating Margin 5.4% (-0.4pt). Non-operating income increased substantially to ¥65.8B (of which equity-method investment income ¥35.3B, dividend income ¥11.2B, interest income ¥6.6B, FX gains ¥3.1B), far exceeding non-operating expenses of ¥6.9B (interest expense ¥4.2B, FX losses ¥1.5B, etc.), restoring Ordinary Income to ¥161.6B (+2.4%). Special gains totaled ¥17.7B (gain on sale of fixed assets ¥16.0B, gain on sale of investment securities ¥1.0B) and special losses totaled ¥19.0B (impairment losses ¥15.7B, loss on disposal of fixed assets ¥2.7B), largely offsetting each other with limited net effect. Profit before income taxes was ¥160.3B, income taxes were ¥40.1B (effective tax rate ~25%), and non-controlling interests were ¥26.2B, resulting in Net Income attributable to owners of the parent of ¥113.0B (+47.7%). In summary, slight revenue decline and operating profit decrease were offset by increased equity-method income and financial income, with non-operating factors driving a large increase in final profit.
Operating Income for the TPR Group (excluding FALTEC) was ¥84.4B (YoY -4.8%), margin 6.4%. The Japan segment had Revenue ¥600.5B (+2.3%) but Operating Income ¥4.0B (-71.5%), margin 0.7%, a sharp deterioration due to higher SG&A and fixed-cost burden. Asia had Revenue ¥530.9B (+2.5%) and Operating Income ¥80.3B (+3.6%), margin 15.1%, maintaining high profitability and forming the core of group profits. North America generated Revenue ¥157.8B (+3.7%) but an operating loss of ¥3.2B (improved from -¥5.8B), margin -2.1%—loss narrowed but remains negative. Other regions: Revenue ¥26.7B (+0.6%), Operating Income ¥3.3B (+23.0%), margin 12.4%—healthy. FALTEC Group had Revenue ¥731.8B (-7.5%), Operating Income ¥14.0B (-36.1%), margin 1.9%—notable decline. Of consolidated Operating Income ¥102.8B, Asia accounts for approximately 78%; improving profitability in Japan, North America, and FALTEC is key to overall earnings recovery.
[Profitability] Operating Margin 5.4% (Prior 5.8%), Net Profit Margin 5.9% (Prior 4.0%)—operating-level profitability declined while final profitability improved. Gross Margin 21.9% (Prior 21.2%) rose due to cost improvement; SG&A Ratio 16.5% (Prior 15.4%) worsened due to higher fixed costs. ROE is 5.3% (roughly flat YoY); equity ROE is approximately 4.4% (Net Income attributable to owners ¥113.0B / average equity attributable to owners), indicating low capital efficiency.
[Cash Quality] Operating Cash Flow (OCF) of ¥227.2B is 2.0x Net Income ¥113.0B, indicating high quality; accrual ratio is -50% ((OCF - Net Income) / Total Assets), showing strong cash backing of earnings. OCF/EBITDA (Operating Income + Depreciation ¥118.0B = EBITDA ¥220.8B) is 1.03x, healthy.
[Investment Efficiency] ROIC (NOPAT / Invested Capital) is estimated at ~4.3%, below cost of capital. Total Asset Turnover is 0.62x (Revenue ¥1905.5B / Total Assets ¥3055.8B), slowed, with non-operating assets—investment securities ¥437.4B and net pension assets ¥156.9B—dragging turnover. Interest coverage based on Operating Income is 24.4x (Operating Income ¥102.8B / Interest expense ¥4.2B), favorable.
[Financial Soundness] Equity Ratio 69.7% (Prior 68.1%), interest-bearing debt ¥266.1B (short-term borrowings ¥186.6B + long-term borrowings ¥79.5B), Debt/Equity 0.15x, Debt/EBITDA 1.21x—conservative. Current Ratio 239%, Quick Ratio 211%—liquidity ample, but 70% of interest-bearing debt is short-term, making refinancing management important. Cash and deposits ¥616.2B cover short-term borrowings ¥186.6B by 3.3x, indicating sufficient liquidity.
OCF was ¥227.2B (YoY +4.5%), 2.0x Net Income ¥113.0B, indicating high quality. Depreciation ¥118.0B and equity-method investment income -¥35.3B (cash outflow) lead to an adjusted subtotal of ¥209.0B. In working capital, trade receivables provided cash inflow of ¥2.0B, inventories used cash of -¥7.1B, and trade payables used cash of -¥25.8B—decline in payables was a cash outflow driver. Corporate taxes paid were -¥39.9B, interest & dividend received totaled ¥62.3B, interest paid -¥4.2B, resulting in final OCF of ¥227.2B. Investing CF was -¥135.4B, driven by acquisitions of tangible and intangible fixed assets of -¥121.2B (6.4% of sales), proceeds from sale of fixed assets ¥25.5B, and acquisition of investment securities -¥9.6B. Free Cash Flow was ¥91.8B (OCF ¥227.2B + Investing CF -¥135.4B), sufficient to cover dividend payments -¥33.1B (cash dividends to parent) and share buybacks -¥25.0B, with total returns of ¥58.1B. Financing CF was -¥115.8B reflecting debt repayments and dividends. Cash and deposits were ¥616.2B, down ¥8.5B YoY, but strong OCF generation and positive Free Cash Flow support shareholder returns and financial stability.
Of Ordinary Income ¥161.6B, Operating Income was ¥102.8B, and the ¥58.8B gap was mainly Non-Operating Income (equity-method investment income ¥35.3B, dividend income ¥11.2B, interest income ¥6.6B, FX gains ¥3.1B, etc.). Equity-method investment income increased substantially YoY by ¥18.8B, contributing to Ordinary Income growth but introducing dependence on associates’ performance. Dividend and interest income reflect a substantial financial asset base and provide recurring income, but they also supplement operating weakness. Net special items were near neutral: special gains ¥17.7B vs. special losses ¥19.0B (net -¥1.3B), though gain on sale of fixed assets ¥16.0B and impairment losses ¥15.7B are one-off. Of Net Income attributable to owners ¥113.0B, aggregating the increment from special items and equity-method investment income suggests about ¥35B is attributable to non-operating or external factors—roughly 31% of Net Income. While OCF is 2.0x Net Income and accruals are healthy, attention is needed to the high reliance on non-operating income. Comprehensive Income was ¥217.8B, well above Net Income ¥113.0B, aided by valuation differences on securities ¥49.2B, translation adjustments ¥20.8B, and retirement benefit adjustments ¥22.7B. The ¥104.8B divergence between Comprehensive Income and Net Income indicates sensitivity to OCI-driven asset/liability valuation changes amid market environment shifts.
Full-year results versus company plan (Revenue ¥1909.0B, Operating Income ¥106.0B, Ordinary Income ¥150.0B, Net Income attributable to owners ¥81.0B): Revenue missed slightly by -0.2%, Operating Income missed by -3.0%, while Ordinary Income exceeded by +7.7% and Net Income exceeded by +39.5%. The operating shortfall was mainly due to deterioration in Japan and FALTEC margins; the upside in Ordinary and Net Income resulted from higher-than-expected equity-method income and special gains. Progress is complete on a full-year basis, but operating shortfall highlights domestic fixed-cost and margin management challenges. Unexpected increases in equity-method income and special gains at the start of the year drove the final profit overperformance, confirming strength from non-operating sources.
Interim dividend of ¥50 was paid (Q2), and a year-end dividend of ¥31 (post-split) is forecast, yielding total annual dividend of ¥56 (adjusted for share split). With Net Income attributable to owners of ¥113.0B and EPS ¥143.10, dividend of ¥56 implies a payout ratio of ≈39%. Actual cash dividend paid was ¥33.1B (per CF statement), implying a payout ratio on a net-income basis of ≈29%, reasonable. Share buybacks of ¥25.0B were executed, and combined with dividends total returns were ¥58.1B, implying a Total Return Ratio of ≈51% relative to Net Income. Free Cash Flow of ¥91.8B exceeds total returns ¥58.1B, indicating sufficient scope to sustain dividends and buybacks. The year-end dividend was revised up from ¥27 to ¥31 (¥4 increase), reinforcing shareholder return posture. Strong OCF and low leverage (Debt/Equity 0.15x) support stable dividends and opportunistic buybacks going forward.
Prolonged deterioration in domestic segment profitability: Japan segment Operating Margin fell sharply to 0.7% (prior 2.4%), with rising SG&A ratio and heavy fixed-cost burden. Continued structural contraction in the domestic market or delayed price pass-through could hinder achieving a consolidated Operating Margin target of 5.4%, prolonging low ROE. FALTEC’s revenue and profit declines (Operating Margin 1.9%, prior 2.8%) pose similar risks; correcting domestic fixed costs and price revisions are urgent.
Reliance on non-operating income: Of Ordinary Income ¥161.6B, ¥58.8B (36%) is non-operating income, driven by equity-method investment income ¥35.3B and dividend/interest income. Deterioration in associates’ performance, reduced dividends, or lower interest rates could materially hit Ordinary Income and leave operating weakness unmitigated. Market and performance volatility of investment securities ¥437.4B and equity-method investments ¥247.9B could propagate to P&L and OCI.
Concentration of short-term debt and working capital management: 70% of interest-bearing debt ¥266.1B (¥186.6B) is short-term borrowings—refinancing failure or rising rates could pressure liquidity. DSO is 72 days, with trade receivables ¥376.1B; collection delays could strain working capital. Inventories ¥174.8B rose +7.5% YoY, posing inventory valuation risk if demand weakens. Decline in trade payables during the period (-¥25.8B) also raises concerns about delayed normalization in the supply chain.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.4% | 7.8% (4.6%–12.3%) | -2.4pt |
| Net Profit Margin | 5.9% | 5.2% (2.3%–8.2%) | +0.7pt |
Operating Margin is 2.4pt below the industry median, placing it below median, while Net Profit Margin exceeds the median by 0.7pt due to non-operating income such as equity-method gains.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.0% | 3.7% (-0.4%–9.3%) | -4.7pt |
Revenue growth lags the industry median by 4.7pt, affected by FALTEC’s decline and stagnation in the domestic market.
※ Source: Company aggregation
Asia’s high profitability and non-operating income support earnings: Asia segment (margin 15.1%) generates about 78% of Operating Income, while equity-method investment income ¥35.3B and dividend/interest income drove ordinary and final income increases as Japan, North America, and FALTEC recovery lagged. This structure—where operating improvement is supplemented by non-operating income—risks entrenching low ROE 5.3% and ROIC 4.3%. Domestic fixed-cost reductions, pricing actions, and FALTEC’s profitability recovery are catalysts for improving consolidated margins and ROE.
Strong cash generation and financial capacity underpin shareholder returns: OCF ¥227.2B and Free Cash Flow ¥91.8B comfortably cover dividends ¥33.1B and buybacks ¥25.0B, supporting a Total Return Ratio of 51% while maintaining conservative balance sheet metrics (Equity Ratio 69.7%, Debt/EBITDA 1.21x, cash ¥616.2B). Addressing short-term debt concentration and shortening DSO would improve working capital efficiency and potentially expand FCF.
This report was generated automatically by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.