| Metric | Current Period | YoY Comparable Period | YoY |
|---|---|---|---|
| Revenue | ¥882.2B | ¥833.7B | +5.8% |
| Operating Income | ¥18.5B | ¥0.0B | -99.9% |
| Ordinary Income | ¥22.2B | ¥3.8B | +482.7% |
| Net Income | ¥14.5B | ¥-30.1B | - |
| ROE | 2.1% | -4.4% | - |
For FY2026 Q3 YTD, Revenue was ¥882.2B (YoY +¥48.5B +5.8%), securing top-line growth. Operating Income was ¥18.5B (a sharp increase from ¥0.0B in the prior-year period), Ordinary Income was ¥22.2B (up +¥18.4B from ¥3.8B YoY, +482.7%), showing substantial improvement, and Net Income turned positive to ¥14.5B (from a ¥-30.1B loss in the prior-year period). Non-operating income supported Ordinary Income, while the core earnings power remains weak with an Operating Margin of 2.1%. A low Gross Margin of 14.8% and SG&A of ¥112.4B are pressuring Operating Income, leaving profitability improvement as an outstanding issue.
[Profitability] ROE 1.9% (above last year but still low), Operating Margin 2.1% (well below the sector median of 8.3%), Net Margin 1.5% (below the sector median of 6.3%), and a low Gross Margin of 14.8% with high SG&A ratio as a profit headwind. DuPont analysis: Net Margin 1.5% × Total Asset Turnover 0.73 × Financial Leverage 1.71, indicating the low Net Margin is the primary bottleneck among ROE drivers. [Investment Efficiency] Total Asset Turnover 0.73x (above the sector median of 0.58x, indicating relatively good asset efficiency), ROIC 4.4% (slightly below the sector median of 5.0%). [Cash Quality] Cash and Deposits ¥192.7B, Cash/Short-term Debt ratio 29.7x, indicating extremely ample liquidity. Working capital efficiency: Receivables Days 79 (roughly in line with the sector median 82.9), Inventory Days 57 (well below the sector median 108.8, indicating strong inventory efficiency), Payables Days 10 (well below the sector median 55.8, suggesting room to utilize supplier credit), and Cash Conversion Cycle 126 days. [Financial Soundness] Equity Ratio 58.4% (slightly below the sector median 63.8% but at a healthy level), Current Ratio 171.8% (below the sector median 284% but adequate), Quick Ratio 156.9%, Debt-to-Capital 0.71x, and Interest-Bearing Debt ¥102.9B for a Debt/Capital ratio of 12.7%, reflecting a conservative capital structure. R&D expenses were ¥27.5B (3.1% of Revenue), indicating continued investment.
Cash and Deposits increased from ¥190.1B to ¥192.7B, up +¥2.6B, supported by profit improvement turning positive. Long-term Borrowings decreased significantly from ¥242.4B to ¥96.4B, down -¥146.0B, reflecting progress in capital structure realignment via repayment or refinancing. Short-term Borrowings increased from ¥4.5B to ¥6.5B, up +¥2.0B, indicating a shift toward the short end of the maturity profile. Investment Securities increased from ¥50.6B to ¥68.2B, up +¥17.6B, suggesting capital allocation into investment assets. In working capital, Accounts Receivable at ¥190.8B and Inventory at ¥54.5B remained stable, while Payables Days at 10 is short, implying room to enhance cash efficiency by extending payment terms. Cash/Short-term Liabilities coverage is extremely high at 29.7x, underscoring robust short-term solvency.
With Ordinary Income at ¥22.2B and Operating Income at ¥18.5B, net non-operating gains were approximately ¥3.7B, indicating non-operating income is underpinning profits. The main components of non-operating income were foreign exchange gains of ¥2.9B and interest and dividend income, suggesting FX fluctuations may have temporarily boosted earnings. Non-operating income accounts for roughly 0.7% of Revenue, implying that profit improvement at the ordinary level depends on non-operating factors such as FX. In special items, impairment losses of ¥0.5B and losses on disposal of fixed assets of ¥0.4B were recorded, representing small but one-off costs. As the details of Operating Cash Flow are not disclosed, direct verification of cash backing for earnings is not possible; however, the increase in Cash and Deposits and the return to profitability suggest some cash generation occurred. That said, with an Operating Margin of 2.1%, there remains significant room to improve the quality of core earnings.
[Position within Industry] (Reference information / In-house research) Profitability: Operating Margin 2.1% (well below the sector median 8.3%, below the IQR range of 4.8–12.6% and in the lower tier), Net Margin 1.5% (below the sector median 6.3%), ROE 1.9% (below the sector median 5.0%, indicating weak capital efficiency) Efficiency: Total Asset Turnover 0.73x (above the sector median 0.58x, indicating relatively good asset efficiency), Inventory Days 57 (well below the sector median 108.8, placing inventory efficiency in the upper tier), Cash Conversion Cycle 126 days (slightly above the sector median 108.1 days) Soundness: Equity Ratio 58.4% (slightly below the sector median 63.8% but within a healthy range), Current Ratio 171.8% (below the sector median 284% but at a sufficient level) Growth: Revenue growth rate 5.8% (above the sector median 2.7%, placing top-line growth in the upper tier) Overall assessment: While revenue growth and asset efficiency are relatively favorable within the industry, Operating Margin, Net Margin, and ROE are significantly below median levels, making profitability improvement the top priority. Inventory efficiency is strong, whereas Payables Days are extremely short, suggesting room to review supply chain terms. Industry: Manufacturing (98 companies); Comparison: FY2025 Q3; Source: In-house aggregation of public financial data
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. The industry benchmarks are reference information aggregated by our firm based on publicly available financial data. Investment decisions are your own responsibility; please consult a professional as necessary before making any investment decisions.