| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥16643.9B | ¥15227.0B | +9.3% |
| Operating Income / Operating Profit | ¥1039.8B | ¥944.8B | +10.1% |
| Profit Before Tax | ¥1337.8B | ¥826.1B | +61.9% |
| Net Income | ¥992.3B | ¥598.3B | +65.8% |
| ROE | 10.9% | 7.9% | - |
For the fiscal year ended March 2026, Revenue was ¥16643.9B (YoY +¥1416.8B +9.3%), Operating Income was ¥1039.8B (YoY +¥95.0B +10.1%), Ordinary Income was ¥1337.8B (YoY +¥511.7B +61.9%), and Net Income attributable to owners of the parent was ¥990.3B (YoY +¥395.8B +66.6%). In addition to operating income growth, financial income of ¥409.1B significantly exceeded financial expenses of ¥111.1B, and gains from foreign exchange and investment income materially expanded profit from the ordinary-income stage onward. By segment, Precision Technologies maintained high profitability with Operating Income of ¥622.5B (margin 22.1%) forming the core of consolidated profits, Semiconductor & Electronics saw notable recovery with Revenue +16.1% and Operating Income +36.0%, and Access Solutions continued stable growth with Revenue +1.3% and Operating Income +7.3%. EPS was ¥246.60 (prior year ¥147.58) and ROE improved to 12.1% (prior year 8.2%), reflecting a material improvement in capital efficiency. The combined effects of higher sales, higher operating profit, and improved non-operating items elevated overall profitability this period.
【Revenue】 Revenue reached ¥16643.9B (+9.3%), marking the third consecutive period of revenue growth. By segment, Semiconductor & Electronics grew the most to ¥5902.6B (+16.1%), accounting for 35.5% of consolidated revenue and driving overall growth. Precision Technologies increased to ¥2811.5B (+10.0%) with double-digit growth as demand for mechanical components such as ball bearings remained firm. Motor, Lighting & Sensing was ¥4565.2B (YoY estimated +6.9%), and Access Solutions was ¥3322.5B (+1.3%) with automotive demand staying resilient. Cost of sales was ¥13713.8B, yielding a gross margin of 17.6% (down -0.2pt from 17.8% prior year), reflecting higher material costs and product mix shifts.
【Profitability】 Operating Income rose to ¥1039.8B (+10.1%), outpacing revenue growth, and the operating margin stayed at 6.2%, unchanged from the prior year. SG&A was ¥1902.8B (+6.4%), or 11.4% of sales (improved -0.3pt from 11.7%), indicating efficiency gains and scale benefits boosting profits. By segment, Precision Technologies contributed Operating Income of ¥622.5B (+11.8%), roughly 60% of consolidated operating income, highlighting its high-margin profile at 22.1%. Semiconductor & Electronics delivered Operating Income of ¥266.7B (+36.0%), with margin improving to 4.5% from 4.1% a year earlier. Access Solutions posted Operating Income of ¥170.9B (+7.3%) and a margin of 5.1%, showing stable performance. Ordinary Income rose sharply to ¥1337.8B (+61.9%), driven mainly by financial income of ¥409.1B (from ¥69.3B prior year, +¥339.8B), likely reflecting FX gains and gains on investment securities. Financial expenses fell to ¥111.1B (from ¥188.0B prior year, -¥76.9B), aided by lower borrowing costs. Profit Before Tax was ¥1337.8B (+61.9%); after deduction of corporate taxes of ¥345.4B, Net Income was ¥992.3B (+65.8%). Comprehensive income was ¥1767.5B, with Other Comprehensive Income of ¥775.2B (mainly foreign currency translation adjustments of ¥744.7B) boosting equity. In summary, higher sales, improved operating efficiency, and expanded financial income jointly drove a strong increase in Net Income.
Precision Technologies recorded Revenue of ¥2811.5B (+10.0%) and Operating Income of ¥622.5B (+11.8%), maintaining the highest profitability among segments with a 22.1% operating margin and contributing about 60% of consolidated operating profit as a core business. Ultra-precision machined components such as ball bearings performed strongly, and recovery in aerospace demand likely contributed. Semiconductor & Electronics showed clear recovery with Revenue ¥5902.6B (+16.1%), Operating Income ¥266.7B (+36.0%), and operating margin 4.5% (up +0.4pt from 4.1%), driven by expanded demand for semiconductors, optical devices, and mechanical components alongside improved profitability. Motor, Lighting & Sensing had Revenue ¥4565.2B (YoY estimated +6.9%) and Operating Income ¥269.3B (YoY estimated +6.1%), supported by stable demand for HDD motors and automotive motors. Access Solutions posted Revenue ¥3322.5B (+1.3%) and Operating Income ¥170.9B (+7.3%) with a 5.1% margin, a modest revenue and profit increase underpinned by stable automotive parts orders though growth pace is tempered by model cycle effects. Other / Unallocated reported Revenue ¥42.1B and an operating loss of ¥26.6B, indicating continued losses in early-stage software development and similar activities. Consolidated Operating Income after corporate adjustments was ¥1039.8B, with Precision’s high margins and Semiconductor recovery forming the twin drivers of consolidated profit growth.
【Profitability】Operating margin was 6.2%, unchanged from the prior year, and a slight gross margin decline to 17.6% (-0.2pt) was offset by SG&A ratio improvement to 11.4% (-0.3pt). Net margin improved substantially to 6.0% (from 3.9% prior year, +2.1pt), largely due to expanded financial income, indicating limited room for further operating-stage improvement. ROE rose to 12.1% (from 8.2% prior year, +3.9pt), reflecting notable capital efficiency gains, aided by improved net margin and maintained total asset turnover of 0.92x (prior year 0.96x). ROA increased to 5.5% (from 3.8% prior year, +1.7pt). 【Cash Quality】Operating Cash Flow / Net Income was 0.96x, broadly in line, but Operating Cash Flow / EBITDA was 0.54x, indicating room for improvement. Operating Cash Flow was ¥948.5B (YoY -29.0%), pressured by increases in accounts receivable of -¥441.6B and inventories of -¥122.9B that strained working capital. DSO was about 78 days (Accounts receivable ¥3,565.2B ÷ annualized daily sales ¥45.6B), and DIO about 104 days (Inventories ¥3,913.1B ÷ annualized daily cost of sales ¥37.6B), showing notable buildup of receivables and inventory. FCF was positive at ¥120.8B but did not fully cover dividend payments of ¥200.8B, with continued investment outflows. 【Investment Efficiency】Capital expenditures were ¥793.6B, exceeding depreciation of ¥704.2B, with Capex/Depreciation = 1.13x, indicating an active capacity expansion stance. Total asset turnover was maintained at 0.92x, but working capital expansion may pressure future turnover. 【Financial Soundness】Equity Ratio improved to 49.5% (from 46.9% prior year, +2.6pt), and D/E ratio was about 0.99x (interest-bearing debt ¥4,824.9B / net assets ¥4,889.7B), a neutral level. Interest coverage was about 9.4x (Operating Income ¥1039.8B / interest payments ¥111.1B), indicating strong ability to service interest and limited interest burden. Current ratio was about 171% (Current assets ¥1,287.3B / Current liabilities ¥6,022.0B), reflecting high liquidity, with cash and cash equivalents of ¥2,275.2B.
Operating Cash Flow was ¥948.5B (from ¥1,336.7B prior year, -29.0%), showing a marked decline and lower conversion efficiency relative to Profit Before Tax of ¥1337.8B. The subtotal before working capital changes was ¥1207.6B, but working capital deterioration from accounts receivable increase -¥441.6B, inventory increase -¥122.9B, and accounts payable increase +¥23.0B produced a net -¥541.5B cash outflow that pressured cash. Depreciation of ¥704.2B was added back as a non-cash expense, but accumulation of receivables and inventories accompanying sales expansion was significant. Corporate tax payments were ¥223.9B, interest payments ¥72.8B, and lease payments ¥88.0B were deducted, leading to weaker operating cash generation year-over-year. Investing Cash Flow was -¥827.8B (improved from -¥1,257.7B prior year), mainly driven by capital expenditures of -¥793.6B. Proceeds from sale of tangible fixed assets were ¥22.5B, intangible asset acquisitions were -¥82.0B, and government subsidies received amounted to ¥50.7B; outflows were restrained compared with the prior year due to absence of large M&A (subsidiary acquisition -¥380.3B prior year). FCF (Operating CF + Investing CF) was ¥120.8B positive, while Financing Cash Flow was -¥161.3B, driven by dividend payments -¥200.8B, short-term borrowings increase +¥191.4B, and long-term borrowings repayment -¥61.1B. Share repurchases were -¥0.0B (negligible). Considering foreign exchange translation effects of +¥173.2B, cash and cash equivalents at period-end rose to ¥2,275.2B (from ¥2,142.6B at period-begin, +¥132.7B). However, the low cash conversion efficiency (OCF/EBITDA = 0.54x) suggests scope to improve working capital management.
Of Net Income ¥992.3B, core earnings from operations were Operating Income ¥1039.8B, and the post-ordinary-stage expansion was due to the net difference of financial income ¥409.1B and financial expenses ¥111.1B (net +¥298.0B), a significant improvement from a net -¥118.7B in the prior year (a +¥416.7B swing). Details of financial income are not disclosed but are presumed to include FX gains, gains on valuation of investment securities, and interest received—largely one-off items. Of Other Comprehensive Income ¥775.2B, foreign currency translation adjustments for overseas operations accounted for ¥744.7B, significantly lifting comprehensive income. The gap between Comprehensive Income ¥1767.5B and Net Income ¥992.3B amounts to ¥775.2B, showing equity increased at a pace well above net income. The ratio of Operating CF to Net Income was 0.96x, largely consistent, but Operating CF subtotal of ¥1207.6B was reduced by working capital changes of -¥541.5B, limiting actual cash generation. The buildup in working capital (Accounts receivable +¥441.6B, Inventories +¥122.9B) suggests an increase in accruals (non-cash earnings), indicating a short-term deterioration in earnings quality. Sustainable improvement in earnings quality requires operating-stage margin improvement and normalization of working capital (stronger receivables collection and inventory reduction), making next fiscal year progress a key determinant.
For the fiscal year ending March 2027, guidance is Revenue ¥16900.0B (YoY +1.5%), Operating Income ¥1200.0B (YoY +15.4%), and Net Income attributable to owners of the parent ¥830.0B (YoY -16.2%). While revenue is forecast to rise slightly, a double-digit increase in operating profit is expected, reflecting assumptions of sustained core earnings improvement. The projected decline in Net Income assumes normalization of financial income—specifically, the ¥409.1B financial income recorded this period (from ¥69.3B prior year) is assumed to level off—so guidance is conservatively premised on an erosion of non-operating income. Conservative FX assumptions and changing interest-rate conditions could also depress Net Income. Through the period, revenue achievement rate is 98.5% (actual ¥16643.9B / forecast ¥16900.0B) and operating profit progress is 86.7% (actual ¥1039.8B / forecast ¥1200.0B), indicating some risk to achieving operating profit targets although full-year attainment remains plausible. EPS guidance is ¥206.68 (from actual ¥246.60, -¥39.92), primarily due to normalization of non-operating income. Dividend guidance is annual ¥30.00 (from ¥50.00 actual, -¥20.00), targeting a payout ratio of around 30%. Guidance is set conservatively with operating profit up but Net Income down, reflecting uncertainty in non-operating items.
This period’s annual dividend was ¥50.00 per share (interim ¥25.00, year-end ¥25.00), with total dividends of ¥200.8B and a payout ratio of approximately 20.3% (Dividend ¥50 / EPS ¥246.60). Share repurchases were ¥0.0B (almost none), so shareholder returns were concentrated in dividends. FCF was ¥120.8B and did not fully cover dividends of ¥200.8B; part of dividend funding relied on the balance sheet, but given operating cash flow and liquidity, sustainability concerns are limited. Next fiscal year dividend guidance is ¥30.00 (−¥20.00), and the company states a target of "consolidated payout ratio around 30%," so the implied payout ratio against projected Net Income ¥830.0B is about 14.5% (¥30 / EPS guidance ¥206.68), a conservative stance versus the stated payout policy. The divergence from the payout policy is likely due to conservative Net Income guidance; depending on actual results, scope for dividend increases exists. Total return ratio equals the payout ratio as buybacks are nil. Treasury stock at period-end stood at 25.49B shares, representing 1.4% of total assets (small), indicating low strategic priority on buybacks. Medium-term, expansion of Operating CF and normalization of working capital are expected to enable realization of the 30% payout target and room for continued dividend increases.
Working capital expansion risk: Accounts receivable increase -¥441.6B and inventory increase -¥122.9B have led to a low Operating CF / EBITDA = 0.54x. DSO is about 78 days and DIO about 104 days, indicating notable buildup of receivables and inventories that could pressure liquidity if demand weakens due to inventory obsolescence or collection delays. Semiconductor & Electronics (35.5% of revenue) is exposed to volatile market conditions, creating inventory valuation loss risk from supply-demand adjustments.
Risk of erosion of non-operating income: Financial income of ¥409.1B materially boosted Net Income this period but consists largely of FX gains and valuation gains on investment securities, i.e., one-time items. Next-year guidance incorporates a -16.2% decline in Net Income assuming normalization of non-operating income. FX appreciation of the yen, falling interest rates, or market volatility could reverse non-operating gains and materially reduce Net Income.
Concentration of short-term interest-bearing debt: Short-term borrowings and commercial paper amount to ¥2641.2B, representing 54.7% of total interest-bearing debt ¥4,824.9B, indicating a maturity mismatch. Although interest coverage is about 9.4x, rising interest rates could increase refinancing costs and, in periods of reduced market liquidity, create rollover risk. Debt/EBITDA of about 2.77x sits near the upper bound of investment-grade ranges, requiring continued leverage management.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 12.1% | 6.3% (3.2%–9.9%) | +5.8pt |
| Operating Margin | 6.2% | 7.8% (4.6%–12.3%) | -1.5pt |
| Net Margin | 6.0% | 5.2% (2.3%–8.2%) | +0.8pt |
ROE exceeds the industry median by +5.8pt placing the company in the upper group, though Operating Margin trails the median by -1.5pt, indicating room for improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 9.3% | 3.7% (-0.4%–9.3%) | +5.6pt |
Revenue growth exceeds the industry median by +5.6pt, placing the company in a high-growth group within manufacturing.
※ Source: Company aggregation
Dual engines of high-margin Precision and semiconductor recovery: Precision Technologies contributes about 60% of consolidated operating profit with a 22.1% operating margin, and Semiconductor & Electronics delivered a 36.0% jump in operating profit, driving growth. The sustainability of consolidated profit depends on maintaining Precision margins and the semiconductor market trend.
Working capital normalization is key to cash generation: Operating CF / EBITDA = 0.54x, DSO ≈ 78 days, DIO ≈ 104 days show receivables and inventories have accumulated and reduced cash conversion efficiency. FCF is ¥120.8B positive but insufficient to fully cover dividends of ¥200.8B; in the short term, improving working capital management (stronger receivables collection and inventory compression) is central to normalizing cash flow and expanding dividend capacity. Progress next fiscal year will directly affect assessments of shareholder-return sustainability.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed before making investment decisions.