| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥12276.0B | ¥11234.1B | +9.3% |
| Operating Income / Operating Profit | ¥1366.2B | ¥1176.5B | +16.1% |
| Ordinary Income | ¥1393.1B | ¥1187.6B | +17.3% |
| Net Income / Net Profit | ¥696.7B | ¥880.3B | -20.9% |
| ROE | 8.3% | 12.0% | - |
For the fiscal year ended March 2026 (Full Year), Revenue was ¥12,275.95B (YoY +¥1,041.88B +9.3%), Operating Income was ¥1,366.20B (YoY +¥189.70B +16.1%), Ordinary Income was ¥1,393.10B (YoY +¥205.51B +17.3%), and Net Income attributable to owners of the parent was ¥980.30B (YoY +¥58.07B +6.3%). The operating margin was 11.1% (improvement of +60bp YoY), driven by progress in high-margin Energy segment projects and double-digit growth in Industry. At the ordinary income stage, increases in equity-method income (¥15.28B, YoY +¥4.63B) and gains on foreign exchange contributed to a growth rate exceeding operating income. Conversely, Net Income growth was limited by a decline in special gains (prior year ¥197.77B → current ¥55.84B). Operating Cash Flow (OCF) was ¥1,235.62B (YoY -¥143.58B -10.4%), with working capital pressure from increases in accounts receivable & contract assets (-¥211.81B) and inventories (-¥115.83B), leaving issues in cash conversion efficiency.
[Revenue] Revenue of ¥12,275.95B represents a +9.3% YoY increase. The Energy segment led with ¥3,851.67B (+10.8%; external customer sales basis ¥3,852.60B +11.2%), and Industry achieved double-digit growth with ¥4,643.53B (+17.0%; external customer sales basis ¥4,643.53B +16.8%). Semiconductors were flat at ¥2,342.53B (+0.4%; external customer sales basis ¥2,342.53B +0.3%), and Food & Distribution declined to ¥1,055.73B (-3.4%; external customer sales basis ¥1,055.73B -3.2%). Contract liabilities increased to ¥786.9B (prior year ¥671.29B, +¥115.61B), and backlog has been steadily accumulated. Contract assets rose to ¥1,056.4B (prior year ¥938.3B, +¥118.1B), indicating progress in revenue recognition under the percentage-of-completion method.
[Profitability] Cost of sales was ¥8,835.94B (cost of sales ratio 72.0%), yielding Gross Profit of ¥3,440.01B (gross margin 28.0%, YoY +¥1,221.0B). SG&A was ¥2,073.80B (SG&A ratio 16.9%, YoY +¥73.26B +3.7%), growing less than sales (+9.3%), allowing operating leverage to work. Operating Income was ¥1,366.20B (operating margin 11.1%), up +16.1% YoY. Non-operating income totaled ¥81.36B (including dividend income ¥25.92B and foreign exchange gains ¥13.99B) and non-operating expenses were ¥54.46B (including interest expense ¥30.67B and foreign exchange losses ¥11.26B), resulting in Ordinary Income of ¥1,393.10B (ordinary income margin 11.3%). Special gains totaled ¥55.84B (gain on sale of investment securities ¥41.27B, gain on sale of fixed assets ¥14.56B) and special losses totaled ¥48.02B (impairment loss ¥29.47B, litigation settlement ¥37.80B), producing Profit before Income Taxes of ¥1,400.91B. After income taxes of ¥386.70B (effective tax rate 27.6%) and non-controlling interests ¥33.90B, Net Income attributable to owners of the parent was ¥980.30B (net margin 8.0%). The decline in special gains from prior year ¥197.77B (mainly gain on sale of investment securities ¥166.44B) limited Net Income growth, but the company ultimately achieved higher sales and profits.
Energy segment recorded Revenue ¥3,941.67B (YoY +11.2%) and Operating Income ¥595.06B (YoY +64.1%), achieving the highest margin among segments at 15.1%. Progress on large power generation plant projects and improved high-margin mix contributed, with Operating Income expanding sharply from ¥36,263 million to ¥59,506 million year-on-year. Industry segment had Revenue ¥4,672.32B (YoY +16.8%) and Operating Income ¥443.83B (YoY +30.6%), margin 9.5%, driven by demand capture in FA and industrial systems. Semiconductor segment Revenue was ¥2,373.86B (YoY +0.3%) and was roughly flat, but Operating Income declined significantly to ¥235.20B (YoY -36.6%), lowering margin to 9.9% due to pricing pressure in a market adjustment and fixed cost burden. Food & Distribution segment Revenue was ¥1,079.76B (YoY -3.2%) and Operating Income ¥131.32B (YoY -5.5%), margin 12.2%, affected by cooling Vending Machine demand and intensified competition. Other segments posted Revenue ¥583.57B (YoY +3.9%) and Operating Income ¥38.65B (YoY +2.7%), margin 6.6%, a slight improvement.
[Profitability] Operating margin of 11.1% improved +60bp YoY from 10.5%, and gross margin was 28.0% (slight decline -30bp from 28.3% prior year), covered by SG&A ratio improvement to 16.9% (from 17.8%, -90bp). ROE 8.3% (prior year 14.3%) declined YoY due to lower net margin and accumulation of shareholders’ equity; DuPont decomposition indicates Net Margin 8.0% × Total Asset Turnover 0.873 × Financial Leverage 1.67x. Ordinary income margin was 11.3%, and EBITDA margin was 16.1% (Operating Income + depreciation ¥617.78B base), showing maintained earnings strength.
[Cash Quality] Operating Cash Flow ¥1,235.62B is 1.26x of Net Income ¥980.30B, a healthy level, but OCF/Revenue ratio 10.1% (prior year 12.9%) and OCF/EBITDA 0.62x (prior year approx. 0.82x) indicate deteriorated cash conversion efficiency. Working capital expansion (increases in accounts receivable ¥2,732.0B and inventories ¥982.8B) is the main cause, with days sales outstanding 81 days and inventory days 106 days showing notable accumulation. Free Cash Flow ¥509.5B (OCF - CapEx ¥705.3B) remains positive, supporting dividends and investment from internal funds.
[Investment Efficiency] ROA 10.2% (based on Ordinary Income/Total Assets) improved from 9.2% prior year. Total Asset Turnover 0.873x, CapEx/Sales ratio 5.7%, CapEx/Depreciation ratio 1.14x, indicating a growth investment phase. Construction in progress ¥599.69B accounts for 17.2% of tangible fixed assets, suggesting mid-term capacity expansion.
[Financial Soundness] Equity Ratio 59.9% (prior year 55.7%, +4.2pt), current ratio 191.6%, quick ratio 169.0% indicate a very strong financial base. Debt/Equity 0.67x; interest-bearing debt (corporate bonds ¥30.0B + long-term borrowings ¥15.06B + short-term borrowings ¥21.83B) totaling ¥66.9B versus cash & deposits ¥70.93B indicates a net cash position. Debt/EBITDA 0.19x and interest coverage 44.6x (Operating Income / interest expense) show minimal interest burden. Short-term debt ratio 59.2% raises maturity mismatch concerns, but cash/short-term debt ratio 3.25x provides ample liquidity.
OCF ¥1,235.62B was supported by operating profit increase (+¥189.7B) and depreciation ¥617.78B (prior year ¥573.41B, +¥44.37B), producing a subtotal of ¥1,625.3B on a pre-tax + non-cash expense basis. However, working capital increased by approximately -¥389.62B (accounts receivable & contract assets +¥211.81B, inventories +¥115.83B, decrease in accounts payable -¥35.81B), partially offset by an increase in contract liabilities +¥108.36B, resulting in overall cash flow pressure. After income taxes paid of -¥387.7B, OCF was ¥1,235.62B (YoY -¥143.58B -10.4%). Investing Cash Flow was -¥726.08B, mainly due to purchase of tangible fixed assets -¥705.34B, purchase of intangible fixed assets -¥134.92B, sale of investment securities +¥43.25B, and recovery of long-term loans +¥229.87B. Free Cash Flow ¥509.54B (OCF + Investing CF) exceeded dividend payments ¥259.8B (cash dividends + non-controlling interests), indicating capacity for growth investment from internal reserves. Financing Cash Flow was -¥481.74B, driven by repayment of long-term borrowings -¥1.25B, net decrease in short-term borrowings -¥45.27B, purchase of treasury stock -¥0.33B, and dividend payments -¥259.8B. Cash and cash equivalents increased by ¥71.98B from opening balance ¥626.75B to closing balance ¥698.73B, maintaining on-hand liquidity.
Earnings quality is centered on recurring business, with Operating Income ¥1,366.20B as the primary source. Non-operating income ¥81.36B (0.7% of Revenue) consisted of dividend income ¥25.92B, interest income ¥7.49B, foreign exchange gains ¥13.99B, and other items ¥18.66B, indicating mainly recurring contributors. Non-operating expenses ¥54.46B comprised interest expense ¥30.67B, foreign exchange losses ¥11.26B, and other ¥10.39B, showing a light financial cost burden. Net special gains were limited to +¥7.82B (special gains ¥55.84B, special losses ¥48.02B), and the decline from prior year special gains ¥197.77B (mainly gain on sale of investment securities ¥166.44B) suppressed Net Income growth. While OCF is 1.26x Net Income, the low OCF/EBITDA 0.62x reflects accrual retention due to working capital increases (accounts receivable & contract assets +¥211.81B, inventories +¥115.83B). Comprehensive Income ¥1,398.0B substantially exceeds Net Income ¥696.7B, with Other Comprehensive Income ¥701.3B (foreign currency translation adjustment ¥162.4B, valuation difference on available-for-sale securities ¥77.1B, adjustments related to retirement benefits ¥134.1B, etc.) contributing and strengthening shareholders’ equity via accumulated valuation/conversion differences.
Company plan for FY2027 (Full Year) forecasts Revenue ¥12,750.0B (YoY +3.9%), Operating Income ¥1,425.0B (YoY +4.3%), Ordinary Income ¥1,430.0B (YoY +2.6%), Net Income attributable to owners of the parent ¥1,050.0B, and EPS ¥712.36. Compared with the current period results, the plan implies continued revenue and profit growth but modest rates, reflecting a conservative assumption of stable execution of large Energy projects and a bottoming recovery in the Semiconductor segment. Progress rate as of the end of Q2 stands at Revenue 96.3%, Operating Income 95.9%, Ordinary Income 97.4%, generally on track with the plan and suggesting high likelihood of achievement. Dividend guidance is annual ¥107 (interim ¥91 + year-end undecided), a reduction from the current period actual ¥200, which appears to reflect a stance prioritizing working capital normalization and growth investment.
Dividends paid were annual ¥200 (interim ¥91, year-end ¥109), with total dividends approximately ¥23.26B. Based on Net Income attributable to owners of the parent ¥980.30B, the dividend payout ratio was about 23.7%, a conservative level, and dividend coverage relative to Free Cash Flow ¥509.54B was 1.71x, indicating sustainability from internal funds. Prior year dividends including interim ¥75 were maintained at a similar scale on an annual basis, supporting a stable dividend policy. Treasury stock acquisition was minor at ¥0.33B in the period, and total return ratio has concentrated on dividends. Next fiscal year dividend guidance of ¥107 (year-end undecided) implies a dividend cut, but this could be revisited considering performance outlook, investment plans, and capital efficiency. Dividend payout ratio and total return ratio are distinguished precisely; currently shareholder returns are primarily dividend-based.
Decline in working capital efficiency: Increases in accounts receivable & contract assets ¥211.81B and inventories ¥115.83B have expanded working capital, reducing OCF/EBITDA to 0.62x. Days sales outstanding 81 days and inventory days 106 days indicate notable retention; if cash conversion cycle prolongs, risks to liquidity and rising capital costs increase. Increase in contract liabilities ¥108.36B indicates backlog accumulation, but delays in acceptance or project management issues could further worsen working capital.
Profitability volatility in the Energy segment: While Energy contributed Operating Income ¥595.06B (YoY +64.1%) and led the company, earnings depend on accurate project management and cost estimation for large projects. With contract assets ¥1,056.4B and contract liabilities ¥786.9B under the percentage-of-completion method, estimate changes or schedule delays could sharply reduce margins. Concentration in backlog digestion timing could also increase quarterly volatility.
Margin deterioration in the Semiconductor segment: Despite flat revenue (+0.3%), the Semiconductor segment suffered a -36.6% decline in Operating Income, lowering margin to 9.9%. Pricing competition during a market adjustment and fixed cost burden are primary factors, with inventory valuation losses and impairment risks present. Delays in semiconductor market recovery would impose further margin pressure and deteriorate product mix, weighing on corporate earnings power.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.1% | 7.8% (4.6%–12.3%) | +3.4pt |
| Net Margin | 5.7% | 5.2% (2.3%–8.2%) | +0.5pt |
Operating margin 11.1% exceeds the industry median 7.8% by +3.4pt, indicating superior profitability in manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 9.3% | 3.7% (-0.4%–9.3%) | +5.6pt |
Revenue growth 9.3% outperformed the industry median 3.7% by +5.6pt, supported by strong Energy and Industry performance.
※ Source: Company aggregation
Operating margin 11.1% (YoY +60bp) and financial soundness (Equity Ratio 59.9%, Debt/EBITDA 0.19x) are robust, supported by progress in high-margin Energy projects and double-digit growth in Industry. Accumulation of contract liabilities ¥786.9B (YoY +¥115.61B) indicates future revenue recognition potential and a deep order pipeline that supports mid-term growth.
Deterioration in working capital efficiency (OCF/EBITDA 0.62x, days sales outstanding 81 days, inventory days 106 days) is impeding cash conversion; progress on inventory and receivables compression after the quarter will be a valuation inflection point. While short-term debt ratio 59.2% raises maturity mismatch concerns, cash/short-term debt ratio 3.25x ensures sufficient liquidity and limited refinancing risk. Free Cash Flow ¥509.54B can cover dividends and growth investment from internal funds; construction in progress / tangible fixed assets ratio 17.2% suggests steps toward future supply capacity expansion and efficiency improvements.
Semiconductor margin deterioration (-36.6% YoY, margin 9.9%) reflects market adjustment, and with sales flat, the profit squeeze is pronounced; timing of recovery is a key variable for next fiscal year guidance. The company plan is conservative (Revenue +3.9%, Operating Income +4.3%), presuming stable execution of large Energy projects and continued cost control. Dividend guidance ¥107 (reduced from current ¥200) reflects prioritization of working capital normalization and growth investment, signaling a shift toward improving capital efficiency via internal retention over total return ratio.
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 information aggregated by the Company based on public financial statements. Investment decisions are your responsibility; please consult professionals as necessary before making investment decisions.