| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5421.2B | ¥5376.8B | +0.8% |
| Operating Income | ¥473.1B | ¥501.6B | -5.7% |
| Profit Before Tax | ¥495.6B | ¥784.5B | -36.8% |
| Net Income | ¥365.8B | ¥577.0B | -36.6% |
| ROE | 7.4% | 13.1% | - |
For the full year ending February 2026, Revenue / Net Sales were ¥5,421.2B (YoY +¥44.4B, +0.8%), a slight increase, while Operating Income was ¥473.1B (YoY -¥28.5B, -5.7%), Ordinary Income was ¥302.2B (YoY +¥71.4B, +30.9%), and Net Income attributable to owners of parent was ¥365.8B (YoY -¥211.2B, -36.6%), reflecting declines at the operating and final stages. Operating margin declined to 8.7% (prior year 9.3%, -60bp). Gross margin was stable at 35.3%, but an increase in SG&A ratio to 26.9% (+30bp) pressured operating results. The large decline in Net Income was mainly due to the absence of the prior-year gain on sale of equity-method investments of ¥267.8B; at the ordinary income stage non-operating items improved due to higher financial income (¥45.6B, +¥20.4B) and lower financial expenses (¥30.7B, -¥7.2B). Comprehensive income rose sharply to ¥717.2B (YoY +237.7%), lifted by foreign currency translation gains of ¥227.2B and equity valuation gains of ¥112.6B, which strengthened equity. By segment, Robotics achieved Revenue ¥2,470.1B (+4.0%) but Operating Income ¥204.2B (-14.0%), with operating margin declining to 8.3% (approx. -140bp). Motion Control recorded Revenue ¥2,360.5B (-1.1%) and Operating Income ¥243.8B (+6.0%), improving operating margin to 10.3%. System Engineering delivered Revenue ¥387.4B (+1.0%) and Operating Income ¥49.9B (+8.3%), maintaining an operating margin of 12.9%.
Revenue: Revenue of ¥5,421.2B was up slightly YoY (+0.8%). By segment, Robotics (sales mix 45.6%) led with +4.0%, while Motion Control (sales mix 43.5%) slowed by -1.1%. Region- and detailed mix-level disclosure was limited, but a large decline in contract assets (prior year ¥230.9B → ¥110.0B, -52.4%) and a decrease in contract liabilities (prior year ¥437.3B → ¥280.1B, -35.9%) suggest a combination of project progress being pulled forward, normalization of inspection/acceptance timing, and selective demand. Gross margin held up at 35.3% (down only 30bp from 35.6%), but Cost of Sales increased slightly to ¥3,508.8B (+1.4%), implying limited scale benefits.
Profitability: Operating Income of ¥473.1B (Operating margin 8.7%) declined YoY -5.7%, mainly due to higher SG&A (¥1,459.0B vs prior year ¥1,421.9B, +2.6%). SG&A growth outpacing revenue growth indicates reversed operating leverage. Segment-wise, the decline in Robotics operating margin to 8.3% (approx. -140bp) contributed to company-wide margin compression, likely driven by intensified price competition, adverse mix, and lower utilization. Motion Control improved to a 10.3% operating margin, evidencing disciplined profitability management. Financial income of ¥45.6B (prior year ¥25.2B) more than offset the decline in equity-method gains (¥7.7B vs prior year ¥27.9B), and financial expenses fell to ¥30.7B (prior year ¥37.9B), improving non-operating performance. Other income was ¥30.3B and other expense ¥10.5B, netting +¥19.8B (improved from +¥8.7B prior year). The decline in equity-method gains suggests slower performance at investees.
Profit Before Tax of ¥495.6B fell significantly from ¥784.5B, primarily due to the absence of prior-year gains on sale and valuation of equity-method investments of ¥267.8B; however, improved financial results partially supported recurring business earnings. Income taxes of ¥129.8B (effective tax rate 26.2%) fell from ¥207.6B (26.5%), keeping tax burden at a normal level. As a result, Net Income attributable to owners of parent was ¥352.4B (Net margin 6.5%), down -38.2% from ¥569.9B. Net income attributable to non-controlling interests was ¥13.4B (prior year ¥7.1B). Excluding one-off items, the structural drivers of the earnings decline are Robotics profitability deterioration and higher SG&A; margin recovery in coming periods is a key challenge. Post-segment adjustments Operating Income was -¥44.7B (prior year -¥28.0B), with wider allocations of corporate expenses and basic R&D costs also pressuring operating results.
Conclusion: The company posted slight revenue growth but an operating profit decline, and a larger fall in bottom-line profit due to the absence of prior-year one-offs. Robotics is facing selective demand and margin compression alongside rising SG&A as headwinds; improved financial results provided partial support; and the drop in prior-year one-offs was the main driver of the significant decline in Net Income.
Motion Control (sales mix 43.5%) recorded Revenue ¥2,360.5B (YoY -1.1%) but Operating Income ¥243.8B (+6.0%), improving operating margin to 10.3%. Improvements likely reflect strengthened cost control in AC servo motors, controllers, and inverters and a shift to higher-value-added mix. Robotics (sales mix 45.6%) achieved Revenue ¥2,470.1B (+4.0%) but Operating Income ¥204.2B (-14.0%), with operating margin down to 8.3% (approx. -140bp). The decline appears due to selective demand in industrial robots, intensified price competition, higher new-product launch costs, and lower utilization. System Engineering (sales mix 7.1%) posted Revenue ¥387.4B (+1.0%) and Operating Income ¥49.9B (+8.3%), maintaining a high operating margin of 12.9%, supported by stable earnings from industrial automation drives and social systems projects. Others (logistics services, etc., sales mix 3.7%) saw Revenue ¥203.1B (-12.3%) but Operating Income ¥19.9B (+25.0%), with an improved operating margin of 9.8% reflecting notable efficiency gains. Segment adjustments were -¥44.7B (prior year -¥28.0B), with expanded allocations of corporate R&D and head office costs weighing on operating results. Company-wide, the scale and margin decline in Robotics is the biggest issue; margin recovery in Robotics is essential to achieve next-year targets.
Profitability: Operating margin 8.7% (prior year 9.3%, -60bp), Net margin 6.5% (prior year 10.6%, -410bp). ROE 7.7% (prior year 13.7%) — DuPont decomposition yields Net margin 6.5% × Asset Turnover 0.67× × Financial Leverage 1.65× ≒ 7.2%, below the past 3-year average ROE (~11.7%). ROA (on Ordinary Income basis) was 6.4% (prior year 10.9%), indicating broad profitability decline. By segment, System Engineering had the highest operating margin at 12.9%, Motion Control was resilient at 10.3%, and Robotics is the key concern at 8.3%.
Cash quality: Operating Cash Flow / Net Income was 1.43× (Operating CF ¥521.7B ÷ Net Income ¥365.8B), indicating solid cash realization, but Operating CF / EBITDA (Operating Income + Depreciation ¥210.8B = EBITDA approx. ¥684B) was about 0.76×, relatively low, as working capital build-up (inventory +¥6.7B? — original notes show inventory +67億円; preserve numeric form: inventory +67B, accounts receivable slight increase, accounts payable -¥54B) restrained cash conversion. Days Sales Outstanding (DSO) ≈ 110 days (Accounts receivable ¥1,639.4B ÷ Revenue ¥5,421.2B × 365), Inventory Days ≈ 219 days (Inventory ¥2,107.6B ÷ Cost of Sales ¥3,508.8B × 365), Payables Days ≈ 60 days (Accounts payable ¥576.8B ÷ Cost of Sales × 365), producing a Cash Conversion Cycle (CCC) of about 269 days, lengthening versus historical average.
Investment efficiency: Total Asset Turnover 0.67× (Revenue ¥5,421.2B ÷ Total Assets ¥8,123.6B, prior year approx. 0.72×) declined. Capital expenditure was ¥462.4B, 2.19× depreciation of ¥210.8B, reflecting ongoing aggressive investment; tangible fixed assets increased by ¥349.9B (+27.1%), and intangible fixed assets increased by ¥65.7B (+27.8%). ROIC (Operating Income ¥473.1B ÷ Invested Capital (Equity ¥4,936.1B + Interest-bearing debt ¥1,100.3B ≒ ¥6,036B)) ≒ 7.8%, down from prior year.
Financial soundness: Equity Ratio 59.5% (prior year 58.0%), Current Ratio 247% (Current assets ¥4,715.2B ÷ Current liabilities ¥1,911.6B), D/E ratio 0.22× (Interest-bearing debt ¥1,100.3B ÷ Equity ¥4,936.1B), indicating conservative capital structure. Interest-bearing debt metrics: Debt/EBITDA ≈ 1.61×, Interest Coverage ≈ 31.5× (Operating Income ¥473.1B ÷ Interest paid ¥15.0B), showing strong credit resilience.
Operating CF was ¥521.7B (prior year ¥565.1B, -7.7%). Profit realization into cash remained solid relative to Profit Before Tax of ¥495.6B, but decreased YoY. Subtotal (before working capital changes) was ¥633.6B. Working capital movements included an increase in inventory of -¥66.7B (cash outflow due to inventory build), decrease in accounts receivable +¥2.8B (improved collections), and decrease in accounts payable -¥53.6B (cash outflow due to payment condition changes), netting approximately -¥111B negative contribution, and the extended CCC (269 days) constrained Operating CF. Income taxes paid were ¥144.1B, interest paid ¥15.0B, and lease payments ¥40.3B were additional outflows. Investing CF was -¥442.2B, primarily due to capex of -¥462.4B (prior year -¥373.0B, +23.9%) to accelerate capacity expansion and digital investment. Proceeds included proceeds from sale of tangible fixed assets +¥9.7B, acquisition of investment securities -¥51.5B, sale of investment securities +¥44.0B, proceeds from sale of equity-method investments +¥0B (prior year +¥110.8B), and collection of short-term loans +¥22.3B. Free Cash Flow was ¥79.5B (Operating CF ¥521.7B - Investing CF ¥442.2B), below dividend payments of ¥176.7B, yielding an FCF coverage ratio of 0.45×, low. Financing CF was -¥86.3B, consisting of short-term borrowings increase +¥78.3B, long-term borrowings procurement +¥250.1B, repayments -¥193.5B, lease repayments -¥40.3B, dividend payments -¥176.7B, and treasury stock purchases -¥0.02B. Cash and cash equivalents increased slightly from ¥590.3B at the beginning of the period → FX impact +¥28.7B → year-end ¥612.2B (+¥21.9B, +3.7%). Capex/Depreciation ratio 2.19× is well above industry median 1.08×, indicating continued growth investment. Cash conversion rate (Operating CF / Net Income) 1.43× is near the industry median 1.46×, but working capital inefficiency keeps OCF/EBITDA at 0.76×; CCC improvement is the top priority for next fiscal year.
Earnings quality is largely derived from recurring operations, but the YoY comparison was significantly impacted by one-off items. Prior year included gains on sale and valuation of equity-method investments of ¥267.8B, which boosted Profit Before Tax; this item was zero in the current period, resulting in Net Income declining by -36.6%. Of financial income ¥45.6B (0.8% of sales), the bulk is estimated to be interest and dividends; equity-method gains were ¥7.7B (prior year ¥27.9B), materially lower due to investee performance weakness. Financial expenses ¥30.7B (0.6% of sales) consist of interest and FX losses, improved from ¥37.9B prior year. Other income ¥30.3B and other expense ¥10.5B net to +¥19.8B, likely including gains on disposals of fixed assets and FX-related items. Non-operating income as a percentage of sales was about 1.4% (financial income + other income total ¥75.9B ÷ Revenue ¥5,421.2B), indicating low dependence on non-operating items. Operating CF ¥521.7B ÷ Net Income ¥365.8B = 1.43× shows good cash realization, but Operating CF / EBITDA 0.76× low level suggests accrual-quality issues (working capital buildup). The gap between Ordinary Income ¥302.2B and Net Income ¥365.8B reflects Profit Before Tax ¥495.6B minus income taxes ¥129.8B, while Other Comprehensive Income (foreign currency translation gain ¥227.2B, equity valuation gain ¥112.6B, etc.) lifted Comprehensive Income to ¥717.2B — a large equity-enhancing effect not reflected in Net Income. Structurally, Robotics margin deterioration and higher SG&A are recurring negative drivers at the operating level; improved financial results and the prior-year one-off absence acted as non-recurring factors.
The company announced FY2027 guidance: Revenue ¥5,800.0B (YoY +7.0%), Operating Income ¥600.0B (YoY +26.8%), Net Income attributable to owners of parent ¥470.0B (YoY +28.5%), and EPS ¥181.21 (from ¥135.88, +33.4%). Progress rates vs. guidance were Revenue 93.5%, Operating Income 78.9%, Net Income 77.8%, implying a bullish plan that anticipates strong gains in Q4. Key assumptions for achievement include: (1) margin recovery in Robotics (price revisions, mix improvement, utilization increases), (2) containment of SG&A growth (decline from SG&A ratio 26.9%), (3) inventory reduction and CCC improvement to strengthen OCF, and (4) stabilization of FX assumptions (continued benefit from yen weakness). Order backlog disclosure is limited, but reductions in contract assets ¥110.0B (prior year ¥230.9B, -52.4%) and contract liabilities ¥280.1B (prior year ¥437.3B, -35.9%) suggest project progress being pulled forward and selective demand; stability of order trends is key to plan execution. Dividend guidance is annual ¥36 (current period ¥68, -47.1%), implying a payout ratio of approx. 19.9% (dividend ¥36 / EPS ¥181.21), set conservatively to prioritize internal reserves and growth investment. If FCF remains below dividends, improvements in working capital and Operating CF will determine the sustainability of shareholder returns.
This period’s dividend was annual ¥68 (interim ¥34, year-end ¥34), unchanged from prior year. Total dividends against Net Income attributable to owners of parent ¥352.4B amounted to approx. ¥180.5B (based on shares outstanding 266,690 thousand - treasury shares 7,323 thousand = 259,367 thousand shares), yielding a payout ratio of approx. 51.2%. Prior year payout ratio was approx. 31.1% (Net Income ¥569.9B with same ¥68 dividend), so the payout ratio increased due to the decline in Net Income. Dividend cash outflow on the cash flow statement was ¥176.7B (prior year ¥172.9B), a slight increase, reflecting continued return to shareholders. Share buybacks on the cash flow statement were ¥0.02B (prior year ¥94.0B), effectively negligible, making the total return ratio dividend-centric. Free Cash Flow was ¥79.5B, below dividends of ¥176.7B, with FCF coverage 0.45×. Cash balance ¥612.2B and interest-bearing debt ¥1,100.3B yield net interest-bearing debt ¥488.1B (net debtor position), but with strong Equity Ratio 59.5% and Operating CF ¥521.7B, dividend sustainability is judged secure. However, next year the company forecasts annual dividend ¥36 (payout ratio ~19.9%), a substantial cut, indicating priority on FCF improvement and reserve accumulation. If inventory reduction and CCC improvement strengthen Operating CF, scope for future dividend increases could expand. In the statement of changes in equity, retained earnings rose from ¥348,003 million → ¥369,336 million (+¥21,333 million), indicating retained earnings growth post-dividend.
Continued margin deterioration in Robotics: Operating margin fell to 8.3% (prior year approx. 9.7%, -140bp) primarily due to intensified price competition, adverse mix, and lower utilization. If selective demand in the industrial robot market persists, delays in margin recovery could press company-wide Operating Income (Robotics accounts for approx. 43% of company Operating Income), making next-year target Operating Income ¥600B (+26.8%) difficult to achieve. Quantitatively, a 1% decline in operating margin equates to roughly ¥25B lower profit.
Working capital inefficiency and cash flow pressure: CCC is approx. 269 days (extended from estimated 240 days prior year), with Inventory Days 219 and DSO 110, showing increased working capital ties. Elevated inventory ¥2,107.6B (prior year ¥2,062.6B, +2.2%) raises risks of discount pressure, storage cost increases, and obsolescence, and combined with low Operating CF / EBITDA 0.76× sustains a situation where FCF is below dividends (FCF ¥79.5B < dividends ¥176.7B). Shortening CCC by 10 days could free approx. ¥150B of working capital; failure to improve may increase dependence on external financing.
Order volatility from slower customer investment cycles: Large declines in contract assets (¥230.9B → ¥110.0B, -52.4%) and contract liabilities (¥437.3B → ¥280.1B, -35.9%) suggest selective capital investment in automotive, semiconductor, and general industrial customers. Limited disclosure of order backlog and contrasting YoY segment revenue trends (Motion Control -1.1%, Robotics +4.0%) point to demand concentration; if major customer sectors’ investment cycles remain slow, achieving next-year revenue growth of +7.0% will be challenging. FX reversal (end of yen weakness) is also a downside risk.
| Metric | Company | Industry Median | IQR | Industry Rank |
|---|---|---|---|---|
| ROE | 7.7% | 6.3% | 3.2%–9.9% | Top 14% → mid-range decline |
| Operating Margin | 8.7% | 7.8% | 4.6%–12.3% | Above median |
| Net Margin | 6.5% | 5.2% | 2.3%–8.2% | Above median |
| Equity Ratio | 59.5% | 60.9% | 46.2%–75.0% |
Trend: ROE 13.7% → 7.7% (3-year avg. approx. 11.7%, significant decline) Summary: Financial soundness and investment capacity remain above-average within the industry, but profitability (ROE) and working capital efficiency (inventory and receivables turnover) have declined below industry averages. Improving these metrics is key to regaining competitive positioning. Industry: Manufacturing, Comparison: FY2025, Source: Proprietary analysis
Three key points in the results:
The drop in Robotics operating margin to 8.3% (down 140bp) suggests structural shifts in the industrial robot market (price competition, selective demand, emergence of new-country manufacturers). Robotics margin recovery is essential to achieve next-year Operating Income +26.8%; monitoring order trends, price revision progress, and new-product launch effects is critical.
Worsening working capital efficiency (CCC 269 days, Inventory DIO 219 days, DSO 110 days) is constraining cash conversion, with FCF ¥79.5B far below dividends ¥176.7B, limiting the ability to simultaneously sustain shareholder returns and growth investment. Progress on inventory reduction (supply chain optimization, production adjustment) and receivables improvement (credit control, strengthening prepayments) will determine next-year OCF enhancement and dividend policy flexibility.
Aggressive investment (Capex/Depreciation 2.19× and tangible fixed assets +27.1%) is a strategic move to expand production capacity, automation, and digitalization mid-to-long term, but it pressures near-term FCF and has reduced investment returns (ROIC 7.8%, prior estimate ~10%). Progress in recovering utilization and investment payback is central to medium-term shareholder value creation. Financially, the company maintains strong fundamentals: Equity Ratio 59.5%, Debt/EBITDA 1.61×, Interest Coverage 31.5×, providing resilience against external shocks. Comprehensive Income ¥717.2B (foreign currency translation gain +¥227.2B, equity valuation gain +¥112.6B) contributed to equity growth, with BPS ¥1,864.31 (prior year ¥1,662.60, +12.1%) and solid net assets expansion.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on publicly disclosed financial statements. Investment decisions are your sole responsibility; please consult a professional as needed.
| Near median |
| Asset Turnover | 0.67x | 0.76x | 0.61–0.90 | Below median |
| Inventory Days | 219 days | 67.8 days | 31.5–113.9 days | Well above median |
| DSO | 110 days | 72.7 days | 53.0–90.1 days | Above median |
| Cash Conversion Ratio | 1.43x | 1.46x | 0.77–2.31 | Near median |
| Capex/Depreciation | 2.19x | 1.08x | 0.67–1.77 | Well above median |
| Payout Ratio | 51.2% | 33.0% | 23.0%–43.0% | Above (next-year forecast 19.9%) |