| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2008.3B | ¥1885.3B | +6.5% |
| Operating Income | ¥123.5B | ¥250.0B | -50.6% |
| Ordinary Income | ¥117.6B | ¥251.2B | -53.2% |
| Net Income | ¥83.3B | ¥179.6B | -53.6% |
| ROE | 6.3% | 13.1% | - |
The fiscal year ended March 2025 recorded Revenue of ¥2008.3B (YoY +¥123.0B +6.5%), Operating Income of ¥123.5B (YoY -¥126.5B -50.6%), Ordinary Income of ¥117.6B (YoY -¥133.7B -53.2%), and Net Income of ¥83.3B (YoY -¥96.3B -53.6%). While top-line growth was secured, Gross Profit Margin declined to 44.7% from 55.1% a year earlier (-10.4pt). SG&A was controlled at ¥774.2B (YoY -¥1.7B), but could not offset the deterioration in gross margin, causing Operating Margin to worsen materially to 6.2% (down 7.1pt from 13.3% prior year). Non-operating activities recorded foreign exchange losses of ¥9.0B, and extraordinary items (Fixed asset sale gains ¥17.9B and impairment losses ¥15.3B) mostly offset each other, resulting in a net gain of ¥2.6B; however, one-off items were sizable, amounting to roughly 38% of Net Income. The result was higher Revenue but lower profits.
[Revenue] Revenue was ¥2008.3B (YoY +6.5%), achieving growth. Because segment disclosures are not available, detailed decomposition is difficult, but working capital increases (Accounts receivable +¥34.2B, Inventory +¥140.5B) suggest sales remained firm while customer acceptance/consumption pacing and prolonged production lead times likely led to buildup of unshipped and work-in-process inventory. Foreign currency translation adjustment contributed +¥9.4B, indicating that exchange rate movements toward a weaker yen may have partly boosted Revenue.
[Profitability] Cost of sales was ¥1110.6B (YoY +¥26.0B +2.4%), rising at a much lower rate than Revenue, yet Gross Profit Margin fell to 44.7% from 55.1% a year earlier (-10.4pt). The deterioration in gross margin appears to be driven by a combination of adverse product mix, higher raw material/manufacturing costs, and/or worsening yields and manufacturing efficiency. SG&A was ¥774.2B (YoY -¥1.7B -0.2%), slightly down, improving SG&A ratio to 38.6% (from 41.9% prior year, -3.3pt), but not enough to compensate for the gross margin decline, so Operating Income halved to ¥123.5B (YoY -50.6%). On the non-operating side, interest income of ¥3.8B contributed to income while foreign exchange losses of ¥9.0B resulted in a net non-operating loss of ¥6.0B, further reducing Ordinary Income to ¥117.6B (YoY -53.2%). Extraordinary items netted to a positive ¥2.6B (fixed asset sale gains ¥17.9B less impairment losses ¥15.3B). Income taxes were ¥30.2B (effective tax rate 25.7%), resulting in Net Income of ¥83.3B (YoY -53.6%). In conclusion, the company reported higher Revenue but lower profits.
[Profitability] Operating Margin was 6.2% (down 7.1pt from 13.3% prior year) and Net Margin was 4.1% (down 5.4pt from 9.5% prior year), indicating a significant deterioration in profitability. Gross Profit Margin of 44.7% declined 10.4pt from 55.1%, suggesting combined impacts of product mix deterioration, cost increases, and manufacturing efficiency declines. SG&A ratio of 38.6% improved by 3.3pt from 41.9% but did not offset the gross margin decline. ROE was 6.3%, down 8.3pt from 14.6%, mainly due to the deterioration in Net Margin. [Cash Quality] Operating Cash Flow (OCF) was ¥76.9B, roughly 0.92x of Net Income ¥83.3B, showing general alignment, but OCF/EBITDA was low at 0.26x (OCF ¥76.9B ÷ EBITDA ¥293.4B), with working capital build-up (Inventory +¥140.5B, Accounts receivable +¥34.2B) constraining cash generation. Working capital turnover days were DSO 67 days (Accounts receivable ¥368.8B ÷ Revenue ¥2008.3B × 365 days), DIO 102 days (Inventory ¥340.9B ÷ Cost of sales ¥1110.6B × 365 days), DPO 52 days (Accounts payable ¥157.9B ÷ Cost of sales ¥1110.6B × 365 days), resulting in CCC extended to approximately 117 days and deteriorated capital efficiency. [Investment Efficiency] ROA was 7.0% (Ordinary Income ¥117.6B ÷ Total assets ¥1676.2B), down 7.1pt from 14.1% prior year. Total asset turnover was steady at 1.20x (Revenue ¥2008.3B ÷ Total assets ¥1676.2B), but Net Margin deterioration lowered both ROE and ROA. Capital expenditures were ¥148.6B, or 7.4% of Revenue, and depreciation was ¥169.0B, implying capex/depreciation ratio of 0.88x and suggesting maintenance/efficiency-focused investments. [Financial Soundness] Equity Ratio was 79.4% (down 1.1pt from 80.5% prior year) and Debt-to-Equity ratio 0.26x, maintaining a conservative capital structure. Current Ratio was 377.7% (Current assets ¥1228.2B ÷ Current liabilities ¥325.2B), indicating very strong short-term liquidity, but Cash and deposits fell substantially to ¥395.4B (down 45.7% from ¥728.4B prior year). Simultaneous execution of Investment Cash Flow of ¥228.8B and dividends/share repurchases of ¥138.5B against OCF of ¥76.9B pressured liquidity.
Operating Cash Flow was ¥76.9B, down 75.9% from ¥318.7B prior year. OCF before working capital changes totaled ¥105.4B, reflecting underlying profitability, but increases in inventory of ¥140.5B (Work-in-process ¥211.3B accounts for about 62% of total inventory ¥340.9B) and accounts receivable of ¥34.2B substantially tied up cash. Corporate tax payments of ¥32.2B were deducted, leaving OCF at ¥76.9B. Investing Cash Flow was an outflow of ¥228.8B, comprised of capital expenditures ¥148.6B, intangible asset purchases ¥80.5B, and proceeds from fixed asset sales ¥23.6B, resulting in a large net cash outflow. Free Cash Flow was negative ¥151.9B (OCF ¥76.9B - Investing CF ¥228.8B), indicating internal funds could not cover investment needs. Financing Cash Flow was an outflow of ¥142.4B, mainly for dividends ¥88.5B, share buybacks ¥50.0B, and lease liability repayments ¥4.4B. Consequently, Cash and cash equivalents decreased by ¥283.0B to an ending balance of ¥445.4B (down significantly from ¥728.4B prior year). Although OCF ¥76.9B was broadly aligned with Net Income ¥83.3B, OCF/EBITDA was low at 0.26x (EBITDA ¥293.4B = Operating Income ¥123.5B + Depreciation ¥169.0B), and working capital stagnation severely hindered cash generation.
Operating Income of ¥123.5B forms the core of recurring earnings. On the non-operating side, interest income ¥3.8B contributed while foreign exchange losses ¥9.0B and other non-operating expenses ¥1.0B combined to produce a net non-operating loss of ¥6.0B. Exchange losses were largely one-off in nature and contributed a ¥6.0B negative impact in the path to Ordinary Income of ¥117.6B. Extraordinary items (fixed asset sale gains ¥17.9B and impairment losses ¥15.3B) nearly offset, leaving a net contribution of ¥2.6B, but in absolute terms these items totaled ¥33.2B (gains + impairment) — about 40% of Net Income ¥83.3B — increasing earnings volatility. Accrual ratio was low at 0.6% ((Net Income ¥83.3B - OCF ¥76.9B) ÷ Total assets ¥1676.2B), which is favorable, but OCF/Net Income 0.92x and OCF/EBITDA 0.26x indicate weak cash conversion, leaving some concerns over earnings quality. The ¥34.3B gap between Ordinary Income ¥117.6B and Net Income ¥83.3B is mainly explained by income taxes ¥30.2B and net extraordinary items ¥2.6B, so the divergence is within an acceptable range.
Full Year guidance projects Revenue ¥2150.0B (YoY +7.1%), Operating Income ¥140.0B (YoY +13.3%), Ordinary Income ¥140.0B (YoY +19.1%), and Net Income not disclosed (implied approximately ¥100B based on EPS forecast of ¥57.05). Progress against first-half results (Revenue ¥2008.3B, Operating Income ¥123.5B, Ordinary Income ¥117.6B) implies achievement rates of 93.4% for Revenue, 88.2% for Operating Income, and 84.0% for Ordinary Income; the plan assumes second-half increases of Revenue ¥141.7B (H1 vs H2 +7.1%), Operating Income +¥16.5B (+13.4%), and Ordinary Income +¥22.4B (+19.0%). Achieving full-year targets requires recovery in gross margin (cost optimization and product mix improvement) and normalization of working capital (resolving the ¥140.5B inventory build and shortening DSO), and stable foreign exchange conditions are also a necessary condition. Dividend guidance is annual ¥25 (presumably per share) with forecast payout ratio 43.8% based on EPS forecast ¥57.05, a slight improvement from this year’s 45.5%.
Annual dividend is ¥50 (interim ¥25, year-end ¥25), unchanged from prior year. Payout ratio is 45.5% (Dividend ¥50 ÷ EPS ¥49.74), maintaining the same level as prior year. Total dividend amount is approximately ¥88.5B (outstanding shares 1.80B - treasury shares 0.05B × ¥50), which corresponds to about 103% of Net Income ¥83.3B on a dividend payout basis, meaning dividend payments slightly exceeded Net Income. In addition, share buybacks of ¥50.0B were executed, making total returns approximately ¥138.5B (Dividends ¥88.5B + Buybacks ¥50.0B), which implies a Total Return Ratio of about 166% relative to Net Income ¥83.3B — a high level. Given Free Cash Flow was negative ¥151.9B, dividends and buybacks were not funded from internal cash generation but by drawing down cash deposits. Next fiscal year, with projected Net Income recovery (approx. ¥100B) and working capital improvement, maintaining annual dividend of ¥25 (forecast payout ratio 43.8%) appears feasible, but continuation of share buybacks at current levels would require Free Cash Flow to return to positive.
Gross Margin Decline Risk: Gross Profit Margin fell to 44.7% from 55.1% prior year (-10.4pt). This likely reflects a mix of product mix deterioration, raw material and manufacturing cost increases, and yield declines. If price pass-through lags or competition intensifies causing sustained low gross margins, recovery of Operating Margin will be difficult. Guidance for next fiscal year embeds a modest improvement to an Operating Margin of 6.5% (Operating Income ¥140B ÷ Revenue ¥2150B), but realization requires rigorous cost control and product mix improvement.
Working Capital Stagnation Risk: Inventory ¥340.9B (YoY +¥140.5B, with Work-in-process ¥211.3B accounting for 62% of inventory) and Accounts receivable ¥368.8B (YoY +¥34.2B) increases extended DIO to 102 days, DSO to 67 days, and CCC to approximately 117 days. A persistently high share of work-in-process suggests production bottlenecks or slow responsiveness to demand changes; prolonged stagnation raises risks of obsolescence and write-downs. With OCF/EBITDA at 0.26x indicating weak cash conversion, delayed normalization of working capital would further pressure liquidity.
Foreign Exchange Risk: Foreign exchange losses of ¥9.0B were recorded in non-operating items, a substantial increase from ¥2.5B prior year. This likely reflects yen appreciation adjustments or weakened hedge effectiveness. Continued exchange rate volatility could destabilize recurring income. Limited disclosure on currency composition of Revenue and costs or on hedging strategies increases uncertainty and complicates quantitative assessment of FX sensitivity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.2% | 7.8% (4.6%–12.3%) | -1.6pt |
| Net Margin | 4.1% | 5.2% (2.3%–8.2%) | -1.0pt |
Both Operating Margin and Net Margin are below industry medians, placing the company in the lower tier on profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.5% | 3.7% (-0.4%–9.3%) | +2.8pt |
Revenue growth outperforms the industry median, placing the company among the leaders in top-line expansion within manufacturing.
※Source: Company compilation
Despite Revenue growth, sharp decline in gross margin halved Operating Income and reduced ROE to 6.3%. Gross Profit Margin deteriorated to 44.7% (down 10.4pt from 55.1%), and SG&A control (¥774.2B, YoY -0.2%) could not offset the gross margin decline, resulting in Operating Margin falling to 6.2% (down 7.1pt from 13.3%). Guidance anticipates a modest improvement to 6.5% Operating Margin, but realization depends on product mix improvement, cost optimization, and yield enhancement. ROE of 6.3% is below the industry median, indicating continued underperformance on profitability within manufacturing.
Working capital deterioration and reduced cash generation are pressuring the balance sheet and liquidity. Inventory increased by ¥140.5B (with work-in-process share 62%) and accounts receivable increased by ¥34.2B, extending DSO to 67 days, DIO to 102 days, and CCC to approximately 117 days, and reducing OCF/EBITDA to 0.26x. Free Cash Flow was negative ¥151.9B; total shareholder returns of ¥138.5B (Dividends ¥88.5B + Buybacks ¥50.0B) could not be funded internally, and Cash and deposits fell substantially to ¥395.4B (YoY -45.7%). While Equity Ratio is strong at 79.4%, ongoing pressure on liquidity could affect the sustainability of shareholder returns. Achieving next fiscal year’s profit recovery and working capital normalization will be key to restoring cash generation and maintaining return policy.
Revenue growth of 6.5% outperforms the industry median of 3.7%, indicating strong top-line expansion capability. However, Operating Margin 6.2% and Net Margin 4.1% lag industry medians (7.8% and 5.2% respectively), highlighting a trade-off between growth and profitability. Guidance targets Revenue +7.1% and Operating Income +13.3%, but narrowing the profitability gap with peers depends on gross margin recovery and working capital improvements.
This report was automatically generated by AI analyzing XBRL financial statement filings. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.