| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥5692.6B | ¥5770.2B | -1.3% |
| Operating Income | ¥143.4B | ¥202.5B | -29.2% |
| Ordinary Income | ¥106.1B | ¥183.4B | -42.2% |
| Net Income | ¥-120.5B | ¥136.4B | +52.3% |
| ROE | -11.9% | 11.8% | - |
For the fiscal year ended March 2026, Revenue was ¥5692.6B (YoY -¥77.6B -1.3%), Operating Income was ¥143.4B (YoY -¥59.2B -29.2%), Ordinary Income was ¥106.1B (YoY -¥77.3B -42.2%), and Net loss attributable to owners of the parent was ¥120.5B (a deterioration of ¥258.9B from prior-year profit of ¥136.4B). Despite a slight revenue decline, double-digit operating profit deterioration progressed from the operating stage; non-operating expenses of ¥57.0B including foreign exchange losses of ¥27.0B and extraordinary losses of ¥85.7B (including impairment on available-for-sale securities of ¥34.3B) accumulated, resulting in a final-period loss. Gross margin was 38.2%, down 1.3pt YoY; SG&A to sales improved 0.4pt to 35.7% of sales, but Operating Margin deteriorated 1.0pt to 2.5%. An anomalous effective tax rate of 217.5% also pressured the bottom line. Retail Solutions posted slight revenue growth but profit declined 3.9%; Workplace Solutions saw revenue down 4.0% and profit down 45.5%, with rapid deterioration in profitability becoming the bottleneck for consolidated profit.
Revenue of ¥5692.6B (-1.3%) was driven by Retail Solutions at ¥3476.4B (+0.3%) which maintained slight growth supported by domestic POS and MFP strength, while Workplace Solutions at ¥2277.6B (-4.0%) saw declines due to weakening demand for MFPs and Auto-ID overseas, pulling down consolidated top line. Segment composition was Retail 61.1% and Workplace 39.9% (before intersegment eliminations), highlighting a Retail-skewed structure. FX impacts and unfavorable product mix offset volume maintenance, leaving the top line largely flat.
Operating Income of ¥143.4B (-29.2%) was mainly due to increased cost of sales of ¥3518.6B compressing gross profit to ¥2174.1B (gross margin 38.2%, -1.3pt YoY). SG&A was controlled at ¥2030.7B (35.7% of sales, -0.4pt YoY) but could not offset the gross margin deterioration, resulting in Operating Margin declining 1.0pt to 2.5%. Segment profits were Retail ¥76.3B (-3.9%, margin 2.2%) and Workplace ¥67.1B (-45.5%, margin 2.9%), with Workplace’s halving of profit the principal cause of consolidated profit decline. Ordinary Income of ¥106.1B (-42.2%) was depressed as non-operating expenses ¥57.0B (interest expense ¥17.0B, foreign exchange losses ¥27.0B, etc.) far exceeded non-operating income ¥19.8B, amplifying operating deterioration. Net income was further hit by extraordinary losses of ¥85.7B (impairment on available-for-sale securities ¥34.3B, loss on disposal of fixed assets ¥6.8B, etc.) versus extraordinary gains of ¥5.9B (gain on sales of available-for-sale securities, etc.), leaving profit before tax at ¥26.2B. Corporate tax and others amounted to ¥57.1B (effective tax rate 217.5%), and after adjustment for non-controlling interests of -¥8.0B, net loss attributable to owners of the parent was ¥120.5B. In conclusion, this is a harsh performance with declines in revenue and profit and a switch to a final-period loss.
Retail Solutions: Revenue ¥3476.4B (+0.3%), Operating Income ¥76.3B (-3.9%), margin 2.2% — revenue slightly increased but profit modestly declined. Domestic sales and maintenance of POS systems, MFPs, and Auto-ID remained firm, but reductions in gross margin and higher cost burdens compressed profitability. Workplace Solutions: Revenue ¥2277.6B (-4.0%), Operating Income ¥67.1B (-45.5%), margin 2.9% — revenue declined and profit halved. Slowing sales of MFPs and Auto-ID in overseas markets, FX headwinds, and rising costs combined to rapidly worsen profitability. Depreciation and amortization were Retail ¥53.9B and Workplace ¥132.4B, indicating Workplace is more asset-intensive. Goodwill amortization was minor at a total of ¥1.6B. Segment assets of consolidated ¥3614.3B comprised Retail ¥1823.9B, Workplace ¥1550.7B, and adjustments ¥239.8B (cash and available-for-sale securities, etc.).
Profitability: Operating Margin 2.5% (down 1.0pt from 3.5% prior year), Ordinary Income Margin 1.9% (down 1.3pt from 3.2%), Net Margin -2.1% (down 4.5pt from 2.4%) — profitability deteriorated at all stages. ROE -11.9% (worsened 21.8pt from 9.9% prior year) turned substantially negative due to the final-period loss and erosion of equity (Net Assets ¥1013.8B, YoY -¥143.0B). Gross margin 38.2% (prior year 39.5%) reflects FX and cost increases and worsening product mix; SG&A ratio 35.7% (prior year 36.1%) cost control could not offset margin declines.
Cash quality: Operating Cash Flow (OCF) ¥43.0B (YoY -82.7%) versus Net Income ¥-120.5B yields a negative OCF/Net Income ratio, indicating weak cash backing for profits. EBITDA (Operating Income + D&A) is approximately ¥331.4B, and OCF/EBITDA ratio is 0.13x, a low level, with working capital increases (Accounts receivable -¥116.6B, Inventories -¥109.8B, Accounts payable +¥208.8B) suppressing cash generation. Investment efficiency: Total asset turnover 1.58x (prior year 1.67x) slightly decreased; Capital expenditure ¥96.2B versus D&A ¥188.0B gives Capex/Depreciation ratio 0.51x, indicating restrained replacement investment. Financial soundness: Equity Ratio 28.0% (down 5.4pt from 33.4% prior year) driven by decrease in retained earnings (¥368.7B, down ¥216.5B from ¥585.2B), shrinking capital buffer. D/E ratio 2.57x is high, reflecting shrinkage of shareholders’ equity ¥940.7B vs interest-bearing debt (short-term borrowings ¥38.2B + long-term borrowings ¥129.5B = ¥167.7B). On the other hand, Debt/EBITDA 0.51x and EBITDA interest coverage 19.5x (EBITDA / interest paid) indicate debt-service metrics are in a sound range. Current ratio 119.7% and quick ratio 92.6% show limited short-term liquidity cushion.
Operating Cash Flow was ¥43.0B (YoY -82.7%). Starting from Profit before tax ¥26.2B plus non-cash charges such as Depreciation ¥188.0B to subtotal ¥145.9B of operating adjustments, working capital deterioration—Accounts receivable increase -¥116.6B and Inventory increase -¥109.8B—and corporate tax payments -¥94.3B were deducted, resulting in the OCF outcome. Accounts payable rose by ¥208.8B, partially easing working capital, but the buildup in receivables and inventory was the main cash absorber; OCF/EBITDA ratio 0.13x indicates a marked deterioration in cash conversion. Investing cash flow was -¥113.7B, primarily Capital Expenditures -¥96.2B and intangible asset additions -¥43.3B. Acquisition of subsidiary shares -¥6.7B and business acquisitions ¥6.8B offset each other, and proceeds from sales of securities ¥8.9B partially mitigated cash outflows. Free Cash Flow was -¥70.7B (OCF ¥43.0B + Investing CF -¥113.7B), indicating insufficiency of internal funds to cover Capex and dividends. Financing Cash Flow was -¥31.0B, where borrowings of ¥130.3B were offset by repayments -¥100.6B, lease liability repayments -¥46.6B, and dividend payments -¥13.2B. Cash and cash equivalents decreased from ¥479.3B at the beginning of the period to ¥395.0B at the end of the period, after FX effects ¥17.3B and exclusion of subsidiaries -¥98.5B. Reliance on accounts payable for working capital adjustment raises sustainability concerns; normalization of receivables and inventory management is key to CF improvement.
Core recurring earnings are Operating Income ¥143.4B, derived from Gross Profit ¥2174.1B less SG&A ¥2030.7B. One-off factors significantly damaged Net Income, notably extraordinary losses ¥85.7B (impairment on available-for-sale securities ¥34.3B, loss on disposal of fixed assets ¥6.8B, other ¥44.6B). Extraordinary gains were limited at ¥5.9B (gain on sale of available-for-sale securities ¥5.9B, gain on sale of fixed assets ¥0.8B). Net non-operating items were a burden of -¥37.2B (Non-operating income ¥19.8B - Non-operating expenses ¥57.0B), with foreign exchange losses ¥27.0B and interest expense ¥17.0B pressuring Ordinary Income. Equity method investment income ¥7.1B and interest received ¥4.1B partially offset these. The gap between Ordinary Income ¥106.1B and Profit before tax ¥26.2B was due to net extraordinary items of -¥79.8B, and the anomalous corporate tax charge of ¥57.1B (effective tax rate 217.5%) suggests valuation allowances on deferred tax assets and impacts from non-taxable losses. Although OCF exceeded Net Income, the negative OCF/Net Income ratio and the influence of working capital maneuvers and one-off losses indicate earnings quality is heavily affected by these factors and recurring cash-generating ability is fragile.
The full-year plan targets Revenue ¥5900.0B (YoY +3.6%), Operating Income ¥200.0B (+39.5%), Ordinary Income ¥160.0B (+50.8%), and Net Income (EPS basis) ¥132.10. Achievement rates vs plan were Revenue 96.5% (shortfall ¥-207.4B), Operating Income 71.7% (shortfall ¥-56.6B), Ordinary Income 66.3% (shortfall ¥-53.9B), and Net Income missed significantly due to the loss. While Revenue was broadly near plan, deterioration in profitability (gross margin and operating margin), expansion of foreign exchange losses, and occurrence of extraordinary losses widened shortfalls at the operating and ordinary stages and caused a large downside at the final profit level. The sharp decline in Workplace segment profit and the impairment on available-for-sale securities of ¥34.3B were major causes of the shortfall, with delayed price pass-through and insufficient cost absorption capacity underlying these issues. For the next fiscal period, inventory and receivables compression, margin improvement through strict pricing policy, stronger FX hedging, and improved controls over extraordinary loss risks are prerequisites for plan achievement.
A year-end dividend of ¥20 per share was paid, with total dividend payments of approximately ¥23.8B. The same ¥20 dividend was paid in the prior year, so the dividend amount was maintained. Given the Net loss attributable to owners of the parent of ¥120.5B, the payout ratio is arithmetically negative; dividends were paid equal to 33.7% against Free Cash Flow of -¥70.7B and not covered by internal cash generation. Dividend funding depends on retained earnings on the balance sheet (¥368.7B) and on-hand cash (¥395.1B), and recovery of earnings and a return to positive FCF are prerequisites for dividend sustainability. Share buybacks were very limited at -¥0.1B, leaving dividends as the primary channel of shareholder return. The Total Return Ratio is not reported because only dividends were distributed; future return capacity will depend on recovery of OCF and normalization of working capital management.
Deterioration of profitability and weakening cash conversion: Operating Margin 2.5% and Net Margin -2.1% show substantial profitability deterioration, while OCF ¥43.0B (YoY -82.7%) and OCF/EBITDA 0.13x indicate sharply weakened cash generation. Working capital deterioration with Accounts receivable +¥116.6B and Inventories +¥109.8B persists, and reliance on Accounts payable +¥208.8B to generate cash raises sustainability concerns. Inventories increased +21.3% YoY, increasing obsolescence and write-down risk amid weakening demand. The gross margin deterioration to 38.2% (-1.3pt YoY) and elevated SG&A ratio are reversing operating leverage, and FX and interest disadvantages are entrenching pressure on pre-ordinary and ordinary profits.
Impairment on available-for-sale securities and capital erosion: An impairment on available-for-sale securities of ¥34.3B was recorded, and holdings of securities fell significantly YoY to ¥131.5B (-64.6% YoY). Recording of extraordinary losses ¥85.7B and the final-period loss reduced retained earnings by 37.0% from ¥585.2B to ¥368.7B, lowering the Equity Ratio to 28.0% (-5.4pt) and shrinking capital buffers; D/E ratio is 2.57x. Market volatility of securities and FX risk continue to impact both the P/L and the balance sheet, and equity vulnerability constrains dividend and investment capacity.
Rapid deterioration in Workplace Solutions profitability and failure to meet full-year plan: Workplace revenue ¥2277.6B (-4.0%) and Operating Income ¥67.1B (-45.5%) halved profits and were the primary reason operating income missed plan (achievement rate 71.7%). Weakening demand for MFPs and Auto-ID in overseas markets, FX headwinds, and delayed price pass-through hit the revenue structure, leaving a low margin of 2.9%. Actual performance fell far short of the full-year plan (Revenue ¥5900B, Operating Income ¥200B, Ordinary Income ¥160B), with operating underperformance of -28.3pt and ordinary -33.7pt, raising concerns about investor confidence and downward pressure on stock valuation. Reconstructing Workplace’s profitability and enforcing pricing policy are urgent; delays will affect medium- to long-term growth outlook.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.5% | 7.8% (4.6%–12.3%) | -5.2pt |
| Net Margin | -2.1% | 5.2% (2.3%–8.2%) | -7.3pt |
Our company’s Operating Margin and Net Margin are well below industry medians, making profitability improvement urgent.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.3% | 3.7% (-0.4%–9.3%) | -5.0pt |
Revenue growth is negative and below the industry median, indicating lagging top-line expansion.
※Source: Company compilation based on public financial statements
Room to restructure revenue model and short-term priorities: With Operating Margin 2.5% vs industry median 7.8% (-5.2pt deficit), gross margin decline to 38.2% (-1.3pt YoY) and Workplace Solutions profit halving (-45.5%) indicate vulnerability of earnings. Working capital deterioration from Accounts receivable and Inventory increases resulted in OCF/EBITDA 0.13x and Free Cash Flow -¥70.7B, creating insufficiency of internal funds for dividends and investment. Short-term priorities are inventory compression and accelerated receivables collection, margin recovery through price pass-through and cost optimization, and stronger FX hedging; progress on these will be indicators of recovery in profitability and cash generation.
Balancing financial safety and capital efficiency: Although leverage is high at D/E 2.57x, Debt/EBITDA 0.51x and EBITDA interest coverage 19.5x suggest manageable debt burden, and on-hand cash ¥395.1B supports short-term liquidity. However, the decline in Equity Ratio to 28.0% and a 37.0% decrease in retained earnings indicate shrinking capital buffers, constraining dividends and growth investment capacity. ROE deterioration to -11.9% reflects the final-period loss and impairment of capital efficiency; medium-term recovery of equity through capital policy revision and earnings recovery is a prerequisite for restoring shareholder value.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.