| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥503.7B | ¥469.6B | +7.3% |
| Operating Income / Operating Profit | ¥54.0B | ¥63.8B | -15.4% |
| Ordinary Income | ¥79.2B | ¥47.5B | +66.8% |
| Net Income | ¥58.0B | ¥33.2B | +74.5% |
| ROE | 1.7% | 1.0% | - |
For Q1 of the fiscal year ending March 2026, Revenue amounted to ¥503.7B (YoY +¥34.1B +7.3%), Operating Income was ¥54.0B (YoY -¥9.8B -15.4%), Ordinary Income was ¥79.2B (YoY +¥31.7B +66.8%), and Net Income attributable to owners of the parent was ¥58.0B (YoY +¥24.8B +74.5%). The results exhibit a two-faced nature: revenue increased while operating profitability weakened, but non-operating gains — notably foreign exchange gains and interest income — contributed to substantial increases at the ordinary and net levels. Revenue grew in both the Automotive Electrical Components market and the Life & Industry Equipment market; by region, Europe +14.0% and Asia +4.5% drove performance. Gross margin was 29.5% (YoY -0.8pt) and SG&A ratio was 18.8% (YoY +2.1pt), with deterioration in cost and expense lines leading to an operating margin decline to 10.7% (YoY -2.9pt). In non-operating items, interest income of ¥5.8B and foreign exchange gains of ¥10.7B contributed, improving the ordinary margin to 15.7% (YoY +5.6pt) and the net margin to 11.5% (YoY +4.4pt). EPS rose materially to ¥23.62 (prior year ¥13.23 +78.5%).
[Revenue] Revenue of ¥503.7B (+7.3%) consisted of Automotive Electrical Components market ¥391.5B (+6.8%) and Life & Industry Equipment market ¥112.2B (+9.2%). By region, Europe ¥127.4B (+14.0%) showed the highest growth rate, and Asia ¥452.3B (+4.5%) served as the core market driving sales. Japan ¥304.0B (+1.2%) was slightly up, while the Americas ¥95.3B (-2.7%) declined. Gross profit margin declined to 29.5% from 30.3% a year earlier (-0.8pt), likely due to higher raw material prices, increased energy costs, and delays in passing on price increases.
[Profitability] Operating Income was ¥54.0B (-15.4%), and the operating margin fell significantly to 10.7% (from 13.6% a year earlier, -2.9pt). SG&A was ¥94.5B, up from ¥78.5B a year earlier (+20.4%), raising the SG&A ratio to 18.8% (from 16.7% a year earlier, +2.1pt). The sharp SG&A increase is thought to reflect one-off costs related to M&A (integration of Mabuchi Motor NPM Co., Ltd.), as well as increases in personnel and promotion expenses. In non-operating items, interest income of ¥5.8B and foreign exchange gains of ¥10.7B contributed, while foreign exchange losses of ¥28.4B were also recorded, resulting in a net foreign exchange burden equivalent to about 33% of Operating Income. Consequently, Ordinary Income rose to ¥79.2B (+66.8%) and ordinary margin improved to 15.7% (+5.6pt) due to non-operating factors. Extraordinary items were minimal (Extraordinary loss ¥0.6B), and Pre-tax Income was ¥78.6B. After income taxes of ¥20.6B (effective tax rate 26.2%), Net Income was ¥58.0B (+74.5%), with a net margin of 11.5% (+4.4pt). In summary, the company recorded revenue and net income growth overall, but operating-stage results were revenue-up/profit-down, with non-operating factors driving final earnings growth.
The Asia segment recorded Revenue ¥452.3B (+4.5%), Operating Income ¥37.2B (+10.6%), and a margin of 8.2%, remaining a solid core earnings source. Japan recorded Revenue ¥304.0B (+1.2%) — slight increase — but Operating Income decreased sharply to ¥15.8B (-43.1%), deteriorating margin to 5.2% (from 9.2% a year earlier, -4.0pt). Europe showed high growth with Revenue ¥127.4B (+14.0%) and Operating Income ¥2.3B (from ¥0.1B a year earlier, +2009.1%), turning to profitability with a margin of 1.8%. The Americas declined to Revenue ¥95.3B (-2.7%) and Operating Income ¥0.1B (-94.1%), with a margin of 0.1%, effectively near break-even. Profitability disparities across regions widened, with Asia’s high profitability underpinning consolidated earnings while deteriorating profitability in Japan and the Americas has become the main drag on consolidated margins.
[Profitability] Operating margin of 10.7% declined 2.9pt from 13.6% a year earlier; comparable multi-year averages are not available, so this is a single-year assessment. Net margin improved to 11.5% from 7.1% a year earlier (+4.4pt), largely due to non-operating income contributions. ROE of 1.7% reflects an extremely conservative capital structure with an Equity Ratio of 89.5%, indicating low capital efficiency. [Cash Quality] Days Sales Outstanding (DSO) is approximately 28.5 days and Days Inventory Outstanding (DIO) approximately 27.6 days, both suggesting deterioration year-on-year and raising concerns about declining working capital efficiency. [Investment Efficiency] Total Asset Turnover on an annualized basis is 0.53x (quarter 0.133×4), which is low, strongly influenced by cash holdings of ¥135.2B (35.8% of total assets). Goodwill of ¥4.73B is 1.4% of net assets, a healthy level. [Financial Soundness] Equity Ratio 89.5% (prior year 90.3%), current ratio 925.6%, quick ratio 783.8% — extremely strong. Interest-bearing debt ¥5.0B (short-term ¥0.55B + long-term ¥4.45B) versus cash ¥135.2B yields net cash ¥130.2B and D/E ratio 0.01x, effectively debt-free.
Because the cash flow statement was not disclosed, funding trends were analyzed from balance sheet movements. Cash and deposits decreased ¥8.19B year-on-year (-5.7%) to ¥135.2B. Short-term borrowings increased by ¥0.53B to ¥0.55B from ¥0.02B a year earlier; long-term borrowings rose by ¥3.15B to ¥4.45B from ¥1.30B a year earlier, for total additional borrowings of ¥3.68B. Inventories increased ¥2.33B to ¥38.0B, and trade receivables increased ¥0.59B to ¥39.31B, with working capital expansion pressuring liquidity. Goodwill increased ¥0.87B to ¥4.73B from ¥3.87B, reflecting the acquisition of Mabuchi Motor NPM Co., Ltd. in the Japan segment (goodwill recorded ¥0.94B). Construction in progress remained high at ¥10.49B, indicating a continued capital expenditure pipeline. As a proxy for Operating Cash Flow, subtracting working capital increases of ¥2.92B (Inventory +¥2.33B + Trade receivables +¥0.59B) from Net Income ¥58.0B yields estimated cash generation from operations of approximately ¥28.8B, suggesting significant scope to improve inventory and credit management.
Of Ordinary Income ¥79.2B, Operating Income ¥54.0B accounts for 68.2%, with the remaining 31.8% contributed by non-operating income. Major components of non-operating income ¥27.4B are interest income ¥5.8B, foreign exchange gains ¥10.7B, and other ¥3.3B. Evaluated net of foreign exchange losses ¥28.4B, foreign exchange produced a net burden of ¥17.7B, representing volatility equivalent to about 33% of Operating Income. Interest income ¥5.8B is recurring given cash holdings of ¥135.2B, but foreign exchange impacts are non-recurring and volatile. Extraordinary items were minimal (Extraordinary loss ¥0.6B). Comprehensive income ¥120.6B significantly exceeded Net Income ¥58.0B, driven by Other Comprehensive Income ¥62.6B, primarily foreign currency translation adjustments ¥52.8B and valuation differences on available-for-sale securities ¥10.2B, reflecting unrealized gains from yen depreciation. The linkage between Net Income and cash flow has weakened due to working capital increases; from an accrual perspective, inventory and receivables expansion has lowered earnings quality.
The Full Year plan calls for Revenue ¥2,130B (YoY +6.3%), Operating Income ¥260B (+2.1%), Ordinary Income ¥292B (-16.8%), and Net Income ¥215B. Q1 progress rates are: Revenue 23.6% (standard 25%: -1.4pt), Operating Income 20.7% (standard 25%: -4.3pt), Ordinary Income 27.1% (standard +2.1pt), and Net Income 27.0% (standard +2.0pt). Operating Income progress is about 17% below standard, indicating a weak start to the first half. Conversely, Ordinary and Net Income are ahead of standard, relying on non-operating gains from FX and interest. Achieving full-year guidance assumes recovery of operating margins in H2 through price pass-through, SG&A containment, and inventory compression. No revision to earnings guidance was announced as of Q1; the company appears to be planning a H2-weighted recovery. Progress toward the EPS forecast of ¥89.56 is 26.4%, slightly above pace. The dividend forecast is ¥28 (payout ratio 31.3%) and is considered feasible given cash on hand and earnings levels.
Dividend forecast is ¥28 annually (interim undecided), implying a payout ratio of 31.3% against company EPS forecast ¥89.56 — a sustainable level. Comparison with last fiscal year’s dividend of ¥39 is complicated by the 2-for-1 stock split effective January 1, 2026; on a split-adjusted basis, dividend policy appears continuous. Comparing cash on hand ¥135.2B, estimated operating cash flow proxy ¥28.8B, and estimated annual dividend outflow approximately ¥6.88B (outstanding shares 260M × ¥28), dividend funding is highly stable. With Equity Ratio 89.5% and net cash ¥130.2B, the financial foundation for maintaining dividends appears solid. No share buyback disclosure was made; shareholder returns are assessed to be dividend-focused.
Inventory stagnation / excess inventory risk: Inventories ¥38.0B increased +6.5% YoY, with DIO ≈ 27.6 days showing deterioration. Excess inventory above demand could lead to future discounting or disposal losses, further pressuring gross margin. Inventory compression and turnover improvement are the highest short-term priorities.
Earnings volatility from foreign exchange fluctuations: Concurrent recording of foreign exchange gains ¥10.7B and losses ¥28.4B produced a net burden ¥17.7B, about 33% of Operating Income. FX exposure significantly affects earnings stability; hedge strategy accuracy is critical to the reliability of earnings forecasts.
SG&A fixed-cost build-up reversing operating leverage: SG&A ¥94.5B rose +20.4% YoY, far outpacing revenue growth of +7.3%, increasing the SG&A ratio to 18.8% (+2.1pt). It is necessary to determine whether M&A integration costs and personnel increases are transient or structural fixed costs; in the event of revenue slowdown, there is a risk of sharp declines in Operating Income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.7% | 6.8% (2.9%–9.0%) | +3.9pt |
| Net Margin | 11.5% | 5.9% (3.3%–7.7%) | +5.6pt |
Profitability metrics exceed the industry median by a wide margin, maintaining top-tier profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.3% | 13.2% (2.5%–28.5%) | -5.9pt |
Revenue growth is 5.9pt below the industry median, placing the company from mid- to lower-range on growth pace.
※ Source: Company compilation
Two-faced nature of worsening operating profitability and reliance on non-operating income: Operating margin declined to 10.7% (-2.9pt) while Ordinary and Net Income rose sharply due to foreign exchange gains and interest income. From a sustainability perspective, the high dependency on non-operating items raises risk, and FX volatility increases earnings variability. Recovery of operating margin in H2 (price pass-through and cost optimization) is key to achieving full-year targets and improving earnings quality.
Deterioration in working capital efficiency and need for inventory compression: Inventories +6.5% and trade receivables +1.5% caused working capital expansion, and the operating cash flow proxy is roughly ¥28.8B against Net Income ¥58.0B, effectively halving cash conversion. Worsening DIO/DSO trends constrain short-term cash generation; inventory compression and stronger receivables collection are the highest short-term priorities.
Trade-off between a very strong balance sheet and low capital efficiency: Equity Ratio 89.5% and net cash ¥130.2B provide strong downside protection, yet ROE 1.7% and Total Asset Turnover 0.53x alongside conservative financial leverage (1.12x) suppress capital efficiency. M&A (Goodwill ¥4.73B, 1.4% of net assets) is small and within healthy range, but there is room to improve capital efficiency through growth investments and enhanced shareholder returns.
This report was automatically generated by AI analyzing XBRL earnings disclosure data. It is not a recommendation to invest in any particular security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.