| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥250.7B | ¥239.6B | +4.7% |
| Operating Income | ¥10.8B | ¥-6.3B | +19.8% |
| Ordinary Income | ¥12.7B | ¥-8.2B | +144.5% |
| Net Income | ¥7.5B | ¥-0.3B | +2996.2% |
| ROE | 4.0% | -0.1% | - |
For the fiscal year ended March 2026, Revenue was ¥250.73B (YoY +¥11.16B +4.7%), Operating Income was ¥10.85B (YoY +¥17.17B, turned to profit), Ordinary Income was ¥12.68B (YoY +¥20.88B, turned to profit), and Net Income attributable to owners of the parent was ¥11.59B (YoY +¥13.93B, turned to profit), marking a significant turnaround from the prior year loss. Revenue growth was modest, but gross margin improved to 25.4% (from 22.0% YoY, +3.4pt) and SG&A ratio improved to 21.1% (from 24.6% YoY, -3.5pt), driving Operating Margin to 4.3% (from -2.6% YoY) — a +6.9pt improvement. Non-operating items contributed net income improvement of ¥1.83B, and extraordinary items largely offset each other, restoring Net Margin to 4.6%. By region, Japan accounted for 95.3% of Revenue (pre-segment eliminations) as the core market, with Operating Income improving markedly to ¥8.37B (+197.0%). Europe (margin 7.9%) and North America (margin 6.3%) maintained high profitability. Operating Cash Flow (OCF) was ¥31.27B, 2.7x Net Income, indicating high-quality earnings; Free Cash Flow (FCF) was ¥7.68B, nearly covering dividends and share buybacks. Cash balance of ¥96.3B exceeds short-term borrowings of ¥19.0B by more than five times, indicating robust liquidity, but Debt/EBITDA at 3.19x is somewhat high and the prolonged working capital cycle (CCC177 days) remains a challenge.
[Revenue] Revenue reached ¥250.73B (+4.7%), showing modest growth. By segment, Japan ¥239.0B (+4.9%) was the main driver, accounting for 95.3% of consolidated Revenue (pre-segment eliminations), aided by recovery in domestic customer demand. Overseas, Asia ¥61.0B (+1.8%) showed sluggish growth, while Europe ¥14.0B (+11.2%) and North America ¥6.8B (+20.4%) recorded double-digit growth, reflecting geographic diversification of high-value analog power ICs. Design-in base amounted to Japan ¥182.5B, Asia ¥40.0B, Europe ¥19.2B, North America ¥9.0B — design adoption remains Japan-centric but order wins in Europe and North America are expanding. Inventories were significantly reduced to ¥21.22B (prior ¥32.59B, -34.9%), and inventory adjustments supported capacity utilization and manufacturing cost optimization, underpinning revenue recovery.
[Profitability] Gross profit was ¥63.71B (gross margin 25.4%), up from ¥52.72B (22.0%) — +3.4pt — driven by manufacturing cost efficiencies and higher-value product mix. SG&A was ¥52.86B (SG&A ratio 21.1%), down from ¥59.04B (24.6%) — reduction of ¥6.18B — thanks to fixed cost control and scale efficiencies, improving by -3.5pt. As a result, Operating Income was ¥10.85B (Operating Margin 4.3%), a turnaround from Operating Loss of ¥-6.32B in the prior year — a +6.9pt improvement. Non-operating items contributed net ¥1.83B (Non-operating income ¥3.61B - Non-operating expenses ¥1.78B); foreign exchange gains ¥1.64B and FX losses ¥2.72B largely offset, and net interest/investment income (interest & dividends received ¥0.96B vs interest paid ¥1.72B) was a slight positive. Net FX impact was approximately -¥1.1B, imposing an approximate 10% headwind relative to Operating Income. Ordinary Income was ¥12.68B (Ordinary Income margin 5.1%), turning positive from ¥-8.20B prior year — an +8.5pt improvement. Extraordinary items nearly offset: extraordinary gains ¥1.25B (including ¥0.49B gain on sale of investment securities) versus extraordinary losses ¥1.20B (including impairment loss ¥11.15B and valuation loss on investment securities ¥0.84B), resulting in profit before tax of ¥12.74B. Income taxes were ¥1.15B (effective tax rate 9.0%), reduced by recognition of deferred tax assets, leading to Net Income attributable to owners of the parent of ¥11.59B (Net Margin 4.6%), a turnaround from ¥-2.36B prior year. In conclusion, revenue growth and strong profit improvement drove normalization of profitability.
Japan (Revenue ¥239.0B, +4.9%) delivered Operating Income ¥8.37B (+197.0%), improving margin to 3.5% and recovering sharply from prior-year loss of ¥-8.63B. Domestic customer demand recovery and manufacturing efficiency contributed, making it the core business generating about 77% of segment profit. Asia (Revenue ¥61.0B, +1.8%) posted Operating Income ¥1.03B (+48.3%) with margin 1.7% — low profitability but continuing earnings improvement from prior ¥0.70B, indicating signs of margin recovery amid price competition. Europe (Revenue ¥14.0B, +11.2%) recorded Operating Income ¥1.11B (+39.0%) with highest regional margin of 7.9%, supported by broader adoption of high-value products. North America (Revenue ¥6.8B, +20.4%) posted Operating Income ¥0.43B (+3103%) with margin 6.3%, rapidly recovering from ¥0.01B last year to establish a profitable base. Geographic diversification is progressing, but concentration remains high with Japan accounting for 95.3% of Revenue (pre-segment eliminations), leaving exposure to domestic demand fluctuations.
[Profitability] Operating Margin of 4.3% improved +6.9pt from -2.6% prior year, supported by simultaneous improvements in gross margin (25.4%, +3.4pt) and SG&A ratio (21.1%, -3.5pt). Net Margin of 4.6% turned positive from -9.8% prior year; low effective tax rate of 9.0% boosted bottom-line. ROE was 4.0% (reported), recovering from -12.4% prior year, though single-year assessment given limited multi-year comparability. EBITDA was ¥30.57B (Operating Income ¥10.85B + Depreciation & Amortization ¥19.72B), yielding an EBITDA margin of 12.2% — moderate pre-depreciation profit generation from gross profit, forming a cash-generation base.
[Cash Quality] OCF/Net Income ratio was 2.70x, indicating strong cash quality; accrual ratio -5.5% also supports earnings quality. OCF/EBITDA was 1.02x, reflecting healthy cash conversion, with working capital efficiency improvements supporting OCF.
[Investment Efficiency] Total Asset Turnover was 0.70x (Revenue ¥250.73B ÷ Total Assets ¥358.01B), roughly flat from 0.71x prior year — total assets grew slightly faster than revenue. Days Inventory Outstanding (DIO) was 127 days, Days Sales Outstanding (DSO) was 73 days, resulting in Cash Conversion Cycle (CCC) of 177 days — prolonged and indicating room to improve working capital efficiency.
[Financial Soundness] Equity Ratio was 52.4%, slightly up from 51.8% prior year, maintaining a healthy range. Debt/EBITDA was 3.19x (Interest-bearing debt ¥97.45B ÷ EBITDA ¥30.57B), slightly above typical investment-grade thresholds, but Interest Coverage was 6.31x (Operating Income ¥10.85B ÷ Interest paid ¥1.72B), indicating solid interest-paying capacity. Current Ratio was 271% and Quick Ratio 245%, showing strong short-term liquidity; Cash ¥96.3B is 5.1x short-term liabilities ¥19.0B, indicating very high liquidity resilience.
Operating Cash Flow was ¥31.27B (prior ¥33.59B, -6.9%). Starting from profit before tax ¥12.74B, adjustments and working capital changes contributed to subtotal ¥32.13B. Inventory decrease of ¥0.43B and accounts payable increase of ¥3.38B were positive contributors, partly offset by accounts receivable increase of -¥8.33B; after corporate tax payments of -¥1.20B and interest payments of -¥1.72B, OCF of ¥31.27B was generated. Investing Cash Flow was -¥23.59B, primarily attributable to acquisitions of tangible fixed assets -¥14.32B; this declined from prior year -¥38.81B large-scale investments and settled to refreshment-level investment. Acquisition of intangible assets -¥7.65B reflects digital investments such as software. FCF was ¥7.68B (OCF ¥31.27B + Investing CF -¥23.59B), which nearly covered dividend payments -¥6.04B and treasury stock purchases -¥1.85B, resulting in a cash increase of ¥1.48B. Financing Cash Flow was -¥9.53B: repayment of long-term borrowings -¥29.56B was offset by new borrowings ¥30.0B, and short-term borrowings increased by ¥19.0B, while dividends and share buybacks provided shareholder returns. CapEx of ¥14.32B was 0.73x depreciation ¥19.72B, conservative and at renewal level after large investments. Prolonged working capital cycle (CCC177 days) signals delays in inventory turns and collections, posing cash strain risk during revenue expansion.
Earnings quality has normalized at the operating level, with Operating Income ¥10.85B forming the core of Ordinary Income. Non-operating items contributed net ¥1.83B, but FX gains ¥1.64B and FX losses ¥2.72B mostly offset, producing net FX impact of about -¥1.1B — roughly a 10% headwind to Operating Income. Interest and dividend receipts ¥0.96B versus interest paid ¥1.72B produced a slight positive net contribution; non-operating income ¥3.61B equals 1.4% of Revenue and is less than 5%, indicating low dependency. Extraordinary items (extraordinary gains ¥1.25B including ¥0.49B gain on sale of investment securities, and extraordinary losses ¥1.20B including impairment loss ¥11.15B and valuation loss on investment securities ¥0.84B) nearly offset, limiting one-off impact on net income. OCF being 2.7x Net Income and accrual ratio -5.5% indicate strong cash backing for earnings and little distortion from accrual accounting. Comprehensive income was ¥21.50B, well above Net Income ¥11.59B; other comprehensive income ¥9.91B comprised valuation difference on securities ¥5.11B, adjustments related to retirement benefits ¥3.76B, and foreign currency translation adjustments ¥1.04B, reflecting market recovery and improvement in pension assets. Sustainable improvement in operating profitability is needed for earnings quality stability, as non-operating and extraordinary contributions are mostly temporary; further expansion of Operating Income next fiscal year will be important.
Company guidance projects Revenue ¥280.0B (YoY +11.7%), Operating Income ¥13.0B (YoY +19.8%), Ordinary Income ¥13.0B (YoY +2.5%), and Net Income attributable to owners of the parent ¥14.0B. This implies increases vs reported results of Revenue +¥29.27B and Operating Income +¥2.15B, assuming modest increase in Operating Margin to ~4.6% (from 4.3%, +0.3pt). As there is no mid-term progress metric disclosed, assessability of full-year guidance depends on execution. Assumptions include maintaining gross margin, further reduction in SG&A ratio, and continued growth in high-margin Europe and North America. Shortening inventory days 127 and CCC177 would boost OCF and increase likelihood of achieving guidance. Downside risks include deviation in FX impact (net effect approx -¥1.1B, ~10% of Operating Income), increasing working capital needs, and re-expansion of fixed costs. EPS forecast ¥132.17 assumes dividend guidance ¥28 (payout ratio approx 21%) and contemplates conservative range including potential continuation of share buybacks. If Operating Margin increases to 4.6%, full-year plan is achievable, but working capital efficiency and price maintenance are key.
Annual dividend is ¥56 (interim ¥28, year-end ¥28), total dividend payout approximately ¥6.04B (per consolidated cash flow statement). Payout Ratio relative to Net Income attributable to owners of the parent ¥11.59B is approximately 51.2% (reported), a sustainable level. Treasury stock acquisition amounted to ¥1.85B; combined with dividends, total shareholder returns were approximately ¥7.89B, slightly exceeding FCF ¥7.68B but absorbable given cash balance ¥96.3B. Company policy is to maintain DPS ¥28, keeping ¥28 for next fiscal year as well, indicating intent to balance profit growth and dividend stability. Total Return Ratio is approximately 68% (total returns ¥7.89B ÷ Net Income ¥11.59B), reflecting shareholder returns aligned with cash-generation capacity. Given Debt/EBITDA of 3.19x, scope for dividend increase depends on shortening the working capital cycle and boosting EBITDA; for the time being, dividend maintenance and flexible buybacks are expected.
Low working capital efficiency risk: DSO73 days, DIO127 days, CCC177 days — prolonged cycle leading to habitual cash tie-up during revenue expansion. Inventory turn delays may stem from product mix changes or extended customer specification lead times; without improvements in utilization and collection acceleration, cash generation per revenue could decline and working capital demand increase. Quantitatively, each one-day CCC reduction releases approximately ¥0.69B of cash (Revenue ¥250.73B ÷ 365 days), and shortening CCC to 150 days could improve cash by about ¥18.6B, though current signs of improvement are limited.
Geographic concentration risk: Japan accounts for 95.3% of Revenue (pre-segment eliminations), making the company highly sensitive to domestic demand and policy changes. High-margin Europe and North America (margins 7.9% and 6.3%) account for only 8.3% of total Revenue, limiting diversification. In downturns or adverse FX conditions, global offset effects are constrained, increasing volatility of Operating Income. Quantitatively, Japan Operating Income ¥8.37B represents 77% of consolidated Operating Income; a 10% decline in Japan operating profit would reduce consolidated Operating Income by about 8%.
Leverage level and earnings volatility risk: Debt/EBITDA 3.19x slightly exceeds typical investment-grade threshold (3.0x), reducing debt tolerance in an EBITDA contraction. Thin Operating Margin of 4.3% means a 5% revenue decline could reduce EBITDA by approximately 13% (due to fixed cost leverage), pushing Debt/EBITDA above 3.6x. Interest Coverage of 6.31x is adequate, but margin fragility limits the safety buffer of capital structure.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.3% | 7.8% (4.6%–12.3%) | -3.4pt |
| Net Margin | 3.0% | 5.2% (2.3%–8.2%) | -2.2pt |
Operating Margin is -3.4pt below the industry median of 7.8%, indicating profitability below manufacturing peers. Net Margin is -2.2pt below median 5.2%, suggesting scope to improve both gross margin and SG&A control.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.7% | 3.7% (-0.4%–9.3%) | +1.0pt |
Revenue growth at 4.7% is +1.0pt above the industry median 3.7%, modestly outperforming manufacturing peers on growth.
※ Source: Company compilation
Normalization and sustainability of profitability: Gross margin +3.4pt and SG&A ratio -3.5pt drove Operating Margin recovery to 4.3%, establishing a profit base after prior-year loss. OCF ¥31.27B at 2.7x Net Income and accrual ratio -5.5% indicate strong cash support for earnings. Achieving company plan (Operating Margin 4.6%) requires expansion in high-margin Europe and North America and price maintenance. Inventory compression -34.9% improved manufacturing efficiency, but DIO127 days and CCC177 days underscore working capital efficiency issues and potential cash strain during revenue growth. Absorbing net FX headwind approx -¥1.1B (about 10% of Operating Income) is a positive, but next-year hedging policy and FX deviations remain performance risk factors.
Balance between financial soundness and shareholder returns: Cash ¥96.3B vs short-term liabilities ¥19.0B (5.1x) and Interest Coverage 6.31x indicate strong short-term liquidity and interest-paying capacity. However, Debt/EBITDA 3.19x slightly exceeds investment-grade threshold, limiting debt resilience in downturns. FCF ¥7.68B covered dividends ¥6.04B and buybacks ¥1.85B, and Total Return Ratio 68% is sustainable, though scope for dividend increases depends on working capital and EBITDA improvements. Payout Ratio 51.2% supports stable dividend continuation, but if leverage reduction is prioritized, shareholder return expansion may be curtailed.
Geographic concentration and margin improvement potential: Japan constitutes 95.3% of Revenue, exposing the company to domestic demand risk, while Europe (margin 7.9%) and North America (margin 6.3%) expansion offers room to improve consolidated margins. Industry benchmark shows Operating Margin median 7.8% — company is -3.4pt below median. Accelerating high-value product mix, improving gross margin, and shortening CCC to below 150 days could push Operating Margin above 5% and align with industry profitability. Although Japan concentration remains a risk, growth in Europe/North America and Asia efficiency improvements could deliver simultaneous diversification and margin enhancement.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute an investment recommendation for any specific security. Industry benchmarks are reference information compiled by the firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.