Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥555.1B | ¥490.6B | +13.1% |
| Operating Income | ¥40.8B | ¥31.6B | +28.9% |
| Ordinary Income | ¥47.3B | ¥37.8B | +25.3% |
| Net Income | ¥31.0B | ¥23.5B | +31.8% |
| ROE (Annualized) | 7.1% | 5.5% | - |
Executive Summary
The Company posted higher revenue and earnings, accompanied by improved operating leverage, mainly driven by growth in FA and Material Processing. Revenue was ¥555.1B (+13.1% YoY), Operating Income was ¥40.8B (+28.9%), Ordinary Income was ¥47.3B (+25.3%), and consolidated Net Income was ¥31.0B (+31.8%). The decline in the cost-of-sales ratio and the improvement in the SG&A ratio to 22.7% (23.4% in the previous year) resulted in an earnings growth rate exceeding revenue growth.
Factors Affecting Performance
【Revenue】Revenue of ¥555.1B increased +13.1% YoY. By segment, the core Material Processing business grew significantly to ¥227.3B (+37.4%), while FA increased to ¥82.3B (+25.7%). Energy Management declined to ¥245.0B (△5.5%), indicating that growth was uneven across businesses.
【Profit and Loss】The gross profit margin improved slightly to 30.1% (30.0% in the previous year), while the SG&A ratio declined to 22.7% (23.4% in the previous year). As a result, the operating margin improved to 7.3% (6.4% in the previous year), achieving Operating Income growth exceeding revenue growth. Ordinary Income reached ¥47.3B after adding ¥10.3B in non-operating income, including ¥5.5B in interest and dividend income and ¥1.3B in foreign exchange gains. The ¥1.3B extraordinary loss had only a minor impact on Net Income. Accordingly, the results can be characterized as higher revenue and higher earnings.
Segment Analysis
Material Processing generated revenue of ¥227.3B (+37.4%), Operating Income of ¥26.8B (+39.4%), and a margin of 11.8%, making it the Company’s largest contributor to profit. FA generated revenue of ¥82.3B (+25.7%) and Operating Income of ¥4.0B (a substantial increase YoY), with profitability improving to a margin of 4.9%; however, its margin remains lower than those of the other segments. Energy Management generated revenue of ¥245.0B (△5.5%), Operating Income of ¥22.0B (△6.3%), and a margin of 9.0%, making it the only segment to report both lower revenue and lower earnings. Corporate expenses were ¥12.1B, which was deducted from the total of ¥52.8B for the reportable segments, resulting in consolidated Operating Income of ¥40.8B.
Key Financial Indicators
【Profitability】The operating margin improved to 7.3% (6.4% in the previous year), while the consolidated net profit margin improved to 5.6% (4.8% in the previous year). 【Cash Flow Quality】Accounts receivable declined YoY to ¥449.2B, while work in process was ¥300.2B, finished goods were ¥392.0B, and raw materials were ¥473.4B, indicating that inventory-related assets remained at high levels and that the volume of projects in production increased. 【Investment Efficiency】Annualized ROE was 7.1%, supported by the improvement in the net profit margin. 【Financial Soundness】With an equity ratio of 54.7%, current assets of ¥2034.9B, and current liabilities of ¥965.8B, the Company has strong capacity to meet short-term obligations. Although interest-bearing debt, including long-term borrowings of ¥357.8B, is of a certain scale, the capital structure remains within a conservative range based on the equity ratio.
Cash Flow Analysis
As individual data from the statement of cash flows have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥335.2B, a slight decrease from ¥341.6B in the same period of the previous year. While accounts receivable and notes receivable declined YoY to ¥449.2B, work in process increased to ¥300.2B, and total inventories, including raw materials and finished goods, stood at ¥392.0B. These movements indicate that the focus of working capital has shifted toward the production and acceptance processes following order intake. The increase in work in process represents assets awaiting future conversion into revenue, meaning that the Company’s cash-generation capacity depends on the smooth progress of production and acceptance. Long-term borrowings were ¥357.8B and short-term borrowings were ¥383.5B, indicating that part of the funding structure depends on short-term financing.
Earnings Quality
Non-operating income of ¥10.3B included ¥5.5B in interest and dividend income and ¥1.3B in foreign exchange gains, both of which were additions arising from factors outside the core business. Non-operating expenses were ¥3.8B, including ¥2.5B in interest expenses. Since interest and dividend income exceeded these expenses, the Company generated net income from an interest-related perspective. Extraordinary income was ¥0.1B versus an extraordinary loss of ¥1.3B, resulting in a net loss of ¥1.2B; however, the impact on Net Income of ¥31.0B was limited, indicating a low degree of dependence of current-period earnings on one-time items. Comprehensive income was ¥51.3B, and the ¥14.3B difference from Net Income of ¥31.0B was mainly attributable to an increase of +¥14.3B in valuation differences on available-for-sale securities and an increase of +¥8.4B in foreign currency translation adjustments. Valuation factors unrelated to core business earnings thus boosted comprehensive income.
Earnings Forecasts and Guidance
The full-year Company forecast calls for revenue of ¥2800.0B (+17.8% YoY), Operating Income of ¥250.0B (+33.1%), and Ordinary Income of ¥255.0B (+26.9%). Progress against the full-year forecast in Q1 was 19.8% for revenue, 16.3% for Operating Income, and 18.6% for Ordinary Income, all below the simple one-quarter benchmark of 25%. However, the deviations were not larger than 10pt, and neither the earnings forecast nor the dividend forecast was revised. Accordingly, the plan appears to assume a concentration of project progress and acceptance in the second half of the fiscal year.
Shareholder Returns
The dividend for the same period of the previous year was ¥84 per share, and no revision to the dividend forecast was made in Q1. A 1-for-5 stock split, with October 1, 2026 as the effective date, is scheduled. The year-end dividend for the fiscal year ending March 2027 (forecast) is presented on a post-split basis, and the total annual dividend is shown as “－” due to the impact of the stock split. Without taking the stock split into account, the year-end dividend would be ¥105.00 per share and the total annual dividend would be ¥210.00 per share.
Risk Factors
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Lengthening of the working capital cycle: Work in process increased YoY to ¥300.2B, and total inventories, including raw materials of ¥473.4B and finished goods of ¥392.0B, remained at high levels. If orders and acceptance do not progress as planned, there is a risk of inventory accumulation and funds becoming tied up.
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Uneven demand across segments: Energy Management reported a △5.5% YoY decline in revenue and a △6.3% decline in segment profit, with Company-wide growth concentrated in FA and Material Processing. If an adjustment occurs in the capital investment cycle, the benefits of demand diversification may decline.
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Short-term funding structure: Short-term borrowings were ¥383.5B, indicating that part of the funding structure depends on short-term financing when compared with cash and deposits of ¥335.2B. Changes in the interest-rate environment could affect financial expenses and refinancing terms.
Industry Benchmark (For Reference; Compiled by the Company)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.3% | 8.7% (4.2%–14.3%) | −1.3pt |
| Net Profit Margin | 5.6% | 7.1% (3.2%–10.6%) | −1.5pt |
Both the operating margin and net profit margin were below the industry median, placing the Company’s profitability somewhat below the industry average.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 13.1% | 6.2% (-1.1%–14.6%) | +6.9pt |
The revenue growth rate significantly exceeded the industry median, placing the Company’s growth among the higher-ranking companies in the industry.
※Source: Compiled by the Company
Key Takeaways from the Results
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Operating Income increased +28.9% against revenue growth of +13.1%, confirming positive operating leverage accompanied by a decline in the SG&A ratio (22.7%, versus 23.4% in the previous year). The primary factors behind the margin improvement were the high profitability of Material Processing and higher earnings in FA.
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By segment, Material Processing and FA drove growth and earnings, while Energy Management reported lower revenue and lower earnings. A notable characteristic is the concentration of growth drivers within the business portfolio.
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Q1 progress against the full-year plan was 19.8% for revenue and 16.3% for Operating Income, below the standard 25% benchmark. However, no earnings forecast revision was made, and progress on projects in the second half of the fiscal year will be key to achieving the plan.
Theoretical Share Price (Reference Value)
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥5,798 |
| base | ¥5,826 |
| bull | ¥5,861 |
| Valuation Assumptions | Value |
|---|---|
| Book Value Per Share (BPS) | ¥7,345 |
| Adjusted Forecast EPS | ¥150.9 |
| Cost of Equity r | 9.77% (10-year Japanese Government Bond 2.77% + Equity Risk Premium 6.00% + Size Premium 1.00%) |
| Persistence Factor of Residual Income ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 30.0% |
| Forecast EPS Confidence Adjustment | ×1.080 (based on the industry’s historical guidance achievement rate) |
| implied PBR / PER | 0.79x / 38.6x |
Sensitivity: ¥5,666–¥5,994 at ±1% for the cost of equity, and ¥5,778–¥5,858 at ±0.1 for ω.
Notes:
- Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
- Net assets as of the quarter-end were used (there is a timing difference relative to the full-year forecast).
- Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.
(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest-rate reference month: 2026-07 / A mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee the future share price.)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.
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