| Metric | Current | Prior-year period | YoY |
|---|---|---|---|
| Revenue | ¥927.6B | ¥875.6B | +5.9% |
| Operating Income | ¥83.0B | ¥67.5B | +23.0% |
| Ordinary Income | ¥89.0B | ¥72.3B | +23.1% |
| Net Income | ¥62.4B | ¥50.7B | +26.4% |
| ROE | 7.3% | 6.2% | - |
FY2026 Q3 results delivered higher revenue and profits: Revenue ¥927.6B (+¥52.0B from ¥875.6B, +5.9%), Operating Income ¥83.0B (+¥15.5B from ¥67.5B, +23.0%), Ordinary Income ¥89.0B (+¥16.7B from ¥72.3B, +23.1%), and Net Income ¥62.4B (+¥11.7B from ¥50.7B, +23.1%). Operating margin improved to 8.9%, evidencing strong operating leverage with profits outpacing sales growth. Full-year outlook remains on track: Revenue ¥1,280B (+6.4%), Operating Income ¥100B (+15.4%), Ordinary Income ¥105B (+12.6%), and Net Income ¥74B, with steady progress toward targets.
[Profitability] ROE 7.4% (improved +1.1pt from 6.3% in the prior-year period), Operating Margin 8.9% (+1.2pt from 7.7%), and Net Margin 6.8% (+1.0pt from 5.8%), indicating broad-based margin improvement. Non-operating income—dividends received of ¥3.1B and gain on sale of marketable securities of ¥3.2B—supported Ordinary Income. [Cash Quality] Cash and deposits of ¥239.5B, with cash coverage of short-term liabilities at 14.4x, indicate ample liquidity. Working capital stands at ¥469.3B, sufficiently covering operating needs. [Investment Efficiency] Total asset turnover improved modestly to 0.65x (from 0.62x), and tangible fixed asset turnover is roughly 6.5x, reflecting relatively solid asset efficiency. [Financial Soundness] Equity Ratio 60.1% (+2.9pt from 57.2%), Current Ratio 214.4%, Quick Ratio 200.2%, and debt-to-equity ratio 0.66x denote a conservative capital structure. Interest coverage of 33.6x underscores very strong debt service capacity.
Cash and deposits increased by +¥25.2B YoY to ¥239.5B, driven by higher operating profits. Current assets rose to ¥879.4B, up +¥68.2B YoY, primarily due to accounts receivable of ¥281.2B (+¥30.0B) and inventories of ¥58.2B (+¥8.6B), consistent with normal working capital expansion accompanying sales growth. Investment securities were ¥84.6B, roughly flat YoY (+¥0.1B), as partial disposals (gain on sale of marketable securities of ¥3.2B) offset mark-to-market changes. In financing activities, interest-bearing debt decreased to ¥112.5B, down -¥5.0B YoY, reflecting deleveraging via repayments. Cash coverage of short-term liabilities stands at 14.4x and the Current Ratio at 214.4%, indicating very low liquidity risk.
Ordinary Income was ¥89.0B versus Operating Income of ¥83.0B, implying approximately ¥6.0B net non-operating gains. Key components were dividends received of ¥3.1B, equity in earnings of affiliates of ¥0.8B, and gain on sale of marketable securities of ¥3.2B (extraordinary income). Interest expense of ¥2.5B is limited, implying an effective interest rate of about 2.2% on interest-bearing debt of ¥112.5B. Against the Operating Income improvement of +¥15.5B, gross profit reached ¥156.5B (gross margin 16.9%), up +¥12.8B YoY, while SG&A was ¥73.5B, down -¥2.7B YoY—both sales growth and cost discipline amplified operating leverage. The effective tax rate is 32.1%, a standard level. While the ¥3.2B gain on sale of marketable securities contributed as a non-recurring item, 93% of Ordinary Income is derived from Operating Income, confirming a core business–driven earnings structure.
Demand volatility risk: The core electric motor (Rotating Machines Segment) posted revenue of ¥408B, accounting for 44% of total, but its operating margin is a relatively low 4.2%. A cyclical slowdown or weaker capital expenditure could pressure earnings. If the YoY sales growth of +5.9% decelerates, adverse operating leverage could compress margins. Dependence on non-recurring income: The ¥3.2B gain on sale of marketable securities represents 3.6% of Ordinary Income, with non-recurring items supporting profits. Earnings are exposed to fluctuations in the market value and disposal timing of investment securities totaling ¥84.6B, potentially reducing predictability. FX and raw material price risk: Although reliance on overseas sales and imported raw materials is not specifically disclosed, the gross margin of 16.9% is susceptible to input cost and FX movements. A reversal of yen depreciation or rising commodity prices could pressure gross margins.
[Positioning within Industry] (Reference information; in-house analysis) Profitability: Operating Margin of 8.9% significantly exceeds the industry median of 4.5% (IQR 1.8%–4.8%), placing the company in the upper tier. Net Margin of 6.8% is also above the industry median of 4.7% (IQR 3.6%–12.0%). ROE of 7.4% is below the industry median of 10.4% (IQR 9.2%–11.8%), indicating room to improve capital efficiency. Soundness: Equity Ratio of 60.1% is above the industry median of 52.3% (IQR 27.1%–54.7%), evidencing a strong financial base. The Current Ratio of 214.4% is close to the industry median of 225%, indicating a healthy level. The Net Debt/EBITDA multiple is approximately -1.0 (cash and deposits exceed interest-bearing debt), below the industry median of -0.27, reflecting a conservative, near net-cash profile. Efficiency: Sales growth of 5.9% is slightly below the industry median of 8.3% (IQR 2.1%–14.0%) but shows improvement from last year’s low growth. Return on Assets (ROA) is about 4.4%, below the industry median of 5.7% (IQR 1.8%–8.9%), indicating scope to enhance asset efficiency. (Industry: Electrical Equipment Manufacturing, N=6 companies, comparison basis: 2025 Q3, source: our compilation)
Sustainability of operating leverage: Operating Income rose +23.0% versus sales growth of +5.9%, confirming strong operating leverage driven by SG&A control. SG&A decreased -3.5% from ¥76.2B in the prior-year period to ¥73.5B, with cost management contributing materially to margin improvement. A key question is whether margins can be sustained through fixed-cost control even if sales growth slows. ROE and capital allocation challenges: ROE of 7.4% has improved versus the company’s historical performance but remains well below the industry median of 10.4%, suggesting limited value creation versus an assumed 8% cost of equity. With cash and deposits of ¥239.5B and investment securities of ¥84.6B, financial assets total ¥324B, a high 23% of total assets. Given a conservative Payout Ratio of 33.1%, potential next steps include enhanced shareholder returns or growth investments to improve capital efficiency. Likelihood of achieving full-year guidance: Against cumulative Q3 Operating Income of ¥83.0B, the full-year forecast of ¥100B implies a progress rate of 83%; against Ordinary Income of ¥89.0B, the full-year forecast of ¥105B implies 85%, requiring ¥17B of Operating Income and ¥16B of Ordinary Income in Q4. While achievement will depend on historical Q4 seasonality and order trends, the current run-rate appears consistent with full-year guidance.
This report is an automatically generated earnings analysis created by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by our firm using publicly disclosed financial data. Please make investment decisions at your own discretion and, as necessary, consult a professional advisor.