| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3568.7B | ¥3703.1B | -3.6% |
| Operating Income / Operating Profit | ¥205.4B | ¥217.9B | -5.7% |
| Profit Before Tax | ¥216.6B | ¥234.9B | -7.8% |
| Net Income / Net Profit | ¥37.5B | ¥213.9B | -82.5% |
| ROE | 2.5% | 16.3% | - |
For the fiscal year ended March 2026, Revenue was ¥3,568.7B (YoY -¥134.4B -3.6%), Operating Income was ¥205.4B (YoY -¥12.5B -5.7%), Ordinary Income was ¥53.2B (YoY -¥93.8B -63.8%), and Net Income attributable to owners of the parent was ¥167.9B (YoY -¥34.9B -17.2%). While both revenue and profits declined, reductions in cost and efficiency improvements in the Mobility & Telematics segment and structural reform effects in the Entertainment segment limited the decline at the operating income level. The large decline in Ordinary Income was mainly due to a decrease in equity-method income and a shift to foreign exchange losses. Operating margin slightly worsened to 5.8% (prior year 5.9%), and gross margin fell 1.2ppt to 30.9% (prior year 32.1%), while SG&A ratio improved 0.2ppt to 25.1% (prior year 25.3%) reflecting progress in cost control.
[Revenue] Revenue stood at ¥3,568.7B, a YoY decline of -3.6%. By segment, Mobility & Telematics accounted for ¥1,957.5B (YoY -3.7%) or 54.9% of total, Safety & Security was ¥947.0B (YoY -5.3%) or 26.5%, and Entertainment Solutions was ¥568.2B (YoY -1.9%) or 15.9%. All segments recorded revenue declines, while Other Businesses grew slightly to ¥96.0B (YoY +5.3%). The main causes of the revenue decline were variability in order conditions in Safety & Security and market adjustments in Mobility.
[Profitability] Cost of sales was ¥2,464.7B, yielding gross profit of ¥1,103.9B and a gross margin of 30.9%, down 1.2ppt YoY. SG&A decreased to ¥895.1B (prior year ¥936.3B, -4.4%), improving the SG&A ratio 0.2ppt to 25.1%. As a result, Operating Income was ¥205.4B (-5.7%) and operating margin narrowed 0.1ppt to 5.8%. By segment, Mobility & Telematics turned to profit with Operating Income of ¥54.0B (+10.6%), Entertainment achieved a large profit increase to ¥25.2B (+36.1%), while the core Safety & Security segment declined substantially to ¥127.4B (-31.4%), weighing on consolidated profits. Ordinary Income declined sharply to ¥53.2B (-63.8%), mainly due to equity-method income decreasing to ¥15.7B (prior year ¥19.7B) and a shift to foreign exchange loss of ¥2.5B (prior year foreign exchange gain ¥1.0B). Profit before tax was ¥216.6B (-7.8%); after corporate taxes of ¥46.9B, Net Income was ¥169.7B and Net Income attributable to owners of the parent was ¥167.9B (-17.2%). Impairment losses decreased to ¥7.0B (prior year ¥19.5B). Among special gains/losses, a subsidiary disposal loss of ¥8.0B was recorded while a subsidiary liquidation gain of ¥9.4B was recognized, leaving one-off items roughly neutral. In conclusion, despite revenue and profit declines, improvements in operating breakeven and reduced one-off losses meant the decline in final profit was smaller than the decline in operating profit.
The Mobility & Telematics segment recorded Revenue of ¥1,957.5B (-3.7%) and Operating Income of ¥54.0B (+10.6%), with a margin of 2.8%, improving 0.4ppt from 2.4% the prior year. The profit expansion despite lower revenue was driven by cost optimization and improved product mix. The Safety & Security segment had Revenue of ¥947.0B (-5.3%) and Operating Income of ¥127.4B (-31.4%), with a margin of 13.4%, down 5.2ppt from 18.6% the prior year. The profit decline in this core segment was a headwind to consolidated profits, reflecting market fluctuations and intensified price competition. The Entertainment Solutions segment recorded Revenue of ¥568.2B (-1.9%) and Operating Income of ¥25.2B (+36.1%), with a margin of 4.4%, up 1.2ppt from 3.2% the prior year, as structural reforms lowered the breakeven point. Other Businesses delivered Revenue of ¥96.0B (+5.3%) and Operating Income of ¥2.3B (prior year ¥0.1B), turning significantly profitable.
[Profitability] ROE was 12.5% (prior year 16.9%), down 4.4ppt but remaining in double digits. Operating margin was 5.8%; net profit margin was 1.1% (on a parent-company-owner basis 4.7%). Gross margin of 30.9% declined 1.2ppt YoY; SG&A ratio improved 0.2ppt to 25.1%. [Cash Quality] Operating Cash Flow (OCF) was ¥337.6B, about 2.0x Net Income of ¥169.7B, indicating strong cash backing of profits. The accrual ratio is (Net Income ¥169.7B - OCF ¥337.6B) ÷ Total Assets ¥3,476B = -4.8%, which is healthy. From an operating CF subtotal of ¥377.3B, working capital changes of -¥39.6B (Accounts receivable increase -¥18.1B, Inventory increase -¥15.0B, Accounts payable increase +¥0.1B) resulted in Free Cash Flow of ¥114.5B. [Investment Efficiency] Total asset turnover was 1.03x (Revenue ¥3,568.7B ÷ Total Assets ¥3,476B), steady. Working capital efficiency remains elevated with DSO approx. 76 days (Accounts receivable ¥739B ÷ daily sales ¥9.8B) and DIO approx. 90 days (Inventories ¥610B ÷ daily COGS ¥6.8B), indicating inventory and receivable stagnation is a challenge. [Financial Soundness] Equity Ratio was 41.4% (prior year 39.9%), an improvement. Interest-bearing debt was Short-term borrowings ¥185.9B + Long-term borrowings ¥500.1B = ¥686.0B; Debt/Equity ratio versus equity ¥1,438.3B was 47.7%, conservative. Current ratio was about 186% (Current assets ¥2,176.5B ÷ Current liabilities ¥1,171.7B), and Cash & Cash Equivalents of ¥657.2B far exceed short-term borrowings of ¥185.9B, indicating strong liquidity. Interest coverage was robust at Operating Income ¥205.4B ÷ Financial expenses ¥14.5B ≈ 14.2x.
Operating Cash Flow was ¥337.6B (prior year ¥314.5B, +7.3%), solid. Profit before tax ¥216.6B plus depreciation ¥179.7B, impairment ¥7.0B and other non-cash charges, with working capital movements of Accounts receivable increase -¥18.1B, Inventory increase -¥15.0B, Accounts payable slight increase +¥0.1B, produced net working capital cash absorption of ¥39.6B. From an operating CF subtotal of ¥377.3B, after corporate tax payments of ¥40.4B etc., OCF of ¥337.6B was secured. Investing CF was -¥223.0B, mainly capital expenditures ¥98.2B and intangible asset acquisitions ¥127.5B, with inflows from tangible asset sales ¥14.9B and subsidiary sale proceeds ¥3.6B. Free Cash Flow rose to ¥114.5B (prior year ¥99.1B). Financing CF recorded inflow of ¥17.6B, after short-term borrowings executed ¥656.0B - repayments ¥718.2B, long-term borrowings executed ¥130.0B - repayments ¥172.4B, issuance of convertible bonds ¥300.0B, share buybacks -¥100.0B, dividend payments -¥23.6B, and lease repayments -¥36.5B. Including foreign exchange impact of +¥39.0B, Cash & Cash Equivalents increased ¥171.2B from opening ¥485.9B to closing ¥657.2B. With OCF about 2.0x Net Income and accrual at -4.8%, cash backing is strong; Free Cash Flow covers dividends (¥23.6B) about 4.9x, but improving working capital turnover is key to enhancing cash conversion.
Operating Income of ¥205.4B diverged from Ordinary Income of ¥53.2B by ¥152.2B. Non-operating items included Financial income ¥10.0B, Financial expenses ¥14.5B, Other income ¥29.7B, Other expenses ¥30.5B, and equity-method income ¥15.7B, with a foreign exchange loss of ¥2.5B recorded. Other expenses declined from ¥58.5B in the prior year to ¥30.5B, and impairment losses fell from ¥19.5B to ¥7.0B, so reductions in one-off expenses supported profits. Most non-operating income comprised recurring financial income and equity-method income, with limited speculative elements. Comprehensive income was ¥302.6B (Net Income ¥169.7B plus ¥132.9B), driven by other comprehensive income items: valuation differences on financial assets measured at fair value ¥13.4B, foreign currency translation adjustments for overseas operations ¥101.8B, cash flow hedges ¥7.1B, and remeasurements of defined benefit plans ¥3.1B. The large positive translation adjustment was valuation gain from yen depreciation; in contrast to operating-level foreign exchange losses, FX provided a tailwind to comprehensive income. With an accrual ratio of -4.8% indicating strong cash backing, and a year-on-year reduction in one-off items such as impairments and subsidiary disposal losses, the quality of earnings shows an improving trend.
Full year guidance was Revenue ¥3,640.0B, Operating Income ¥206.0B (YoY +0.3%), Net Income attributable to owners of the parent ¥150.0B, EPS ¥106.13, Dividend per Share ¥10.0. Actual results of Revenue ¥3,568.7B fell short of guidance by -2.0%, Operating Income ¥205.4B was -0.3% vs. guidance and largely in line, while Net Income attributable to owners of the parent ¥167.9B exceeded guidance by +11.9%. Improvements in non-operating and special items boosted final profit above plan. The revenue shortfall is attributable to variability in orders in the Safety & Security segment, but on the profit front, improved profitability and reduced one-off costs achieved plan. Dividend payout was DPS ¥18.0 (interim ¥6.0 + year-end ¥12.0), far exceeding the guided DPS ¥10.0, reflecting strong shareholder returns. Progress rates versus guidance were Revenue 98.0%, Operating Income 99.7%, Net Income 111.9%—operating performance was largely as expected, and final profit exceeded expectations.
Actual dividend was DPS ¥18.0 (interim ¥6.0 + year-end ¥12.0). The payout ratio relative to Net Income attributable to owners of the parent ¥167.9B was 11.1% (Total dividends ¥23.6B ÷ Net Income ¥167.9B), conservative. Dividends relative to Free Cash Flow ¥114.5B amounted to 20.6%, and relative to OCF ¥337.6B was 7.0%, indicating ample capacity. Additionally, share buybacks totaling ¥100.0B were executed; combined with dividends ¥23.6B, total returns were ¥123.6B and the Total Return Ratio was 73.6% (¥123.6B ÷ ¥167.9B), representing a focused capital allocation. Given an Equity Ratio of 41.4%, Cash & Cash Equivalents ¥657.2B, and stable OCF, the current dividend level appears sustainable, and the total return policy including buybacks demonstrates a commitment to bolster shareholder returns within available financial capacity.
Significant profit decline risk in Safety & Security: This segment recorded Operating Income of ¥127.4B, down -31.4% YoY, and margin fell to 13.4% from 18.6% a year earlier (-5.2ppt). As a core segment representing about 62% of consolidated operating income, deterioration in this segment’s profitability—driven by order variability and intensified price competition—would exert downside pressure on consolidated results if such conditions persist. Monitoring order backlog, contract liabilities trends, and timing of market recovery is essential.
Working capital stagnation leading to reduced capital efficiency: With DSO approx. 76 days and DIO approx. 90 days, receivable and inventory turnover remain elevated. Inventories were ¥610.4B (prior year ¥585.0B, +4.3%) and accounts receivable ¥739.2B (prior year ¥717.4B, +3.0%); increases amid declining sales indicate worsening efficiency. If inventory obsolescence or delays in receivable collection materialize, OCF quality could deteriorate and working capital cash absorption could expand. Progress on improving working capital cycle is key to medium-term cash generation.
FX volatility and pressure on gross margin: A foreign exchange loss of ¥2.5B was recorded at the operating level and gross margin declined to 30.9% (YoY -1.2ppt). Yen appreciation would increase procurement cost pressure and, if price pass-through lags, could further erode gross margins. Although the consolidated statement recorded a large positive foreign currency translation adjustment of ¥101.8B in other comprehensive income, this is a B/S valuation gain and not realized cash; divergence between operating FX impact and hedge effectiveness can increase volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 12.5% | 6.3% (3.2%–9.9%) | +6.2pt |
| Operating Margin | 5.8% | 7.8% (4.6%–12.3%) | -2.0pt |
| Net Profit Margin | 1.1% | 5.2% (2.3%–8.2%) | -4.1pt |
Company ROE of 12.5% exceeds the industry median 6.3% by +6.2ppt, reflecting advantageous combination of financial leverage and asset efficiency. However, operating margin of 5.8% trails the median 7.8% by -2.0ppt, indicating room for profitability improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.6% | 3.7% (-0.4%–9.3%) | -7.3pt |
Revenue decline of -3.6% lags the industry median growth of +3.7% by -7.3ppt, reflecting a contractionary top-line environment. While operating efficiency and cost control have sustained ROE, restoring top-line growth is a prerequisite for mid-term competitiveness enhancement.
※Source: Company compilation based on public financial statements
OCF ¥337.6B is about 2.0x Net Income, with accrual ratio -4.8%, indicating solid cash backing of profits; Free Cash Flow ¥114.5B covers dividends (¥23.6B) by 4.9x. With share buybacks of ¥100.0B included, Total Return Ratio 73.6%, and Equity Ratio 41.4% and Cash & Cash Equivalents ¥657.2B maintained, financial health is preserved and capital allocation flexibility remains high.
While profit decline in Safety & Security (-31.4%) weighed on consolidated profits, Mobility & Telematics transitioned to higher profits (+10.6%) despite lower revenue, and Entertainment achieved sizable profit growth (+36.1%) due to structural reforms. Trends of segment-level profitability improvement and the timing of order recovery in Safety will be key to future profit momentum.
Working capital stagnation (DSO 76 days, DIO 90 days) and gross margin decline (30.9%, YoY -1.2ppt) are medium-term challenges for profitability improvement. Convertible bond proceeds of ¥30.0B (note: issuance shown as ¥300.0B in the report) are being allocated to growth investment and working capital optimization; if inventory and receivable turnover improve and pricing policies take hold, there is potential for simultaneous improvement in operating margin and OCF. Industry comparison shows operating margin below the median by -2.0ppt while ROE exceeds the median by +6.2ppt, indicating latent potential to enhance shareholder value through margin improvement.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your responsibility; please consult professionals as necessary before making investment decisions.