| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥837.2B | ¥839.6B | -0.3% |
| Operating Income | ¥94.3B | ¥91.1B | +3.5% |
| Ordinary Income | ¥89.1B | ¥84.4B | +5.5% |
| Net Income | ¥44.3B | ¥54.0B | -17.9% |
| ROE | 11.0% | 16.7% | - |
For the fiscal year ended March 2026, Revenue was ¥837.2B (¥-2.4B YoY, -0.3%), Operating Income was ¥94.3B (¥+3.2B YoY, +3.5%), Ordinary Income was ¥89.1B (¥+4.7B YoY, +5.5%), and Net Income attributable to owners of the parent was ¥44.3B (¥-9.7B YoY, -17.9%). While top-line was flat, gross margin was maintained at 49.2% and SG&A was contained, improving Operating Margin to 11.3% (up +0.4pt from 10.9% a year earlier). Ordinary Income increased +5.5% due to improvement in non-operating items, but Net Income declined on the surface due to divergence with Comprehensive Income (Comprehensive Income ¥93.1B, shareholders’ attributable Comprehensive Income ¥67.4B basis), reflecting temporary factors; underlying earning power remains solid.
[Revenue] Revenue was ¥837.2B, down -0.3% YoY. By segment, Japan・Asia・Oceania was ¥679.9B (composition 81.2%) down -4.9%; North, Central & South America was ¥249.6B (29.8%) up +3.7%; Europe・Middle East・Africa was ¥254.6B (30.4%) down -1.0%. External sales excluding inter-segment transactions totaled ¥837.3B, with Japan ¥37.2B (external basis, -2.2%), North America ¥250.0B (+3.7%), Europe ¥216.1B (-1.3%). Cost of sales was ¥425.3B, a cost of sales ratio of 50.8%, yielding a gross margin of 49.2% (up +2.6pt from 46.6% prior year). Although North America supported revenue growth, a slowdown in the core Japan segment led to a slight overall decline.
[Profitability] Operating Income was ¥94.3B (+3.5%) with an Operating Margin of 11.3%. SG&A was ¥317.7B (up from ¥300.1B prior year, +5.9%), rising faster than revenue growth, but the gross margin improvement absorbed this and led to higher operating profit. Segment Operating Income: Japan ¥68.7B (-12.7%, margin 10.1%), North America ¥11.8B (+10.0%, margin 4.7%), Europe ¥11.3B (-6.0%, margin 4.4%); North America’s profit increase partially offset Japan’s decline. Non-operating items: non-operating income ¥3.8B (interest income ¥1.0B, other ¥1.3B) versus non-operating expenses ¥9.0B (interest expense ¥4.5B, FX loss ¥0.2B, equity-method loss ¥1.0B included), net -¥5.2B. Ordinary Income was ¥89.1B (+5.5%). Extraordinary items were net neutral (Extraordinary Income ¥0.2B from gain on sale of fixed assets, Extraordinary Loss ¥0.0B including impairment loss ¥1.7B and other disposal losses ¥0.0B). Pre-tax income was ¥89.2B, with income taxes ¥21.5B (effective tax rate 24.1%), resulting in Net Income ¥44.3B (-17.9%). Comprehensive Income was ¥93.1B (FX translation adjustment ¥23.8B, retirement benefit adjustments ¥1.2B, etc.), and the divergence between Comprehensive Income attributable to owners of the parent ¥92.6B and Net Income ¥44.3B reflects a temporary increase in equity from Other Comprehensive Income. In conclusion, while headline shows revenue up but profit down, underlying trend is revenue and profit growth, supported by improvements in non-operating items and gross margin.
Japan・Asia・Oceania: Revenue ¥679.9B (-4.9%), Operating Income ¥68.7B (-12.7%), margin 10.1%. Domestic demand normalization and intensified price competition led to revenue and profit declines; Operating Income fell roughly ¥10B from ¥78.7B prior year. North, Central & South America: Revenue ¥249.6B (+3.7%), Operating Income ¥11.8B (+10.0%), margin 4.7%. Regional expansion and local promotion drove revenue and profit increases, with profit growth outpacing revenue growth, indicating improving efficiency. Europe・Middle East・Africa: Revenue ¥254.6B (-1.0%), Operating Income ¥11.3B (-6.0%), margin 4.4%. Weak European economy caused revenue and profit declines, but profit deterioration was contained within the revenue decline. Japan remains the core, accounting for about 73% of consolidated Operating Income of ¥94.3B, with North America’s growth providing a partial cushion.
[Profitability] Operating Margin 11.3% (up +0.4pt from 10.9% prior year), Net Margin 5.3% (down -1.1pt from 6.4% prior year). Gross Margin improved significantly to 49.2% (up +2.6pt from 46.6%), lifting Operating Margin, but divergence with Comprehensive Income reduced headline Net Margin. ROE 11.0% (calculation basis: Net Income ¥44.3B ÷ Equity ¥401.1B as a simple half-year estimate; annualized roughly equivalent to 16–18%). [Cash Quality] Operating Cash Flow / Net Income is 1.04x (OCF ¥46.2B ÷ Net Income ¥44.3B), indicating sound quality, but working capital deterioration (inventory increase ¥18.0B, accounts payable decrease ¥14.9B) compressed OCF from an operating subtotal of ¥76.6B. Free Cash Flow was -¥7.7B (OCF ¥46.2B - Investing CF ¥53.9B), with CapEx ¥29.9B and intangible asset investment ¥4.1B absorbing cash. [Investment Efficiency] Total Asset Turnover is 1.01x (Revenue ¥837.2B ÷ Total Assets ¥828.9B), roughly flat. Days Inventory Outstanding (DIO) estimated ~160 days (Inventory ¥186.0B ÷ Cost of Sales ¥425.3B × 365), indicating elevated inventory. Days Sales Outstanding (DSO) ~64 days (Accounts Receivable ¥147.7B ÷ Revenue ¥837.2B × 365), typical. Days Payable Outstanding (DPO) ~35 days (Accounts Payable ¥40.9B ÷ Cost of Sales ¥425.3B × 365), resulting in a Cash Conversion Cycle (CCC) ~189 days, long. [Financial Health] Equity Ratio 48.4% (up +5.9pt from 42.5% prior year), Current Ratio 163.1% (Current Assets ¥626.8B ÷ Current Liabilities ¥384.4B), Quick Ratio 114.7% ((Current Assets - Inventory ¥186.0B) ÷ Current Liabilities), indicating good liquidity. Interest-bearing debt consists of Short-term Borrowings ¥174.5B + Long-term Borrowings ¥19.8B + Lease Liabilities (current ¥4.8B + non-current ¥18.0B) totaling ¥217.1B. Debt/EBITDA is 1.88x (Interest-bearing debt ¥217.1B ÷ estimated EBITDA ¥115.5B; EBITDA = Operating Income ¥94.3B + Depreciation ¥22.0B - Goodwill Amortization ¥0.2B (approx)). Interest Coverage is 20.9x (Operating Income ¥94.3B ÷ Interest Paid ¥4.5B), indicating low interest burden.
Operating Cash Flow was ¥46.2B (down -41.2% from ¥78.6B prior year). From an operating subtotal of ¥76.6B, working capital changes reduced cash by -¥18.0B (inventory increase), -¥1.2B (accounts receivable increase), and -¥14.9B (accounts payable decrease); corporate tax payments ¥28.6B also drained cash. OCF/Net Income 1.04x suggests decent quality, but deterioration in working capital is a concern. Investing Cash Flow was -¥53.9B, mainly CapEx ¥29.9B and intangible asset investment ¥4.1B; proceeds from sales ¥0.3B were minimal. Depreciation ¥22.0B vs CapEx ¥29.9B gives a CapEx/Depreciation ratio of 1.36x, indicating growth investment. Free Cash Flow -¥7.7B indicates investment exceeded cash generation this period, funded by cash on hand and borrowings. Financing Cash Flow was -¥13.2B, with net increase in short-term borrowings ¥25.4B, long-term borrowings repayment ¥18.0B, dividend payments ¥17.3B, and lease repayments ¥5.2B as main items. Cash and deposits increased slightly to ¥163.7B (from ¥154.5B prior year, +¥9.2B), aided by FX effects ¥6.3B. Overall, cash generation weakened due to lower OCF and higher investing outflows, but cash on hand and short-term borrowings preserved financial flexibility.
Most earnings are recurring operating earnings; non-operating income ¥3.8B (0.5% of sales) and extraordinary income ¥0.2B (0.02% of sales) indicate minimal dependence on one-off items. Non-operating expenses are led by interest expense ¥4.5B and equity-method loss ¥1.0B; FX loss ¥0.2B is minor. Extraordinary losses include impairment loss ¥1.7B (partial write-down of fixed assets) but impact on Net Income is limited (~2%). The gap between Ordinary Income ¥89.1B and Net Income ¥44.3B (after effective tax rate 24.1%) and Comprehensive Income ¥93.1B (FX translation adjustment ¥23.8B, retirement benefit adjustment ¥1.2B) reflects temporary equity movements. The accrual ratio (difference between Operating Income ¥94.3B and OCF ¥46.2B = ¥48.1B ÷ Total Assets ¥828.9B) is about 5.8%, somewhat elevated, but mainly due to working capital changes (inventory build and accounts payable decrease) rather than revenue recognition distortion. Cash conversion rate (OCF/Net Income 1.04x) is healthy; overall quality of earnings is assessed as generally good.
Full-year guidance for the fiscal year ending March 2026: Revenue ¥910.0B (YoY +8.7%), Operating Income ¥95.0B (YoY +0.7%), Ordinary Income ¥86.0B (YoY -3.5%), Net Income attributable to owners of the parent ¥61.0B (EPS forecast ¥210.83), Dividend forecast ¥27.50. Versus current results, guidance implies Revenue +¥72.8B, Operating Income +¥0.7B, Ordinary Income -¥3.1B. A flat-to-slightly-up operating profit versus the revenue increase suggests a conservative assumption incorporating higher costs associated with inventory normalization and increased promotional expenses. Progress rates vs guidance: Revenue 91.9% (¥837.2B/¥910.0B), Operating Income 99.3% (¥94.3B/¥95.0B), Ordinary Income 103.6% (¥89.1B/¥86.0B). Ordinary Income has already exceeded the full-year guidance, Operating Income is near target, and Revenue assumes a reversal in the remaining period. Continued North America growth, recovery in the Japan segment, and stabilization in Europe are key to achieving guidance.
Annual dividend per share is ¥55 (interim ¥25 + year-end ¥30, including a memorial dividend of ¥5 at year-end). Payout Ratio is 24.6% (Dividend ¥55 ÷ EPS ¥233.01) in a conservative range. Total dividend amount is approximately ¥1.52B (average shares outstanding during period 28,933 thousand × ¥55 ÷ 1,000), representing about 34% relative to Net Income ¥44.3B. No share buybacks were executed (CF impact -¥0.0B), so Total Return Ratio equals the payout ratio of 24.6%. With Free Cash Flow -¥7.7B and dividend payments ¥17.3B, FCF coverage is -0.44x, indicating a shortfall funded in the short term by cash on hand ¥163.7B and borrowing capacity. Next fiscal year dividend forecast is ¥27.5 (assumed ordinary dividend ¥22.5 + memorial dividend equivalent ¥5), a 50% reduction from the current year’s ¥55, reflecting the lapse of the special dividend component. Payout ratio on next year’s EPS forecast ¥210.83 would be 13.0%, a low level consistent with a priority on growth investment. Cash and low interest-bearing debt levels provide short- to medium-term support for dividend sustainability, but working capital improvement and OCF stabilization are key to long-term return capacity.
Working capital expansion risk: Inventory ¥186.0B (up +10.4% from ¥168.5B prior year), CCC ~189 days and a trend toward lengthening. Inventory build and accounts payable decrease have pressured OCF by approximately ¥33B, raising risks of inventory obsolescence, write-downs, and increased working capital burden. Reducing DIO (~160 days) and CCC (~189 days) is an urgent financial KPI.
Dependence on Japan segment and slowdown risk: Japan・Asia・Oceania accounts for 81.2% of revenue (on external basis about 44%) and ~73% of Operating Income; this core recorded -4.9% revenue and -12.7% Operating Income. Domestic demand normalization, price competition, and yen appreciation harming export margins increase consolidated performance volatility. Whether North America and Europe growth can compensate will be a focus from the next fiscal year onward.
Concentration of short-term debt and refinancing risk: Short-term borrowings ¥174.5B and long-term borrowings due within one year ¥21.6B, with about 51% of current liabilities being interest-bearing debt. Cash and deposits ¥163.7B cover ~83% of short-term interest-bearing debt ¥196.1B, but reliance on refinancing/repayment of short-term debt remains high, leaving refinancing risk if interest rates rise or credit conditions deteriorate. Long-term borrowings were reduced to ¥19.8B (down from ¥39.7B prior year), offering room to extend maturities; optimizing debt maturity profile is key to improving financial stability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.3% | 7.8% (4.6%–12.3%) | +3.5pt |
| Net Margin | 5.3% | 5.2% (2.3%–8.2%) | +0.1pt |
Operating Margin is +3.5pt above the industry median, indicating superior profitability; Net Margin is in line with the median and maintains a healthy profit profile.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.3% | 3.7% (-0.4%–9.3%) | -4.0pt |
Revenue growth lags the industry median by -4.0pt, showing slower top-line expansion. The slowdown in the Japan segment is the main cause; harnessing North America’s growth to accelerate overall revenue is a challenge.
※ Source: Company aggregation
Operating Margin 11.3% and Gross Margin 49.2% are top-tier in the industry, with pricing power and cost management as competitive advantages. Continued revenue and profit growth in North America (Revenue +3.7%, Operating Income +10.0%) could offset Japan’s slowdown and increase the likelihood of sustaining consolidated profit growth. The next-year guidance is conservative despite near-100% progress rates for Operating and Ordinary Income, leaving upside potential.
Working capital expansion (CCC ~189 days, Inventory +10.4%) is pressuring OCF and resulted in Free Cash Flow -¥7.7B this period. If inventory compression and accounts payable normalization proceed, the company can maintain OCF/Net Income 1.04x quality while restoring cash generation, enabling coexistence of dividend capacity and growth investment. Quarterly monitoring of DIO and CCC is recommended as short- to mid-term KPIs.
Equity Ratio 48.4%, Debt/EBITDA 1.88x, and Interest Coverage 20.9x indicate investment-grade financial resilience, but the concentration of short-term borrowings ¥174.5B (over 80% of interest-bearing debt) is a refinancing risk. With Long-term Borrowings reduced to ¥19.8B, there is scope to lengthen maturities and further strengthen stability by increasing cash buffers. Payout Ratio 24.6% is conservative; next-year forecast 13% signals prioritization of growth investment, but improvement in FCF is a precondition for expanding returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the Company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary.