| Metric | Current Period | Prior-year Period | YoY |
|---|---|---|---|
| Revenue | ¥220.1B | ¥202.0B | +8.9% |
| Operating Income | ¥23.8B | ¥23.9B | -0.5% |
| Ordinary Income | ¥25.8B | ¥26.0B | -1.0% |
| Net Income | ¥17.0B | ¥18.3B | -7.5% |
| ROE | 7.2% | 8.1% | - |
FY2026 Q3 results were Revenue ¥220.1B (YoY +¥18.1B +8.9%), Operating Income ¥23.8B (YoY -¥0.1B -0.5%), Ordinary Income ¥25.8B (YoY -¥0.2B -1.0%), and Net Income ¥17.0B (YoY -¥1.3B -7.1%). While revenue increased, Operating Income was roughly flat and Net Income declined. Gross Margin of 24.3% remained on par with the prior year, but higher SG&A expenses of ¥29.7B and recognition of ¥2.0B in Extraordinary Losses were the primary drivers of lower earnings. By segment, Industrial Power Distribution Equipment delivered revenue of ¥181.6B (82% of total) and Operating Income of ¥31.4B, forming the core business. Full-year guidance was maintained at Revenue ¥286.0B, Operating Income ¥34.0B, and Net Income ¥26.3B, with cumulative Q3 progress rates of 77% for revenue, 70% for Operating Income, and 64% for Net Income.
[Profitability] ROE 7.1% (down from 7.8% YoY), ROA 5.2%, Operating Margin 10.8% (down -1.0pt from 11.8% YoY), Net Margin 7.6% (down -1.4pt from 9.0% YoY), and Gross Margin at 24.3%. DuPont analysis for ROE shows a Net Margin of 7.6%, Total Asset Turnover of 0.678x, and Financial Leverage of 1.37x, indicating the margin decline is the main cause of weaker profitability. [Cash Quality] Cash and Deposits stood at ¥65.1B, with a Cash Conversion Cycle (CCC) of 193 days, indicating a lengthening cash conversion cycle. Days Sales Outstanding 91 days, Days Inventory Outstanding 136 days, and Days Payables Outstanding 34 days suggest room to improve working capital efficiency. [Investment Efficiency] Total Asset Turnover 0.678x, ROIC 7.4% (down from 8.9% YoY). Return on invested capital exceeds the industry level but has room for improvement. Treasury stock balance was ¥2.4B (up 42% from ¥1.7B YoY), indicating continued share repurchases. [Financial Soundness] Equity Ratio 73.2% (+3.3pt from 69.9% YoY), Current Ratio 362.9%, and Quick Ratio 333.4%, all at high levels. Interest-bearing debt of ¥6.2B, D/E ratio 0.026x, and Debt/Capital 2.5% indicate extremely low reliance on borrowings. However, the Short-term Liabilities Ratio is 61.4%, showing a bias toward short-term debt in the liability structure. Interest Coverage is 361.5x, suggesting limited interest burden (Interest Expense ¥0.07B).
Cash and Deposits were ¥65.1B, up +¥1.3B from ¥63.8B a year earlier, resulting in only a modest increase in cash despite a rising revenue environment. Working capital analysis shows Accounts Receivable at ¥54.6B (+¥5.2B from ¥49.4B YoY) and Inventory at ¥82.4B (+¥8.2B from ¥74.2B YoY), indicating increased working capital investment alongside sales growth. Meanwhile, Accounts Payable rose to ¥20.8B (+¥2.4B from ¥18.4B YoY), reflecting utilization of trade payables, but the lengthened CCC of 193 days suggests a challenge in capital efficiency. Cash coverage of short-term liabilities of ¥55.7B is 1.17x, indicating ample liquidity. Property, Plant and Equipment totaled ¥68.8B, a slight increase from ¥68.4B a year earlier, implying capex at maintenance/renewal levels. The Payout Ratio of 42.8% (full-year forecast dividend of ¥70) is within the company’s cash generation capacity, but a continued elongation of working capital could affect the cash cycle.
Ordinary Income was ¥25.8B versus Operating Income of ¥23.8B, with Net Non-operating Income of ¥2.0B supporting earnings. The breakdown of Non-operating Income of ¥2.2B is mainly Dividend Income of ¥0.7B and Foreign Exchange Gains of ¥0.5B, including temporary financial and FX factors. Non-operating Income accounts for 1.0% of revenue. The improvement from Operating Income to Ordinary Income is stable; however, an Extraordinary Loss of ¥2.0B has been deducted from Profit Before Tax of ¥23.8B, pressuring Net Income through one-off expenses. The effective tax rate of 28.6% is at a normal level, with no unusual tax burden. While revenue increased by 8.9%, Operating Income declined by -0.5% and Net Income by -7.1%, widening the decline at the profit lines; despite stable Gross Margin, higher SG&A and Extraordinary Losses have degraded earnings quality. The lengthening of working capital (CCC 193 days) indicates a timing gap between revenue recognition and cash collection, warranting attention from an accruals perspective.
Risk of deteriorating working capital efficiency: DSO at 91 days and DIO at 136 days, resulting in a CCC of 193 days and continuing to lengthen. In a sales expansion phase, accelerated working capital investment could strain cash flow generation. Quantitatively, working capital increased by ¥13.4B (Receivables +¥5.2B, Inventory +¥8.2B). Risk of concentration in short-term liabilities: With a Short-term Liabilities Ratio of 61.4%, liabilities are concentrated in the short term. Liquidity is sufficient, but there is refinancing risk if market conditions change. Against short-term liabilities of ¥55.7B, cash of ¥65.1B currently provides coverage. Risk of sustained margin decline: Operating Margin at 10.8% (vs. 11.8% a year ago) and Net Margin at 7.6% (vs. 9.0% a year ago) are trending down. Increases in SG&A offset improvements in gross profit, and Extraordinary Losses also occurred. If structural cost increases persist, improving ROE will be difficult.
[Position within Industry] (Reference information; our estimates) Profitability: ROE 7.1% exceeds the industry median of 5.0% (Q3 2025, n=98 companies) and is at a top-tier level. Operating Margin of 10.8% exceeds the industry median of 8.3% (IQR 4.8-12.6%). Net Margin of 7.6% is favorable versus the industry median of 6.3% (IQR 3.2-9.0%). Soundness: Equity Ratio of 73.2% significantly exceeds the industry median of 63.8% (IQR 49.5-74.7%), indicating strong financial stability. The Current Ratio of 362.9% exceeds the industry median of 284%. Efficiency: Total Asset Turnover of 0.678x exceeds the industry median of 0.58x, indicating good asset efficiency. However, CCC of 193 days far exceeds the industry median of 108 days (IQR 72-143 days), making working capital efficiency inferior within the industry. DIO of 136 days is longer than the industry median of 109 days, and DSO of 91 days is slightly longer than the median of 83 days. Growth: Revenue growth of 8.9% far exceeds the industry median of 2.7% (IQR -1.9% to 7.9%), placing the company in the upper group. Overall: Profitability and financial soundness are top-tier within the industry, and growth is strong; however, working capital efficiency trails the industry average. While ROE is top-tier within the industry, it is trending down versus the company’s own past (7.8% → 7.1%). Industry: Manufacturing (n=98 companies), Comparables: Q3 2025 results, Source: Our compilation
Margin pressure amid revenue growth and importance of working capital management: While achieving 8.9% revenue growth, Operating Margin declined by 1.0pt from 11.8% to 10.8%, and Net Income decreased by 7.1%. Rising SG&A and the elongation of working capital (CCC 193 days, far above the industry median of 108 days) are compressing profitability. Improving receivables collection and inventory efficiency will be key to earnings recovery. Balance between financial soundness and capital efficiency: With an Equity Ratio of 73.2%, Cash and Deposits of ¥65.1B, and interest-bearing debt of ¥6.2B, the balance sheet is highly conservative, and interest burden risk is limited. Meanwhile, ROE of 7.1% declined from 7.8%, leaving ample room to improve capital efficiency. Continued share repurchases (treasury stock balance up 42%) are part of capital policy, but balancing working capital efficiency improvements with growth investments will be a challenge going forward. Likelihood of achieving full-year plan: Against full-year guidance (Revenue ¥286B, Operating Income ¥34B, Net Income ¥26.3B), Q3 progress rates are 77% for revenue, 70% for Operating Income, and 64% for Net Income. The revenue growth pace is steady, but on the profit side, Net Income of ¥9.2B in Q4 (on par with last year’s Q4) will be needed, making the containment of Extraordinary Losses and the maintenance of Gross Margin the conditions for achievement.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any investment decisions.