Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥72.09B | ¥70.24B | +2.6% |
| Operating Income | ¥4.36B | ¥4.05B | +7.6% |
| Ordinary Income | ¥4.41B | ¥4.03B | +9.3% |
| Net Income | ¥0.82B | ¥2.84B | −71.0% |
| ROE | 1.3% | 4.5% | - |
Executive Summary
The cumulative results for 3Q FY2025 reflected both higher revenue and operating income from the core business and a significant decline in net income attributable to owners of the parent. Revenue of ¥72.09B (up +2.6% YoY), Operating Income of ¥4.36B (up +7.6%), and Ordinary Income of ¥4.41B (up +9.3%) all increased, while Net Income fell sharply to ¥0.82B from ¥2.84B in the previous year. The primary reason for the sharp decline in Net Income was a ¥2.54B extraordinary loss (including inventory valuation losses) associated with the decision to withdraw from the Middle East and Africa businesses; this should be evaluated separately from the profitability of the core business. In Japan, progress in shipments of second-generation smart meters contributed to earnings growth, while overseas, reductions in selling, general and administrative expenses resulting from organizational restructuring supported the increase in profit.
Factors Affecting Performance
【Revenue】Revenue was ¥72.09B, representing a +2.6% YoY increase. Domestic Measurement and Control Business revenue was ¥41.8B (+5.7%), driven by smart meter revenue of ¥28.8B (+10.5%), while Overseas Measurement and Control Business revenue was ¥30.6B (-1.9%), with continued customer inventory adjustments in Oceania acting as a factor behind the decline. Europe recorded strong growth of +26.3% due to increased shipments for projects in the United Kingdom, resulting in divergent performance across regions.
【Profit and Loss】Operating Income was ¥4.36B (up +7.6% YoY), and the Operating Margin of 6.0% improved by approximately 28bp from the previous year, supported by reductions in overseas SG&A expenses and improved profitability in the switchboard business. Ordinary Income also increased to ¥4.41B (up +9.3%), but the extraordinary loss of ¥2.54B (including ¥0.50B in business structural reform costs, primarily temporary factors related to the business withdrawal) substantially exceeded the extraordinary gain of ¥0.61B, causing Net Income to decline to ¥0.82B. The divergence between Ordinary Income and Net Income resulted from net extraordinary losses of approximately ¥1.93B. In conclusion, the Company recorded higher revenue and profit at the Operating Income and Ordinary Income levels, but Net Income declined due to the extraordinary loss.
Segment Analysis
The disclosed segments comprise Domestic Measurement and Control, Overseas Measurement and Control, and Real Estate. (The aggregated segment in XBRL consists only of Real Estate, with revenue of ¥0.33B, Operating Income of ¥0.16B, and a profit margin of 48.2%, primarily reflecting gains on the sale of non-operating assets.) In terms of revenue composition, the Domestic Measurement and Control Business, with revenue of ¥41.8B, was the largest segment and the “core business”; its Operating Income of ¥2.9B (+8.4%) was also the primary driver of overall profit growth. The Overseas Measurement and Control Business recorded higher Operating Income of ¥1.3B (+10.6%) despite revenue of ¥30.6B (-1.9%), supported by SG&A reductions resulting from organizational restructuring. The Real Estate Business is small in scale but has an exceptionally high profit margin of 48.2%, reflecting the recognition of gains on asset sales.
Key Financial Indicators
Profitability: ROE was 1.3%, and the Operating Margin was 6.0% (improving from approximately 5.8% in the previous year). Basic EPS of ¥6.57 declined sharply from ¥49.86 in the previous year. Financial soundness: The Equity Ratio was 66.9% (on a total-assets basis), and current assets of ¥50.79B exceeded current liabilities of ¥23.61B, indicating sound liquidity. Net assets were ¥61.97B, a slight decrease from ¥63.34B in the previous year.
Cash Flow Analysis
As specific figures for Operating CF, Investing CF, and Financing CF are not disclosed in this report, the situation is described based on changes in cash and deposits. Cash and deposits were ¥8.32B, down from ¥11.55B in the previous year, primarily due to the repayment of short-term borrowings (-¥2.84B) and working capital requirements related to inventory and accounts receivable. Inventories were high at ¥11.74B, making inventory reduction (target: ¥3.0B; progress as of Q3: ¥1.3B) the key to improving cash generation.
Earnings Quality
Net Income of ¥0.82B was substantially below Ordinary Income of ¥4.41B, primarily due to temporary factors, including the ¥2.54B extraordinary loss from inventory valuation losses and other items associated with the business withdrawal. Of ¥0.49B in non-operating income, dividend income of ¥0.29B accounted for approximately 6割, with stable income from investment securities supporting Ordinary Income. Extraordinary gains and losses consist of non-recurring items associated with business structural reform and withdrawal and should be evaluated separately from profitability at the Ordinary Income level.
Earnings Forecast and Guidance
The full-year forecasts remain unchanged at revenue of ¥98.00B, Operating Income of ¥5.80B, and Ordinary Income of ¥5.70B. The cumulative 3Q progress rates were 73.6% for revenue, 75.1% for Operating Income, and 77.3% for Ordinary Income, broadly in line with the standard 75% progress level as of Q3. Cumulative 3Q Net Income was ¥0.82B against the full-year forecast of ¥3.60B, representing progress of only 22.8%; this reflects the concentrated recognition of the extraordinary loss and assumes a recovery in profit in Q4.
Shareholder Returns
The annual dividend forecast is ¥35.00 (including ¥17.00 for Q2), and the Payout Ratio should be calculated based on the full-year forecast profit. The Company has also announced a ¥2.0B share buyback. When dividends and share buybacks are combined, they should be considered separately as the Total Return Ratio.
Catalysts
【Short Term】The key performance focuses are the full-scale commencement of shipments of second-generation smart meters in Q4 and the normalization of one-time expenses following completion of the withdrawal from the Middle East and Africa businesses. 【Long Term】The introduction of the next-generation “NEOS” meter in Oceania (production commencement in January 2026 and full-scale rollout from April onward), along with the continuation of United Kingdom projects through FY2027, will influence medium-term earnings trends.
Industry Benchmark (Reference; Compiled by the Company)
Industry Benchmark (manufacturing)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.0% | 8.6% (4.3%–12.7%) | −2.5pt |
| Net Profit Margin | 1.1% | 6.4% (2.8%–10.3%) | −5.3pt |
Both the Operating Margin and Net Profit Margin are below the industry median, placing profitability relatively low within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.6% | 3.3% (-2.1%–8.9%) | −0.7pt |
The revenue growth rate is slightly below the industry median but remains within the IQR and does not represent pronounced underperformance.
※Source: Compiled by the Company
Risk Factors
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Inventory and working capital accumulation: Inventories of ¥11.74B and accounts receivable of ¥16.61B are high, and prolonged collection periods and inventory turnover pose structural risks that could constrain capital efficiency.
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Structural changes in overseas businesses: Continued customer inventory adjustments in Oceania and an expected slowdown in United Kingdom projects from FY2026 onward will be sources of volatility in overseas earnings.
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Effectiveness of business structural reform: The ¥2.04B extraordinary loss associated with the withdrawal from the Middle East and Africa businesses is a temporary factor, but whether fixed-cost reductions and profitability improvements progress as planned after the withdrawal will be a key monitoring point.
Key Earnings Takeaways
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The Operating Margin improved from the previous year to 6.0%, but remains below the industry median of 8.6%, indicating that profitability improvement is still in progress.
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The significant decline in Net Income was primarily due to temporary factors related to the extraordinary loss, while the earnings data confirms that higher revenue and profit continued at the Ordinary Income level.
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Progress has been made in reducing inventories (target: ¥3.0B; progress as of Q3: ¥1.3B) and short-term borrowings, making further improvement in working capital efficiency a key focus going forward.
Theoretical Share Price (Reference Value)
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥1,238 |
| base | ¥1,255 |
| bull | ¥1,277 |
| Valuation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥1,390 |
| Adjusted Forecast EPS | ¥86.7 |
| Cost of Equity r | 9.77% (10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Persistence Factor for Residual Income ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 43.6% |
| Forecast EPS Confidence Adjustment | ×1.080 (based on the historical guidance achievement rate of peer companies in the same industry) |
| Implied PBR / PER | 0.90x / 14.5x |
Sensitivity: ¥1,221–¥1,291 at ±1% for the Cost of Equity, and ¥1,251–¥1,258 at ±0.1 for ω.
Notes:
- As forecast ROE is below the Cost of Equity, the theoretical value is below Book Value per Share.
- Net assets as of the quarter-end are 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 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price.)
This report is an earnings analysis document automatically generated by AI through an integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. 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 professionals as necessary.
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