| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥729.7B | ¥673.8B | +8.3% |
| Operating Income / Operating Profit | ¥61.2B | ¥36.5B | +67.5% |
| Ordinary Income | ¥65.7B | ¥34.8B | +88.9% |
| Net Income / Net Profit | ¥25.0B | ¥43.6B | -42.7% |
| ROE | 3.6% | 6.8% | - |
For the fiscal year ended March 2026, Revenue was ¥729.7B (YoY +¥55.9B, +8.3%), Operating Income was ¥61.2B (YoY +¥24.7B, +67.5%), Ordinary Income was ¥65.7B (YoY +¥30.9B, +88.9%), and Net Income attributable to owners of the parent was ¥25.0B (YoY -¥18.6B, -42.7%). The company achieved revenue and operating profit growth, with the Operating Margin improving to 8.4% (YoY +3.0pt). Gross Margin improved to 44.3% (YoY +0.6pt) and SG&A ratio declined to 35.9% (YoY -2.3pt), enhancing profitability. At the ordinary income level, foreign exchange gains of ¥6.2B contributed, expanding the Ordinary Income margin to 9.0% (YoY +3.8pt). Net Income declined due to the absence of prior-year special gains such as ¥12.0B from subsidiary share sales (total special gains prior year ¥25.7B), but on an ordinary basis the company posted a significant increase in profitability.
[Revenue] Revenue was ¥729.7B (YoY +8.3%), an increase year-over-year. By segment, Asia Pacific recorded ¥213.8B (YoY +27.6%), a large increase and drove profitability with an Operating Margin of 12.9% (YoY +6.4pt). Japan was ¥358.6B (YoY +3.2%) with moderate revenue growth and Operating Margin improved to 5.4% (YoY +1.0pt). EMEA revenue was ¥190.1B (YoY +9.2%) and increased, but reported an operating loss of ¥2.5B (loss narrowed YoY -55.8%) and remained negative. Americas revenue was ¥163.0B (YoY +9.3%) with revenue growth but Operating Income declined to ¥9.5B (YoY -16.2%). Regional revenue composition was Japan 33.6%, Americas 21.8%, EMEA 26.0%, Asia Pacific 29.3%; revenue gains were supported by capturing Asian demand and price/product mix improvements.
[Profitability] Operating Income was ¥61.2B (YoY +67.5%), a sizable increase. Cost of sales was ¥406.2B (55.7% of sales), yielding Gross Profit of ¥323.5B (Gross Margin 44.3%, YoY +0.6pt). SG&A was ¥262.3B (SG&A ratio 35.9%, YoY -2.3pt); while Revenue grew +8.3%, SG&A grew only +1.7%, producing operating leverage. Includes goodwill amortization of ¥10.5B (YoY +¥0.6B). Non-operating income of ¥14.9B included foreign exchange gains ¥6.2B and equity-method investment income ¥1.1B; subtracting non-operating expenses of ¥10.4B (including interest expense ¥4.3B) produced Ordinary Income of ¥65.7B (YoY +88.9%). Special gains were ¥1.6B (including fixed asset sale gains ¥0.3B), special losses ¥3.1B (including settlement payments ¥3.0B), yielding Profit before tax ¥64.2B. Income taxes and other amounted to ¥25.5B (effective tax rate 39.7%), resulting in Net Income ¥25.0B (YoY -42.7%). The Net Income decline was mainly due to the absence of prior-year special gains (¥12.0B from subsidiary share sales, etc.), while the ordinary income base achieved substantial growth. In conclusion, revenue and operating profit increased, but Net Income declined due to one-off prior-year special gains.
Japan: Revenue ¥358.6B (YoY +3.2%), Operating Income ¥19.4B (YoY +64.0%), Operating Margin improved to 5.4% (YoY +1.0pt). Americas: Revenue ¥163.0B (YoY +9.3%) increased, but Operating Income decreased to ¥9.5B (YoY -16.2%), margin down to 5.9% (YoY -1.7pt). EMEA: Revenue ¥190.1B (YoY +9.2%) increased but posted an operating loss of ¥2.5B; loss narrowed YoY -55.8% yet remained negative. Asia Pacific: Revenue ¥213.8B (YoY +27.6%), Operating Income ¥27.5B (YoY +151.1%), delivering a high margin of 12.9% (YoY +7.0pt) and driving company-wide profit growth. Consolidated Operating Income after corporate adjustments was ¥61.2B, with Asia growth and Japan profitability offsetting declines in EMEA and Americas.
[Profitability] Operating Margin 8.4% (improved +3.0pt from 5.4% prior year), Net Margin 3.4% (down -3.0pt from 6.5% prior year, mainly due to loss of special gains), Gross Margin 44.3% (improved +0.6pt from 43.7% prior year). ROE 3.6% (prior year 6.8%), declined due to lower Net Income. Ordinary Income margin 9.0% (improved +3.8pt from 5.2% prior year) as non-operating FX gains contributed to ordinary-stage profitability. [Cash Quality] Operating Cash Flow (OCF) ¥74.4B is 2.98x Net Income ¥25.0B; OCF/EBITDA is 0.74x, below a standard benchmark (≥1.0x), and increases in working capital (Accounts receivable -¥13.7B, Accounts payable -¥5.1B) constrained cash conversion. [Investment Efficiency] Total Asset Turnover 0.64x (prior year 0.63x) slightly improved. Capital expenditures ¥43.5B (1.09x depreciation ¥40.0B), intangible asset investment ¥10.2B, continuing growth investments. [Financial Soundness] Equity Ratio 61.6% (improved +2.1pt from 59.5% prior year), Current Ratio 197% (prior year 186%), D/E ratio 0.28x (interest-bearing debt ¥193.3B / Net Assets ¥699.2B) at healthy levels. Interest Coverage 14.1x (OCF ¥74.4B / Interest paid ¥5.3B) indicates strong financial resilience.
Operating Cash Flow was ¥74.4B (YoY -33.8%). Starting from Profit before tax ¥64.2B, adding Depreciation ¥40.0B and Goodwill amortization ¥10.5B yielded operating cash subtotal ¥100.5B; subtracting increases in Accounts receivable -¥13.7B, decreases in Accounts payable -¥5.1B, and corporate tax payments -¥24.8B produced OCF ¥74.4B. OCF/EBITDA (Operating Income + Depreciation + Goodwill amortization) is 0.74x, with working capital increases pressuring cash conversion. Investing Cash Flow was -¥53.0B, driven by Capital Expenditures -¥43.5B and intangible asset investments -¥10.2B. Financing Cash Flow was -¥36.9B, including Dividends paid -¥38.3B, net short-term borrowings +¥3.5B (drawdowns during the period +¥328.3B and repayments -¥324.8B), long-term borrowings raised +¥41.2B and repaid -¥38.3B, and lease liability repayments -¥6.4B. Free Cash Flow was ¥21.5B (OCF + Investing CF) positive, but insufficient to fully cover dividends of ¥38.3B (FCF coverage 0.56x). Cash and cash equivalents at year-end were ¥181.4B; the period decrease of -¥10.5B reflected dividend payments and working capital increases.
Of Ordinary Income ¥65.7B, Operating Income ¥61.2B is core operating earnings, and Non-operating net income +¥4.5B arises from Non-operating income ¥14.9B (FX gains ¥6.2B, equity-method investment income ¥1.1B, interest & dividends received ¥2.6B, etc.) less Non-operating expenses ¥10.4B (interest expense ¥4.3B, etc.). FX gains ¥6.2B are temporary; excluding FX, estimated Ordinary Income is approximately ¥59.5B. Net special items were a net -¥1.5B (Special gains ¥1.6B, Special losses ¥3.1B), with prior-year special gains of ¥25.7B (subsidiary share sale gains ¥12.0B, fixed asset sale gains ¥10.7B, etc.) absent. Comprehensive income ¥97.7B comprises Net Income ¥25.0B plus Other Comprehensive Income adjustments +¥72.7B including foreign currency translation adjustments ¥56.9B — most comprehensive income is attributable to translation differences rather than realized profit. The divergence between OCF and Net Income is driven by working capital increases (Accounts receivable -¥13.7B, Accounts payable -¥5.1B) and non-cash items (Depreciation ¥40.0B, Goodwill amortization ¥10.5B). Accrual (Net Income - OCF) is -¥49.4B; OCF substantially exceeds Net Income, indicating strong cash backing, but working capital growth could affect future earnings quality.
Full Year guidance: Revenue ¥755.0B (YoY +3.5%), Operating Income ¥72.0B (YoY +17.7%), Ordinary Income ¥67.5B (YoY +2.7%), Net Income ¥60.0B (from current period ¥25.0B, +140.0%), EPS ¥203.25. Based on first-half results (Revenue ¥729.7B, Operating Income ¥61.2B), the second half is expected to add Revenue ¥25.3B (H2 vs H1 +3.5%) and Operating Income ¥10.8B (H2 vs H1 +17.6%). Full-year Operating Margin is targeted at 9.5% (first-half result 8.4%), assuming further improvement in H2 profitability. The large increase in Net Income assumes the prior-year special gains effect has fully cycled out. Progress rates are Revenue 96.6%, Operating Income 85.0%, Ordinary Income 97.3% — near forecast achievement except for Operating Income. H2 assumes slower revenue growth, with EMEA turning profitable, Americas profitability recovering, and inventory normalization being critical.
Annual dividend ¥130 (Interim ¥65, Year-end ¥65 forecast), total dividend payout approximately ¥38.3B. Dividend payout ratio vs Net Income attributable to owners of the parent (¥25.0B) is 153.2% (Total Return Ratio at similar level), substantially exceeding Net Income. Prior year payout ratio was also high at 215.4%; due to loss of special gains, payout ratio remains elevated. Based on full-year forecast Net Income ¥60.0B, the payout ratio would be 32.0%, making dividend maintenance feasible if H2 Net Income targets are met. Free Cash Flow ¥21.5B vs dividends ¥38.3B gives FCF coverage 0.56x, requiring support from cash on hand and borrowing capacity. The dividend policy suggests emphasis on stable dividends, but medium-term sustainability depends on OCF improvement and Net Income growth. No share buybacks were executed; shareholder returns are delivered solely via dividends.
Working capital increases and declining cash conversion: Increases in Accounts receivable -¥13.7B and decreases in Accounts payable -¥5.1B have worsened working capital. OCF/EBITDA 0.74x is below benchmark, raising concerns about increased DIO and longer receivables collection periods. Delays in inventory adjustment or credit management could pressure OCF and impact dividend funding.
Underperformance in EMEA and profit decline in Americas: EMEA remains loss-making with an operating loss of ¥2.5B; Americas’ Operating Margin fell to 5.9% (from 7.6% prior year). If profitability in these regions does not improve, upside for consolidated Operating Margin will be limited and achieving the full-year Operating Income guidance ¥72.0B may be difficult.
High effective tax rate constraining Net Income: Effective tax rate 39.7% (prior year 47.9%) remains high and suppresses Net Income. Differences in regional tax rates and recoverability of deferred tax assets could affect Net Income growth and, together with elevated payout ratios, risk sustainability of shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.4% | 7.8% (4.6%–12.3%) | +0.6pt |
| Net Margin | 3.4% | 5.2% (2.3%–8.2%) | -1.8pt |
Operating Margin exceeds the industry median by +0.6pt indicating solid profitability, but Net Margin lags the median by -1.8pt, due to high effective tax rate and loss of special gains at the bottom line.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.3% | 3.7% (-0.4%–9.3%) | +4.6pt |
Revenue growth outperforms the industry median by +4.6pt, with Asia Pacific high growth providing relative advantage within the sector.
※ Source: Company aggregation
Asia Pacific-led revenue and profit growth: Asia Pacific delivered Revenue +27.6% and Operating Income +151.1% with a high margin of 12.9%, driving company-wide profit growth. Japan also improved Operating Margin to 5.4%, strengthening the revenue base. Achieving full-year Operating Income guidance ¥72.0B depends on continued Asia demand in H2 and EMEA returning to profitability.
Scope for working capital efficiency improvement and dividend sustainability: OCF ¥74.4B is 2.98x Net Income, indicating solid cash generation, but OCF/EBITDA 0.74x and working capital increases constrain cash conversion. Free Cash Flow ¥21.5B vs dividends ¥38.3B (FCF coverage 0.56x) is insufficient, requiring cash reserves and borrowing capacity. Improving inventory and receivables management and expanding OCF in H2 are keys to maintaining dividends.
Balancing financial soundness and growth investment: Equity Ratio 61.6%, D/E 0.28x, Interest Coverage 14.1x indicate strong financial resilience. Continued growth investment with Capital Expenditures ¥43.5B and Intangible investments ¥10.2B and Production in Construction in Progress +¥37.6B shows progress in capacity expansion. Balancing use of financial flexibility for growth investment while improving cash conversion will be decisive for medium-term shareholder value enhancement.
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 securities. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.