| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥4216.4B | ¥4524.6B | -6.8% |
| Operating Income | ¥188.4B | ¥186.3B | +1.2% |
| Ordinary Income | ¥207.7B | ¥168.1B | +23.6% |
| Net Income | ¥175.2B | ¥137.4B | +27.5% |
| ROE | 9.7% | 9.4% | - |
For the fiscal year ended March 2026, Revenue was ¥4,216.4B (‑¥308.2B YoY, -6.8%), a decline, while Operating Income edged up to ¥188.4B (+¥2.1B YoY, +1.2%). Ordinary Income grew materially to ¥207.7B (+¥39.6B, +23.6%) driven by higher non-operating income, and Net Income attributable to owners of the parent increased to ¥175.2B (+¥37.8B, +27.5%), a double-digit rise. The increase in profit despite lower revenue was supported by SG&A reductions (‑¥84B, -8.9%) and cost optimization, together with improved non-operating results (non-operating income ¥64.1B, +¥28.2B) and recognition of extraordinary gains (gain on sale of investment securities ¥43.4B, gain on business transfer ¥51.2B). Gross margin declined to 24.9% from 25.1% a year earlier (‑0.2pt), but SG&A ratio improved to 20.5% from 20.9% (‑0.4pt), yielding an operating margin of 4.5% (prior year 4.1%, +0.4pt).
[Revenue] Revenue was ¥4,216.4B, down 6.8% YoY. By segment, Public Solutions grew briskly to ¥1,397.1B (+7.1%), aided by expanded orders for road-related systems and defense projects. Conversely, Enterprise Solutions declined substantially to ¥1,505.7B (‑16.3%), impacted by reduced capex from financial institutions for ATMs and cash handling equipment. Component Products decreased to ¥681.6B (‑10.1%) and EMS to ¥627.3B (‑4.8%). Weakness in corporate capex demand pressured company-wide sales.
[Profitability] Operating Income was ¥188.4B (+1.2%), a modest increase. Gross profit decreased to ¥1,051.6B (‑¥82B) alongside lower sales, but SG&A was reduced to ¥863.1B (‑¥84B, ‑8.9%), improving the operating margin to 4.5% from 4.1% (+0.4pt). By segment, Public Solutions operating income rose sharply to ¥181.4B (+28.7%), maintaining a high margin of 13.0%. Enterprise Solutions operating income fell to ¥103.0B (‑21.4%). EMS turned profitable to ¥9.9B from a loss of ¥‑8.0B a year earlier. Ordinary Income increased significantly to ¥207.7B (+23.6%), with non-operating income rising to ¥64.1B (prior year ¥36.2B, +¥28.2B); dividend income received ¥15.2B and foreign exchange gains ¥14.9B contributed. Net Income attributable to owners of the parent was ¥175.2B (+27.5%), supported by extraordinary gains of gain on sale of investment securities ¥43.4B and gain on business transfer ¥51.2B, while extraordinary losses remained limited at ¥33.7B including impairment losses of ¥18.3B, resulting in a net extraordinary positive impact of ¥60.9B. Comprehensive income surged to ¥386.3B (prior year ¥70.4B), aided by retirement benefit adjustments of ¥127.0B and valuation differences on available-for-sale securities of ¥48.6B. While the company achieved higher profits despite lower sales, a significant portion of Net Income depended on non-recurring items and improved non-operating results.
Public Solutions: Revenue ¥1,397.1B (+7.1%), Operating Income ¥181.4B (+28.7%), margin 13.0% — the most profitable segment. Large public projects in transportation, disaster prevention, and defense were strong, making this core business account for the majority of company operating income. Enterprise Solutions: Revenue ¥1,505.7B (‑16.3%), Operating Income ¥103.0B (‑21.4%), margin 6.8% — weaker demand for ATMs and cash handling equipment led to revenue and profit declines. Component Products: Revenue ¥681.6B (‑10.1%), Operating Income ¥19.7B (‑32.8%), margin 2.9% — softened corporate demand for communication equipment and price competition pressured profits. EMS: Revenue ¥627.3B (‑4.8%), Operating Income ¥9.9B — returned to profitability from a loss of ¥‑8.0B prior year, driven by design and contract manufacturing efficiency and margin improvements. Corporate and other adjustments totaled ¥‑109.8B, including R&D and headquarters costs.
[Profitability] Operating margin was 4.5% (prior year 4.1%, +0.4pt), supported by SG&A control and higher profitability in Public Solutions. ROE improved to 9.7% (prior year 8.7%, +1.0pt) and ROA to 4.9% (prior year 4.0%, +0.9pt), driven by higher Net Income and expanded equity. [Cash Quality] Operating Cash Flow (OCF) was ¥206.5B (prior year ¥392.6B, ‑47.4%), mainly due to an increase in trade receivables (‑¥209.2B). OCF/Net Income was 0.96x, indicating broadly healthy cash conversion, but Free Cash Flow (FCF) was ¥103.7B (OCF ¥206.5B ‑ Investing CF ¥102.8B) down from ¥195.3B a year earlier. Days Sales Outstanding (DSO) lengthened to about 113 days, indicating delayed collections that strain liquidity. [Investment Efficiency] Capital expenditures were ¥82.9B, only 0.53x depreciation expense of ¥155.8B, signaling continued capex restraint. Total asset turnover fell to 0.947x from 1.101x due to lower sales and asset growth (+¥342.5B, +8.3%), weighing on efficiency. [Financial Soundness] Equity ratio improved to 40.5% (prior year 35.4%, +5.1pt); net assets expanded to ¥1,804.2B (prior year ¥1,457.5B, +¥346.7B). Interest-bearing debt was ¥940.2B (including short-term borrowings ¥40.8B, long-term borrowings ¥53.2B, etc.), resulting in D/E of 0.52x and interest coverage of 9.6x, indicating sound financial safety. Cash and deposits were ¥359.0B and the current ratio was 142.4%, providing adequate liquidity.
OCF was ¥206.5B, down ‑47.4% from ¥392.6B the prior year. Profit before income taxes and adjustments was ¥268.7B, and non-cash depreciation added ¥155.8B, but an increase in trade receivables of ‑¥209.2B heavily strained cash. Inventories decreased by ¥41.5B, improving inventory efficiency, while trade payables rose ¥7.0B, contributing only marginally. Investing CF was ‑¥102.8B, driven by capital expenditures of ‑¥82.9B and intangible asset acquisitions of ‑¥62.5B, partially offset by sales of investment securities ¥91.5B and business transfer proceeds ¥13.2B. FCF was ¥103.7B (prior year ¥195.3B), halved mainly due to the increase in receivables. Financing CF was ‑¥118.7B: debt raised long-term ¥180.0B, offset by long-term debt repayments of ‑¥182.4B, net short-term borrowings ‑¥48.4B, and dividend payments of ‑¥38.9B. Cash and deposits decreased slightly from ¥368.7B at the beginning of the period to ¥359.0B at year-end (‑¥4.5B), with foreign exchange gains adding ¥10.5B; however, the decline in OCF and outflows for investing and dividends had an impact. DSO at about 113 days remains prolonged; shortening collection terms is key to improving cash efficiency.
Recurring earnings are centered on Operating Income of ¥188.4B, with stable contributions from non-operating items such as dividend income received ¥15.2B and interest income received ¥9.5B. One-off factors include extraordinary gains (gain on sale of investment securities ¥43.4B and gain on business transfer ¥51.2B) totaling ¥94.7B; after subtracting extraordinary losses of ¥33.7B, the net extraordinary amount of +¥60.9B accounts for roughly 35% of Net Income ¥175.2B, indicating high reliance on non-recurring items. In non-operating results, both foreign exchange gains ¥14.9B and foreign exchange losses ¥14.0B were recorded, netting +¥0.9B and adding structural volatility. Comprehensive income ¥386.3B is 2.2x Net Income ¥175.2B, mainly due to retirement benefit adjustments ¥127.0B (market valuation increases in pension assets and discount rate changes) and valuation gains on securities ¥48.6B. OCF/Net Income of 0.96x is broadly consistent, but due to the increase in receivables, OCF/EBITDA (estimated EBITDA ¥344.2B vs. OCF ¥206.5B) is 0.60x, indicating weak cash conversion. The gap between Ordinary Income ¥207.7B and Net Income ¥175.2B stems from net extraordinary items +¥60.9B and an effective tax rate of 19.9% (income taxes, etc. ¥53.5B ÷ profit before tax ¥268.7B), underscoring that Net Income quality is materially influenced by one-off gains.
The full-year forecast is maintained at Revenue ¥4,400.0B (+4.4% YoY), Operating Income ¥220.0B (+16.7%), Ordinary Income ¥220.0B (+5.9%), and Net Income attributable to owners of the parent ¥180.0B (+2.7%). Achievement ratios against the current results are: Revenue 95.8%, Operating Income 85.7%, Ordinary Income 94.4%, Net Income 97.3%. Operating Income is short by 14.3%, attributed to slower revenue recovery and downward pressure on gross margin. Net Income is expected to decline next fiscal year from this year’s one-off gains (extraordinary gains ¥94.7B), so expansion of core Operating Income will be the evaluation point. Forecast EPS for the full year is ¥207.52, and the dividend forecast is ¥0 (no dividend), suggesting a change in dividend policy.
The year-end dividend for this fiscal year was ¥65 per share, total dividends of approximately ¥39.0B (issued shares 87,217 thousand shares – treasury shares 472 thousand shares), with a payout ratio of 31.3%, a healthy level. No interim dividend was paid; dividends are paid once annually at year-end. FCF of ¥103.7B adequately covers total dividends of ¥39.0B, with an FCF-to-dividend coverage of 2.7x, indicating cushion. Share buybacks during the period were minimal at ¥0.2 million, so shareholder returns continue to be dividend-centric. The forecast for next year is ¥0 dividend (no dividend), suggesting priority on restructuring earnings and capital spending. The payout ratio of 31.3% was maintained year-on-year; given a history of stable dividends, next year’s lack of dividend is likely a temporary measure. With cash and deposits of ¥359.0B and retained earnings of ¥1,010.7B, there is room for dividend funding and potential resumption of dividends depending on performance.
Trade receivables collection delay risk: Trade receivables totaled ¥1,302.3B with DSO of about 113 days and continued lengthening, increasing ¥180.2B YoY. The increase in receivables of ‑¥209.2B has heavily pressured OCF; unless collection terms improve, cash flow and working capital efficiency will continue to deteriorate. The rise in receivables amid revenue declines in Enterprise Solutions suggests payment term deterioration or delays in acceptance procedures by customers, raising concerns regarding credit losses.
Short-term debt refinancing risk: Of current liabilities ¥1,717.5B, short-term borrowings are ¥40.8B, trade payables ¥607.5B, and other current liabilities ¥466.2B, with a short-term liability ratio of 43.4%. Cash and deposits ¥359.0B are small relative to short-term liabilities, with a cash/short-term liabilities ratio of 0.88x, below 1.0x. With OCF down ‑47.4% YoY, the need to roll over short-term liabilities or higher financing costs could strain finances.
Dependence on one-off gains and weak core earnings power: Of Net Income ¥175.2B, net extraordinary items were +¥60.9B (≈35%), and Operating Income rose only modestly +1.2% YoY to ¥188.4B. Operating margin of 4.5% is 3.3pt below the industry median of 7.8%, and revenue growth of ‑6.8% is 10.5pt below the median 3.7%. With low profitability and declining sales outside Public Solutions, sustaining profit levels will be difficult if core earnings do not strengthen. Continued capex restraint (capex/depreciation 0.53x) raises concerns about maintaining competitiveness medium-term.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.5% | 7.8% (4.6%–12.3%) | -3.3pt |
| Net Margin | 4.2% | 5.2% (2.3%–8.2%) | -1.0pt |
Profitability is below industry median; operating margin is 3.3pt below the median, indicating room for improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -6.8% | 3.7% (-0.4%–9.3%) | -10.5pt |
Revenue growth is 10.5pt below the industry median, diverging from industry growth trends.
※ Source: Company compilation
Cost optimization and operating margin improvement despite lower sales: Despite Revenue down ‑6.8%, SG&A was reduced by ‑8.9%, improving Operating Margin to 4.5% (prior year 4.1%, +0.4pt). Higher profitability in Public Solutions (margin 13.0%, Operating Income +28.7%) drove results, and EMS turning profitable also contributed. Next fiscal year, achieving a sustained Operating Margin above 5% on a core basis and margin recovery in Enterprise Solutions and Component Products will be key evaluation points.
Earnings structure reliant on one-off gains and potential next-year reversal: Of Net Income ¥175.2B, net extraordinary items +¥60.9B (≈35%) were due to sale of investment securities and business transfers; non-operating income also increased +¥28.2B YoY. The next year’s Net Income forecast ¥180.0B (+2.7% YoY) may be impacted by the absence of these one-offs, so core earnings strength will be tested. Achieving Operating Income forecast ¥220.0B (+16.7%) depends on continued strength in Public Solutions and profitability recovery in other segments.
Working capital efficiency and liquidity improvement needed: The increase in trade receivables of ‑¥209.2B heavily pressured OCF ¥206.5B (‑47.4% YoY), with DSO ≈113 days continuing to lengthen. FCF halved to ¥103.7B from ¥195.3B, and capex/depreciation is 0.53x with continued capex restraint. With a short-term liability ratio of 43.4% and cash/short-term liabilities 0.88x, improving receivables turnover and OCF recovery are critical to financial safety. The ¥0 dividend forecast reflects prioritization of working capital and capex; the extent of improvement in liquidity will determine prospects for dividend resumption.
This report was auto-generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are made at your own responsibility; consult a professional advisor as needed.