| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1916.3B | ¥1877.3B | +2.1% |
| Operating Income / Operating Profit | ¥147.2B | ¥207.5B | -29.1% |
| Ordinary Income | ¥145.3B | ¥221.3B | -34.3% |
| Net Income | ¥101.0B | ¥144.5B | -30.1% |
| ROE | 4.3% | 6.3% | - |
For the cumulative Q3 of FY2026, Revenue was ¥1,916B (YoY +¥39B +2.1%), Operating Income was ¥147B (YoY -¥60B -29.1%), Ordinary Income was ¥145B (YoY -¥76B -34.3%), and quarterly Net Income attributable to owners of the parent was ¥91B (YoY -¥40B -30.5%). The results show higher revenue but lower profits; revenue increased for the second consecutive period while profitability deteriorated significantly. Operating margin declined to 7.7%, down 3.4pt from 11.1% in the prior-year period, indicating a marked deterioration in profitability.
Revenue: Revenue was ¥1,916B (+2.1% YoY), a slight increase. By segment, the core Vacuum Equipment business was ¥1,506B (+0.1%) and remained essentially flat, while Vacuum Application was ¥439B (+9.0%) and grew strongly. Revenue composition was Vacuum Equipment 78.6%, Vacuum Application 22.9%, with stagnation in the core business constraining overall growth. Point-in-time recognized revenue was ¥967B and over-time recognized revenue was ¥949B, nearly balanced, suggesting progress in recognition for longer-term project-type sales. Contract liabilities (advance receipts) were ¥351B, up ¥121B (+52.6%) from ¥230B in the prior-year period, indicating both backlog accumulation and timing shifts in acceptance/inspection.
P&L: Gross margin fell to 30.3% (prior 32.2%), a 1.9pt decline, confirming worsening cost of goods sold. SG&A was ¥433B, with an SG&A ratio of 22.6% (prior 21.2%), up 1.4pt, and SG&A growth of +8.9% YoY outpaced revenue growth, pressuring Operating Income. Operating Income was ¥147B (-29.1% YoY), with an operating margin of 7.7% (-3.4pt), indicating a large deterioration in profitability. Non-operating items included interest income of ¥5B and equity-method gains of ¥4B, offset by foreign exchange losses of ¥8B, resulting in Ordinary Income of ¥145B (-34.3% YoY). Extraordinary items included gain on sale of investment securities ¥16B as a positive factor and impairment losses ¥3B, with Pre-tax Income landing at ¥133B (-36.6% YoY). After deducting income taxes of ¥32B (effective tax rate 24.2%), Net Income attributable to owners of the parent was ¥91B (-30.5% YoY), and net margin declined to 4.8% (prior 7.0%), down 2.2pt. By segment Operating Income: Vacuum Equipment ¥128B (-28.0% YoY, margin 8.5%), Vacuum Application ¥19B (-36.3% YoY, margin 4.2%), both showing large profit declines and company-wide margin compression. Conclusion: results are higher revenue but lower profit.
The core Vacuum Equipment business generated Revenue of ¥1,506B (+0.1% YoY), a marginal increase, with Operating Income of ¥128B (-28.0% YoY) and a margin of 8.5% (prior 11.8%), down 3.3pt. As the core business accounting for 86.7% of company Operating Income, profitability deteriorated substantially due to elevated costs and project-level profitability weakness. Vacuum Application achieved Revenue of ¥439B (+9.0% YoY) but Operating Income was ¥19B (-36.3% YoY) with a margin of 4.2% (prior 7.8%), down 3.6pt — revenue growth did not translate into profit increases, suggesting impacts from product mix or higher costs. Both segments show pronounced margin declines, confirming a company-wide deterioration in profitability.
OCF was ¥125.8B (prior ¥244.6B, -48.6% YoY), a large decline. Pre-tax Income was ¥133.3B; adding Depreciation ¥79.5B and provisions/other adjustments ¥21.4B, changes in working capital included Inventory increase -¥64.5B, Trade Receivables increase -¥28.8B, Contract liabilities increase +¥101.1B, with the net effect compressing OCF. Work-in-process stood at ¥525.7B (prior ¥456.5B), up ¥69.2B, indicating project progress delays that are tying up cash. Subtotal OCF was ¥214.4B, from which corporate taxes paid -¥91.9B were deducted to yield final OCF of ¥125.8B. Investing CF was -¥98.2B (prior -¥84.3B), mainly capital expenditures -¥97.2B. Financing CF was -¥125.0B (prior -¥39.1B), with repayments of long-term borrowings -¥52.9B, dividend payments -¥80.9B, and treasury stock purchases -¥4.9B as main outflows. Free Cash Flow was ¥27.6B positive but insufficient to cover dividends + buybacks totaling ¥85.8B, requiring use of cash on hand. Ending cash was ¥910B (beginning ¥989B), leaving ample liquidity, but resolving working capital stagnation is key to cash generation.
Operating Income ¥147B is primarily driven by recurring earnings from equipment and vacuum application businesses. One-off items include gain on sale of investment securities ¥16B and gain on sale of fixed assets ¥1B as positives, and impairment loss ¥3B as a negative, with net extraordinary items ≈ +¥14B, representing about 14% of Net Income — indicating notable variability. Non-operating income ¥23B is 1.2% of Revenue and within normal range, including dividend income ¥3B and equity-method gains ¥4B. Non-operating expenses ¥25B include foreign exchange losses ¥8B, reflecting revenue volatility from FX movements. OCF/Net Income = 1.25x indicates good cash conversion, but OCF/EBITDA = 0.55x shows delayed cash conversion with WIP and receivables tying up working capital. Comprehensive Income was ¥158B (Net Income ¥101B + Other Comprehensive Income ¥57B), mainly driven by translation adjustments ¥43B and OCI from equity-method affiliates ¥10B, creating a divergence from Net Income of about 57%. Income taxes ¥32B on Pre-tax Income ¥133B produced an effective tax rate of 24.2%, within normal range. The gap between Ordinary Income ¥145B and Net Income ¥101B (~30%) is mainly attributable to taxes and non-controlling interests ¥10B.
Progress against full-year forecast: Revenue 73.7% (1,916 / 2,600B), Operating Income 77.5% (147 / 190B), Ordinary Income 76.5% (145 / 190B), Net Income 49.2% (91 / 185B). Compared to a standard Q3 progress benchmark of 75%, Revenue, Operating Income, and Ordinary Income are roughly on par, but Net Income is substantially short. Recovery of Net Income in Q4 assumes improvement in operating margins, suppression of extraordinary item volatility, and tax rate normalization. Accumulation of contract liabilities ¥351B suggests firm order intake, and progress in acceptance and WIP reduction in Q4 could accelerate revenue and profit recognition. The earnings forecast was revised this quarter and reflects the latest business conditions.
Dividend guidance is ¥152 per annum, implying a Payout Ratio of approximately 40% against full-year EPS of ¥375.97. Dividend payments in the cumulative Q3 totaled ¥80.9B; the interim payout ratio relative to Net Income ¥101.0B is about 80% (a high level) but is a provisional mid-year metric. Treasury stock purchases were ¥4.9B, and combined with dividends the Total Return Ratio is approximately 85%. Free Cash Flow ¥27.6B cannot cover dividends + buybacks of ¥85.8B, necessitating use of cash on hand. With cash and deposits ¥989B and ample liquidity, there is no short-term concern over sustainability of returns, but medium-to-long-term sustainability depends on improving OCF and working capital efficiency. Dividend guidance was revised this quarter to reflect the latest earnings outlook.
WIP stagnation risk: Work-in-process ¥525.7B accounts for 66.5% of Inventories ¥790.1B and increased by ¥69.2B YoY. WIP stagnation leads to delays in acceptance/inspection and revenue recognition, extending CCC to 276 days (DSO 171 days + DIO 216 days - DPO 111 days). If manufacturing bottleneck resolution and acceptance progress are delayed, working capital will remain tied up and cash conversion inefficiency could persist.
Fixed-cost absorption deterioration risk: SG&A ¥433B increased +8.9%, far outpacing revenue growth of +2.1%, and SG&A ratio rose to 22.6% (prior 21.2%), up 1.4pt. Costs such as personnel, R&D, and sales network investments have become fixed; if revenue growth slows, operating leverage will reverse. With Operating margin at 7.7% (prior 11.1%, -3.4pt), there is risk of further profitability deterioration if top-line growth underperforms.
Foreign exchange risk: Foreign exchange losses of ¥8B were recorded in non-operating expenses, and translation adjustment of +¥43B was recorded in Other Comprehensive Income. Given a likely high share of overseas sales and manufacturing, exchange rate fluctuations directly impact earnings and asset valuations. In a yen appreciation scenario, non-operating losses and balance sheet valuation write-down risks could materialize.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.7% | 8.9% (5.4%–12.7%) | -1.2pt |
| Net Margin | 5.3% | 6.5% (3.3%–9.4%) | -1.2pt |
The company's profitability trails the manufacturing median by 1.2pt in Operating Margin and 1.2pt in Net Margin, placing it slightly below median within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.1% | 2.8% (-1.5%–8.8%) | -0.7pt |
Revenue growth is 0.7pt below the median, indicating slightly below-median growth within the industry.
※ Source: Company aggregation
Margin recovery and working capital efficiency: Declines in Operating margin to 7.7% (prior 11.1%, -3.4pt) and Net margin to 4.8% (prior 7.0%, -2.2pt), and low ROE of 4.3% indicate material deterioration in profitability and capital efficiency. A high WIP ratio of 66.5% and extended CCC of 276 days suggest manufacturing process and acceptance timing bottlenecks; WIP compression and order acceptance progress in Q4 are key to recovery. Accumulated contract liabilities ¥351B support order resilience and could accelerate revenue and profit recognition as acceptance progresses.
Financial soundness and sustainability of shareholder returns: Equity Ratio 60.6%, Current Ratio 247.5%, and net cash ¥589B indicate a very strong financial base and high resilience to short-term external shocks. However, Free Cash Flow ¥27.6B does not cover dividends + buybacks ¥85.8B, so cash coverage of returns is tight. Sustaining total returns over the medium to long term will require OCF improvement and better working capital efficiency; cash generation trends from Q4 onward should be monitored.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company using publicly disclosed financial statements. Investment decisions are your own responsibility; consult a professional as necessary.