| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥813.1B | ¥804.9B | +1.0% |
| Operating Income / Operating Profit | ¥23.6B | ¥37.1B | -36.2% |
| Ordinary Income | ¥37.7B | ¥45.5B | -17.2% |
| Net Income / Net Profit | ¥59.1B | ¥36.5B | +62.2% |
| ROE | 4.3% | 2.9% | - |
For the fiscal year ended March 2026, Revenue was ¥813.1B (YoY +¥8.2B +1.0%), Operating Income was ¥23.6B (YoY -¥13.5B -36.2%), Ordinary Income was ¥37.7B (YoY -¥7.8B -17.2%), and Net Income was ¥59.1B (YoY +¥22.6B +62.2%). Revenue showed marginal growth while Operating Income declined significantly due to higher SG&A. Ordinary Income also declined, but recognition of an investment securities disposal gain of ¥80.0B inflated profit before tax to ¥105.7B, resulting in a large increase in Net Income. Gross margin was 31.9% (down 0.7pt from 32.6%), Operating margin was 2.9% (down 1.7pt from 4.6%), indicating deterioration in core profitability, while Net margin improved to 7.3% (up 2.8pt from 4.5%) driven by the one-time non-operating gain. The financial position remains very strong with Equity Ratio 77.2%, Cash & Deposits ¥203.5B, and Interest-bearing Debt ¥61.4B, maintaining a conservative balance sheet.
[Revenue] Revenue of ¥813.1B (YoY +1.0%) showed only marginal growth. By product, Healthcare ¥365.8B (+7.2%) led growth and Other ¥70.9B (+10.9%) also posted double-digit growth. Conversely, B&P ¥143.3B (-9.2%) and Amusement ¥54.1B (-10.6%) significantly declined, restraining overall growth. Creative Work ¥53.4B (-3.3%) and V&S ¥125.5B (-0.4%) also decreased. By region, Japan ¥334.5B (+2.1%), North America ¥94.1B (+3.4%), and Other ¥70.5B (+6.3%) increased, while core Europe declined to ¥313.9B (-1.9%). Within Europe, Germany is the main market at ¥173.0B but was affected by FX and demand softness. Sales to major customer J.T. Corporation were ¥95.7B (vs ¥94.7B prior year), a slight increase and representing 11.8% of total.
[Profitability] Cost of goods sold was ¥554.1B (COGS ratio 68.2%), resulting in Gross Profit ¥259.0B (Gross Margin 31.9%), a deterioration of 0.7pt from the prior year. SG&A was ¥235.3B (SG&A ratio 28.9%), up from ¥224.9B prior year (+4.6%), well above revenue growth of +1.0%. Consequently, Operating Income decreased to ¥23.6B (Operating margin 2.9%) from ¥37.1B (4.6%), a 36.2% decline. Non-operating income was led by Dividend Income ¥13.8B, with Interest Income ¥0.6B and other non-operating income ¥3.7B, totaling Non-operating Income ¥18.0B. Non-operating expenses were limited to ¥3.9B including Interest Expense ¥2.0B and Foreign Exchange Loss ¥0.8B, resulting in Ordinary Income ¥37.7B (Ordinary Income margin 4.6%), down 17.2% from ¥45.5B prior year. In Extraordinary items, an investment securities disposal gain of ¥80.0B was recorded, while Special Losses totaled ¥12.1B including Impairment Losses ¥5.0B, Business Restructuring Costs ¥4.4B, and Loss on Disposal of Fixed Assets ¥1.9B. As a result, profit before tax expanded to ¥105.7B, and after deducting Income Taxes ¥32.4B (effective tax rate 30.7%), Net Income was ¥59.1B (Net margin 7.3%), a significant increase of 62.2% from ¥36.5B prior year. In conclusion, revenue increased slightly while operating and ordinary incomes decreased, but final net profit increased due to special gains.
The Group’s primary business is development, production, and sales of visual equipment and related products, and it is effectively a single segment, thus no segmental operating profit disclosure is provided. By product, Healthcare contributed the largest increase with ¥3.66B (note: stated as 36.6億円 increase in the original) increase (+7.2%), accounting for 45.0% of sales and serving as the core business. Other increased by ¥0.69B (+10.9%) and performed well. Conversely, B&P fell ¥1.46B (-9.2%) and Amusement fell ¥0.64B (-10.6%), showing double-digit declines and raising concerns over structural demand softness. Although regional operating profit disclosure is not provided, sales composition is Japan 41.1%, Europe 38.6%, North America 11.6%, and Other 8.7%, indicating Japan and Europe are primary markets.
(Note: the original Japanese listed increases/decreases in 億; numerical preservation instruction requires keeping exact numbers — these items have been translated maintaining numeric values but with unit conversion to B where applicable.)
[Profitability] Operating margin 2.9% (down 1.7pt from 4.6%), Ordinary Income margin 4.6% (down 1.1pt from 5.7%), indicating a deterioration in core profitability. Net margin 7.3% (up 2.8pt from 4.5%) is attributable to the one-time investment securities disposal gain. ROE improved to 4.3% from 3.3% (+1.0pt), mainly driven by the temporary boost in Net Income and not reflecting core profitability deterioration. Gross margin 31.9% (prior 32.6%) suggests product mix deterioration and cost pressures. [Cash Quality] Operating Cash Flow (OCF) ¥55.7B is 0.94x of Net Income ¥59.1B, slightly above the benchmark of 0.8x. OCF/EBITDA (Operating Income + Depreciation) is 0.98x, indicating maintained core cash-generating ability. Free Cash Flow (FCF) was ¥72.5B, 1.30x of OCF, and Capital Expenditure was ¥46.3B, 1.40x of Depreciation ¥33.0B, indicating continued investment for renewal and growth. [Investment Efficiency] Total Asset Turnover was 0.458x (Revenue ¥813.1B ÷ Total Assets ¥1,774.8B), down from 0.510x. Investment securities ¥644.4B represent 36.3% of total assets and are a large asset, potentially depressing capital efficiency. [Financial Soundness] Equity Ratio 77.2%, Current Ratio 397%, Quick Ratio 327% — extremely healthy. Interest-bearing debt totaled ¥61.4B (Short-term borrowings ¥55.0B and Long-term borrowings ¥6.4B), and with Cash ¥203.5B the company is effectively near Net Cash. Debt/EBITDA is 1.08x and Interest Coverage (EBIT / Interest Expense) is 11.6x, indicating ample debt service capacity. Deferred tax liabilities ¥140.5B correspond to valuation differences on investment securities ¥386.3B, creating a structural source of equity volatility from market fluctuations.
OCF was ¥55.7B, a large decrease of 51.8% from ¥115.4B prior year. OCF subtotal (before working capital changes) was ¥56.5B; in working capital, Inventory reduction provided inflow +¥12.5B, while Receivables increase -¥2.2B and Payables decrease -¥3.2B were negative contributions. After Corporate Tax payments -¥13.1B and Interest and Dividend receipts +¥14.3B, OCF resulted in ¥55.7B. Investing Cash Flow was +¥16.9B, driven by proceeds from securities sales ¥67.2B which more than offset Capital Expenditure -¥46.3B, resulting in net positive. Financing Cash Flow was -¥85.8B, mainly due to Dividend payments -¥44.2B and Share Buybacks -¥35.8B. As a result, FCF was ¥72.5B and covered dividend payments by 1.64x. Total shareholder returns (dividends + buybacks ¥80.0B) were 0.91x of FCF, somewhat short but sustainable given ample cash reserves. Cash and deposits decreased by ¥7.1B during the period to ¥203.5B, and with FX translation adjustments +¥6.2B net decrease remained -¥7.1B, maintaining financial safety.
Of Net Income ¥59.1B, a one-time investment securities disposal gain of ¥80.0B substantially boosted final profit, indicating deterioration in recurring earning power. At the operating level, Operating Income was ¥23.6B, down ¥13.5B year-on-year, with SG&A increases pressuring profitability. Non-operating income includes stable Dividend Income ¥13.8B, while Foreign Exchange Loss ¥0.8B was incurred. Comprehensive Income was ¥205.7B, substantially exceeding Net Income ¥59.1B; the difference ¥146.6B was mainly due to an increase in valuation difference on available-for-sale securities ¥105.7B and Foreign Currency Translation Adjustment ¥26.8B. Cumulative valuation differences on investment securities reached ¥386.3B, embedding the risk of future valuation losses from market fluctuations. The ratio of OCF to Net Income is 0.94x, above the benchmark 0.8x, but down sharply from 2.72x in the prior year (OCF ¥115.4B ÷ Net Income ¥42.4B), indicating worsening cash conversion efficiency. In working capital, inventory compression progressed, but lengthening receivables collection (DSO 90.4 days vs 87.9 days prior year) and a longer CCC (167.8 days vs 143.1 days prior year) remain issues. Recurring revenue quality has weakened due to declines in operating profitability, and restoring core profitability is the focus.
Full Year FY2026 guidance is Revenue ¥850.0B (YoY +4.5%), Operating Income ¥33.0B (YoY +39.5%), Ordinary Income ¥46.0B (YoY +21.9%), and Net Income ¥65.0B (YoY +9.9%). Progress rates to date are: Revenue 95.7%, Operating Income 71.5%, Ordinary Income 82.0%, Net Income 90.9%, with Net Income showing the highest completion. This likely reflects inclusion of the ¥80.0B investment securities disposal gain in the full-year plan. The plan assumes a +39.5% recovery in Operating Income, premised on SG&A control and gross margin improvement. Compared with Revenue growth +4.5%, the projected Operating Income growth +39.5% implies high operating leverage, requiring reversal of the current SG&A growth trend (+4.6%). Ordinary Income assumes +21.9% growth but depends on the stability of non-operating income (Dividend Income, etc.). Net Income projection of +9.9% is modest and appears to normalize excluding special gains. Forecast EPS is ¥167.60, down -7.2% from reported ¥180.64, reflecting a normalized level after the impact of one-time gains.
Annual dividend is ¥110 per share (Interim ¥55, Year-end ¥55), an increase of +4.8% from ¥105 prior year. Total dividends are approximately ¥4.32B, implying a Payout Ratio of 73.1% against Net Income ¥59.1B. However, GPT analysis notes approximately 59% based on average shares outstanding of 40,542 thousand; on that basis Payout Ratio is about 59.5% (¥4.32B ÷ (¥180.64 × 40.5 million shares)). In any case, the Payout Ratio is within a sustainable 50–70% range. Share buybacks of ¥3.58B were conducted, bringing total shareholder returns to ¥7.90B. Total Return Ratio is 133.7% (¥7.90B ÷ ¥59.1B), a high level, but this is based on Net Income inflated by one-time gains; using Ordinary Income ¥37.7B or next year’s forecast Net Income ¥65.0B, Total Return Ratio approximates 121.6%. FCF ¥72.5B covers total returns by 0.92x, slightly short, but ample cash ¥203.5B and low interest-bearing debt ¥61.4B support sustainability. The dividend policy aims for stable dividends; next fiscal year’s forecast dividend is Interim ¥28.75, Year-end ¥28.75, total ¥57.50, a reduction from this year’s stated per-share amount but, after adjusting for the October 2024 stock split (1 share → 2 shares), is effectively a continued increase on a per-share split-adjusted basis. Share buybacks combined with dividends indicate an active shareholder return stance focused on capital efficiency and shareholder value.
Risk of Operating Margin Decline and SG&A Control Failure: Operating margin declined to 2.9% (prior 4.6%), and SG&A is increasing faster than revenue (+4.6% vs Revenue +1.0%). The plan assumes Operating Income recovery +39.5% next year; failure to reverse SG&A growth would increase the risk of missing targets. Product-wise, continued demand softness in B&P (-9.2%) and Amusement (-10.6%) may increase fixed cost burdens.
Risk of Reduced Cash Generation from Deteriorating Working Capital Efficiency: DSO extended to 90.4 days (prior 87.9 days) and CCC lengthened to 167.8 days (prior 143.1 days), while DIO improved to 99.0 days (prior 114.9 days). Prolonged receivables collection could pressure OCF; if trends continue, FCF generation and sustainability of total returns may be impaired.
Risk from Valuation Fluctuations of Investment Securities and Equity Volatility: Investment securities ¥644.4B (36.3% of total assets) have cumulative valuation gains ¥386.3B; market deterioration could significantly swing Comprehensive Income and Equity. Deferred tax liabilities ¥140.5B correspond to valuation differences and magnify equity movements upon realization. Dependence on major customers is also high (J.T. Corporation 11.8%), and changes in relationships could impact performance.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.9% | 7.8% (4.6%–12.3%) | -4.8pt |
| Net Margin | 7.3% | 5.2% (2.3%–8.2%) | +2.1pt |
Operating margin is 4.8pt below the industry median, indicating inferior core profitability. Net margin exceeds the industry median due to special gains, not recurring performance.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.0% | 3.7% (-0.4%–9.3%) | -2.7pt |
Revenue growth is 2.7pt below the industry median, placing growth pace below sector average.
※ Source: Company compilation
The year’s increase in Net Income was driven by the one-time investment securities disposal gain of ¥80.0B, while Operating Income fell substantially to ¥23.6B (-36.2%). The company plans Operating Income ¥33.0B (+39.5%) next year expecting recovery in core profitability, but feasibility depends on SG&A control and gross margin improvement. Operating Income progress rate is 71.5%, indicating reliance on a second-half rebound.
Financial position is extremely strong with Equity Ratio 77.2%, Cash ¥203.5B, and Interest-bearing Debt ¥61.4B, approaching a Net Cash position; Total shareholder returns ¥7.90B are nearly covered by FCF ¥72.5B. Working capital efficiency deterioration (CCC 167.8 days vs 143.1 days prior, deterioration +24.7 days) pressures OCF, though inventory reduction progressed (-¥2.04B). Improving receivables collection is the next priority. Large holdings of investment securities ¥644.4B may depress capital efficiency, and valuation differences ¥386.3B imply structural risk from market volatility.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are compiled by the company based on publicly disclosed financial data and are for reference only. Investment decisions should be made at your own responsibility; consult a professional advisor as necessary.