| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1323.3B | ¥1880.1B | -29.6% |
| Operating Income / Operating Profit | ¥-186.9B | ¥-370.7B | +49.6% |
| Ordinary Income | ¥-304.6B | ¥-404.1B | +24.6% |
| Net Income / Net Profit | ¥-78.1B | ¥-820.2B | +90.5% |
| ROE | 105.3% | -1190.4% | - |
The Q2 results for the fiscal year ending March 2026 recorded revenue of ¥1323.3B (YoY -¥556.8B, -29.6%), an operating loss of ¥186.9B (improvement of ¥183.8B from an operating loss of ¥370.7B in the prior year same period), an ordinary loss of ¥304.6B (improvement of ¥99.5B from an ordinary loss of ¥404.1B), and a net loss of ¥78.1B (improvement of ¥742.1B, +90.5%, from a net loss of ¥820.2B). Despite the revenue decline, the operating loss was halved and gross margin improved from negative territory in the prior year to 1.9%. However, non-operating expenses of ¥134.8B—centered on interest expense of ¥87.3B—weighed on the ordinary stage. Special gains of ¥233.9B, including ¥185.3B from the sale of subsidiary shares, and special losses of ¥114.5B, including ¥94.2B of business restructuring expenses and ¥19.7B of impairments, materially reduced the net loss. Still, core operating profitability remains in negative territory.
[Revenue] Revenue was ¥1323.3B, a substantial decline of ¥556.8B (‑29.6% YoY). Within the single Display segment, headwinds persisted on both volumes and pricing. Deterioration in order conditions and reduced shipments to major customers are presumed primary drivers of the revenue decline. Cost of sales was ¥1297.6B, down ¥680.0B (‑34.4% YoY), declining at a greater rate than sales; as manufacturing cost corrections progressed, gross margin improved to 1.9% (prior year -5.1%). Production scaling down and inventory compression likely contributed to rationalization of fixed cost burden.
[Profitability] Gross profit turned positive to ¥2.57B (prior year ¥-9.65B), and SG&A declined substantially to ¥212.6B (prior year ¥274.2B, -22.5%). SG&A ratio rose to 16.1% (prior year 14.6%), but fixed cost compression from structural reforms was effective. Operating loss was ¥186.9B, a ¥183.8B improvement from ¥370.7B in the prior year, and operating margin was -14.1% (prior year -19.7%, +5.6pt improvement). Non-operating income was ¥17.1B (including ¥10.3B foreign exchange gains), and non-operating expenses were ¥134.8B (centered on interest expense of ¥87.3B, approximately double the prior year ¥44.1B), resulting in an ordinary loss of ¥304.6B (improved ¥99.5B from an ordinary loss of ¥404.1B). The sharp increase in interest burden pressured improvement at the ordinary level. Special gains of ¥233.9B (¥185.3B gain on sale of subsidiary shares, ¥0.8B gain on sale of fixed assets, etc.) and special losses of ¥114.5B (¥94.2B business restructuring costs, ¥19.7B impairment losses, etc.) reduced the pre-tax loss substantially to ¥185.3B (prior year pre-tax loss ¥770.6B). After recording income taxes of ¥12.8B, net loss was ¥78.1B (improved +90.5% from prior year net loss ¥820.2B). In conclusion, revenue declined but losses narrowed; however, the improvement heavily depended on one-time gains and asset disposals.
[Profitability] Operating margin -14.1% (improved +5.6pt from -19.7% prior year), net profit margin -5.9% (significant improvement from -43.6% prior year). Although net losses narrowed, core operating profitability remains negative. Gross margin turned positive to 1.9% from negative in the prior year, indicating progress in cost correction. ROE is 105.3% (prior year -1,699.5%), but this is an apparent high figure attributable to negative shareholders’ equity of ¥-74.1B and does not reflect meaningful capital efficiency.
[Cash Quality] Operating Cash Flow (OCF) was ¥-232.9B, a 2.98x outflow relative to net loss of ¥-78.1B, indicating weak cash generation from operations. Depreciation of ¥39.1B results in EBITDA (Operating Income + Depreciation) of ¥-147.8B and an EBITDA margin of -11.2%, a deep deficit. OCF subtotal (before working capital changes) was ¥-35.9B; working capital improvements—inventory decrease +¥173.3B, accounts receivable decrease +¥61.2B, and advances received increase +¥49.2B—supported OCF, offset by accounts payable decrease -¥87.1B.
[Investment Efficiency] Total asset turnover was 1.065x (Revenue ¥1323.3B ÷ Total Assets ¥1242.5B), improving due to asset compression, but negative shareholders’ equity produced abnormal financial leverage of -16.8x, indicating extremely high financial risk.
[Financial Soundness] Equity ratio is -6.0% (prior year 4.7%), reflecting capital impairment and insolvency. Current ratio is 63.4% (current assets ¥810.4B ÷ current liabilities ¥1278.6B), and quick ratio is 57.7% (quick assets ¥737.6B ÷ current liabilities ¥1278.6B), indicating severely weak short-term payment capacity. Cash of ¥277.6B versus short-term borrowings of ¥650.0B yields a cash/short-term liabilities ratio of 0.43x; liquidity on hand is insufficient and refinancing risk is high.
OCF was ¥-232.9B (prior year ¥-254.5B, improvement +8.5%). The OCF subtotal was ¥-35.9B, with working capital improvements—inventory decrease +¥173.3B, accounts receivable decrease +¥61.2B, advances received increase +¥49.2B—contributing, while accounts payable decrease -¥87.1B and other payables decrease -¥15.8B offset improvements. Cash outflows included business restructuring payments -¥64.4B, interest paid -¥83.5B, and corporate taxes paid -¥2.1B, leaving operating cash generation weak. Investing CF was a large inflow of ¥+228.5B (prior year -¥81.6B), primarily due to ¥200.0B proceeds from sale of subsidiary shares—an asset-sale-driven, temporary funding source. Capital expenditures were restrained at -¥11.9B, proceeds from fixed asset sales totaled ¥0.9B, and including sales of marketable securities, free cash flow was ¥-4.3B, nearly balanced but lacking sustainability. Financing CF was ¥+50.5B (prior year +¥256.9B), mainly from net increase in short-term borrowings +¥55.0B and lease repayments -¥5.5B. Cash rose from ¥204.3B at the beginning of the period to ¥271.9B at period end, an increase of ¥67.5B, but this depended on one-time investing inflows and increased borrowings; achieving operating cash flow profitability is an urgent issue.
This period’s earnings structure was heavily influenced by one-time factors. Of non-operating income ¥17.1B, foreign exchange gains ¥10.3B contributed, but non-operating expenses of ¥134.8B were dominated by interest expense ¥87.3B (approximately double prior year ¥44.1B), reflecting a concentration of short-term borrowings and the impact of rising interest rates. Non-operating net was a deficit of ¥-117.7B, which, together with operating loss ¥-186.9B, pressured the ordinary stage. The majority of special gains ¥233.9B was ¥185.3B from sale of subsidiary shares, a one-time gain tied to portfolio restructuring with low repeatability. Special losses ¥114.5B included ¥94.2B of business restructuring expenses and ¥19.7B of impairments, indicating reforms are ongoing. Comprehensive income was ¥-141.7B, wider than net loss ¥-78.1B; translation adjustments +¥26.7B and retirement benefit adjustments +¥29.7B contributed, but on a comprehensive basis the deficit widened somewhat. The fact that OCF is roughly three times the net loss outflow is due to temporary improvements in working capital, so accrual quality requires attention. The gap between ordinary income and net income is driven by special items (net one-time gain +¥119.4B); core business profitability remains negative even at the ordinary level, and restoring sustainable profitability is a key challenge.
Liquidity Risk: Current ratio 63.4% and quick ratio 57.7% indicate severely weak short-term payment capacity. Short-term borrowings of ¥650.0B constitute the core of current liabilities; cash of ¥277.6B results in a short-term liabilities coverage reaching 100%. Cash/short-term liabilities ratio of 0.43x shows insufficient liquidity on hand, and refinancing risk is extremely high unless maturities are extended or capital is strengthened. With OCF at ¥-232.9B and weak operational cash generation, the company remains dependent on one-time measures such as asset sales.
Financial Soundness Risk: Equity ratio -6.0% and shareholders’ equity ¥-74.1B indicate insolvency and progressing capital impairment. Accumulated deficits in retained earnings of ¥-1644.8B and continued net losses mean recovery of equity requires capital measures such as equity issuance or subordinated capital. Financial leverage is abnormal due to negative equity, and financial flexibility is markedly low. There may be potential covenant constraints in ratings and dealings with financial institutions, requiring monitoring.
Profitability and Interest Burden Risk: Gross margin 1.9%, operating margin -14.1%, and EBITDA margin -11.2% indicate core profitability remains negative and structurally weak. Interest expense of ¥87.3B (approximately double prior year ¥44.1B) has surged; interest coverage (EBIT ÷ interest paid) is -2.14x, a deep deficit, indicating high sensitivity to interest rates. While product mix improvements and fixed cost reductions are underway, the steep revenue decline of -29.6% undermines economies of scale and worsens fixed cost absorption, pressuring profitability.
Profitability & Returns
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | -14.1% | 7.8% (4.6%–12.3%) | -21.9pt |
| Net Profit Margin | -5.9% | 5.2% (2.3%–8.2%) | -11.1pt |
Our company materially underperforms the industry median in profitability, with both operating and net profits in the red, placing it near the bottom within the sector.
Growth & Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -29.6% | 3.7% (-0.4%–9.3%) | -33.3pt |
Our growth rate is 33.3pt below the industry median, highlighting a marked revenue decline relative to peers. Structural reforms and demand contraction have materially depressed growth.
※Source: Company aggregation
Recovery of core operating profitability is the top priority. With gross margin 1.9%, operating margin -14.1%, and EBITDA margin -11.2%, the company remains in the red; sustainable return to profitability requires durable gross margin improvement through product mix optimization and utilization improvement, plus consolidation of fixed cost reductions. Note that ¥94.2B of structural reform expenses are being incurred and personnel and capacity rationalization are underway.
Securing financial flexibility is urgent. Insolvency of ¥-74.1B in shareholders’ equity, current ratio 63.4%, and short-term borrowings ¥650.0B against cash ¥277.6B make short-term funding very fragile. Extending debt maturities, equity issuance, or raising subordinated capital are indispensable. Although asset sales such as ¥200.0B from sale of subsidiary shares temporarily secured funds, sustainability is lacking; operating cash flow normalization and interest burden reduction are keys to medium-term stabilization.
Continued improvement in working capital management is commendable. Inventory compressed to ¥72.3B (-48.4%), accounts payable reduced to ¥202.4B (-28.1%), and advances received increased to ¥162.4B (+43.4%), indicating working capital optimization aligned with production cuts supported OCF. Going forward, controlling working capital during revenue recovery and shortening the cash conversion cycle will be crucial to sustainable cash generation.
This report was automatically generated by AI analyzing XBRL financial statement data and is an earnings analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our company based on public financial statement data. Investment decisions are your responsibility; please consult a professional as appropriate.