| Indicator | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1321.3B | ¥1180.1B | +12.0% |
| Operating Income / Operating Profit | ¥155.2B | ¥135.3B | +14.7% |
| Ordinary Income | ¥166.1B | ¥131.9B | +25.9% |
| Net Income | ¥199.4B | ¥74.9B | +166.2% |
| ROE | 18.4% | 9.1% | - |
For the fiscal year ended March 2026, Elecom reported Revenue of ¥1321.3B (YoY +¥141.2B, +12.0%), Operating Income of ¥155.2B (YoY +¥19.9B, +14.7%), Ordinary Income of ¥166.1B (YoY +¥34.2B, +25.9%), and Net Income attributable to owners of the parent of ¥199.4B (YoY +¥124.5B, +166.2%), achieving revenue and profit growth across all stages. Revenue increased for the third consecutive fiscal year, driven by BtoB Solutions (+29.6%), and profitability improved with a gross margin of 39.6% (YoY +0.5pt) and an operating margin of 11.7% (YoY +0.2pt). The large increase in Net Income was mainly due to Special Income of ¥85.2B, including negative goodwill recognition of ¥76.5B; therefore, underlying earnings power should be assessed based on the operating-level profit trend excluding special items.
[Revenue] Revenue reached ¥1321.3B (YoY +12.0%), achieving double-digit growth. By product, BtoB Solutions was the largest growth driver at ¥429.1B (+29.6%), supported by recovery in corporate renewal demand and wins of large projects. Power & I/O Devices-related sales were ¥430.0B (+7.8%), Consumer Electronics ¥134.7B (+2.8%) remained solid, Peripherals & Accessories were ¥312.9B (+0.2%) essentially flat, and Other was ¥14.6B (+119.3%) a small but large increase. Sales to major customer Amazon Japan were ¥151.2B (¥128.8B prior year) up +17.4%, with growth in EC channels lifting overall results. By region, domestic sales accounted for over 90%, and recovery in domestic demand supported performance. Cost of sales ratio improved to 60.4% (prior year 60.9%, improvement of 0.5pt), reflecting favorable product mix and cost management.
[Profitability] Gross profit was ¥523.6B (gross margin 39.6%, YoY +0.5pt), and SG&A was ¥368.3B (SG&A ratio 27.9%, YoY +0.2pt); absolute SG&A increased with sales expansion, but the ratio rose only slightly, indicating operating leverage. As a result, Operating Income was ¥155.2B (operating margin 11.7%, YoY +0.2pt), showing steady improvement. Non-operating income included interest income ¥6.1B and foreign exchange gains ¥3.2B, bringing non-operating income to ¥11.2B; after subtracting non-operating expenses ¥0.4B, Ordinary Income was ¥166.1B (+25.9%), outpacing operating-level growth. In special items, Special Income of ¥85.2B (including negative goodwill of ¥76.5B from new consolidation of a subsidiary, gain on sale of fixed assets ¥7.2B, and gain on sale of investment securities ¥1.4B) was recorded; after deducting Special Losses of ¥3.9B (including impairment losses ¥1.0B and business restructuring costs ¥1.7B), Pretax Income was ¥247.4B. After corporate taxes of ¥45.5B (effective tax rate 18.4%), Net Income reached ¥199.4B (net margin 15.1%, YoY +166.2%). While the operating trend shows stable revenue and profit growth, the sharp rise in Net Income is dependent on one-off items, so the conclusion is revenue and profit growth (sustainable at the operating level; Net Income increased with special factors).
[Profitability] Operating margin improved to 11.7% (prior year 11.5%, +0.2pt), and gross margin improved to 39.6% (prior year 39.1%, +0.5pt). ROE rose sharply to 18.4% (prior year 11.0%), largely driven by the boost from special items to the net margin of 15.1% (prior year 6.3%). Total asset turnover was 0.91x (prior year 1.03x), slightly down due to accumulation of inventory and receivables, and financial leverage was 1.34x (prior year 1.39x), slightly lower reflecting an improvement in Equity Ratio. ROA (on Ordinary Income basis) was 11.4% (prior year 11.5%), roughly flat, indicating stable core business earning power. [Cash Quality] The Operating Cash Flow (OCF) to Net Income ratio was 0.49x, at a low level, affected by increases in working capital (Receivables +¥62.6B, Inventories +¥34.0B) and adjustments for special income. OCF to EBITDA ratio was 0.52x, indicating room to improve cash conversion. Free Cash Flow was ¥68.0B (OCF ¥98.8B − CapEx ¥44.4B), sufficient to cover dividend payments of ¥38.2B. [Investment Efficiency] Total asset turnover was 0.91x, Days Sales Outstanding (DSO) 75 days, Days Inventory Outstanding (DIO) 70 days, Days Payable Outstanding (DPO) 86 days, resulting in a Cash Conversion Cycle (CCC) of 59 days. Year-on-year DSO and DIO lengthened, indicating scope to improve collections and inventory efficiency. Capital expenditures were ¥44.4B (3.4% of sales), 1.34x of depreciation expense ¥33.1B, continuing growth investments. [Financial Soundness] Equity Ratio was 74.5% (prior year 72.1%), high, with a current ratio of 354.0% and quick ratio of 309.1% indicating ample short-term liquidity. Interest-bearing debt consisted only of short-term borrowings ¥5.0B, effectively debt-free operations, and net cash was ¥708.9B (Cash ¥585.0B + Marketable Securities ¥123.9B − Short-term Borrowings ¥5.0B). Debt/EBITDA was 0.03x, and interest coverage was 3,881x (EBIT ¥155.2B / interest expense ¥0.04B), indicating extremely limited financial risk.
Operating Cash Flow was ¥98.8B (prior year ¥173.5B, YoY -43.1%), a substantial decline. Starting from Pretax Income before tax adjustments of ¥247.4B, adjustments included deducting negative goodwill ¥76.5B, adding depreciation ¥33.1B, changes in working capital such as increase in trade receivables ¥128.3B, increase in inventories ¥251.0B, increase in trade payables ¥74.3B, and payments of corporate taxes ¥36.5B. The build-up of receivables and inventory accompanying sales growth was the main driver; with DSO 75 days and DIO 70 days showing lengthening, efficiency improvements in collections and inventory are needed. Investing Cash Flow was -¥30.8B (prior year -¥44.2B); while CapEx of ¥44.4B was made, proceeds included sale of tangible fixed assets ¥16.9B and sale of investment securities ¥8.0B, which limited net outflows. Financing Cash Flow was -¥37.9B (prior year -¥106.4B), primarily dividend payments of ¥38.2B; share buybacks were minimal (¥0.01B) and proceeds from disposal of treasury stock ¥0.3B were received. Free Cash Flow (OCF + Investing CF) was ¥68.0B, and after factoring in foreign exchange translation adjustments of ¥12.8B, cash increased by ¥42.9B to an ending balance of ¥584.9B. OCF to Net Income ratio 0.49x and OCF to EBITDA ratio 0.52x remain low, so improving working capital efficiency and cash conversion are focal points going forward.
This period’s earnings structure is characterized by operating-level profit improvement (Operating Income +¥19.9B) plus Special Income of ¥85.2B (of which negative goodwill ¥76.5B, gain on sale of fixed assets ¥7.2B, gain on sale of investment securities ¥1.4B) that substantially boosted Net Income. Of the difference between Ordinary Income ¥166.1B and Net Income ¥199.4B (¥33.3B), after tax adjustments, approximately ¥66B of the net special items impact (net special income ~¥81.3B) appears to be a temporary uplift, and adjusted underlying Net Income is estimated around ¥133B level (net margin approximately 10%). Non-operating income ¥11.2B (0.8% of sales) centered on interest income ¥6.1B, dividend income ¥0.9B, and foreign exchange gains ¥3.2B, all within recurring income and healthy at under 5% of sales. Non-operating expenses were minor at ¥0.4B, and interest expense was limited to ¥0.04B. The accrual ratio (Net Income − OCF) / Total Assets was 7.0%, a neutral level, but OCF to Net Income ratio 0.49x reflects expansion of working capital and a relatively high portion of earnings not backed by cash. Goodwill amortization ¥4.3B was 2.3% of EBITDA (Operating Income + Depreciation + Goodwill Amortization = ¥192.6B), so impact is limited. Overall, core profitability improvements appear sustainable, but Net Income quality depends significantly on one-off items; evaluations for next fiscal year must incorporate potential reversals of special income.
Full-year guidance is Revenue ¥1448.0B (YoY +9.6%), Operating Income ¥165.0B (YoY +6.3%), Ordinary Income ¥164.0B (YoY -1.2%), and Net Income attributable to owners of the parent ¥114.5B (EPS ¥142.17). Revenue is expected to continue growing but at a slower rate than the current fiscal year. Operating Income is projected to increase, while Ordinary Income is forecast to decline slightly, reflecting expected volatility in non-operating items. Net Income is projected to decline significantly by -42.6% year-on-year, mainly due to the reversal of this period’s Special Income of ¥85.2B; on an adjusted basis, the company assumes a typical increasing-profit trend. Progress toward the plan stands at: Revenue 91.3%, Operating Income 94.1%, Ordinary Income 101.3%, Net Income 174.2% — Net Income greatly exceeds plan due to special factors, while operating and ordinary stages are generally on plan. The dividend forecast is ¥29.00 per year (interim actual ¥26, year-end forecast ¥3), returning to normal dividend levels from this year’s ¥57 (including a commemorative dividend of ¥5). Forecast payout ratio is approximately 20.4%, a conservative level.
Annual dividend paid was ¥57.00 (interim ¥26, year-end ¥31, including ¥5 commemorative dividend at year-end), resulting in an actual payout ratio of 22.0% (based on Net Income ¥199.4B and total dividends of ¥43.8B). This is an increase from prior year annual dividend ¥48.00 (interim ¥24, year-end ¥24), and even excluding the commemorative dividend, the ordinary dividend level equates to ¥52, exceeding the prior year. Total dividends were approximately ¥43.8B; coverage relative to OCF ¥98.8B is 2.3x and relative to Free Cash Flow ¥68.0B is 1.6x, leaving ample room. Share buybacks were minimal at ¥0.01B this period, and capital policy included disposal of treasury stock (proceeds ¥77.2B) to improve equity efficiency. Total Shareholder Return Ratio (dividends + buybacks) is effectively similar to the payout ratio at about 22%, and with cash ¥585.0B and net cash ¥708.9B, dividend sustainability is very high. Next fiscal year’s forecast dividend ¥29.00 (payout ratio ~20%) reflects normalization after the commemorative dividend, but strong financial base leaves room for potential future increases.
Risk of deteriorating working capital efficiency: DSO 75 days and DIO 70 days have lengthened YoY, and OCF to Net Income ratio 0.49x and OCF to EBITDA 0.52x remain low. Although the build-up of receivables and inventory is partly investment ahead of sales growth, prolonged collection delays or inventory stagnation could pressure cash flows and compress gross margins (discounting pressure). If inventory write-downs or additional allowance for doubtful accounts are required, downside impact on profitability is possible.
Volatility risk in BtoB Solutions projects: BtoB Solutions, the growth driver this period (+29.6% YoY), depends on timing of large project wins and customers’ capital expenditure cycles, making project variability high. There is no guarantee that the same growth rate can be sustained; order delays or losses could slow revenue growth and reduce operating leverage. The lack of disclosure on backlog and contract liabilities limits visibility into future revenue, which is a risk factor.
Dependence on special income and assessing underlying earnings power: Of Net Income ¥199.4B, Special Income including negative goodwill ¥76.5B accounted for a substantial portion, and after tax this boosted earnings by roughly ¥66B; adjusted underlying Net Income is estimated around ¥133B. Next fiscal year’s forecast reflects a large drop in Net Income (-42.6%) due to reversal of special income, so investors should evaluate performance based on operating and ordinary income stages. Insufficient understanding of core-profit levels excluding special items could lead to valuation distortions and increased stock price volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.7% | 7.8% (4.6%–12.3%) | +4.0pt |
| Net Margin | 15.1% | 5.2% (2.3%–8.2%) | +9.9pt |
Both operating margin and net margin materially exceed industry medians, placing the company among the higher-profitability manufacturers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.0% | 3.7% (-0.4%–9.3%) | +8.3pt |
Revenue growth outperforms the industry median by +8.3pt, with BtoB Solutions’ high growth standing out within manufacturing.
※ Source: Company aggregation
Core profitability improvements appear sustainable: Operating margin 11.7% (+0.2pt) and gross margin 39.6% (+0.5pt) show steady progress, with BtoB Solutions growth of +29.6% serving as the growth driver. Versus industry benchmarks, the company maintains competitive strength with operating margin +4.0pt and revenue growth +8.3pt, and structural tailwinds from corporate demand recovery and EC channel expansion are expected to continue. Operating-level profit growth is forecast to continue next year at +6.3%, and underlying earnings growth excluding special items is expected to be stable.
Net Income ¥199.4B was materially influenced by Special Income ¥85.2B (mainly negative goodwill ¥76.5B); adjusted underlying Net Income is estimated around ¥133B (net margin ~10%). Next fiscal year’s forecast Net Income ¥114.5B (-42.6%) incorporates this one-off reversal, but operating and ordinary earnings remain robust, so this should be viewed as a reversion to normalized profit levels. Dividend steps down from ¥57 to forecast ¥29, but the company maintains a conservative payout ratio (~20%) and high sustainability given net cash ¥708.9B.
The principal point of attention is declining cash conversion efficiency due to expanding working capital. OCF to Net Income ratio 0.49x and OCF to EBITDA 0.52x remain low, with DSO 75 days and DIO 70 days still extended. While some build-up is investment ahead of sales growth, if improvements in collections and inventory are delayed, volatility in Free Cash Flow and downward pressure on gross margins are concerns. Quarterly trends in normalization of DSO/DIO and recovery in OCF will be key monitoring metrics to balance financial soundness and growth sustainability.
This report was automatically generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the company from public financial statements. Investment decisions are your responsibility; please consult professional advisors as needed before making investment decisions.
---End of Report---