| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥1174.6B | ¥1129.8B | +4.0% |
| Operating Income | ¥148.3B | ¥121.2B | +22.3% |
| Profit Before Tax | ¥161.5B | ¥127.4B | +26.8% |
| Net Income | ¥116.8B | ¥92.6B | +26.1% |
| ROE | 8.8% | 7.5% | - |
For the fiscal year ended March 2026, Revenue was ¥1,174.6B (YoY +¥44.8B, +4.0%), Operating Income was ¥148.3B (YoY +¥27.1B, +22.3%), Ordinary Income was ¥143.2B (YoY +¥40.4B, +39.3%), and Net Income was ¥116.8B (YoY +¥24.2B, +26.1%). While maintaining a gross margin of 51.1%, SG&A ratio was restrained to 31.0%, improving the operating margin to 12.6% (YoY +1.9pt). The core Communications Measurement business saw revenue decline (-1.9%) but improved profitability to a 15.7% margin, delivering a +28.7% increase in operating income. The PQA business achieved +9.9% revenue growth and +17.0% operating income growth, and the Environmental Measurement business grew rapidly at +26.2%, emerging as a new revenue source. By region, Japan was +9.6% and EMEA +12.3% (solid), while Other Asia slowed -4.3%. Financial income doubled to ¥15.6B (prior ¥7.6B), significantly exceeding financial expenses of ¥2.6B and boosting profitability at the ordinary-income level.
[Revenue] Revenue was ¥1,174.6B (YoY +4.0%). By segment, Communications Measurement was ¥687.7B (-1.9%, 58.6% of total) showing a decline, PQA was ¥310.3B (+9.9%, 26.4% of total) continuing growth, Environmental Measurement was ¥107.9B (+26.2%, 9.2% of total) with high growth. Other revenue was ¥68.7B (+12.9%, 5.8% of total). By region, Japan was ¥398.9B (+9.6%), Americas ¥286.3B (+1.8%), EMEA ¥173.5B (+12.3%), and Other Asia ¥316.0B (-4.3%), with recovery in Japan and EMEA contributing to top-line growth. The decline in Communications Measurement revenue was mainly due to weaker demand in Asia, but product-mix improvements enhanced profitability.
[Profitability] Operating Income was ¥148.3B (+22.3%), with an operating margin of 12.6% (YoY +1.9pt). Cost of goods sold was ¥573.9B, maintaining a gross margin of 51.1%. SG&A increased to ¥363.9B (+9.0%) but remained 31.0% of sales (a suppression of +0.5pt YoY). By segment, Communications Measurement operating income improved to ¥107.8B (+28.7%, margin 15.7%), PQA to ¥33.2B (+17.0%, margin 10.7%), and Environmental Measurement to ¥8.5B (-5.6%, margin 7.9%)—showing margin deterioration despite revenue growth. Adjusted corporate expenses totaled -¥20.3B (prior -¥14.5B), and basic research investment continued, including R&D expenses of ¥94.4B (8.0% of sales). Ordinary Income was ¥143.2B (+39.3%); financial income of ¥15.6B (including ¥0.4B dividends) greatly exceeded financial expenses of ¥2.6B, and equity-method investment income/loss of ¥0.3B also contributed. Profit Before Tax was ¥161.5B (+26.8%); after corporate taxes of ¥44.7B at an effective tax rate of 27.7%, Net Income was ¥116.8B (+26.1%). No material extraordinary items occurred, and ordinary income translated smoothly into net income in a year of revenue and profit growth.
The Communications Measurement business recorded Revenue of ¥687.7B (-1.9%), largely affected by weaker demand in Asia, but Operating Income improved to ¥107.8B (+28.7%) with an operating margin of 15.7% (prior 11.9%), a +3.8pt improvement driven by mix improvement and cost efficiency. The PQA business achieved Revenue of ¥310.3B (+9.9%) with continued volume growth, Operating Income of ¥33.2B (+17.0%), and an operating margin of 10.7% (prior 10.0%), up +0.7pt. The Environmental Measurement business delivered Revenue of ¥107.9B (+26.2%) by capturing EV/battery and power-measurement demand, but Operating Income was ¥8.5B (-5.6%) and margin fell to 7.9% (prior 10.5%, -2.6pt) as upfront investments for new projects and shortfall in scale pressured margins. Other recorded Revenue of ¥68.7B (+12.9%) and Operating Income of ¥19.7B (+35.4%), maintaining a high margin of 28.7%.
[Profitability] Operating margin improved to 12.6% (prior 10.7%, +1.9pt), and net margin improved to 9.9% (prior 8.2%, +1.7pt). ROE was 9.1% (prior 7.4%, +1.7pt), recovering above the three-year average. Maintenance of a 51.1% gross margin (prior 48.7%) and suppression of SG&A ratio to 31.0% were the main drivers of improved profitability.
[Cash Quality] Operating Cash Flow (OCF) was ¥178.8B, 1.53x Net Income of ¥116.8B, demonstrating high-quality cash generation. OCF/EBITDA was 0.86x (EBITDA = Operating Income ¥148.3B + Depreciation ¥60.1B ≒ ¥208.4B). Inventory increase of -¥18.7B pressured working capital. Working capital efficiency metrics are DSO 91 days, DIO 167 days, and CCC 205 days, indicating prolonged working capital cycles and room for improvement in inventory and receivables management.
[Investment Efficiency] Total asset turnover was 0.68x; inventory increases and an increase in intangible assets due to acquisitions (¥81.6B → ¥178.2B) restrained asset efficiency. CapEx/Depreciation ratio was 0.68x (CapEx ¥41.1B / Depreciation ¥60.1B), indicating restrained renewal investment and the need to assess pace of mid-term growth investment.
[Financial Soundness] Equity Ratio was 76.6%, D/E 0.31x, Debt/EBITDA 0.17x, and interest coverage approximately 56x—extremely strong. Interest-bearing debt balance was ¥35.6B versus cash and deposits of ¥493.1B, resulting in a net cash position.
Operating Cash Flow was ¥178.8B (YoY -15.1%). Starting from Profit Before Tax of ¥161.5B, adding back Depreciation of ¥60.1B, changes in working capital were -¥43.6B (Inventory -¥18.7B, improvement in trade receivables +¥9.8B, increase in trade payables +¥8.0B, employee benefits +¥11.6B), and corporate tax payments were -¥50.5B. Investing Cash Flow was -¥146.8B, with subsidiary acquisitions of -¥98.5B as the largest outflow, followed by capital expenditure -¥41.1B and intangible asset acquisitions -¥11.6B. Proceeds from sale of fixed assets of ¥5.7B partly offset this. Financing Cash Flow was -¥64.0B, primarily dividend payments of -¥51.4B and share buybacks of -¥13.4B; this was offset by a prior-year deposit liability release of +¥13.4B, and lease liability repayments of -¥12.6B. After foreign exchange effects of +¥24.2B, cash decreased by ¥7.8B to end the period at ¥493.1B. Free Cash Flow of ¥32.0B was insufficient to cover total dividends and buybacks of ¥64.8B, leaving Free Cash Flow coverage at 0.49x, but the strong balance sheet supports sustainability of shareholder returns.
Operating Income of ¥148.3B was mainly generated from recurring business activities. The increase in financial income to ¥15.6B (prior ¥7.6B) resulted from natural growth in interest/dividend income and improved returns on foreign-currency deposits, and is sustainable. Gain on sale of fixed assets of ¥5.7B was a one-off but limited (3.8% of operating income) and did not materially distort core profitability. The difference between Comprehensive Income ¥148.4B and Net Income ¥116.8B (¥31.6B) was mainly due to foreign currency translation gains of +¥42.4B and other OCI items (e.g., remeasurement of defined benefit plans -¥13.6B). The relationship between OCF and Net Income is sound. OCF of ¥178.8B, despite working capital increase of -¥43.6B, was 1.20x Operating Income, and the cash realization delay was due to temporary inventory build-up without materially damaging earnings quality. The accrual (Net Income ¥116.8B – OCF ¥178.8B ≒ -¥62.0B) is negative, indicating cash collection lagging profit recognition, but overall confirms a high-quality earnings structure.
Full-year guidance projects Revenue ¥1,400.0B (vs. actual +19.2%), Operating Income ¥200.0B (+34.8%), and Net Income ¥150.0B (+28.4%), assuming demand recovery and project digestion in H2. Compared with H1 actuals (¥1,174.6B, ¥148.3B, ¥116.8B), H2 requires incremental increases of Revenue ¥225.4B, Operating Income ¥51.7B, and Net Income ¥33.2B; progress ratios are 83.9% for Revenue, 74.1% for Operating Income, and 77.9% for Net Income, indicating a H2-weighted assumption. Against a full-year operating margin target of 14.3%, H1 actual was 12.6%, implying an expected H2 margin of approximately 16.1%. EPS forecast is ¥117.19 with H1 actual ¥91.20 (progress 77.8%). Dividend forecast is ¥25 (ordinary dividend only); H1 actuals included ¥50 (including special dividend), reflecting adjustments to the year-end dividend.
Dividends totaled interim ¥20 and year-end ¥30 (including ¥4 commemorative), aggregate ¥50, yielding a payout ratio of 56.8% (based on EPS ¥91.20). Total dividend amount was ¥51.4B, returning 44.0% of Net Income ¥116.8B. Share repurchases amounted to ¥13.4B, resulting in a Total Return Ratio of 55.5% (total return ¥64.8B / Net Income ¥116.8B). Dividend coverage by Free Cash Flow was 0.62x and total return coverage was 0.49x, indicating shortfalls, but cash and deposits of ¥493.1B and a strong balance sheet support sustainability. Next fiscal year dividend is forecast at ¥25, reverting to a baseline after the commemorative dividend, and policy remains consistent with targeting payout ratios in the high-50% range.
Inventory buildup and working capital efficiency risk: Inventory rose to ¥262.8B (+17.2%), lengthening DIO to 167 days. Although the buildup was based on demand forecasts, shorter product life cycles and demand volatility present impairment risk. DSO at 91 days is long, and delayed improvement of CCC at 205 days could slow cash generation. The working capital increase of -¥43.6B pressured OCF, making normalization of inventory and receivables management urgent.
Concentration in core segment and demand volatility risk: Communications Measurement accounts for 58.6% of revenue, making the company sensitive to demand swings in specific markets/customers. Slowing in Asia led to revenue decline in this segment, and scope for geographic/customer diversification is limited. Timing of large projects and delays in 5G/6G-related investment cycles could amplify performance volatility.
Increase in intangible assets and integration risk: Goodwill and intangible assets doubled to ¥178.2B following subsidiary acquisitions of ¥98.5B. If integration or synergy realization is delayed, impairment risk may materialize. The ratio to total assets is about 10% and within tolerable range, but simultaneous integration of multiple deals carries execution risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 9.1% | 6.3% (3.2%–9.9%) | +2.8pt |
| Operating Margin | 12.6% | 7.8% (4.6%–12.3%) | +4.9pt |
| Net Margin | 9.9% | 5.2% (2.3%–8.2%) | +4.8pt |
The company's profitability substantially exceeds the manufacturing-sector median, with ROE and operating margin in the upper quartile.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.0% | 3.7% (-0.4%–9.3%) | +0.3pt |
Growth is in line with the industry median, maintaining an industry-standard expansion pace.
※ Source: Company compilation
Mix improvement and cost efficiency boosted operating margin to 12.6% (YoY +1.9pt), enabling high profitability despite revenue decline in the core Communications Measurement business. Key watch points are the feasibility of achieving the assumed H2 operating margin of 16.1% and the pace of margin recovery in Environmental Measurement. Continued revenue growth in PQA and maintained profitability in Communications Measurement will determine sustainability of companywide margins.
A strong balance sheet (Equity Ratio 76.6%, net cash ¥45,75?B) provides capacity for growth investment and shareholder returns, but Free Cash Flow coverage of dividends at 0.62x remains insufficient. Subsidiary acquisitions of ¥98.5B and inventory increase of -¥18.7B accelerated cash outflows; focus will be on early realization of integration benefits and inventory compression to normalize FCF generation. Monitoring is required on whether restrained CapEx (CapEx/Depreciation 0.68x) is appropriate for medium-term renewal and growth.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.