| Indicator | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥172.6B | ¥167.9B | +2.8% |
| Operating Income / Operating Profit | ¥11.6B | ¥16.6B | -30.4% |
| Ordinary Income | ¥16.8B | ¥21.3B | -20.8% |
| Net Income / Net Profit | ¥13.8B | ¥25.1B | -45.0% |
| ROE | 4.7% | 8.9% | - |
For the full year ended March 2026, revenue was ¥172.6B (YoY +¥4.7B +2.8%), achieving top-line growth, but operating income declined substantially to ¥11.6B (YoY -¥5.0B -30.4%), ordinary income to ¥16.8B (YoY -¥4.4B -20.8%), and net income attributable to parent company shareholders to ¥12.7B (YoY -¥7.4B -36.6%). Gross margin was 29.3% (down -2.4pt from 31.7% a year earlier) and operating margin was 6.7% (down -3.2pt from 9.9%), indicating material deterioration in profitability. Non-operating items included foreign exchange gains of ¥2.6B and dividend income of ¥1.2B, totaling ¥5.9B, which supported the ordinary profit level. A gain on sale of investment securities of ¥6.7B was recorded as an extraordinary gain, but a high effective tax rate of 37.9% pressured net income. Operating Cash Flow (OCF) was strong at ¥19.3B (YoY +¥1.2B +6.6%), but large capital expenditure of ¥32.4B led to investing CF of -¥23.7B and free cash flow of -¥4.3B, turning negative.
[Revenue] Revenue was ¥172.6B (YoY +2.8%), securing growth. The Electronic Components segment recorded ¥167.1B (+3.2%), with strong sales of its core front operation blocks, resistors, and sensors. By region, Japan was ¥76.7B (external sales basis, YoY +9.5%) and remained solid domestically; Asia was ¥87.8B (-1.9%) with a slight decline; North America was ¥2.6B (+8.4%) with modest growth. Other segments (machinery and equipment sales, etc.) were ¥5.5B (-9.0%). Including intercompany transactions by region, total Electronic Components sales by location were Japan ¥140.3B, Asia ¥145.6B, North America ¥2.6B, reflecting active inter-site transactions. Cost of sales was ¥122.0B (cost ratio 70.7%), producing a gross margin of 29.3%, down 2.4pt from 31.7% a year earlier, highlighting deteriorating profitability.
[Profitability] Operating income was ¥11.6B (YoY -30.4%), a substantial decline. Gross profit decreased to ¥50.6B (-5.7%) while SG&A rose to ¥39.0B (YoY +6.4%). Major increases in SG&A were R&D expenses of ¥6.1B (YoY +¥0.9B, 3.5% of sales) and logistics costs of ¥3.1B (+¥0.2B), lifting the SG&A ratio to 22.6% (up +0.8pt from 21.8%). Depreciation was ¥7.9B (of which ¥1.3B is included in SG&A), roughly flat year-on-year, and retirement benefit expense improved to -¥0.5B (prior year -¥0.8B). In non-operating items, foreign exchange gains of ¥2.6B, dividend income of ¥1.2B, and interest income of ¥1.2B amounted to non-operating income of ¥5.9B (prior year ¥5.3B); after subtracting non-operating expenses of ¥0.6B (including interest expense of ¥0.1B), ordinary income was ¥16.8B (YoY -20.8%). In extraordinary items, a gain on sale of investment securities of ¥6.7B was recorded, while extraordinary losses including impairment losses of ¥0.1B totaled ¥2.1B, producing profit before income taxes of ¥21.4B (YoY -10.6%). After income taxes of ¥8.1B (effective tax rate 37.9%) and deduction of net income attributable to non-controlling interests of ¥0.5B, net income attributable to parent company shareholders was ¥12.7B (YoY -36.6%), a marked reduction. In summary, the company reported higher revenue but lower profits.
The Electronic Components segment posted revenue of ¥167.1B (YoY +3.2%), operating income of ¥10.5B (YoY -31.8%), and margin of 6.3% (down -3.2pt from 9.5%), with the decline in profit outpacing revenue growth. By region, Japan’s external sales were ¥76.7B (YoY +9.5%) and performed well, but regional profit turned to a loss of -¥0.6B (prior year ¥3.7B profit), showing substantial deterioration in profitability. Asia had external sales of ¥87.8B (YoY -1.9%) and regional profit of ¥10.4B (YoY -12.2%), showing declines but maintaining margins. North America had external sales of ¥2.6B (YoY +8.4%) and regional profit of ¥0.1B (YoY -16.3%), small-scale with revenue up but profit down. Other segments (machinery and equipment sales, etc.) recorded revenue of ¥5.5B (YoY -9.0%), operating income of ¥1.2B (YoY +2.7%), and margin of 21.3% (prior year 20.7%), maintaining high profitability. The deterioration in Electronic Components profitability is mainly attributable to rising cost ratios and higher fixed costs at Japanese sites, making production efficiency improvement a key issue.
[Profitability] Operating margin 6.7% (prior year 9.9%), net profit margin 7.4% (prior year 12.0%) indicate weaker profitability. ROE was 4.7% (prior year 7.4%), reflecting lower capital efficiency. Gross margin 29.3% (prior year 31.7%), SG&A ratio 22.6% (prior year 21.8%) indicate a worsened cost structure. [Cash Quality] OCF / Net Income was 1.52x, showing solid cash generation, and OCF / EBITDA was 0.99x, a high level. Days Sales Outstanding (DSO) 61 days, Days Inventory Outstanding (DIO) 109 days, Days Payables Outstanding (DPO) 34 days produce a CCC of 136 days, indicating room to improve working capital efficiency. [Investment Efficiency] Total asset turnover was 0.50x, similar to last year; capital expenditure was ¥32.4B (Capex / Sales 18.8%), indicating a phase of large-scale investment. Capex / Depreciation was 4.09x, reflecting aggressive capacity expansion, and construction in progress of ¥28.6B (40.1% of tangible fixed assets) indicates a significant portion of non-operational invested assets. [Financial Soundness] Equity Ratio was 84.4% (prior year 84.9%), current ratio 739%, quick ratio 671%, demonstrating extremely strong liquidity. Debt / EBITDA was 0.02x and interest coverage was 113x, indicating no concern over debt-servicing ability. Cash and deposits were ¥112.3B, 224 times short-term borrowings of ¥0.5B, indicating effectively debt-free operations.
OCF was ¥19.3B (YoY +6.6%); from OCF subtotal of ¥21.0B, changes in working capital such as inventory increase of -¥2.0B and decrease in accounts payable of -¥0.3B were negative contributors, while a decrease in accounts receivable of +¥7.9B was a positive contributor; after income taxes paid of -¥4.4B, OCF totaled ¥19.3B. Investing CF was -¥23.7B, mainly due to large capital expenditure of -¥32.4B, partially offset by proceeds from sale of investment securities +¥7.3B and decrease in time deposits +¥1.5B. Financing CF was -¥16.2B, with dividend payments -¥9.5B (including dividends to non-controlling interests -¥1.1B) and share buybacks -¥5.0B as the primary outflows. As a result, free cash flow (OCF + Investing CF) was -¥4.3B, turning negative, and cash and cash equivalents decreased to ¥91.6B (opening balance ¥110.6B). Interest and dividends received totaled ¥2.4B and interest paid -¥0.1B, yielding positive financial income; foreign exchange effect +¥1.5B also contributed to cash increases. Due to large capital investment and high dividends/share buybacks, internal funds alone were insufficient to meet near-term funding needs, making transition to an investment recovery phase important.
Of ordinary income of ¥16.8B, operating income of ¥11.6B represents core business earnings, while non-operating income of ¥5.9B (including foreign exchange gains ¥2.6B, dividend income ¥1.2B, and interest income ¥1.2B) underpinned profits, resulting in a high non-operating dependency of 35.1%. Foreign exchange gains and dividend/interest from investment securities are temporary and externally driven, and thus not a sustainable earnings base. Extraordinary gain of ¥6.7B (gain on sale of investment securities) is clearly one-off, accounting for 31.3% of profit before income taxes of ¥21.4B. Comprehensive income was ¥24.4B, ¥10.6B higher than net income of ¥13.8B, with other comprehensive income including foreign currency translation adjustments ¥3.9B, adjustments related to retirement benefits ¥6.8B, and valuation differences on available-for-sale securities ¥0.4B. OCF / Net Income ratio of 1.52x shows good cash backing, but high dependence on non-operating and extraordinary items indicates the need to strengthen core business profitability.
Full-year guidance targets revenue ¥180.0B (vs. this period +4.3%), operating income ¥15.0B (vs. this period +29.5%), ordinary income ¥16.0B (vs. this period -5.0%), and net income attributable to parent company shareholders ¥14.0B (vs. this period +10.2%). Operating margin is expected to improve to 8.3%, assuming SG&A containment and production efficiency gains from commissioning large capital investments. Revenue progress rate is 95.9% (172.6/180.0) and generally on track, but operating income progress rate is 77.3% (11.6/15.0), somewhat behind plan, implying that profitability improvements in H2 are required. The ordinary income forecast of ¥16.0B is below this period’s ¥16.8B, factoring in a decline in non-operating income. EPS is forecast at ¥151.62 and the dividend forecast is ¥60 (payout ratio 39.6%), reverting from the commemorative dividend-including ¥100 this period to a normal level. Achieving targets will require yield improvement from new equipment start-ups, absorption of fixed costs, and improved working capital efficiency via better inventory and receivables turnover.
Annual dividend this period was ¥100 (Q2-end ¥50, year-end ¥50, with commemorative dividend of ¥15 included in each interim and year-end ordinary dividend of ¥35), resulting in a payout ratio of 77.0% (total dividends ¥9.5B / net income ¥12.7B after deducting non-controlling interests) at a high level. Excluding the commemorative dividend, ordinary dividend base equates to ¥70, implying a payout ratio of approximately 54%. Share buybacks of ¥5.0B were executed, and combined with dividends total shareholder returns amounted to ¥14.5B, with a Total Return Ratio of 114.2% (¥14.5B / net income ¥12.7B), exceeding 100%. The Total Return Ratio exceeding 100% while free cash flow is negative (¥-4.3B) raises some sustainability concerns, though this was funded from a substantial cash balance of ¥112.3B. Next period dividend forecast is ¥60 (payout ratio 39.6%), reverting to the normal level excluding the commemorative dividend, aiming to normalize total returns. Medium- to long-term dividend sustainability depends on achieving FCF profitability through operation of large investments and improved working capital efficiency.
Profitability deterioration risk: With gross margin 29.3% (YoY -2.4pt) and operating margin 6.7% (YoY -3.2pt), profitability has significantly worsened. If cost control and SG&A restraint are not achieved, there is risk of further declines in operating margin. The Japanese site of the Electronic Components segment has turned regionally loss-making, making production efficiency improvements urgent.
Recovery risk of large capital expenditures: Tangible fixed assets increased to ¥71.2B (YoY +55.5%), and construction in progress of ¥28.6B (40.1% of PPE) indicates a high ratio of non-operational invested assets. Capex of ¥32.4B (Capex / Sales 18.8%, Capex / Depreciation 4.09x) is large relative to revenue and profit scale; delays in ramp-up or lower utilization could increase fixed cost burden or trigger impairment risks.
Working capital efficiency and cash outflow risk: CCC 136 days (DSO 61 days, DIO 109 days, DPO 34 days) shows room to improve inventory turnover; inventory build-up or delays in receivables collection could strain OCF. This period implemented dividends and share buybacks while Total Return Ratio was 114.2% and free cash flow was negative; prolonged delays in investment recovery could impact liquidity.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.7% | 7.8% (4.6%–12.3%) | -1.0pt |
| Net Profit Margin | 8.0% | 5.2% (2.3%–8.2%) | +2.8pt |
Operating margin is 1.0pt below the industry median, placing profitability below median within the industry, while net profit margin is 2.8pt above the median due to contributions from non-operating and extraordinary items.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.8% | 3.7% (-0.4%–9.3%) | -0.9pt |
Revenue growth rate is 0.9pt below the industry median, suggesting slightly slower growth within the industry.
※Source: Company aggregation
Recovery in profitability driven by commissioning of large capital investments: As construction in progress of ¥28.6B (40.1% of tangible fixed assets) becomes operational, improvements in gross margin and fixed cost absorption could restore operating margin toward the next-period forecast of 8.3% (YoY +1.6pt). Capex has increased for three consecutive periods (Capex / Depreciation 4.09x), indicating a turning point in the investment cycle. Progress in start-up and degree of yield improvement will be key catalysts for future equity valuation.
Significant potential to improve working capital efficiency, key to FCF profitability: CCC 136 days (inventory days 109) indicates room to improve inventory efficiency; inventory reductions and faster receivables turnover would expand OCF and potentially return FCF to positive. Although FCF was -¥4.3B this period, OCF of ¥19.3B is 1.52x net income, showing solid cash generation and expectation for improved cash creation after the investment peak passes.
Strong financial base and normalization of dividends: Equity Ratio 84.4%, cash ¥112.3B, Debt / EBITDA 0.02x demonstrate very high financial safety, providing resilience to short-term external shocks or delays in investment recovery. Next period dividend forecast of ¥60 (payout ratio 39.6%) represents a return to the normal level excluding the commemorative dividend, indicating a shift toward sustainable return policy. Reducing dependence on non-operating and extraordinary income and improving core business profitability will underpin medium-term ROE improvement (current 4.7%) and shareholder value enhancement.
This report is an automatically generated financial analysis document produced by AI that analyzed XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by our firm based on publicly available financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.