| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1235.6B | ¥1140.5B | +8.3% |
| Operating Income / Operating Profit | ¥52.9B | ¥52.0B | +1.8% |
| Ordinary Income | ¥48.8B | ¥50.6B | -3.6% |
| Net Income / Net Profit | ¥-11.3B | ¥-2.1B | -423.7% |
| ROE | -1.8% | -0.3% | - |
The fiscal year ended March 2026 results recorded Revenue ¥1235.6B (YoY +¥95.1B +8.3%), Operating Income ¥52.9B (YoY +¥0.9B +1.8%), Ordinary Income ¥48.8B (YoY -¥1.8B -3.6%), and a Net Loss attributable to owners of the parent of ¥11.3B (widening from a ¥2.1B net loss in the prior year). While top-line growth and slight operating income increase were observed, a Special Loss of ¥36.6B and tax burden with an effective tax rate exceeding 206% caused the final loss to widen, resulting in a significant deterioration of -423.7% YoY. At the operating stage, Gross Margin was 24.9% (prior year 26.6%), which appears to have declined, but SG&A ratio improved to 20.7% (prior year 22.0%), limiting the decline in Operating Margin to 4.3% (prior year 4.6%), a 0.3pt decrease. At the ordinary stage, interest expense of ¥9.6B and a decline in equity-method investment income (¥1.3B, prior year ¥5.1B) pressured results, bringing Ordinary Income margin to 3.9% (prior year 4.4%), a 0.5pt deterioration.
[Revenue] Revenue was ¥1235.6B (+8.3%), marking the third consecutive year of revenue growth. By segment, Electronic Chemical Assembly Related led with ¥399.2B (+15.5%) driving double-digit growth, and Electronic Components Related grew steadily to ¥815.5B (+6.2%). Information Equipment Related declined sharply to ¥21.4B (-25.4%), weighing on the aggregate. By region, Japan was ¥343.1B (-6.2%) showing domestic slowdown, while China ¥250.1B (+6.1%), Other Asia ¥302.7B (+22.3%), Europe ¥151.1B (+12.2%), and the U.S. ¥185.0B (+20.0%) all supported growth overseas. Revenue mix was Electronic Components Related 66.0%, Electronic Chemical Assembly Related 32.3%, Information Equipment 1.7%, and the higher contribution from the high‑margin Electronic Chemical Assembly Related improved the mix.
[Profitability] Cost of sales was ¥927.5B, representing a cost ratio of 75.1%, and Gross Profit was ¥308.1B, yielding a Gross Margin of 24.9%. Gross Margin declined 1.7pt from 26.6% in the prior year due to changes in cost structure and product mix. SG&A was ¥255.2B (SG&A ratio 20.7%), an increase of 1.6% from ¥251.2B a year earlier, and management restrained SG&A growth relative to Revenue growth of +8.3%, securing Operating Income of ¥52.9B (+1.8%). Operating margin was 4.3%, down 0.3pt from 4.6% prior year, but core earnings remained resilient. Non-operating items were weighed down by interest expense ¥9.6B (interest burden coefficient 0.25); interest income ¥1.6B and equity-method investment income ¥1.3B (prior year ¥5.1B) did not fully offset, resulting in non-operating deficit of ¥-4.1B. Consequently, Ordinary Income was ¥48.8B (-3.6%), Ordinary Income margin 3.9% (prior year 4.4%), representing a ¥0.4B reduction from the operating stage. Extraordinary items included a Special Loss of ¥36.6B (including loss on liquidation of affiliates ¥11.5B, loss on retirement/disposal of fixed assets ¥1.2B, impairment loss ¥0.3B), compressing Profit Before Tax to ¥13.3B. Income taxes of ¥27.4B (effective tax rate approx. 206%) exceeded pre-tax profit, resulting in a Net Loss attributable to owners of the parent of ¥11.3B (prior year net loss ¥2.1B). In summary, revenue growth and slight operating income increase were offset by non-operating expenses and one-off special losses plus high tax burden, leading to an expanded final loss.
Electronic Components Related segment recorded Revenue ¥815.5B (+6.2%), Operating Income ¥33.0B (+1.0%), margin 4.1%, and continued stable growth as the core segment. The steady margin was constrained by SG&A allocations and product mix changes. Electronic Chemical Assembly Related segment achieved Revenue ¥399.2B (+15.5%), Operating Income ¥33.3B (+8.8%), margin 8.4%, achieving double-digit growth in both revenue and profit and maintaining high margins to drive group earnings. Information Equipment Related recorded Revenue ¥21.4B (-25.4%), Operating Loss ¥5.7B (widening from an operating loss of ¥1.8B in the prior year, -212.7%), margin -26.5%, and remains structurally loss-making. Headquarters and other adjustments were -¥7.8B (prior year -¥9.6B), primarily R&D for future development and core system renewal costs. Of the company-wide Operating Income ¥52.9B, both Electronic Chemical Assembly Related and Electronic Components Related each contributed roughly ¥33B, offsetting the Information Equipment Related loss and headquarters costs.
[Profitability] Operating margin 4.3% declined 0.3pt from 4.6% prior year and is 3.5pt below the industry median 7.8%, indicating significant room for improvement. Net margin -0.9% was far below the industry median 5.2% due to one-off special losses and high tax burden. Gross Margin 24.9% fell from 26.6% prior year, but improvement in SG&A ratio to 20.7% limited the decline at the operating level. ROE -1.8% (prior year 4.6%) reflects the current period loss; DuPont decomposition is explained by Net Margin -1.1% × Total Asset Turnover 0.933 × Financial Leverage 2.10x. ROA (on Ordinary Income basis) 3.8% declined from 4.2% prior year.
[Cash Quality] Operating Cash Flow (OCF) ¥28.5B was positive but down -68.6% from ¥90.8B prior year, and OCF/Net Income was -2.53x due to the net loss. OCF/EBITDA ratio 0.29x is low and deterioration in working capital (A/R increase -¥36.1B, inventories increase -¥6.9B) hindered cash conversion. Free Cash Flow was -¥19.5B (OCF ¥28.5B - Investing Cash Flow ¥48.0B), turning negative from ¥51.8B prior year, mainly driven by increased capital expenditure ¥54.7B (CapEx/Revenue 4.4%, CapEx/Depreciation 1.24x).
[Investment Efficiency] ROIC 3.7% is below the cost of capital, indicating capital efficiency issues. Total Asset Turnover 0.933x slightly improved from 0.917x prior year, but Inventory Days 102 days (DIO), Receivable Days 89 days (DSO), and Cash Conversion Cycle 137 days have lengthened, making working capital efficiency improvement urgent.
[Financial Soundness] Equity Ratio 47.5% (prior year 51.3%) remains at a stable level, but Debt/Capital ratio 30.9%, Total Interest-Bearing Debt ¥281.2B (Debt/EBITDA 2.90x) present a moderate debt burden. Short-term debt ratio 67.9% shows maturity concentration; cash ¥189.5B versus short-term borrowings ¥190.8B yields Cash/Short-term Debt 0.99x, leaving refinancing resilience somewhat vulnerable. Interest coverage is 5.51x on an EBIT basis and 10.10x on an EBITDA basis, indicating interest payment ability is secured, yet the interest burden coefficient 0.25 and interest expense continue to pressure profits.
OCF was ¥28.5B (prior year ¥90.8B, -68.6%), a significant decline. The subtotal OCF before tax adjustments was ¥56.7B, but actual cash was compressed by working capital deterioration. Major contributors were increase in trade receivables -¥36.1B (DSO extension) and inventories -¥6.9B (DIO extension); increase in trade payables +¥15.1B did not fully offset, producing roughly ¥28B of net cash outflow in working capital. Corporate tax payments -¥22.9B and interest payments -¥9.4B also drained cash. Investing Cash Flow was -¥48.0B (prior year -¥39.0B), driven by capital expenditure -¥54.7B. Tangible fixed asset acquisition -¥54.7B was at a level exceeding depreciation (CapEx/Depreciation 1.24x), reflecting capacity expansion investments mainly for Electronic Chemical Assembly Related. Proceeds from sale of fixed assets ¥2.1B and proceeds from business transfer ¥4.9B partially offset, but overall Investing Cash Flow was a cash outflow of -¥48.0B. Financing Cash Flow was +¥3.2B, secured by long-term borrowings ¥75.1B and an increase in short-term borrowings ¥18.2B, while repayments of long-term borrowings -¥53.1B, dividend payments -¥10.7B, share buybacks -¥11.8B, and lease liability repayments -¥15.0B were executed. Free Cash Flow was -¥19.5B, and dividend payments ¥10.7B plus share buybacks ¥11.8B total return ¥22.5B could not be covered by FCF, resulting in reliance on external funding and drawing down cash balances. Cash and Cash Equivalents at period-end declined to ¥180.9B (prior year ¥194.8B, -¥13.9B), net of foreign exchange impact +¥2.5B, cash decreased on net.
Recurring earnings are aligned with Operating Income ¥52.9B, consistent with segment profit total ¥60.7B minus headquarters adjustments -¥7.8B, indicating stable core earnings. A one-off Special Loss ¥36.6B was recorded, comprised of loss on liquidation of affiliates ¥11.5B, loss on retirement/disposal of fixed assets ¥1.2B, and impairment loss ¥0.3B. Non-operating income ¥9.5B (interest income ¥1.6B, dividend income ¥1.1B, equity-method investment income ¥1.3B, other ¥2.3B) is 0.8% of Revenue and shows low dependence, while non-operating expenses ¥13.6B (interest expense ¥9.6B, foreign exchange losses ¥0.8B, other ¥3.2B) pressured earnings. The ¥60.1B gap between Ordinary Income ¥48.8B and Net Loss ¥11.3B is driven by Special Loss ¥36.6B and Income Taxes ¥27.4B (effective tax rate approx. 206%), and the change from operating profit to Net Income exceeds -128%, showing significant impact from one-off shocks. Accrual ratio ((Net Income - OCF)/Total Assets) is approximately -3.0%, neutral to favorable, but OCF/EBITDA ratio 0.29x and weak cash conversion are primary concerns for earnings quality. Comprehensive Income was ¥10.9B, with valuation difference on available-for-sale securities +¥8.4B, foreign currency translation adjustments +¥15.7B, retirement benefit adjustments +¥8.1B contributing positively, and share of other comprehensive income of equity-method affiliates -¥7.3B contributing negatively. The ¥22.2B difference between Net Loss -¥11.3B and Comprehensive Income ¥10.9B stems from OCI movements, where improvements in FX and securities valuation complemented the P&L.
For FY2027 ending March 2027, the company forecasts Revenue ¥1300.0B (YoY +5.2%), Operating Income ¥56.0B (+5.9%), Ordinary Income ¥49.0B (+0.4%), and Net Income attributable to owners of the parent ¥45.0B (turning profitable from prior year loss ¥-11.3B). Operating margin is expected at 4.3%, similar to the prior year, and no material improvement in core earnings power is embedded. The return to Net Profit is premised on the absence of prior-year Special Loss ¥36.6B and the decline of the high tax burden (effective tax rate 206%), representing a normalization scenario and conservative planning. Forecast EPS 56.55 yen and dividend forecast 8.0 yen imply a Payout Ratio of approximately 14.1%, set at a low level. As of December 2025 year-to-date progress, Revenue is 95.1% (¥1235.6B/¥1300.0B) of the forecast and Operating Income progress is 94.4% (¥52.9B/¥56.0B), indicating high probability of achievement. However, normalization of working capital (improvements in DSO and DIO) and reduction of the Information Equipment Related loss are preconditions. Without continued double-digit growth in Electronic Chemical Assembly Related and a reduction in interest burden, upside at the ordinary level is limited.
Dividends were set at an annual ¥13 (interim ¥5, year-end ¥8), a substantial increase from the prior year year-end dividend of ¥5. Despite a Net Loss attributable to owners of the parent of ¥11.3B, total dividends of ¥10.7B were paid, making the payout ratio incalculable (loss), and sustainability on a profits basis is weak. Free Cash Flow was -¥19.5B, yielding dividend coverage by FCF of approximately -1.8x, indicating insufficiency, and dividends were supported by cash balances and borrowings. Share buybacks of ¥11.8B were executed; together with dividends ¥10.7B, total shareholder return was ¥22.5B, and Total Return Ratio is incalculable (loss). Total return depended on external funding and opening cash, so short-term sustainability is low. For FY2027, dividend forecast is ¥8.0, and with forecast Net Income ¥45.0B the payout ratio is approx. 14.1%, set at a low level; assuming profit normalization, sustainability should improve, but normalization of working capital and FCF positivity are required. Dividend policy may be flexibly revised depending on profit and cash recovery.
Working capital efficiency deterioration risk: With DSO 89 days, DIO 102 days, CCC 137 days, receivable and inventory days have extended and OCF/EBITDA ratio 0.29x shows weak cash conversion. Working capital growth has preceded revenue growth, and inventory backlog and loosening of credit management have become evident. Continued delays in working capital normalization would reduce cash-generation capacity and liquidity, constraining investment and return flexibility and undermining the feasibility of growth strategies.
Interest burden and short-term debt concentration risk: Of Total Interest-Bearing Debt ¥281.2B, short-term debt ratio 67.9% indicates maturity concentration; with short-term borrowings ¥190.8B vs. cash ¥189.5B, Cash/Short-term Debt 0.99x leaves refinancing resilience somewhat weak. Interest expense ¥9.6B (interest burden coefficient 0.25) is pressuring earnings, and in a rising interest rate environment interest payments would increase, raising downside risk to Net Income given the low mid-4% operating margin.
Structural losses in Information Equipment Related business and recurrence risk of special losses: Information Equipment Related recorded Revenue ¥21.4B (-25.4%), Operating Loss ¥5.7B (margin -26.5%) with widening losses and no structural improvement. This fiscal year final loss widened due to Special Loss ¥36.6B (including loss on liquidation of affiliates ¥11.5B) and high tax burden (effective tax rate 206%). There is risk that one-off costs from restructuring or subsidiary disposals may recur. Delays in downsizing or withdrawing from Information Equipment Related and associated additional losses could weigh on consolidated earnings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.3% | 7.8% (4.6%–12.3%) | -3.5pt |
| Net Margin | -0.9% | 5.2% (2.3%–8.2%) | -6.1pt |
Operating margin is 3.5pt below the industry median and net margin is 6.1pt below due to one-off losses. Profitability ranks in the lower peer group with substantial room for improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.3% | 3.7% (-0.4%–9.3%) | +4.6pt |
Revenue growth outperformed the industry median by 4.6pt, placing top-line expansion among the upper peers.
※ Source: Company compilation
High‑margin growth in Electronic Chemical Assembly Related (Revenue +15.5%, Operating Margin 8.4%) and stable contribution from Electronic Components Related support a solid operating earnings base. Although Operating Margin trails the industry median by 3.5pt, continued improvement in SG&A ratio (20.7%) and further increase in the share of high‑margin segments could put recovery to the 5% range within reach medium term. If working capital efficiency normalizes (shortening DSO and DIO) and Information Equipment Related losses shrink, gradual ROIC improvement and FCF positivity could restore return capacity.
This fiscal year’s final loss was due to one-off Special Loss ¥36.6B and effective tax rate 206%, but FY2027 guidance assumes normalization with Revenue ¥1300B (+5.2%), Operating Income ¥56B (+5.9%), and Net Income ¥45B (turning profitable). Dividend forecast ¥8.0 (Payout Ratio 14%) is conservative, leaving room for returns upon recovery of profits and cash. However, short-term debt ratio 67.9% and Cash/Short-term Debt 0.99x indicate refinancing resilience is somewhat weak, and with an interest burden coefficient 0.25 continuing to pressure earnings, improvement in working capital efficiency and FCF positivity are necessary conditions for sustainable growth and expanded returns.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions should be made at your own responsibility and, where necessary, after consulting a professional advisor.