| Indicator | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1235.6B | ¥1140.5B | +8.3% |
| Operating Income | ¥52.9B | ¥52.0B | +1.8% |
| Ordinary Income | ¥48.8B | ¥50.6B | -3.6% |
| Net Income | ¥-11.3B | ¥-2.1B | -423.7% |
| ROE | -1.8% | -0.3% | - |
For the fiscal year ended March 2026 (FY2026 Full Year), the Company achieved revenue of ¥1235.6B (YoY +¥95.1B, +8.3%) while Operating Income was ¥52.9B (YoY +¥0.9B, +1.8%), Ordinary Income was ¥48.8B (YoY -¥1.8B, -3.6%), and Net Income attributable to owners of the parent turned into a significant loss of ¥-11.3B (YoY -¥13.8B, -423.7%). The Electronic Chemical Packaging-related business drove growth with Sales +15.5% and Operating Income +8.8%, whereas the Information Equipment-related business recorded Sales -25.4% and an expanded operating loss of ¥5.7B. Extraordinary losses of ¥36.6B (including ¥11.5B loss on liquidation of subsidiaries) and an abnormal tax burden with an effective tax rate of 206% were the primary causes of the net loss. Gross margin deteriorated to 24.9% (from 26.6%, -1.7pt), operating margin to 4.3% (from 4.6%, -0.3pt), and net margin to -0.9% (from +2.4%), indicating deteriorated profitability at all stages. Free Cash Flow was ¥-19.5B; Operating Cash Flow (OCF) was ¥33.2B (YoY -63.4%) while Investing Cash Flow was ¥-52.7B (Capital Expenditure ¥54.7B) which exceeded OCF. By region, domestic Japan sales slightly declined while China +6.1%, Other Asia +22.3%, Europe +12.2%, and the United States +20.0% showed that external demand drove sales growth.
[Revenue] Revenue of ¥1235.6B (+8.3%) was led by Electronic Chemical Packaging-related business achieving ¥399.2B (+15.5%), delivering double-digit growth and driving the company top line. Electronic Components-related business expanded steadily to ¥815.5B (+6.2%), but Information Equipment-related business declined sharply to ¥21.4B (-25.4%). Sales composition was Electronic Components 66.0%, Electronic Chemical Packaging 32.3%, Information Equipment 1.7%, indicating high concentration in Electronic Components. By region, Japan ¥343.1B (-6.2%) was the only declining market 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 grew, confirming rising share of external demand.
[Profit & Loss] Cost of sales was ¥927.5B (75.1% of sales), securing gross profit of ¥308.1B, but gross margin of 24.9% worsened from 26.6% (-1.7pt). SG&A was ¥255.2B (20.7% of sales), up only 1.6% YoY and thus underperforming revenue growth, allowing some fixed cost absorption, but the decline in gross margin outweighed this, leaving Operating Income at ¥52.9B (4.3% of sales) with only a slight increase. Non-operating income totaled ¥9.5B (including interest income ¥1.6B, dividend income ¥1.1B, equity-method investment income ¥1.3B), while non-operating expenses totaled ¥13.6B (including interest expenses ¥9.6B, foreign exchange losses ¥0.8B), resulting in Ordinary Income of ¥48.8B (3.9% of sales), down 3.6% YoY. Extraordinary items included Extraordinary Income ¥1.2B (gain on sale of fixed assets, etc.) versus Extraordinary Losses ¥36.6B (loss on liquidation of subsidiaries ¥11.5B, loss on disposal of fixed assets ¥1.2B, impairment loss ¥0.3B, etc.), compressing profit before tax to ¥13.3B. Furthermore, an abnormal tax burden of Corporate Taxes, etc. ¥27.4B (effective tax rate approx. 206%) turned final earnings into a loss of ¥-11.3B. In conclusion, despite higher sales, deterioration in gross margin, interest expense burden, extraordinary losses, and abnormal tax burden resulted in a large decline from revenue growth to substantial profit decline.
Electronic Components-related business reported Sales ¥815.5B (+6.2%) and Operating Income ¥33.0B (+1.0%), maintaining a margin of 4.1%. As the largest segment (66.0% of sales), it continues stable growth. Electronic Chemical Packaging-related business recorded Sales ¥399.2B (+15.5%) and Operating Income ¥33.3B (+8.8%) with a high margin of 8.4%, leading both sales growth and profitability for the company. Information Equipment-related business had Sales ¥21.4B (-25.4%) and an Operating Loss of ¥5.7B (worsened from ¥-0.5B the prior year), with a margin of -26.5%, significantly deteriorating and structurally pressuring overall margins. After company-level expenses of ¥7.8B, consolidated Operating Income was ¥52.9B. Electronic Chemical Packaging’s operating contribution reached ¥33.3B (63.0% of company), and Electronic Components ¥33.0B (62.4% of company), forming two pillars of profit, while eliminating the Information Equipment loss is key to improving profitability.
[Profitability] Operating margin was 4.3% (from 4.6%, -0.3pt), Net margin was -0.9% (from +2.4%, -3.3pt) indicating deterioration across profit stages. Gross margin deterioration to 24.9% (from 26.6%, -1.7pt) pressured operating stage, and interest expense ¥9.6B reduced profit at the ordinary stage. ROE was -1.8% (prior year 4.6%), primarily due to negative net margin. By segment, Electronic Chemical Packaging margin 8.4% substantially exceeded company average, while Information Equipment margin -26.5% dragged results. [Cash Quality] Operating Cash Flow ¥33.2B (from ¥90.8B, -63.4%) remained positive but working capital demands (Accounts receivable increase ¥25.1B, inventory increase ¥6.7B) significantly pressured cash. OCF/EBITDA ratio was 0.34x (EBITDA ¥96.8B = Operating Income ¥52.9B + Depreciation ¥44.0B, versus Operating CF ¥33.2B), showing a low cash conversion rate. [Investment Efficiency] Total asset turnover was 0.93x (from 0.92x) showing slight improvement, but ROA (on Ordinary Income basis) was 3.8% (from 4.2%) declining. CapEx was ¥54.7B, exceeding Depreciation ¥44.0B (CapEx/D&A ratio 1.24x), indicating continued growth investment. [Financial Soundness] Equity Ratio was 47.5% (from 51.3%, -3.8pt) declining but still at a sound level. Current ratio was 168.7%, Quick ratio 149.6%, indicating good short-term liquidity. Interest-bearing debt totaled ¥329.6B (Short-term borrowings ¥190.8B; Long-term borrowings including those due within one year ¥138.8B), with Debt/EBITDA multiple 3.40x and Interest Coverage (Operating Income / Interest Expense) 5.51x, showing interest burden is pressuring profits.
Operating Cash Flow was ¥33.2B (from ¥90.8B, -63.4%), reflecting profit before tax ¥13.3B before adjustments for non-cash expenses such as Depreciation ¥44.0B and changes in working capital. Working capital changes absorbed cash with Accounts receivable increase ¥25.1B and Inventory increase ¥6.7B, partially offset by Accounts payable increase ¥15.1B. Corporate tax payments ¥22.9B also weighed heavily, compressing the OCF from a subtotal of ¥61.3B. Investing Cash Flow was ¥-52.7B, primarily due to CapEx ¥54.7B. Proceeds from sale of tangible fixed assets generated ¥2.4B, and net change in time deposits had a ¥0.0B impact. Financing Cash Flow saw an inflow of ¥3.2B: long-term borrowings raised ¥75.1B and net increase in short-term borrowings ¥18.2B were offset by repayments of long-term borrowings ¥53.1B, lease liability repayments ¥15.0B, dividend payments ¥10.5B, and treasury stock acquisition ¥11.8B. Free Cash Flow was ¥-19.5B (Operating CF ¥33.2B - Investing CF ¥52.7B). As a result of dividends and treasury stock purchases, cash and cash equivalents decreased from ¥194.8B to ¥180.1B, a decline of ¥14.7B. Improving working capital efficiency and recovering Operating CF are urgent tasks.
Operating Income ¥52.9B and Ordinary Income ¥48.8B both reflect recurring earnings power of the core business, and non-operating income ¥9.5B (interest income ¥1.6B, dividend income ¥1.1B, equity-method investment income ¥1.3B, etc.) is limited at 0.8% of sales. However, interest expense ¥9.6B structurally suppresses Ordinary Income. Extraordinary items included Extraordinary Income ¥1.2B versus Extraordinary Losses ¥36.6B (loss on liquidation of subsidiaries ¥11.5B, loss on disposal of fixed assets ¥1.2B, etc.), meaning one-off factors substantially distorted net income. The abnormal tax burden—Corporate Taxes, etc. ¥27.4B on pre-tax profit ¥13.3B (effective tax rate approx. 206%)—is presumed to reflect write-downs of deferred tax assets and the effect of temporary differences, exceeding normal tax burden levels. The gap between Ordinary Income ¥48.8B and Net Loss ¥-11.3B is ¥60.1B, mostly attributable to extraordinary losses and abnormal tax burden. The divergence between Operating CF ¥33.2B and Net Loss ¥-11.3B (OCF / Net Income -2.94x) is driven by add-backs of non-cash expenses such as Depreciation ¥44.0B and changes in working capital, producing an accrual (Net Income - Operating CF) of ¥-44.5B. Comprehensive income of ¥10.9B (Foreign currency translation adjustments ¥15.7B, valuation difference on available-for-sale securities ¥8.4B, adjustments related to retirement benefits ¥8.1B, equity-method affiliates' OCI share ¥-7.3B) is ¥22.2B higher than Net Loss ¥-11.3B, indicating accumulated Other Comprehensive Income supports the quality of shareholders’ equity.
The Company plans for FY ending March 2027 Full Year Sales ¥1300.0B (+5.2%), Operating Income ¥56.0B (+5.9%), Ordinary Income ¥49.0B (+0.4%), Net Income attributable to owners of the parent ¥45.0B (turning to profit), EPS ¥56.55, and dividend ¥8.0 per share. Current period results (Sales ¥1235.6B, Operating Income ¥52.9B, Ordinary Income ¥48.8B) are near plan levels at the operating and ordinary stages, but Net Loss ¥-11.3B materially missed due to Extraordinary Losses ¥36.6B and abnormal tax burden. For the next fiscal year, assuming the removal of one-off items and normalization of tax burden, the Company anticipates a return to net profit and EPS recovery to ¥56.55. Operating Income progress is 52.9/56.0 = 94.5%, and improvement in gross margin and elimination of the Information Equipment business loss are keys to achieving plan. Revenue progress is 94.9%, underpinned by maintaining high profitability in Electronic Chemical Packaging and expanding external demand. Continued interest expense burden and the degree of working capital efficiency improvement pose downside risks to plan execution.
Dividends were paid as interim ¥5.0 and year-end ¥8.0, total ¥13.0 per share (prior year ¥5.0, +¥8.0). The dividend payout ratio relative to Net Loss ¥-11.3B is negative in calculation and effectively represents a return of capital rather than being funded from earnings. Total dividend amount is estimated at ¥10.6B; relative to Operating CF ¥33.2B and FCF ¥-19.5B, dividends alone are coverable by Operating CF but not by FCF. The Company repurchased treasury stock of ¥11.8B during the period, and combined with dividends ¥10.6B, total shareholder returns reached ¥22.4B. Total Return Ratio cannot be calculated on a net loss basis; total returns relative to Operating CF ¥33.2B are 67.5%, and relative to FCF ¥-19.5B represent a net outflow. Next period dividend forecast is ¥8.0 per share (flat reduction), implying a payout ratio of 14.2% against planned Net Income ¥45.0B, a conservative level. Sustainability of dividends depends on profit recovery from the removal of one-off items, OCF expansion through working capital improvement, and reduction in borrowing dependence. Cash and deposits balance ¥189.5B shows capacity to implement dividends and buybacks, but this is nearly offset by short-term borrowings ¥190.8B, so FCF turning positive is a prerequisite for maintaining total returns.
Deterioration in Working Capital Efficiency: Accounts receivable ¥302.7B (+7.1%) and Inventory ¥258.2B (+10.6%) increased, substantially pressuring Operating CF. DSO 89 days, DIO 102 days, and CCC 137 days indicate slowing working capital turnover; strengthening credit management and inventory optimization are urgent. Inventory breakdown: Finished goods ¥96.4B, Raw materials ¥123.4B, Work-in-process ¥38.2B, with potential impairment and obsolescence risks.
Interest Burden and Short-term Borrowing Dependence: Interest expense ¥9.6B represents 18.2% of Operating Income ¥52.9B, structurally compressing profit. Of interest-bearing debt ¥329.6B, short-term borrowings ¥190.8B (57.9%) indicate high short-term dependence, creating refinancing risk as cash ¥189.5B and short-term borrowings ¥190.8B are nearly matched. Long-term borrowings increased to ¥90.4B (+25.8%); lengthening debt maturities and containing interest burden are keys to improving capital efficiency.
Expansion of Loss in Information Equipment Business: With Sales ¥21.4B (-25.4%) and Operating Loss ¥5.7B (margin -26.5%), losses have expanded and reduce company margins by about 0.5pt. Delay in turning this business profitable or deciding on exit would structurally worsen ROE. Shrinking broadcast audio equipment market and intensified competition are underlying factors; business restructuring and product portfolio review are necessary.
Profitability & Returns
| Metric | Our 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 |
Both Operating Margin and Net Margin are well below industry medians, placing the company in the lower tier on profitability.
Growth & Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.3% | 3.7% (-0.4%–9.3%) | +4.6pt |
Revenue growth is well above industry median, placing the company in the upper tier on growth.
※ Source: Company aggregation
Recovery scenario from removal of one-off items and keys to profitability improvement: The primary causes of the ¥11.3B net loss were Extraordinary Losses ¥36.6B and abnormal tax burden (effective tax rate 206%); the Company expects a return to net profit of ¥45.0B next year on the assumption these one-off factors do not recur. However, deteriorated gross margin 24.9% (YoY -1.7pt) and structural interest expense ¥9.6B pressure profitability; Operating Margin 4.3% (industry median 7.8% : -3.5pt) places the company in the lower half of the industry. While Electronic Chemical Packaging division margin 8.4% drives the company, the Information Equipment division’s Operating Loss ¥5.7B (margin -26.5%) drags results, and its turnaround or restructuring is a prerequisite for ROE improvement.
Improvement of working capital efficiency and cash generation is the top priority: Operating CF ¥33.2B (YoY -63.4%) remained positive but Accounts receivable increase ¥25.1B and Inventory increase ¥6.7B significantly absorbed cash, leaving OCF/EBITDA 0.34x and low conversion. DSO 89 days, DIO 102 days, CCC 137 days show slowed working capital turnover; strengthening credit control and optimizing inventory are urgent. With FCF ¥-19.5B, the Company executed dividends ¥10.6B and treasury stock purchases ¥11.8B totaling ¥22.4B, reducing cash and cash equivalents to ¥180.1B (down ¥14.7B). With short-term borrowings ¥190.8B nearly equal to cash ¥189.5B, maintaining dividends and total returns requires OCF expansion through working capital improvements.
External demand expansion and maintaining high profitability in Electronic Chemical Packaging are growth engines: Revenue growth 8.3% (industry median 3.7% : +4.6pt) places the company in the higher ranks for growth, driven by China +6.1%, Other Asia +22.3%, Europe +12.2%, and U.S. +20.0%. Electronic Chemical Packaging business achieved Sales +15.5% and Operating Income +8.8%, combining high growth and high profitability; its operating contribution reached ¥33.3B (63.0% of company). The next fiscal year plan assumes Sales ¥1300.0B (+5.2%) and Operating Income ¥56.0B (+5.9%), premised on maintaining Electronic Chemical Packaging profitability and firm external demand. Conversely, interest burden and high short-term borrowing ratio (short-term share 57.9%) pose refinancing risks; lengthening maturities and improving capital efficiency are keys to medium-term financial stability.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information aggregated by the Company based on public financial statement data. Investment decisions are your responsibility; please consult a professional advisor as needed before making investment decisions.