| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥10194.6B | ¥9904.1B | +2.9% |
| Operating Income / Operating Profit | ¥420.4B | ¥341.1B | +23.3% |
| Ordinary Income | ¥491.4B | ¥305.2B | +61.0% |
| Net Income | ¥464.7B | ¥434.6B | +6.9% |
| ROE | 10.3% | 10.5% | - |
For the fiscal year ended March 2026, Revenue was ¥10194.6B (YoY +¥290.5B, +2.9%), Operating Income was ¥420.4B (YoY +¥79.3B, +23.3%), Ordinary Income was ¥491.4B (YoY +¥186.2B, +61.0%), and Net income attributable to owners of parent was ¥268.8B (YoY -¥109.6B, -29.0%). At the operating level, SG&A ratio improved to 13.7% (YoY -0.5pt) and gross margin slightly rose to 17.8% (+0.1pt), expanding the operating margin to 4.1% (+0.7pt) and driving the increase in Operating Income. At the ordinary level, equity-method investment gains reversed to ¥79.6B (previous year recorded a loss of ¥19.6B) and interest income increased by ¥1.9B to ¥18.8B, producing a substantial increase in Ordinary Income. At the Net Income level, recognition of Special Losses of ¥54.2B (including impairment losses of ¥42.0B) and a rise in the effective tax rate (34.2% → 37.9%) resulted in a decline, and the absence of prior-year Special Gains of ¥342.3B also had a significant impact. Operating Cash Flow was ¥959.3B (YoY +45.7%), the highest on record and indicating very strong cash generation; Free Cash Flow secured ¥375.2B, and shareholder returns totaling ¥322.1B (dividends ¥122.1B and share buybacks ¥200.0B) were largely covered by Free Cash Flow.
[Revenue] Revenue was ¥10194.6B (YoY +¥290.5B, +2.9%). By segment, the Mobility Business (formerly Module & Systems Business) was largest at ¥5550.8B (+3.3%), accounting for 54.4% of consolidated sales; the Components Business was ¥3586.1B (+3.0%) at 35.2%; the Sensors & Communication Business was ¥852.8B (+1.3%) at 8.4%; and Other was ¥313.1B (-0.6%) at 3.1%. By geography, sales to China declined to ¥2062.6B (-5.6%) while the U.S. rose to ¥1854.1B (+4.3%) and Korea grew to ¥1522.0B (+24.4%), with the increase to Korea particularly notable. Sales to major customer Apple were ¥2366.3B (+3.5%), representing 23.2% of consolidated sales, indicating a still high customer concentration. Cost of sales was ¥8376.0B, with gross margin of 17.8% (YoY +0.1pt) slightly improving.
[Profitability] Gross profit was ¥1818.6B (YoY +¥66.9B, +3.8%), SG&A was ¥1398.1B (YoY -¥12.5B, -0.9%), reducing the SG&A ratio to 13.7% (-0.5pt). As a result, Operating Income rose substantially to ¥420.4B (YoY +¥79.3B, +23.3%), and Operating Margin expanded to 4.1% (+0.7pt). By segment, the Components Business maintained high profitability with Operating Income of ¥301.7B (margin 8.4%), nearly flat YoY (-0.8%). The Mobility Business turned sharply profitable at ¥141.6B (YoY +152.6%), reversing from a prior-year loss and improving margin to 2.6%. The Sensors & Communication Business continued to record an operating loss of ¥35.4B (worsened -5.3% YoY), weighing on consolidated profits. Non-operating income included an equity-method investment gain of ¥79.6B (reversing from a ¥19.6B loss prior year) and interest income of ¥18.8B (YoY +¥1.9B), contributing to Ordinary Income of ¥491.4B (YoY +61.0%). In extraordinary items, Special Losses of ¥54.2B were recorded (impairment losses ¥42.0B, loss on disposal of fixed assets ¥11.6B), while previous-year Special Gains of ¥342.3B (including gain on sale of subsidiary shares ¥270.7B) were absent. Profit before tax was ¥439.4B (from ¥578.7B prior year, -24.1%), corporate taxes were ¥166.5B (effective tax rate 37.9%), resulting in Net income attributable to owners of parent of ¥268.8B (from ¥378.4B prior year, -29.0%). In summary: revenue and operating/ordinary profits increased, but Net Income declined due to one-time losses and higher tax burden.
The Mobility Business reported Revenue of ¥5550.8B (YoY +3.3%) and Operating Income of ¥141.6B (from ¥56.1B prior year, +152.6%), a substantial recovery with Operating Margin improving to 2.6% (from 1.0% prior year). The segment turned from prior-year low profitability to positive results via cost efficiency and improved product mix. Impairment losses of ¥36.6B were recorded, reflecting a reassessment of the profitability of certain assets. The Components Business posted Revenue of ¥3586.1B (YoY +3.0%) and Operating Income of ¥301.7B (-0.8% YoY), a slight decline but maintaining an Operating Margin of 8.4% and accounting for about 72% of consolidated Operating Income, preserving its status as the core profit-generating business. Impairment losses were limited at ¥0.98B, indicating healthy asset quality. The Sensors & Communication Business saw Revenue of ¥852.8B (+1.3%) but an operating loss of ¥35.4B (worsened -5.3% YoY), remaining in the red with an Operating Margin of -4.1%. Impairment losses of ¥1.2B were recorded, and improvement of the revenue structure is urgently required. Other businesses posted Revenue of ¥313.1B (-0.6%) and Operating Income of ¥13.1B (-13.6%), maintaining an Operating Margin of 4.2%.
[Profitability] Operating Margin improved to 4.1% (from 3.4%, +0.7pt), Gross Margin rose slightly to 17.8% (from 17.7%, +0.1pt), and SG&A Ratio decreased to 13.7% (from 14.2%, -0.5pt), boosting Operating Margin. Net Margin fell to 2.6% (from 3.8%, -1.2pt), primarily due to Special Losses of ¥54.2B and a higher effective tax rate. ROE declined to 6.0% (from 9.4%), influenced by weaker Net Margin and a slight decrease in asset turnover (approximately 1.302 → 1.30x). ROA (on an Ordinary Income basis) improved to 6.4% (from 4.1%), reflecting the significant increase in Ordinary Income.
[Cash Quality] Operating Cash Flow was ¥959.3B (from ¥658.2B, +45.7%), a record high; Operating CF / Net Income ratio was 3.57x, and OCF/EBITDA (Operating Income + Depreciation) was 1.26x, indicating very high quality of earnings. The accrual ratio was -8.8%, supporting cash generation quality. Free Cash Flow was ¥375.2B (Operating CF ¥959.3B - Investing CF ¥584.0B), and dividend coverage was 3.07x (¥375.2B/¥122.1B), indicating very high dividend sustainability.
[Investment Efficiency] Total Asset Turnover was stable at 1.30x (Revenue ¥10194.6B / Ending Total Assets ¥7831.5B), and financial leverage was conservative at 1.74x. EBITDA (Operating Income ¥420.4B + Depreciation ¥339.7B) was ¥760.1B, indicating maintained capital productivity.
[Financial Soundness] Equity Ratio rose to 57.4% (from 56.0%). Current Ratio was 208.0% (¥5007.2B / ¥2407.2B), and Quick Ratio was 180.4%, indicating very ample short-term liquidity. Interest-bearing debt (short-term borrowings ¥370.7B + long-term borrowings ¥552.1B + long-term borrowings due within one year ¥144.0B) totaled ¥1066.8B; after deducting cash and deposits of ¥1536.1B, Net Interest-Bearing Debt was -¥469.3B, effectively debt-free. Debt/EBITDA ratio was 1.40x (¥1066.8B/¥760.1B), and Interest Coverage was 42.6x (Operating Income ¥420.4B / Interest expense ¥9.9B), indicating very strong financial resilience. Debt-to-Equity ratio was 0.74x, Debt/Capital ratio was 19.2%, reflecting a healthy capital structure. Short-term debt ratio was 40.2% (short-term borrowings + long-term borrowings due within one year / interest-bearing debt), somewhat high, but Cash / Short-term debt was 2.98x, limiting liquidity risk.
Operating Cash Flow was ¥959.3B (YoY +45.7%), supported by profit before tax ¥439.4B, depreciation ¥339.7B, impairment losses ¥42.0B as non-cash expenses, and working capital improvements (inventory reduction ¥112.4B, trade receivables reduction ¥97.3B). Equity-method investment gains of ¥79.6B were adjusted as non-cash items, and cash tax payments of ¥128.7B were absorbed while still generating high CF. Investing CF outflow was ¥584.0B, led by capital expenditure ¥436.1B and intangible asset investments ¥163.4B; while capex was roughly flat YoY, intangible investments (mainly software) more than doubled. Free Cash Flow was ¥375.2B (¥959.3B - ¥584.0B). Financing CF was an outflow of ¥411.3B, including dividend payments ¥122.1B and share repurchases ¥200.0B, and repayment of long-term borrowings ¥239.1B, partially offset by long-term borrowings raised ¥139.4B. Cash and cash equivalents increased by ¥59.3B from ¥1474.6B at the beginning of the period to ¥1533.9B at year-end, with foreign exchange effects contributing ¥95.3B. Operating CF / Net Income was 3.57x and OCF/EBITDA was 1.26x, underscoring high earnings quality. Operating CF margin (Operating CF / Revenue) improved substantially to 9.4% from 6.6% prior year. Inventory turnover days were about 23.8 days (Inventory ¥665.5B / Revenue ¥10194.6B × 365), indicating efficient working capital management.
Overall quality of earnings is generally good, with Operating Income ¥420.4B forming the core of recurring earnings. Non-operating income totaled ¥130.7B, comprised of equity-method investment gains ¥79.6B (reversal from a ¥19.6B loss prior year), interest income ¥18.8B, dividend income ¥14.6B, and foreign exchange gains ¥15.6B; the increase in equity-method investment gains is notable. The improved performance of equity-method investees may be transitory, so sustainability requires monitoring. Non-operating expenses totaled ¥59.7B, including interest expense ¥9.9B, foreign exchange losses ¥27.5B, and fees ¥7.8B; foreign exchange losses offset foreign exchange gains, resulting in a net foreign exchange loss of ¥11.9B and reflecting FX volatility. Net non-operating income was ¥71.0B (¥130.7B - ¥59.7B), or 0.7% of Revenue, indicating no excessive dependence. In extraordinary items, Special Gains were ¥2.2B (gain on sale of fixed assets) versus Special Losses ¥54.2B (impairment losses ¥42.0B, loss on disposal of fixed assets ¥11.6B), which pressured Net Income. The absence of prior-year Special Gains of ¥342.3B (gain on sale of subsidiary shares ¥270.7B, gain on business transfer ¥64.2B, etc.) also materially contributed to the YoY decline in Net Income. The gap between Ordinary Income ¥491.4B and Net income attributable to owners of parent ¥268.8B (a 45.3% divergence) is due to Special Losses and an effective tax rate of 37.9% (corporate taxes ¥166.5B / profit before tax ¥439.4B), though the company maintains strong operational earning power. Accrual quality is high with Operating CF / Net Income 3.57x and OCF/EBITDA 1.26x, indicating a small divergence between profit and cash. Comprehensive income was ¥654.0B (¥648.3B attributable to owners of parent), significantly exceeding Net Income ¥268.8B, driven by foreign currency translation adjustments ¥317.8B (yen depreciation effect) and actuarial adjustments for retirement benefits ¥57.9B. Other comprehensive income of ¥381.1B boosted equity, but these gains are subject to reversal risks from future FX movements and are not realized earnings.
The company’s guidance for the next fiscal year (FY2027 ending March 2027) forecasts Revenue ¥10450.0B (YoY +2.5%), Operating Income ¥485.0B (+15.4%), Ordinary Income ¥455.0B (-7.4%), and Net income attributable to owners of parent ¥300.0B (+11.6%). The company plans to improve Operating Margin to 4.6% (from 4.1%, +0.5pt), assuming continued profitability improvement in the Mobility Business and ongoing cost efficiency measures. Ordinary Income is guided lower YoY, reflecting a cautious plan that factors in the disappearance of non-operating items such as this period’s equity-method investment gains of ¥79.6B and FX effects. Net Income is expected to increase assuming normalization of Special items. EPS forecast is ¥150.41 (current period ¥134.77), and dividend forecast is ¥32 (current period ¥62 assumed to be maintained), implying a payout ratio around 40%, a sustainable level. At period-end, progress toward full-year guidance stands at 86.7% for Operating Income (¥420.4B/¥485.0B) and 108.0% for Ordinary Income (¥491.4B/¥455.0B), indicating an upside at the ordinary level but a modest shortfall at the operating level, assuming recovery in the second half. Revenue progress is 97.6% (¥10194.6B/¥10450.0B), suggesting a high probability of achieving the full-year target.
Annual dividend is ¥62 (interim ¥30, year-end ¥32) totaling ¥122.1B (same as prior year ¥122.1B), representing a payout ratio of approximately 45.4% (¥122.1B / Net income attributable to owners of parent ¥268.8B). On a Net income basis, payout ratio is 45.4%, and on an EPS basis it is 46.0% (dividend ¥62 / EPS ¥134.77), indicating a sustainable level. In addition, the company executed share buybacks of ¥200.0B, bringing total shareholder returns to ¥322.1B (dividends + buybacks) and a Total Return Ratio of 119.8% (¥322.1B / ¥268.8B), demonstrating an active shareholder return stance. Total returns of ¥322.1B represent 85.8% of Free Cash Flow ¥375.2B, indicating returns were largely within Free Cash Flow capacity. Treasury shares held at period-end amounted to 12,989 thousand shares (6.2% of issued shares), with ¥200.0B repurchased during the period. Next fiscal year dividend guidance is a full-year ¥32 (inferred from year-end ¥32, suggesting interim + year-end totaling ¥62 maintained), implying a payout ratio of about 41% vs. EPS forecast ¥150.41 (¥62 / ¥150.41), indicating continuation of a stable dividend policy. Dividend sustainability is strongly supported by Free Cash Flow coverage of 3.07x and Operating CF coverage of 7.86x.
Customer concentration risk: Sales to Apple of ¥2366.3B represent 23.2% of consolidated Revenue, indicating high dependence on a single customer. Fluctuations in demand for Apple products or changes in transaction terms can directly impact performance; a decline in sales to Apple could significantly compress consolidated profits. Although YoY sales increased +3.5%, demand cyclicality and market trends pose vulnerability.
Segment concentration and unprofitable business risk: The Mobility Business accounts for 54.4% of Revenue, indicating high segment concentration. This segment’s Operating Margin is low at 2.6%, and impairment losses of ¥36.6B were recorded, showing a fragile earnings base. The Sensors & Communication Business continues to post an operating loss of ¥35.4B and pressures consolidated profits. Delays in profitability improvement for both segments could depress consolidated profitability.
Investment ramp-up risk and asset valuation: Construction in progress ¥350.4B represents 22.2% of tangible fixed assets ¥1579.9B; delays or cost overruns in new investment projects could lead to impairments or margin pressure. Impairment losses of ¥42.0B were recorded this period, and with tighter asset valuations, further impairment risk remains. Intangible fixed assets ¥305.97B (YoY +38.9%) have increased, bringing risks of delayed recovery or obsolescence of software investments. Regionally, sales to China declined -5.6% YoY, indicating susceptibility to geopolitical risk and demand cycles.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.1% | 7.8% (4.6%–12.3%) | -3.6pt |
| Net Margin | 4.6% | 5.2% (2.3%–8.2%) | -0.6pt |
Profitability lags industry median, with gaps of -3.6pt in Operating Margin and -0.6pt in Net Margin, indicating substantial room for improvement relative to the broader manufacturing sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.9% | 3.7% (-0.4%–9.3%) | -0.8pt |
Revenue growth is slightly below the industry median but the difference is modest, broadly in line with manufacturing sector trends.
※Source: Company compilation of public financial statements
Sustainability of operating-level improvement and profitability gains: Operating Margin improved to 4.1% (from 3.4%, +0.7pt), aided by a reduction in SG&A ratio (-0.5pt) and the Mobility Business turning profitable. Guidance anticipates further improvement to 4.6% next fiscal year, assuming continued cost efficiency and product mix improvements. Operating Income has improved for three consecutive years, indicating strengthening of the structural earnings base. However, Gross Margin at 17.8% remains low relative to peers, and mid-term challenges include raising Gross Margin through price pass-through and yield improvements. Resolution of the Sensors & Communication Business deficit and further margin improvement in the Mobility Business are key to raising consolidated profitability.
Strong cash generation and shareholder return stance: Operating CF of ¥959.3B (YoY +45.7%) reached a record high, enabling Free Cash Flow ¥375.2B while executing total returns of ¥322.1B (dividends + buybacks). Dividend coverage 3.07x and Operating CF coverage 7.86x indicate very high sustainability of shareholder returns. The company is effectively debt-free (Net Interest-Bearing Debt -¥469.3B), allowing coexistence of additional investment and shareholder returns. Management intends to maintain a stable dividend policy with a target payout ratio around 40%, reflecting balanced capital allocation between growth investment and returns.
Concentration and execution risk for investments: High concentration to Apple (23.2%) and to the Mobility Business (54.4%) exposes the company to demand shifts and changes in transaction terms. Construction in progress ratio 22.2% signals risks in project ramp-up, and the recording of impairment losses ¥42.0B this period reflects stricter asset valuation. Continued deficits in the Sensors Business and a decline in China sales (-5.6%) add uncertainty. Although Mobility margin improvement to 2.6% is progressing, it remains low; quality cost management and smooth capitalization of investment projects are essential to stabilize consolidated earnings. Medium-term reductions in performance volatility will depend on diversifying customers/segments and cultivating higher-margin businesses.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm from publicly disclosed financial statements. Investment decisions are your own responsibility; consult a professional advisor as necessary.