| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥546.3B | ¥530.6B | +2.9% |
| Operating Income / Operating Profit | ¥33.5B | ¥46.2B | -27.4% |
| Profit Before Tax | ¥25.5B | ¥29.6B | -13.6% |
| Net Income / Net Profit | ¥20.6B | ¥17.9B | +15.2% |
| ROE | 6.5% | 6.1% | - |
For the fiscal year ended March 2026, Revenue was ¥546.3B (YoY +¥15.7B +2.9%), Operating Income was ¥33.5B (YoY -¥12.7B -27.4%), Ordinary Income was ¥5.2B (YoY -¥5.2B -49.8%), and Net Income was ¥20.6B (YoY +¥2.7B +15.2%). The result was higher revenue but lower profit, with notable deterioration in operating profitability; however, reductions in financial expenses and lower tax burden lifted the bottom-line profit.
[Revenue] Core quartz crystal resonators amounted to ¥395.1B (share 72.4%, YoY +¥5.3B +1.4%) with slight growth, quartz oscillators reached ¥90.9B (share 16.6%, +¥4.3B +4.9%) and Other products were ¥60.2B (share 11.0%, +¥6.1B +11.3%) showing double-digit growth. By region, Japan grew to ¥91.0B (YoY +¥9.4B +11.5%) and Americas to ¥63.3B (YoY +¥6.3B +11.1%), while China was stable at ¥185.7B (YoY -¥1.7B -0.9%). Although there are signs of product-mix improvement, gross margin fell to 28.8% from 30.3% a year earlier (down 1.5pt), with rising raw material, energy and logistics costs and timing lags in price revisions compressing gross profit.
[Profitability] Cost of goods sold increased to ¥389.2B (cost ratio 71.2%, +1.5pt from 69.7% prior year), yielding gross profit of ¥157.1B but with gross margin down to 28.8%. SG&A rose to ¥98.5B (SG&A ratio 18.0%, +0.2pt from 17.8%), an increase of ¥4.0B, resulting in Operating Income of ¥33.5B (Operating margin 6.1%, down 2.6pt from 8.7%). Non-operating items included Financial Expenses of ¥7.2B (down ¥4.0B from ¥11.2B prior year) and Equity-method losses of -¥1.6B, producing Ordinary Income of ¥5.2B (down from ¥10.4B, -49.8%). Profit Before Tax was ¥25.5B (prior year ¥29.6B), and Income Taxes were ¥4.9B (effective tax rate 19.2%, down 20.1pt from 39.3%), substantially lower, resulting in Net Income of ¥20.6B (Net margin 3.8%, up 0.4pt from 3.4%). In summary, the company recorded higher revenue but lower operating and ordinary profit, with final net profit increasing due to lower financial and tax burdens.
[Profitability] Operating margin deteriorated to 6.1% (down 2.6pt from 8.7%) driven by lower gross margin and higher SG&A. R&D expenses were ¥28.3B (as a % of sales 5.2%), maintaining technology investment. ROE improved slightly to 6.8% (up 0.5pt from 6.3%) but remains at benchmark levels when composed of a Net margin of 3.8%, Total Asset Turnover of 0.72x, and Financial Leverage of 2.39x. [Cash Quality] Operating Cash Flow (OCF) was ¥42.0B, 2.03x Net Income, indicating high quality, but inventory increase of -¥14.9B and accounts receivable increase of -¥5.3B absorbed cash, partially offset by accounts payable increase of +¥12.2B. DSO (Days Sales Outstanding) is approximately 92 days, DIO (Days Inventory Outstanding) approximately 117 days, DPO (Days Payables Outstanding) approximately 97 days, yielding a Cash Conversion Cycle of about 112 days, which has lengthened. [Investment Efficiency] Capital expenditures were active at ¥57.0B (CapEx/Sales 10.4%); with Depreciation of ¥39.1B, CapEx/Depreciation is about 1.46x, indicating an update/expansion phase. Tangible fixed assets were ¥231.7B (30.4% of total assets), showing relatively high capital intensity. [Financial Health] Equity Ratio is 41.8%, long-term borrowings ¥248.1B, short-term borrowings ¥13.3B, lease liabilities total ¥34.0B; net interest-bearing debt is about ¥157.6B and Debt/Capital ratio is about 45.0%. Interest coverage is Operating Income ¥33.5B / Financial Expenses ¥7.2B ≈ 4.7x, approaching cautionary levels. Current Ratio is about 315%, indicating limited short-term liquidity risk.
OCF decreased to ¥42.0B (down 31.2% from ¥61.1B prior year). Profit Before Tax was ¥25.5B, add-backs included Depreciation and Amortization ¥39.1B, but working capital increases absorbed cash. Inventory increased by -¥14.9B, Accounts Receivable increased by -¥5.3B, and Accounts Payable increased by +¥12.2B, resulting in an overall working capital outflow of about -¥8.0B. Income tax paid -¥7.4B, interest paid -¥4.4B, and lease payments -¥9.1B further reduced cash, leaving OCF at ¥42.0B. Investing Cash Flow was -¥73.8B, mainly due to CapEx -¥57.0B, intangible asset investments -¥10.4B, and time deposit placements -¥8.0B. Free Cash Flow (FCF) turned negative to -¥31.8B. Financing Cash Flow was -¥24.4B, driven by dividend payments -¥6.9B, share buybacks -¥1.6B, lease liability repayments -¥9.1B, and long-term borrowings repayments -¥8.0B, partially offset by new long-term borrowings of ¥1.2B. Foreign exchange translation effects were +¥5.5B, resulting in Cash and Cash Equivalents decreasing from ¥158.8B to ¥108.0B (a decline of -¥50.8B). The FCF deficit is primarily due to working capital absorption and active CapEx; extended payables (DPO ~97 days) provided partial buffering.
Comprehensive income was ¥35.8B against Net Income of ¥20.6B. Other Comprehensive Income of +¥15.2B comprised translation differences on foreign operations +¥15.3B, net changes in fair value through OCI financial assets +¥3.8B, and remeasurements of defined benefit plans -¥4.2B. The majority of translation differences are temporary FX movements and do not reflect recurring earning power. Financial income was ¥0.8B and Financial Expenses were ¥7.2B (down ¥4.0B from ¥11.2B), with the reduction in financial expenses supporting Ordinary Income. Equity-method losses were -¥1.6B, a recurring negative contribution. The fact that OCF is 2.03x Net Income indicates quality, but working capital increases are absorbing cash—normalization of inventory and receivables is essential to improve earnings quality. The effective tax rate is 19.2% (vs. 39.3% prior year), substantially lower, likely aided by utilization of deferred tax assets and tax incentives; however, there is risk of higher tax rates in coming periods.
For FY2027 ending March 2027, management forecasts Revenue ¥606.0B (YoY +10.9%), Operating Income ¥40.0B (YoY +19.2%), Net Income ¥23.0B (YoY +11.3%), EPS ¥99.90, and Dividend ¥15 (per share) expecting revenue and profit growth. Progress against H1 results (Revenue ¥546.3B, Operating Income ¥33.5B, Net Income ¥20.6B) shows progress rates of 90.1% for Revenue, 83.8% for Operating Income, and 89.6% for Net Income, reflecting an assertive guidance that assumes H2 revenue and profit increases. Achievement of forecasts depends on normalization of inventory and receivables, progress in price pass-through, improvement in gross margin via higher utilization, and further compression of interest burden. Rising CapEx and product-mix improvement are expected to contribute, but demand volatility and FX impacts warrant monitoring.
Annual dividend is ¥30 (interim ¥15, year-end ¥15), total dividend payout ¥6.9B, and Payout Ratio is 33.6% (based on this period Net Income ¥20.6B), a reasonable level. Share buybacks totaled ¥1.6B, making Total Return Amount ¥8.5B and Total Return Ratio about 41%. Total returns of ¥8.5B represent 20.2% of OCF ¥42.0B, indicating coverage on a cash flow basis, but FCF is -¥31.8B, so dividends and buybacks rely heavily on OCF. The dividend policy appears to target a stable dividend with a Payout Ratio guideline of 30–40%. Potential for dividend increases will likely be considered progressively in line with improvements in ROIC and FCF.
Profitability volatility risk: Gross margin declined to 28.8% (down 1.5pt) mainly due to rising raw material, energy and logistics costs and timing lags in price pass-through. Operating margin fell to 6.1% (from 8.7%), and if SG&A growth (+¥4.0B +4.2%) continues to outpace revenue growth (+2.9%), there is risk of operating leverage reversing. Delays in product-mix improvement and price pass-through could prolong the profitability slump.
Working capital expansion and cash strain risk: Inventory ¥124.4B (YoY +¥19.0B +18.0%) and Accounts Receivable ¥138.0B (YoY +¥10.9B +8.6%) have increased substantially, with DSO ~92 days, DIO ~117 days, and CCC ~112 days. Although extended payables (DPO ~97 days) offset some impact, inventory obsolescence/write-down risk and receivables collection delays could materialize, weakening cash generation.
Interest burden and financing cost pressure risk: Financial Expenses improved to ¥7.2B (YoY -¥4.0B), but total interest-bearing debt is about ¥276.1B (Long-term borrowings ¥248.1B + Short-term borrowings ¥13.3B + Lease liabilities ¥34.0B - Cash ¥108.0B = Net interest-bearing debt ~¥157.6B). Interest coverage is about 4.7x, nearing cautionary levels. In a rising-rate environment, higher financing costs could emerge; if approximately 22.5% of EBIT (Operating Income + Equity-method loss ≒ ¥31.9B) is absorbed by interest expense, improving ROE and ROIC could become difficult.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 6.8% | 6.3% (3.2%–9.9%) | +0.5pt |
| Operating Margin | 6.1% | 7.8% (4.6%–12.3%) | -1.6pt |
| Net Margin | 3.8% | 5.2% (2.3%–8.2%) | -1.4pt |
ROE exceeds the industry median, but Operating and Net margins are below median, indicating the need for profitability improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 2.9% | 3.7% (-0.4%–9.3%) | -0.8pt |
Revenue growth trails the industry median, signalling the need to strengthen growth capability.
※ Source: Company compilation
Progress on profitability improvement is the main focus. Although gross margin declined to 28.8%, recovery is expected through price pass-through, higher utilization and product-mix improvement. If Operating margin improves from 6.1% to the FY2027 guidance of 6.6% (Operating Income ¥40.0B / Revenue ¥606.0B), this would help lift ROE and ROIC. Correcting the structural issue where SG&A growth outpaces revenue growth is essential.
Normalizing working capital efficiency and improving cash conversion are key to enhancing capital efficiency. If inventory and receivables accumulation (DSO ~92 days, DIO ~117 days, CCC ~112 days) are normalized, OCF expansion and FCF turning positive would broaden return capacity and strengthen financial health. Active CapEx (¥57.0B, CapEx/Sales 10.4%) coming online and progress in production capacity and insourcing would support medium-term supply capability and cost competitiveness.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.