| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥482.0B | ¥480.5B | +0.3% |
| Operating Income | ¥4.3B | ¥-2.2B | +86.0% |
| Ordinary Income | ¥12.4B | ¥5.5B | +126.3% |
| Net Income (Attributable to Parent Company Shareholders) | ¥2.1B | ¥-2.3B | +194.7% |
| ROE | 0.7% | -0.8% | - |
For the fiscal year ended March 2026, Revenue was ¥482.0B (YoY +¥1.5B +0.3%), essentially flat, while Operating Income turned positive to ¥4.3B (YoY +¥6.5B, from ¥-2.2B), Ordinary Income expanded to ¥12.4B (YoY +¥6.9B +126.3%), and Net Income attributable to parent company shareholders reached ¥2.1B (YoY +¥4.4B, from ¥-2.3B), representing a significant improvement in profitability. At the operating level, Gross Margin was 19.5% (prior year 19.3% +0.2pt) and SG&A ratio improved to 18.6% (prior year 19.7% -1.1pt), with SG&A discipline contributing to a recovery in Operating Margin to 0.9% (prior year -0.5%). At the ordinary level, equity-method income of ¥1.5B (prior year ¥0.7B) and foreign exchange gains of ¥1.2B (prior year ¥0.5B) contributed, expanding Ordinary Income margin to 2.6%. One-off items included Special Losses of ¥3.9B (of which impairment loss ¥3.1B), and Corporate Taxes of ¥8.1B (effective tax rate approximately 93% on pre-tax income of ¥8.7B), which constrained Net Income to ¥2.1B. By segment, the CS Business remained the earnings pillar with Operating Income of ¥11.9B (margin 5.3%), while the SCI Business posted a loss of ¥-3.8B and the R&D Center ¥-3.8B, highlighting a pronounced bifurcation in earnings.
Revenue: Revenue was ¥482.0B (YoY +0.3%), essentially flat. By segment, CS Business increased slightly to ¥225.2B (+1.6%), SCI Business decreased slightly to ¥256.2B (-0.1%), and the R&D Center declined sharply to ¥0.6B (-75.3%). External factors included non-operating foreign exchange gains of ¥1.2B, suggesting that yen weakness provided some support to overseas earnings. Gross margin improved only modestly to 19.5% (prior year 19.3% +0.2pt), indicating ongoing product mix and pricing pressures. Revenue composition: CS Business 46.7%, SCI Business 53.1%, showing near parity between the two segments.
Profitability: Operating Income turned positive to ¥4.3B (prior year ¥-2.2B), with Operating Margin improving to 0.9% (prior year -0.5% +1.4pt). The primary driver was SG&A reduction: SG&A fell to ¥89.8B from ¥94.7B (¥-4.9B), with SG&A ratio improving to 18.6% (prior year 19.7% -1.1pt). Gross Profit increased slightly to ¥94.1B (prior year ¥92.5B +¥1.6B), and Gross Margin rose to 19.5% (+0.2pt). Segment profits: CS Business Operating Income ¥11.9B (margin 5.3%, down ¥3.4B from prior year ¥15.3B), SCI Business ¥-3.8B (improved ¥9.3B from prior year ¥-13.1B), R&D Center ¥-3.8B (improved ¥0.7B from prior year ¥-4.5B). The shrinkage of SCI segment losses was the key factor behind consolidated operating profitability. At the ordinary level, non-operating income totaled ¥17.3B (prior year ¥16.6B), including equity-method income ¥1.5B (prior year ¥0.7B) and FX gains ¥1.2B (prior year ¥0.5B). Interest expense was ¥2.5B (prior year ¥2.2B). Ordinary Income therefore expanded to ¥12.4B (prior year ¥5.5B +¥6.9B +126.3%). Pre-tax income turned positive to ¥8.7B (prior year ¥-9.6B), but Special Losses of ¥3.9B (impairment ¥3.1B, loss on retirement of fixed assets ¥0.7B, etc.) and Corporate Taxes of ¥8.1B (effective rate ~93%) limited Net Income attributable to parent company shareholders to ¥2.1B (prior year ¥-2.3B). In conclusion, the company achieved revenue growth and profit expansion, but topline growth was only +0.3%, and profit improvement was driven mainly by SG&A cuts and non-operating income.
The CS Business maintained steady performance with Revenue ¥225.2B (+1.6%) and Operating Income ¥11.9B (margin 5.3%), though Operating Income declined 22.6% from prior year ¥15.3B. Core products such as connectors and jacks secured stable earnings, but margin fell from 6.9% to 5.3% (-1.6pt), suggesting price competition and raw material cost pressure. The SCI Business posted Revenue ¥256.2B (-0.1%) and Operating Income ¥-3.8B (improved 71.1% from prior year ¥-13.1B), narrowing losses substantially. Profitability improvements in remote controls, camera modules, and sensors contributed, but the segment remains loss-making with margin -1.5%, indicating ongoing structural reforms. The R&D Center recorded Revenue ¥0.6B (-75.3%) and Operating Income ¥-3.8B (improved 15.0% from prior year ¥-4.5B), continuing to incur losses due to R&D investment phase. Consolidated structure shows CS stable earnings covering losses from SCI and R&D Center, enabling consolidated operating profitability.
Profitability: Operating Margin 0.9% (prior year -0.5% +1.4pt), Ordinary Income Margin 2.6% (prior year 1.1% +1.5pt), Net Margin 0.4% (prior year -0.5% +0.9pt), indicating improvement across stages. ROE was 0.7% (prior year -0.8%), still low but exiting loss territory. Effective tax rate was about 93%, and deferred tax liabilities increased to ¥33.5B (prior year ¥25.8B +¥7.7B), suggesting tax effects from valuation gains and remeasurements of retirement benefit obligations. Cash Quality: Operating Cash Flow (OCF) was ¥20.2B versus Operating Income ¥4.3B, giving OCF/Operating Income of 4.7x, and EBITDA (Operating Income + D&A) of ¥30.6B (D&A ¥26.3B) yields OCF/EBITDA 0.66x, indicating a certain cash-generating ability. Working capital movements: accounts receivable increased ¥10.2B and accounts payable decreased ¥19.0B negatively impacted cash, while inventories decreased ¥11.8B contributed positively. Accrual ratio -327.6% indicates OCF substantially exceeds Net Income, implying relatively healthy cash basis. Investment Efficiency: Total Asset Turnover 0.84x (prior year 0.83x), nearly unchanged. Investment securities increased to ¥52.7B (prior year ¥42.0B +25.4%), and net unrealized gains on other securities expanded to ¥15.5B (prior year ¥9.7B +5.8B). EPS ¥8.87 (prior year -¥297.39), BPS ¥4,923.29 (prior year ¥4,612.02) show improvement in per-share metrics. Financial Soundness: Equity Ratio 54.1% (prior year 50.7% +3.4pt), strengthening the financial base. Interest-bearing debt totaled ¥132.8B (short-term borrowings ¥61.4B, long-term borrowings ¥71.4B) versus prior year ¥143.2B (-¥10.4B), cash and deposits ¥96.7B, net interest-bearing debt ¥36.1B, Debt/EBITDA 4.3x indicating relatively high leverage. Interest coverage was 1.72x (Operating Income ¥4.3B ÷ Interest Paid ¥2.5B), low and suggesting weak interest-bearing capacity. Current Ratio 214% (prior year 199%), Quick Ratio 195%, indicating good short-term liquidity.
Operating Cash Flow was ¥20.2B (prior year ¥24.4B -17.1%), decreasing but remained positive. Subtotal operating cash inflow was ¥33.4B; working capital changes—accounts receivable increase ¥10.2B, inventory decrease ¥11.8B, accounts payable decrease ¥19.0B—offset each other, and after corporate tax payments ¥4.8B, OCF totaled ¥20.2B. Investing Cash Flow was ¥-22.6B (prior year ¥-22.2B), mainly capital expenditures ¥21.9B (prior year ¥20.8B), indicating replacement-heavy investments below depreciation of ¥26.3B. Free Cash Flow was slightly negative at ¥-2.4B (OCF ¥20.2B + Investing CF ¥-22.6B), falling short of autonomous cash generation. Financing Cash Flow was ¥-24.5B (prior year ¥+2.9B), with long-term debt repayments ¥17.4B, net decrease in short-term borrowings ¥13.0B, dividend payments ¥8.9B outflow, partially offset by long-term borrowings ¥20.0B. Cash and equivalents declined to ¥95.9B (prior year ¥104.2B -¥8.2B); foreign exchange impact contributed +¥18.7B, but overall cash outflow prevailed. OCF/Net Income was 9.6x, reflecting large non-cash charges such as depreciation, while OCF/EBITDA 0.66x indicates scope for improvement in working capital efficiency.
Operating Income of ¥4.3B was supplemented by non-operating income ¥17.3B (including equity-method income ¥1.5B and FX gains ¥1.2B), lifting Ordinary Income to ¥12.4B, indicating a relatively high dependence on non-operating factors at the ordinary income level. Special Losses totaled ¥3.9B (impairment ¥3.1B, loss on retirement of fixed assets ¥0.7B) as one-off items, and Corporate Taxes of ¥8.1B (effective tax rate ~93%) were charged against Pre-tax Income ¥8.7B. Comprehensive Income was ¥28.2B, far exceeding Net Income ¥2.1B; Other Comprehensive Income ¥26.1B comprised Foreign Currency Translation Adjustments ¥14.6B, Net Unrealized Gains on Securities ¥5.8B, and Remeasurements of Defined Benefit Plans ¥6.6B, all valuation gains. The fact that OCF substantially exceeds Net Income indicates cash-based health, but abnormal tax burden and special losses compressed Net Income significantly; recurring earning power is closer to Operating Income ¥4.3B + Equity-method income ¥1.5B = about ¥5.8B. The negative accrual ratio suggests conservative profit recognition, but sensitivity to FX and equity-method factors leaves earnings quality somewhat uncertain.
Full Year guidance calls for Revenue ¥490.0B (YoY +1.7%), Operating Income ¥8.0B (YoY +86.0%), Ordinary Income ¥12.0B (YoY -3.5%), Net Income attributable to parent company shareholders ¥8.0B (full year plan; current period actual ¥2.1B), EPS ¥126.41, and dividend ¥50. Progress vs current period results: Revenue 98.4%, Operating Income 53.8%, Ordinary Income 103.5%; Operating Income plan assumes significant profit improvement in H2, while Ordinary Income is nearly achieved. The full-year Operating Income plan of ¥8.0B implies an +86.0% increase from current period ¥4.3B, likely premised on CS Business maintaining earnings and further reduction of SCI Business losses. Ordinary Income guidance of ¥12.0B is slightly below current period ¥12.4B, implying lower H2 contributions from FX or equity-method gains. Full-year Net Income forecast ¥8.0B is about 3.8x current period Net Income ¥2.1B, likely incorporating normalization (reduction) of the effective tax burden. Forecast dividend ¥50 is half of current period total ¥100, but on a full-year basis implies a Payout Ratio of about 40% (¥50 dividend vs EPS ¥126.41), returning to a standard level.
Dividends were interim ¥50 and year-end ¥50, totaling ¥100 per share, with total payouts of approximately ¥8.9B. Relative to Net Income ¥2.1B, the payout ratio was about 424% (dividend total ¥8.9B far exceeding Net Income ¥2.1B), which is unsustainably high at current profit levels. Prior year dividend was also annual ¥50 (total approx. ¥6.4B, prior year Net Income ¥-2.3B), indicating a history of maintaining dividends even in loss years. Free Cash Flow ¥-2.4B vs dividends ¥8.9B yields FCF coverage of -0.27x, indicating dividends were not covered by internal funds. Share buybacks were ¥0.0B (near zero), so shareholder returns are dividend-centric. Next fiscal year guidance assumes dividend ¥50 (total approx. ¥3.2B, based on 6,328 thousand shares outstanding), with full-year Net Income forecast ¥8.0B implying payout ratio ~40% — normalization tied to doubling operating income and tax normalization. The company’s commitment to dividends is notable, but with cash ¥96.7B and liquidity secured, interest-bearing debt ¥132.8B and negative FCF remain concerns; sustainability depends on earnings recovery.
Segment earnings polarization risk: While CS Business secures Operating Income ¥11.9B (margin 5.3%), SCI Business is loss-making at ¥-3.8B (margin -1.5%) and R&D Center ¥-3.8B, leaving consolidated Operating Income of ¥4.3B fragile. Although SCI losses narrowed from ¥-13.1B by ¥9.3B, the segment has not yet reached breakeven; delays in product mix improvement or cost reduction could pressure consolidated earnings.
Leverage and interest burden risk: Interest-bearing debt ¥132.8B and Debt/EBITDA 4.3x indicate elevated leverage, and Interest Coverage 1.72x (Operating Income ¥4.3B ÷ Interest Paid ¥2.5B) implies weak interest resilience. Short-term borrowings ¥61.4B (46% of debt) raise refinancing risk; in a rising-rate environment or during operating profit decline, interest costs could materially compress earnings.
Tax burden and one-off items risk: The current effective tax rate of about 93% (Corporate Taxes ¥8.1B ÷ Pre-tax Income ¥8.7B) is an anomaly; deferred tax liabilities increased to ¥33.5B (prior year ¥25.8B +¥7.7B), likely driven by valuation gains and remeasurement of retirement benefit obligations. Normalization of tax burden will materially affect Net Income volatility, and recurrence of special losses such as the ¥3.1B impairment could destabilize Net Income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.9% | 7.8% (4.6%–12.3%) | -6.9pt |
| Net Margin | 0.4% | 5.2% (2.3%–8.2%) | -4.7pt |
Profitability is well below the industry median; operating margin trails the median by -6.9pt and net margin by -4.7pt, impacted by segment losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.3% | 3.7% (-0.4%–9.3%) | -3.4pt |
Revenue growth of +0.3% lags the industry median +3.7%, placing the company in the lower tier for topline expansion.
※ Source: Company compilation
Achievement of operating profitability via SG&A discipline and reduction of SCI losses confirms improved cost control. Going forward, maintaining CS Business profitability and progressing SCI Business to breakeven are keys to a phased recovery in operating margin; sustaining CS margin at 5.3% and turning SCI margin from -1.5% to positive are prerequisites for sustainable growth.
Despite Net Income compressed to ¥2.1B by an abnormal effective tax rate of 93% and Special Losses ¥3.9B, Comprehensive Income expanded to ¥28.2B (Other Comprehensive Income ¥26.1B), increasing equity to ¥311.6B and improving Equity Ratio to 54.1%, indicating a stronger financial base. Normalization of tax burden and dissipation of one-off items are preconditions for Net Income recovery; achieving full-year Net Income forecast ¥8.0B will be a litmus test for dividend sustainability and shareholder return policy.
Free Cash Flow ¥-2.4B, Interest-bearing Debt ¥132.8B, Debt/EBITDA 4.3x, and Interest Coverage 1.72x indicate remaining challenges in cash generation and leverage resilience. OCF ¥20.2B is below Depreciation ¥26.3B, and there remains room to optimize working capital (AR 82 days, Inventory 21 days, AP 27 days). Refinancing short-term borrowings of ¥61.4B and reducing interest burden are medium-term focal points for financial stability.
This report was automatically generated by AI 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 public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.