| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥900.9B | ¥828.8B | +8.7% |
| Operating Income / Operating Profit | ¥50.2B | ¥42.3B | +18.7% |
| Ordinary Income | ¥55.3B | ¥39.3B | +40.8% |
| Net Income / Net Profit | ¥30.0B | ¥0.5B | +6154.2% |
| ROE | 5.0% | 0.1% | - |
The FY2026 full year results closed with Revenue ¥900.9B (YoY +¥72.1B +8.7%), Operating Income ¥50.2B (YoY +¥7.9B +18.7%), Ordinary Income ¥55.3B (YoY +¥16.0B +40.8%), and Net Income attributable to owners of the parent ¥38.9B (YoY +¥16.6B +74.4%), representing significant top-line and bottom-line expansion. Revenue grew across all three regions (Japan +18.3%, Europe & North America +3.7%, Asia +5.4%), and the operating margin improved to 5.6% (prior year 5.1%, +0.5pt). The substantial increase in Ordinary Income was driven by improvement in non-operating items (net +¥5.1B, an improvement of +¥15.9B), notably foreign exchange gains of ¥3.7B. Net Income was negatively impacted by special gains/losses (net loss ¥5.9B) but still rose sharply on a rebound from the prior year's one-off losses and low profit. The CTC segment led growth with Revenue +25.6% and Operating Income +98.2%, while VCCS recorded Operating Income -22.6%, highlighting a noticeable change in segment mix.
[Revenue] Revenue was ¥900.9B (+8.7%), marking the third consecutive year of revenue growth. By segment, CTC ¥196.1B (+25.6%) was the largest growth driver due to expanded demand for semiconductor test connectors. VCCS ¥561.0B (+0.2%) remained flat driven by the automotive antenna business, with sales to Toyota Motor North America at ¥134.8B (+2.4% YoY). FC & MD ¥114.6B (+3.9%) showed stable growth from medical device OEMs, and Incubation Center ¥29.2B (+977.5%) grew substantially due to business succession. By region, Japan ¥301.4B (+18.3%) showed the largest increase, with Europe & North America ¥341.9B (+3.7%) and Asia ¥257.6B (+5.4%) also growing broadly. Gross margin was 19.8% (prior year 18.9%, +0.9pt) aided by a higher proportion of high-value-added products in CTC.
[Profitability] Operating Income ¥50.2B (+18.7%) increased due to revenue growth and gross margin improvement. SG&A was ¥128.0B (SG&A ratio 14.2%, prior year 13.8%), rising at a rate above revenue growth, but the absolute expansion in gross profit (¥178.2B, +¥13.4B) absorbed this. Segment operating income: CTC ¥29.3B (Operating Margin 14.9%) made the largest contribution; VCCS ¥22.0B (3.9%) saw margin deterioration; FC & MD ¥5.5B (4.8%) declined; Incubation Center continued to record an operating loss of -¥6.9B. Non-operating items were net +¥5.1B (prior year -¥3.0B), primarily due to foreign exchange gains ¥3.7B (prior year foreign exchange losses ¥3.5B). Ordinary Income ¥55.3B (+40.8%) benefited from the significant improvement in non-operating items. Extraordinary items: special gains of ¥6.8B (including negative goodwill gain ¥3.1B and gain on sale of investment securities ¥1.5B) were offset by special losses of ¥12.7B (including business restructuring costs ¥9.1B and impairment losses ¥2.7B), resulting in net -¥5.9B. Pre-tax income of ¥49.4B less income taxes ¥10.4B yielded Net Income attributable to owners of the parent ¥38.9B (+74.4%). In conclusion, this was revenue and earnings growth accompanied by high-margin growth in CTC, low-margin structure in VCCS, and volatility from special items.
The CTC segment achieved Revenue ¥196.1B (+25.6%), Operating Income ¥29.3B (+98.2%), and Operating Margin 14.9%, delivering high-profit growth and accounting for 58.4% of consolidated operating income, becoming the largest profit-contributing segment. Regionally, Asia ¥118.8B (prior ¥95.6B) and Japan ¥13.7B led growth, with expanded demand for semiconductor test connectors and penetration of high-value-added products driving significant margin improvement. The VCCS segment recorded Revenue ¥561.0B (+0.2%) and Operating Income ¥22.0B (-22.6%), Operating Margin 3.9% (prior 5.1%, -1.2pt), turning to lower profit. Stagnant sales to key customers and raw material cost pressures plus price competition compressed margins. FC & MD posted Revenue ¥114.6B (+3.9%), Operating Income ¥5.5B (-30.2%), Operating Margin 4.8% (prior 7.2%, -2.4pt); medical device OEMs were steady but margins declined. Incubation Center expanded rapidly to Revenue ¥29.2B (prior ¥2.7B) due to business succession but continued in an investment phase with operating loss -¥6.9B (improved from -¥8.9B prior). Segment profit composition is shifting toward CTC, and recovery of VCCS margins is a key issue next fiscal year.
[Profitability] Operating Margin 5.6% (prior year 5.1%, +0.5pt) reflects expansion of high-margin CTC products and SG&A efficiency. Gross Margin 19.8% (prior year 18.9%, +0.9pt) improved but remains below the manufacturing median, indicating room for further price pass-through and product-mix improvements. Net Profit Margin 3.3% (prior year 0.1%) improved substantially including impacts of special items. ROE 5.0% (prior year 4.4%, +0.6pt) was mainly driven by improved net profit margin. Total Asset Turnover 1.01x (prior year 1.09x) declined due to asset expansion. EBITDA (Operating Income + Depreciation & Amortization) was ¥91.4B (prior year ¥82.2B), yielding EBITDA/Revenue 10.1%.
[Cash Quality] Operating Cash Flow / Net Income 1.11x appears healthy, but OCF/EBITDA 0.47x (¥43.2B/¥91.4B) is low, with deterioration in working capital (Accounts Receivable +¥4.55B? — see amounts below) suppressing cash conversion efficiency. DSO (Accounts Receivable ÷ Daily Sales) was 74 days (prior 61 days, +13 days) indicating extended collection cycles. Inventory days were 102 days (inventory ¥84.0B ÷ daily COGS), broadly stable but inventory optimization remains a task.
[Investment Efficiency] Total Asset Turnover 1.01x (prior 1.09x) declined as total assets grew +17.1% (¥762.8B → ¥893.6B) outpacing revenue growth of +8.7%. Main drivers were Accounts Receivable +32.9%, Investment Securities +53.0%, and increased cash from long-term borrowings. ROA (Ordinary Income / Total Assets) improved to 6.7% (prior 5.1%, +1.6pt) due to earnings improvement.
[Financial Soundness] Equity Ratio 67.5% (prior 68.1%, -0.6pt) remains very high, with current ratio 280.4% (prior 248.9%) and quick ratio 237.7% indicating strong short-term liquidity. Interest-bearing liabilities (short-term borrowings ¥32.1B, long-term borrowings ¥61.8B, lease obligations ¥6.3B) totaled ¥100.2B vs. cash ¥181.7B, producing net cash ¥81.5B and effectively no net debt. Debt/EBITDA 1.10x and Interest Coverage 28.0x (Operating Income ¥50.2B / Interest Expense ¥1.8B) indicate minimal interest burden. Long-term borrowings increased from ¥31.0B to ¥61.8B (+99.2%), suggesting financing for capex and business acquisitions.
Operating Cash Flow was ¥43.2B (YoY -40.3%). Cash generation from pre-tax profit ¥49.4B built up to an operating cash subtotal of ¥55.0B after adding depreciation ¥41.3B, but was offset by substantial working capital deterioration. Increases in trade receivables ¥18.5B (DSO 61 days → 74 days), inventory increase ¥4.3B, and decrease in trade payables ¥1.1B were the main factors, contributing approximately -¥24B to working capital. Corporate tax payments ¥13.9B also reduced cash. Investing Cash Flow was -¥44.2B, including capex ¥32.1B (purchase of tangible fixed assets), intangible asset purchases ¥3.3B, business acquisitions ¥4.9B, and investment securities purchases ¥5.6B. Free Cash Flow was -¥1.0B (Operating CF ¥43.2B − Investing CF ¥44.2B), nearly balanced, reflecting a balance between growth investment and cash generation. Financing Cash Flow was -¥1.7B: long-term borrowings raised ¥47.2B and repayments ¥30.0B netted +¥17.2B, while dividend payments ¥11.4B and share buybacks ¥7.2B were outflows, and lease repayments ¥4.5B contributed to a small net outflow. Cash increased by ¥10.5B including FX impact +¥13.3B, ending cash balance ¥181.7B. Short-term priorities include correcting DSO and optimizing inventory as levers to improve OCF/EBITDA and achieve stable positive FCF next fiscal year.
Core profit was Operating Income ¥50.2B, and non-operating income ¥7.8B (interest income ¥0.7B, foreign exchange gains ¥3.7B, dividend income ¥1.0B, etc.) accounted for 0.9% of revenue and are limited in scale. Foreign exchange gains reversed from prior year foreign exchange losses ¥3.5B, producing approximately ¥7.2B of positive swing, but this is a volatile, non-recurring item. Extraordinary items: special gains ¥6.8B (including negative goodwill gain ¥3.1B from business succession and gain on sale of investment securities ¥1.5B) versus special losses ¥12.7B (business restructuring costs ¥9.1B, impairment losses ¥2.7B, loss on disposal of fixed assets ¥0.7B), resulting in net -¥5.9B. The absolute value of special items ¥19.6B is roughly 50% of Net Income ¥38.9B, indicating significant influence from one-off items. Operating CF ¥43.2B / Net Income ¥38.9B ratio of 1.11x appears healthy on the surface, but excluding working capital effects the operating subtotal ¥55.0B / Net Income = 1.41x, suggesting accrual quality is generally sound. Nevertheless, OCF/EBITDA 0.47x remains low, with increases in receivables and inventory suppressing cash conversion; strengthening working capital management is necessary to improve earnings quality. Comprehensive income ¥94.5B (foreign currency translation adjustments ¥26.9B, valuation difference on available-for-sale securities ¥7.8B, retirement benefit adjustments ¥20.8B) significantly exceeded net income ¥38.9B, indicating balance-sheet valuation gains boosted reported profits. Next fiscal year, elimination of one-off costs is expected to improve earnings quality.
The company forecasts for FY2027: Revenue ¥970.0B (YoY +7.7%), Operating Income ¥70.0B (YoY +39.5%), Ordinary Income ¥65.0B (YoY +17.6%), Net Income attributable to owners of the parent ¥45.0B (YoY +15.7%), and EPS ¥193.05. The plan assumes a significant expansion of operating margin to 7.2% (prior year 5.6%, +1.6pt), driven by continued high-margin growth in CTC, margin recovery in VCCS, and reduction of losses in the incubation area. Revenue progress at Q2 was ¥467.3B (48.2% of full-year plan), and Operating Income ¥24.8B (35.4% of plan), indicating a back-end weighted plan and assuming recovery in H2 from Q3 onwards. Dividend guidance is DPS ¥32 (prior year ¥56, normalized), targeting a payout ratio of around 50%. The key to achieving the plan is elimination of special items and improvement in operating leverage, and success in working capital management will determine stability of cash generation.
Dividends paid were ¥25 at Q2-end and ¥31 at year-end, total ¥56 (prior year ¥24, +133.3%). Payout Ratio was 50.2% (total dividends ¥19.5B against Net Income ¥38.9B), which is within a sustainable range. Share buybacks of ¥7.2B were implemented, making total shareholder return ¥26.7B (dividends ¥19.5B + buybacks ¥7.2B), and Total Return Ratio was 68.7%. FCF was -¥1.0B, a slight negative, but cash on hand ¥181.7B and strong financial flexibility meant distributions posed no issue. Dividend forecast for FY2027 is ¥32 (YoY -42.9%, normalized), showing a focus on internal reserves. The company intends to maintain a payout ratio of about 50%; there is room for further increases tied to profit growth, but improvements in cash conversion efficiency are a precondition for expanding total returns.
Segment concentration risk: VCCS accounts for 62.3% of Revenue, and sales to Toyota Motor North America account for 15.0% of Revenue. High dependence on the automotive cycle and specific customers means delays in development of new products for autonomous driving/ADAS or changes in procurement policies of major customers could materially impact performance. VCCS’s low Operating Margin of 3.9% creates risk that prolonged raw material cost inflation or price competition will further compress margins.
Working capital and cash conversion risk: DSO 74 days (YoY +13 days) and prolonged accounts receivable combined with elevated inventory days 102 are keeping OCF/EBITDA at a low 0.47x. Accounts receivable expanded to ¥183.8B (+32.9%), outpacing revenue growth, and if collection delays or bad debts materialize, both liquidity and profitability could be affected. Failure in working capital management could lead to persistent negative FCF, making it difficult to balance growth investment and shareholder returns.
Volatility of special items: This fiscal year recorded special losses ¥12.7B (business restructuring costs ¥9.1B, impairment losses ¥2.7B) that pressured net income. Incubation Center continues to post operating losses -¥6.9B; if monetization of new businesses is delayed or additional restructuring becomes necessary, future special loss recognition could recur. Negative goodwill gain ¥3.1B was a one-off from business succession and will not recur. Foreign exchange gains ¥3.7B are volatile (prior year was a loss) so stability of non-operating income is limited.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.6% | 7.8% (4.6%–12.3%) | -2.2pt |
| Net Profit Margin | 3.3% | 5.2% (2.3%–8.2%) | -1.9pt |
The company’s Operating Margin 5.6% is 2.2pt below the manufacturing median 7.8%, positioning it somewhat low within the industry. While CTC is becoming highly profitable, VCCS’s low margin (3.9%) is pulling down the consolidated average.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.7% | 3.7% (-0.4%–9.3%) | +5.0pt |
The company’s Revenue Growth Rate 8.7% exceeds the industry median 3.7% by 5.0pt, showing above-median growth driven by high CTC growth and effects from business succession.
※Source: Company aggregation
Structural change as CTC’s high-margin growth transforms the profit structure is observable. With Operating Margin 14.9% and 58.4% contribution to operating income, the center of profit contribution has shifted from the previously dominant VCCS three years ago. If demand for semiconductor test connectors and penetration in the Asian market continue, stepwise improvement in consolidated operating margin (from 5.6% toward the 7.2% target) is likely. Conversely, VCCS’s declining Operating Margin 3.9% (prior 5.1%) creates a segment concentration risk if price pass-through and product-mix improvements do not progress.
The success of working capital management will determine medium-term upside for ROE and FCF. Prolonged DSO at 74 days and low OCF/EBITDA 0.47x could be temporary with growth, but if structural collection delays or elevated inventory persist, cash generation will be chronically weakened. If accounts receivable collection normalizes (shortening DSO to ≤65 days) and inventory is optimized in the coming periods, there is potential to improve OCF/EBITDA to >0.7x, achieve sustained positive FCF, and increase flexibility on total returns.
Elimination of one-off special items and normalization of FX effects should improve earnings quality in FY2027. Business restructuring costs ¥9.1B and impairment losses ¥2.7B are non-recurring and negative goodwill ¥3.1B is non-repeatable; therefore, the plan’s Operating Income growth of +39.5% outpacing Net Income growth of +15.7% is expected. However, the FX non-operating gain ¥3.7B is volatile and depending on next year’s assumptions, the achievability of Ordinary Income may vary; monitoring is required.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute 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 own responsibility; please consult a professional advisor if necessary.