| Indicator | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1138.4B | ¥1058.3B | +7.6% |
| Operating Income / Operating Profit | ¥38.5B | ¥1.3B | -89.9% |
| Ordinary Income | ¥45.8B | ¥-5.2B | -47.3% |
| Net Income / Net Profit | ¥56.0B | ¥-33.3B | +268.1% |
| ROE | 7.7% | -5.0% | - |
The fiscal year ended March 2026 reported revenue of 1138.4B (YoY +80.1B +7.6%), Operating Income of 38.5B (YoY +37.2B +2900.0%), Ordinary Income of 45.8B (YoY +51.0B, turned from a loss of 5.2B in the prior year to profit), and Net Income of 56.0B (YoY +89.3B, turned from a loss of 33.3B in the prior year to profit). Revenue increased for the first time in three years, and operating results materially improved from the prior low level, establishing profitability. Gross margin improved to 15.5% (prior year 13.6%) up +1.9pt, SG&A ratio compressed to 12.1% (prior year 13.4%), and operating margin expanded to 3.4% (prior year 0.1%) up +3.3pt. The core PowerDevice business recovered strongly with sales of 440.1B (+10.3%) and Operating Income of 25.3B (+212.7%), and PowerSystems maintained high profitability with Operating Income of 12.1B (margin 16.3%). Extraordinary gains of 31.1B (gain on sale of available-for-sale securities 24.6B, gain on sale of fixed assets 4.0B, negative goodwill 1.2B) boosted Net Income. Operating Cash Flow (OCF) was 63.2B (YoY +389.9%), producing Free Cash Flow of 42.0B. ROE improved to 7.7%, but ROIC equivalent remains low; working capital efficiency (CCC 161 days) and low gross margin structure (15.5%) are issues.
Revenue: Revenue was 1138.4B (YoY +80.1B +7.6%) and increased. By segment, PowerDevice achieved external sales of 334.9B (+7.7%) and total sales including internal transactions of 440.1B (+10.3%), achieving double-digit growth driven by recovery in volumes of core semiconductor products and improvements in price/mix. PowerUnit (formerly Electrical Components) recorded external sales of 728.1B, representing the largest share at 64.0% of total sales; EV/PHEV chargers and inverters performed steadily. PowerSystems sales were 74.1B (+7.4%), capturing increased demand for power supplies for communication equipment. Revenue composition: PowerDevice external sales 29.4% of total, PowerUnit 64.0%, PowerSystems 6.5%. Company-wide gross margin was 15.5%, improving +1.9pt from 13.6% the prior year, and cost of goods sold ratio declined to 84.5%. With both revenue growth and gross margin improvement, gross profit rose materially to 176.7B (prior year 143.5B, +33.2B +23.1%).
Profitability: SG&A expenses were 138.2B (prior year 142.2B, -4.0B -2.8%), improving the SG&A ratio to 12.1% (prior year 13.4%) down -1.3pt. Company-wide cost restraint (segment adjustment ▲37.3B, prior year ▲46.6B) contributed. Operating Income improved substantially to 38.5B (prior year 1.3B, +37.2B; operating margin 3.4%). Non-operating items included financial income of 17.9B (dividends received 6.5B, interest income 2.9B) which contributed, while foreign exchange losses of 11.8B were recorded, resulting in net non-operating income of +7.3B (prior year ▲6.5B). Ordinary Income turned to 45.8B (prior year ▲5.2B). Extraordinary gains of 31.1B (gain on sale of available-for-sale securities 24.6B, gain on sale of fixed assets 4.0B, negative goodwill 1.2B) and extraordinary losses of 9.6B (business structure improvement costs 14.1B, loss on disposal of fixed assets 2.7B) resulted in net extraordinary gain of +21.5B. Profit before tax was 67.3B, less corporate taxes 10.7B (effective tax rate 15.9%), yielding Net Income of 56.0B (prior year ▲33.3B) and a substantial turnaround to profit. Comprehensive income was 76.1B, including pension-related adjustment +24.3B and valuation difference on available-for-sale securities ▲4.4B. In conclusion, revenue and profit increased and final profit turned sharply positive due in part to extraordinary gains.
PowerDevice: Sales 440.1B (prior year 399.0B, +10.3%), Operating Income 25.3B (prior year 8.1B, +212.7%), operating margin 5.8%. Recovering substantially from prior low profitability, driven by increased demand and price improvement for diodes, power MOSFETs, and power modules. PowerUnit: Sales 728.1B (prior year 676.8B, +7.6%), Operating Income 38.5B (prior year 49.8B, -22.7%), operating margin 5.3%. Revenue grew but margin declined from 7.4% in the prior year. PowerSystems: Sales 74.1B (prior year 69.0B, +7.4%), Operating Income 12.1B (prior year 20.1B, -39.9%), operating margin 16.3%. Maintained high profitability but dropped significantly from 29.1% in prior year. Others: sales 1.3B, operating loss 0.1B. Segment-wise, recovery in PowerDevice profitability led the improvement in consolidated operating income, while margin decline in the high-margin PowerSystems constrained upside to consolidated margin.
Profitability: Operating margin improved to 3.4% (prior year 0.1%) up +3.3pt; gross margin rose to 15.5% (prior year 13.6%) up +1.9pt; SG&A ratio improved to 12.1% (prior year 13.4%) down -1.3pt. ROE improved markedly to 7.7% (prior year ▲3.6%), with net profit margin 5.0% (prior year ▲3.1%), total asset turnover 0.79x, and financial leverage 1.99x. EBITDA margin was 8.3% (EBITDA 94.3B / Revenue 1138.4B), which includes depreciation & amortization of 55.8B. Cash quality: OCF / Net Income was 1.12x, indicating accounting profits are broadly supported by cash. OCF / EBITDA ratio was 0.67x, showing weak cash conversion, with working capital tie-up (receivables 202.0B + inventories 119.3B - payables 140.1B = working capital 181.2B) as a pressure point. DSO 65 days, DIO 149 days, DPO 53 days, CCC 161 days — prolonged. Investment efficiency: ROIC equivalent (NOPAT / Invested Capital) = Operating Income 38.5B × (1 - effective tax rate 0.159) = 32.4B, Invested Capital (Total Assets 1446.5B - interest-free liabilities 725.6B) = 720.9B, yielding ~4.5%. ROA (based on Ordinary Income) is 3.3%. Financial soundness: Equity Ratio 50.2% (prior year 48.5%), D/E ratio 0.99x, Debt/Capital 37.1% within investment-grade range. Current ratio 284.4%, quick ratio 248.1% — liquidity is very strong. Interest-bearing debt 427.7B (long-term 308.7B, short-term 119.0B), cash 269.2B, net interest-bearing debt 158.5B. Debt/EBITDA 4.53x, Interest Coverage 7.0x (Operating Income 38.5B / interest expense 5.5B).
Operating Cash Flow was 63.2B (prior year ▲21.8B, +85.0B, YoY +389.9%), establishing positive OCF. OCF subtotal (before working capital changes) was 72.0B, including depreciation 55.8B, business structure improvement costs 14.1B, and negative goodwill ▲1.2B. In working capital, inventory decrease +11.0B contributed, while increase in trade receivables ▲9.2B and decrease in trade payables ▲4.9B were cash outflows. Corporate tax payments ▲12.8B, interest & dividend receipts 9.5B, and interest payments ▲5.6B resulted in OCF generation of 63.2B. Investing Cash Flow was ▲21.2B: capital expenditure ▲53.6B (capex to D&A ratio 0.96x indicating near-maintenance level) and intangible asset acquisitions ▲2.6B were offset by sale of available-for-sale securities +54.4B. Included were proceeds from sale of fixed assets +5.4B and acquisition of subsidiary shares ▲22.7B. Free Cash Flow was 42.0B (OCF 63.2B + Investing CF ▲21.2B), sufficiently covering dividend payments ▲6.7B and share buybacks ▲5.4B. Financing Cash Flow was +19.0B, including long-term borrowings +160.0B, long-term borrowings repayments ▲120.3B, net increase in short-term borrowings +26.4B (ending balance 118.96B - prior year 92.60B), bond redemption ▲5.3B, share repurchase ▲5.4B, and dividend payments ▲6.7B. Cash and cash equivalents increased from 203.97B at the beginning of the period to 269.22B at the end, +65.25B, materially improving liquidity. OCF / EBITDA at 0.67x is low; working capital improvement (inventory compression and faster receivables collection) is key to improving cash conversion.
Quality of earnings: recurring profit (Operating Income 38.5B + net non-operating income 7.3B) equals 45.8B, while one-off factors (extraordinary gains 31.1B - extraordinary losses 9.6B = net 21.5B) account for 38.4% of Net Income 56.0B. Breakdown of extraordinary gains: gain on sale of available-for-sale securities 24.6B (partial sale of securities holdings totaling 114.5B), gain on sale of fixed assets 4.0B, negative goodwill 1.2B (recognized in connection with Kyocera’s transfer of its power device business). Of non-operating income 17.9B, dividends received 6.5B and foreign exchange gains 4.9B (offset by foreign exchange losses 11.8B in non-operating expense, net foreign exchange impact ▲6.9B), and other non-operating income 2.5B. Non-operating expenses 10.6B comprise interest expense 5.5B and other non-operating expenses 5.1B. From an accrual perspective, OCF 63.2B exceeds Net Income 56.0B (OCF / Net Income 1.12x), indicating accounting profit is broadly backed by cash, but OCF / EBITDA 0.67x reflects low conversion. The difference between comprehensive income 76.1B and Net Income 56.0B (20.1B) consists of pension-related adjustment +24.3B, valuation difference on available-for-sale securities ▲4.4B, and foreign currency translation adjustment ▲0.4B. Heavy reliance on extraordinary gains is evident; the FY2027 guidance (Net Income 27.0B, net margin 2.2%) indicates core earnings after one-off items will depend on operating margin remaining in the 3% range.
FY2027 (year ending March 2027) forecast: Revenue 1212.0B (YoY +73.6B +6.5%), Operating Income 40.0B (YoY +1.5B +3.9%), Ordinary Income 39.0B (YoY ▲6.8B -14.8%), Net Income 27.0B (YoY ▲29.0B -51.8%), EPS 265.20 yen. Revenue is expected to maintain growth, with Operating Income roughly flat (operating margin 3.3%) assuming gross margin improvement and cost optimization. Ordinary Income is expected to decline due to conservative assumptions on FX impacts and financial income. Net Income is projected to decline substantially due to the loss of prior-year extraordinary gains (net 21.5B), though core earnings (operating income basis) are planned to slightly increase. Progress rate based on year-to-date results: Revenue 94.0% (1138.4B / 1212.0B), Operating Income 96.3% (38.5B / 40.0B), indicating front-loading. Full-year attainment assumes PowerDevice maintains price/mix and PowerSystems sustains high profitability. No dividend is assumed, reflecting reprioritization toward financial soundness and investment capacity.
Dividend is a year-end dividend of 100 yen (total dividends 6.7B, shares outstanding 10,338k - treasury shares 158k), implying a payout ratio of 18.2% (total dividends 6.7B / Net Income 56.0B × 100), conservative. The prior year had no dividend; this year resumed dividends reflecting profit recovery. Share buybacks totaled 5.4B (cash outflow 5.3B), making total shareholder returns 12.1B and total return ratio 21.6%. Coverage of total returns by Free Cash Flow (42.0B) is 3.47x, indicating ample capacity. With cash balance 269.2B and OCF 63.2B, liquidity remains abundant post-dividend and buybacks, and sustainability is high. FY2027 assumes no dividend, likely reflecting reassessment of profit levels after loss of extraordinary gains and prioritization of funding for M&A (Kyocera business succession) and capital expenditure. Dividend policy is performance-linked, aiming for a payout ratio target around 20% subject to balancing financial capacity.
Segment concentration risk: PowerDevice accounts for 85.4% of external sales (38.7% including internal transactions), making consolidated performance highly sensitive to supply/demand and pricing in that segment. Semiconductor market weakness or prolonged customer inventory adjustments could materially impair the 25.3B Operating Income contribution (65.8% of consolidated operating income). Large margin gaps across segments (PowerDevice 5.8%, PowerSystems 16.3%) mean the low-margin core business dilutes consolidated profitability.
Working capital efficiency and inventory risk: CCC 161 days (DSO 65 days, DIO 149 days, DPO 53 days) is prolonged, with working capital 181.2B equal to 15.9% of revenue. Inventories 119.3B (finished goods 119.3B, raw materials 211.9B, work-in-process 61.2B, total 392.4B) account for 27.1% of total assets, creating significant impairment and obsolescence risk in a demand downturn. OCF / EBITDA 0.67x is low; delayed improvement in cash conversion could strain liquidity.
FX volatility and low gross margin structure: Net FX effect ▲6.9B (non-operating FX gains 4.9B - non-operating FX losses 11.8B) equals 17.9% of Operating Income 38.5B, indicating high FX sensitivity. Gross margin 15.5% is well below industry benchmarks (over 20%), implying weak resilience to raw material cost increases or price declines. Operating margin 3.4% is low, limiting fixed-cost coverage. Debt/EBITDA 4.53x is moderately high, posing credit deterioration risk in economic downturns. Asset retirement obligations 15.93B (prior year 8.92B, +78.6%) have surged, potentially increasing future cash outflows.
Revenue & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.4% | 7.8% (4.6%–12.3%) | -4.4pt |
| Net Margin | 4.9% | 5.2% (2.3%–8.2%) | -0.3pt |
Operating margin trails the industry median 7.8% by -4.4pt, indicating low profitability within the sector. Net margin is roughly in line with the median 5.2%, but heavy contribution from extraordinary gains (21.5B = 38.4% of Net Income) weakens recurring earnings power.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.6% | 3.7% (-0.4%–9.3%) | +3.9pt |
Revenue growth of 7.6% exceeds the sector median 3.7% by +3.9pt, indicating top-line recovery strength, supported by demand recovery and price improvement in PowerDevice and steady performance in PowerUnit.
※ Source: Company compilation
Turnaround to profitability and strong liquidity enhance downside resilience. Operating Income improved significantly to 38.5B (operating margin 3.4%), moving away from near-zero operating results in the prior year. Current ratio 284.4% and cash 269.2B minimize short-term maturity risk. However, extraordinary net gains 21.5B account for 38.4% of Net Income 56.0B, and as FY2027 guidance (Net Income 27.0B, net margin 2.2%) indicates, core earnings after one-off items depend on maintaining an operating margin in the 3% range. Gross margin 15.5% is substantially below the industry benchmark (over 20%), leaving limited resilience against price declines or raw material inflation. Improvement in PowerDevice mix and price discipline is key to lifting company margins.
Working capital improvement and leverage reduction are focal points for sustainable value creation. CCC 161 days (DSO 65, DIO 149) is prolonged and OCF / EBITDA 0.67x indicates weak cash conversion. Compressing inventory 119.3B (10.5% of sales) and accelerating receivables collection could enable OCF > 90B (OCF / EBITDA > 0.9x). The leverage target is to reduce Debt/EBITDA 4.53x to below 3.0x over the medium term; maintaining FCF in the 40B range and gradual repayment of interest-bearing debt would improve credit cost and financial flexibility. ROIC equivalent 4.5% falls below estimated capital cost; improving working capital efficiency and operating margin (≥5%) is required to achieve ROIC > 8%.
Segment concentration and margin dispersion are sources of volatility. PowerDevice accounts for 85.4% of sales and consolidated sensitivity to its market is high. With PowerDevice margin 5.8% versus PowerSystems 16.3% (~3x difference), portfolio optimization (expanding high-margin businesses and enhancing value-add in PowerDevice) is a long-term theme to improve consolidated profitability. FY2027 guidance is conservative (operating income roughly flat, operating margin 3.3%), but order backlog and contract liability disclosures are limited, providing few leading indicators. Monitoring FX volatility (net ▲6.9B, 17.9% of Operating Income) and inventory impairment risk (inventory total 392.4B) is necessary.
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 professionals as necessary.