| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥2351.0B | ¥2254.2B | +4.3% |
| Operating Income | ¥187.4B | ¥207.1B | -9.5% |
| Ordinary Income | ¥225.4B | ¥203.7B | +10.7% |
| Net Income | ¥98.1B | ¥167.6B | -41.5% |
| ROE | 5.5% | 9.2% | - |
For the fiscal year ended March 2026, Revenue was ¥2,350.99B (YoY +¥96.75B +4.3%), Operating Income was ¥187.45B (YoY -¥19.66B -9.5%), Ordinary Income was ¥225.44B (YoY +¥21.70B +10.7%), and Net Income was ¥98.13B (YoY -¥69.48B -41.5%). The company delivered revenue growth with profit decline: an increase in SG&A ratio to 43.8% (prior year 43.1%) pressured profits and Operating Margin fell 122bp to 8.0%. Conversely, non-operating items — notably foreign exchange gains of ¥34.84B — drove recovery at the ordinary income level. Net Income declined sharply due to recording of special losses of ¥33.6B including valuation losses on investment securities. By region, North America recovered strongly with Revenue of ¥571.23B (+20.2%) and Operating Income of ¥28.58B (+403.7%), while Japan struggled with Revenue of ¥1,687.99B (-3.3%) and Operating Income of ¥140.94B (-35.7%), highlighting domestic concentration risks.
[Revenue] Revenue reached ¥2,350.99B (YoY +4.3%). By region, North America was ¥571.23B (+20.2%) and Other regions ¥372.48B (+7.3%), led by overseas businesses, while Japan declined to ¥1,687.99B (-3.3%). By product, physiological measurement devices were ¥536.36B (YoY +14.4%), therapeutic devices ¥562.86B (YoY +5.8%) performed well, while patient monitoring systems were ¥842.58B (YoY -0.8%) largely flat. Revenue by customer location: Japan ¥1,444.06B, North America ¥498.08B (prior year ¥419.00B), Europe ¥136.49B, underscoring notable expansion in North America. Overseas revenue ratio rose to 38.6%, indicating progress in geographic diversification.
[Profitability] Operating Income was ¥187.45B (-9.5%). Cost of sales was ¥1,133.72B (cost ratio 48.2%) yielding Gross Profit ¥1,217.26B (gross margin 51.8%, down 20bp from 52.0%). However, SG&A increased to ¥1,029.81B (SG&A ratio 43.8%, up 100bp from 42.8%), which weighed on profits. SG&A breakdown includes Salaries and Allowances ¥435.99B (prior year ¥408.83B, +6.6%), Depreciation ¥37.32B (prior year ¥28.60B, +30.5%), and Retirement Benefit Expenses ¥13.66B (prior year ¥15.80B), with notable increases in personnel and depreciation costs. Operating margin was 8.0% (down 122bp from 9.2%). Ordinary Income improved significantly to ¥225.44B (+10.7%) from the operating level. Non-operating income totaled ¥45.03B, of which foreign exchange gains ¥34.84B contributed materially; non-operating expenses were ¥7.05B, including interest paid ¥3.41B, and were minor. Special income was ¥7.49B (including gain on sale of investment securities ¥5.78B), while special losses amounted to ¥33.60B (including valuation loss on investment securities ¥5.10B, impairment loss ¥0.75B), with one-off items pressuring Net Income. Pre-tax income was ¥199.33B; after deducting income taxes of ¥53.62B, Net Income was ¥98.13B (-41.5%). Comprehensive income was ¥160.16B, ¥62B higher than Net Income, reflecting OCI items: foreign currency translation adjustments ¥0.15B, valuation difference on available-for-sale securities ¥5.07B, and adjustments related to retirement benefits ¥9.24B, indicating a multifaceted view of performance. In conclusion, revenue increased but profit decreased; growth overseas was offset by higher personnel costs and stagnation in domestic operations.
The Japan segment recorded Revenue ¥1,687.99B (YoY -3.3%) and Operating Income ¥140.94B (YoY -35.7%), with Operating Margin 8.3% (down 430bp from 12.6%), representing a significant profit decline. Domestic price competition and higher SG&A pressured profitability. The North America segment posted Revenue ¥571.23B (+20.2%) and Operating Income ¥28.58B (turning from an operating loss of ¥9.41B in the prior year to profit, equivalent to +403.7%), with Operating Margin 5.0%, a dramatic improvement due to strengthened sales organization and improved utilization. The Other regions segment had Revenue ¥372.48B (+7.3%) and Operating Income ¥22.50B (+20.4%), Operating Margin 6.0%, showing stable growth. Consolidated Operating Income after inter-segment adjustments was ¥187.45B, with North America’s progress supporting group results.
[Profitability] ROE of 5.5% declined YoY. DuPont decomposition shows Net Profit Margin 4.2% (prior year 6.3%), Total Asset Turnover 0.92x (prior year 0.87x), Financial Leverage 1.43x (prior year 1.42x); the decline in Net Profit Margin is the main driver of weaker ROE. Operating Margin 8.0% fell 122bp from 9.2% due to higher SG&A ratio. Gross Margin 51.8% decreased 20bp from 52.0%. ROA 8.8% (on Ordinary Income basis) improved 0.9pt from 7.9%, highlighting the contribution of foreign exchange gains in non-operating items. [Cash Quality] Operating Cash Flow (OCF) was ¥210.55B, 2.15x Net Income of ¥98.13B, indicating high cash quality. From OCF subtotal ¥286.28B, changes in working capital contributed receivables +¥33.68B, inventories +¥18.86B, and payables -¥8.70B. Days sales outstanding were 102 days (prior year 108), inventory days 180 days (prior year 155), revealing prolonged inventory holding. Cash Conversion Cycle was 218 days (prior year 188), worsening by 30 days and indicating working capital efficiency issues. [Investment Efficiency] R&D expense was ¥74.53B (3.2% of Revenue), sustaining product innovation investment. Capital expenditure was ¥57.27B (2.4% of Revenue), 1.20x depreciation expense ¥47.57B, indicating strategic investment exceeding depreciation. Total Asset Turnover improved to 0.92x from 0.87x, supported by North American revenue expansion. [Financial Soundness] Equity Ratio was 70.1% (prior year 69.9%), very stable. Interest-bearing debt was ¥225.93B (short-term borrowings ¥0.50B + long-term borrowings ¥223.88B + lease liabilities ¥1.39B) while cash and deposits were ¥356.95B, yielding net cash ¥131.02B. Debt/EBITDA ratio was 0.96x (EBITDA ¥235.02B = Operating Income ¥187.45B + Depreciation ¥47.57B). Interest Coverage was 61.8x (Operating Income ¥187.45B ÷ interest paid ¥3.04B), showing robust ability to service interest. Current ratio 359.7% and quick ratio 293.9% indicate ample short-term liquidity.
OCF was ¥210.55B (YoY +37.7%), a significant improvement. From OCF subtotal ¥286.28B, working capital changes yielded receivables decrease +¥33.68B and inventories decrease +¥18.86B as positive effects, partially offset by payables decrease -¥8.70B. After payment of income taxes ¥76.43B, OCF was generated. OCF/Net Income multiple was 2.15x, indicating solid cash backing of profits. Investing Cash Flow was -¥82.85B, including capex -¥57.27B, acquisition of intangible assets -¥21.31B, acquisition of subsidiary shares -¥5.40B, with recovery of ¥8.27B from sale of investment securities. Free Cash Flow was ¥127.70B (turning positive from prior year -¥98.52B), healthy. Financing Cash Flow was -¥115.99B, with dividend payments -¥52.33B and share buybacks -¥66.16B, returning total capital of ¥118.49B. Meanwhile, long-term borrowings +¥255.00B were raised, enabling a major reduction in short-term borrowings from ¥260.30B to ¥0.50B and shifting the debt profile toward long-term. Cash and cash equivalents at year-end were ¥456.37B (prior year ¥430.61B), expanding liquidity. FCF covered dividends ¥51.08B + capex ¥57.27B = ¥108.35B at 1.18x, and the company demonstrated capacity to cover share buybacks as well.
Operating Income ¥187.45B vs Ordinary Income ¥225.44B shows an improvement of ¥38B driven largely by non-operating income ¥45.03B (of which foreign exchange gains ¥34.84B), a temporary factor; net FX contribution (FX gains ¥34.84B - FX losses ¥9.51B = ¥25.33B) represents about 13.5% of Operating Income. Under adverse FX conditions, ordinary income may decline. Special losses of ¥33.60B (valuation loss on investment securities ¥5.10B, impairment loss ¥0.75B, loss on retirement of fixed assets ¥0.53B, etc.) depressed Net Income and account for most of the reduction from Ordinary Income ¥225.44B to pre-tax income ¥199.33B. Comprehensive income ¥160.16B exceeded Net Income ¥98.13B by ¥62B, driven by Other Comprehensive Income ¥14.46B (valuation difference on available-for-sale securities ¥5.07B, retirement benefit adjustments ¥9.24B, foreign currency translation adjustments ¥0.15B). OCF ¥210.55B was 2.15x Net Income, supported by working capital release (receivables +¥33.68B, inventories +¥18.86B), indicating strong alignment of profit and cash. Regarding earnings sustainability, core operating profitability weakened YoY, while variability in non-operating and special items was large; core sustainable earnings should be evaluated on operating income of ¥187.45B.
Full-year guidance assumes Revenue ¥2,325.00B (YoY -1.1%), Operating Income ¥235.00B (YoY +25.4%), Ordinary Income ¥235.00B (YoY +4.2%), and Net Income ¥150.00B (EPS forecast ¥93.77). Revenue is forecast to be slightly down while Operating Margin is expected to improve to 10.1% (up 210bp from 8.0%), assuming SG&A control and sustained North American profitability. Progress rates: Revenue 101.1% (first half exceeded full-year forecast), Operating Income 79.8% (first half ¥187.45B ÷ full-year ¥235.00B), implying an assumed incremental Operating Income of ¥55.55B in H2. Ordinary Income progress 95.9% indicates most achieved in H1, factoring in continuation of FX gains. Net Income progress is 65.4% (H1 ¥98.13B vs full-year ¥150.00B), assuming H2 Net Income increment of ¥51.87B by limiting special losses. Dividend forecast is annual ¥16.00 (payout ratio 17.1%), a conservative level and implying a dividend cut from annual ¥32.00 (prior year) — note mid-term dividend of ¥16.00 already paid. The slight Revenue decline assumption reflects cautious domestic outlook and delayed smoothing of year-end concentrated shipments; operating profit improvement depends on solidifying North American profitability and SG&A efficiency. Given H1 achieved ~80% of Operating Income guidance and limited upside in H2, attainment probability is relatively high, but FX and domestic demand variability remain risks.
The company paid an interim dividend of ¥16.00, full-year dividend ¥32.00 (doubled from prior year ¥15.00), implying payout ratio 36.2% based on current period Net Income ¥98.13B. Total dividends were ¥51.08B (consolidated basis), adjusted after trust-held shares ¥0.29B from cash dividends ¥52.33B. Share buybacks totaled ¥66.16B, making total return ¥117.24B (dividends ¥51.08B + buybacks ¥66.16B). Total Return Ratio was 119.5% (total return ¥117.24B ÷ Net Income ¥98.13B), exceeding profit, but covered by FCF ¥127.70B, indicating healthy return capacity. DOE (dividend on equity) is approximately 2.8% (dividends ¥51.08B ÷ equity ¥1,798.24B), an appropriate level. Shares outstanding at year-end were 170,961 thousand, treasury shares 10,989 thousand, implying free float ~160,000 thousand. Treasury shares decreased by 2,718 thousand from prior year-end 13,707 thousand, suggesting concurrent buybacks and stock compensation program activity. Forecasted dividend for next fiscal year is annual ¥16.00 (interim ¥8.00 assumed), implying payout ratio 17.1%, a significant decline from H1 realized 36.2%, reflecting conservative dividend policy assuming Net Income increases to ¥150.00B. As long as FCF remains healthy, dividend maintenance/increase potential is present and continuity of total return policy is high.
Risk of deterioration in domestic business profitability: Japan segment reported Revenue ¥1,687.99B (YoY -3.3%) and Operating Income ¥140.94B (YoY -35.7%). Operating Margin 8.3% fell 430bp from 12.6%, with intensified domestic price competition and fixed SG&A burdens squeezing profits. Heavy domestic dependency (71.8% of Revenue) means public healthcare budget cuts or delayed smoothing of year-end concentrated shipments could materially affect overall performance. Contract liabilities (advance receipts) ¥43.0B represent only 1.8% of Revenue, lacking depth as a leading indicator of order backlog.
Risk of worsening working capital efficiency: Inventories ¥333.32B (prior year ¥328.79B) with inventory days 180 days (prior year 155), deteriorated by 25 days. Receivables ¥656.73B (prior year ¥667.08B) with collection days 102 days (prior year 108) improved, but Cash Conversion Cycle extended to 218 days (prior year 188) by 30 days. Prolonged inventory holding increases capital lock-up and obsolescence risk, and delays in working capital compression constrain growth investment capacity.
Earnings volatility from FX fluctuations: FX gains ¥34.84B account for 15.5% of Ordinary Income ¥225.44B; net FX contribution ¥25.33B equals 13.5% of Operating Income ¥187.45B. With overseas revenue ratio 38.6% and increased foreign currency denominated sales, earnings upside in yen depreciation and downside in yen appreciation both increase. Disclosure on FX hedging is limited, so short-term FX moves directly impact earnings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.0% | 7.8% (4.6%–12.3%) | +0.2pt |
| Net Profit Margin | 4.2% | 5.2% (2.3%–8.2%) | -1.0pt |
Operating Margin is 0.2pt above the industry median, indicating relatively strong profitability, while Net Profit Margin is 1.0pt below, reflecting the impact of special losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.3% | 3.7% (-0.4%–9.3%) | +0.6pt |
Revenue growth exceeds the industry median by 0.6pt, reflecting benefits from overseas expansion.
※ Source: Company compilation
Acceleration of North American profitability is key to structural change: North America turned from an operating loss of ¥9.41B to Operating Income ¥28.58B (equivalent to +403.7%), achieving Operating Margin 5.0%. Revenue ¥571.23B (+20.2%) maintained high growth while improving profitability, evidencing success in strengthening sales organization and utilization. Achieving next fiscal year’s Operating Income forecast +25.4% depends critically on expanding North American contribution and is central to the company’s plan to raise group Operating Margin to 10.1%. Meanwhile, the domestic segment continues to struggle with Operating Margin 8.3% (down 430bp from prior year), and success in domestic price revision and product mix improvement will determine medium-term earnings base.
Significant scope to improve working capital efficiency: Inventory days 180 days (prior year 155) and Cash Conversion Cycle 218 days (prior year 188) show worsening working capital efficiency. Inventories ¥333.32B represent 14.2% of Revenue, a high level raising obsolescence and capital lock-up concerns. However, OCF ¥210.55B, 2.15x Net Income, provides strong cash generation; compressing inventory and receivables could unlock substantial additional cash. FCF ¥127.70B covers dividends + capex + buybacks of ¥117.24B, indicating structural ability to return capital, and working capital improvement could lift ROIC/ROE.
Balance between FX contribution and cost increases determines results: FX gains ¥34.84B boosted Ordinary Income by +10.7%, but Operating Income fell -9.5% as SG&A ratio rose to 43.8% (prior year 42.8%). Rising personnel costs ¥435.99B (+6.6%) continue to pressure margins, and delayed price pass-through is a structural challenge. Achieving next year’s Operating Margin target 10.1% requires price measures and productivity improvements to offset personnel inflation, and balancing sustained high growth in North America with a domestic turnaround is critical. Net FX contribution ¥25.33B equals about 13.5% of Operating Income, so strengthening operating-level profitability is required to provide a buffer against FX headwinds.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement disclosures. It does not constitute a recommendation to buy or sell any specific security. Industry benchmark data are compiled by the Company from public financial statements as reference information. Investment decisions should be made at your own responsibility; consult professional advisors as needed.