| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥316.5B | ¥293.3B | +7.9% |
| Operating Income / Operating Profit | ¥32.2B | ¥28.8B | +12.0% |
| Ordinary Income | ¥33.3B | ¥30.3B | +9.6% |
| Net Income / Net Profit | ¥16.0B | ¥16.3B | -1.6% |
| ROE | 6.0% | 6.5% | - |
For the fiscal year ended March 2026, Revenue was ¥316.5B (YoY +¥23.2B +7.9%), Operating Income was ¥32.2B (YoY +¥3.5B +12.0%), Ordinary Income was ¥33.3B (YoY +¥2.9B +9.6%), and Net Income attributable to owners of the parent was ¥20.4B (YoY +¥0.5B +2.5%). Gross profit was ¥99.5B (gross margin 31.5%, YoY -0.4pt) and declined slightly, while SG&A ratio improved to 21.3% (YoY -0.8pt), lifting the operating margin to 10.2% (YoY +0.4pt). By segment, Sensors posted Operating Income of ¥21.0B (+23.0%) with a margin of 22.8%, maintaining high profitability; Instrumentation Systems drove scale expansion with Revenue of ¥117.0B (+17.4%). Operating Cash Flow (OCF) was ¥29.0B (+14.2%), Free Cash Flow (FCF) secured ¥13.8B, covering dividends of ¥6.8B and share buybacks of ¥4.6B so the Total Return Ratio is contained within FCF. Although revenue and profit increased YoY, results slightly missed full-year guidance at 97.4% for Revenue and 97.7% for Operating Income, affected by compressed gross margin and recognition timing of year-end projects.
[Revenue] Revenue totaled ¥316.5B (+7.9%), led by Instrumentation Systems at ¥117.0B (+17.4%). That segment benefited from large-scale projects for performance evaluation testing equipment and control systems, with notable expansion in sales to external customers. Sensors were ¥91.9B (+6.9%), supported by steady demand for infrared radiators and thermal imaging measurement devices. Measurement & Control Instruments were ¥96.1B (-1.4%), slightly down due to some softening in the markets for recorders and controllers. Other (repairs & services etc.) was ¥11.6B (+12.2%), with repair demand remaining firm. By region, Domestic (Japan) was ¥244.8B (majority of domestic sales), Asia ¥64.0B (+15.7%) with growth to China, Korea, and Taiwan, and Other ¥7.6B (+16.5%) with moderate increases to the US and Europe.
[Profitability] Gross profit was ¥99.5B with a gross margin of 31.5% (prior 31.9%, -0.4pt), softening slightly. This reflects a change in project mix with more large Instrumentation Systems projects and increased raw material and outsourcing costs. SG&A was ¥67.3B (+3.8%) and SG&A ratio improved to 21.3% (prior 22.1%, -0.8pt). R&D expense was ¥10.8B (3.4% of sales, prior 3.7%), maintained at a stable level; depreciation included in SG&A was ¥1.9B and retirement benefit expense ¥0.8B. SG&A efficiency offset the gross margin decline, resulting in Operating Income of ¥32.2B (+12.0%) and an operating margin of 10.2% (+0.4pt). Non-operating items included increases in interest income ¥0.3B and dividend income ¥0.6B, while interest expense was ¥0.3B and limited. Net non-operating income contributed +¥1.1B, yielding Ordinary Income of ¥33.3B (+9.6%). Extraordinary items were nearly neutral with Extraordinary Gains ¥0.0B (gain on sales of investment securities, etc.) and Extraordinary Losses ¥0.1B (loss on disposal of fixed assets, etc.). Profit before income taxes was ¥33.2B (+6.8%); income taxes ¥10.0B (effective tax rate 30.1%, up +2.0pt from 28.1%) were deducted, and after subtracting non-controlling interests ¥2.8B, Net Income attributable to owners of the parent was ¥20.4B, with net margin 6.5% (prior 6.8%, -0.3pt). The higher tax burden and smaller extraordinary gains (¥1.0B prior → ¥0.0B current) restrained growth in net income, but overall the company achieved both revenue and profit growth.
Measurement & Control Instruments: Revenue ¥96.1B (-1.4%), Operating Income ¥14.8B (-2.1%), margin 15.4%. Slight softening in the recorder/controller market led to YoY declines in revenue and profit.
Instrumentation Systems: Revenue ¥117.0B (+17.4%), Operating Income ¥16.6B (+7.2%), margin 14.2%. Large projects for performance evaluation testing equipment and control systems drove growth; scale expansion improved fixed-cost absorption, though margin at 14.2% is lower than Sensors.
Sensors: Revenue ¥91.9B (+6.9%), Operating Income ¥21.0B (+23.0%), margin 22.8%. Strong demand for infrared radiators and thermal imaging measurement devices maintained high profitability and was the largest contributor to corporate earnings.
Other: Revenue ¥11.6B (+12.2%), Operating Income ¥3.2B (+26.3%), margin 27.4%. Repair and service demand remained firm.
Corporate expenses were -¥23.3B, accounting for the difference between total segment profit ¥55.6B and Operating Income ¥32.2B.
[Profitability] Operating margin 10.2% (prior 9.8%, +0.4pt) benefited from SG&A efficiency. ROE was 6.0% (prior corrected value 9.4%), decomposed into net margin 6.5% (-0.3pt), total asset turnover 0.77x (total assets +8.8%), and financial leverage 1.55x; increased tax burden and lower net margin were downward factors. Gross margin 31.5% (-0.4pt) reflects project mix changes.
[Cash Quality] Operating Cash Flow 29.0B equals 1.42x Net Income, indicating good quality. OCF/EBITDA was 0.70x, somewhat weak, with working capital (DSO 85 days, DIO 159 days, CCC 199 days) constraining cash conversion. FCF was ¥13.8B, covering dividends ¥6.8B and share buybacks ¥4.6B.
[Investment Efficiency] Capital expenditures ¥13.3B were 1.48x depreciation ¥9.0B, indicating front-loaded growth investment. R&D expense ¥10.8B (3.4% of sales) remains within industry norms.
[Financial Soundness] Equity Ratio 64.7% (prior 66.3%, -1.6pt) remains in a stable range. Current ratio 304% and quick ratio 297% indicate ample liquidity. Debt/EBITDA 0.89x and Interest Coverage 111x show very strong repayment capacity. Long-term borrowings increased to ¥25.2B (YoY +160%), supporting investment expansion and optimizing capital efficiency.
Operating Cash Flow was ¥29.0B (YoY +14.2%). Profit before tax ¥33.2B plus depreciation ¥9.0B, with working capital changes including accounts receivable increase -¥13.5B (collection delays amid sales growth), inventory decrease +¥6.4B (inventory efficiency), and accounts payable increase +¥5.2B. Cash paid for income taxes -¥10.8B was subtracted, producing Operating Cash Flow after working capital adjustments of ¥29.0B from an initial subtotal of ¥39.3B. Investing Cash Flow was -¥15.3B, mainly capital expenditures -¥13.3B (factory equipment and production line enhancements) and software investments -¥2.8B. Included were long-term loan recoveries +¥0.1B and other investing activities -¥1.0B. FCF was ¥13.8B, covering dividend payments -¥6.8B and share buybacks -¥4.6B (total returns ¥11.4B), leaving ¥2.4B surplus. Financing Cash Flow was +¥2.9B, with long-term borrowings +¥21.0B, repayments -¥4.9B, and net short-term borrowings -¥0.3B. Cash and cash equivalents rose from ¥75.8B at the beginning of the period to ¥92.8B at period-end (+¥17.1B), and liquidity on hand was ¥96.2B (cash and deposits).
Core earnings are largely composed of Operating Income ¥32.2B (10.2% of sales), indicating high recurrence. Non-operating income was ¥1.7B (0.5% of sales), centered on dividend income ¥0.6B and interest income ¥0.3B. Extraordinary items were minimal (Extraordinary Gains ¥0.0B and Extraordinary Losses ¥0.1B), impacting Net Income by less than ±¥0.1B. The accruals ratio was -2.1% (= (Net Income ¥20.4B - Operating Cash Flow ¥29.0B) / Total Assets ¥411.1B), a healthy level. Operating Cash Flow exceeded Net Income by 1.42x, so cash realization of profits is generally good, though OCF/EBITDA 0.70x reflects working capital build-up. Comprehensive income was ¥28.1B, exceeding Net Income ¥16.0B by ¥12.1B, driven by valuation changes: unrealized gains on other securities +¥3.0B, retirement benefit adjustments +¥1.5B, and translation adjustments +¥0.4B. Most of the comprehensive income increase stems from balance sheet valuation movements, while core earnings quality remains high.
Full Year guidance was Revenue ¥325.0B (+2.7%), Operating Income ¥33.0B (+2.3%), Ordinary Income ¥34.0B (+2.2%), Net Income attributable to owners of the parent ¥21.5B, EPS ¥131.29. Actual results were Revenue ¥316.5B (progress 97.4%), Operating Income ¥32.2B (97.7%), Ordinary Income ¥33.3B (97.8%), Net Income attributable to owners of the parent ¥20.4B (95.0%), representing minor shortfalls of 3–5% against standard progress (year-end = 100%). The shortfall reflects a -0.4pt compression in gross margin and increased corporate costs (higher personnel and expenses in general & administrative expenses), with some timing shift in delivery of large Instrumentation Systems projects. Dividend forecast is annual ¥20 (post share-split basis).
Dividends were interim ¥25 (pre-split) and year-end ¥30 (post-split basis; a 1-for-2 share split implemented in October), with cash dividends paid totaling ¥6.8B. Payout Ratio relative to Net Income attributable to owners of the parent ¥20.4B was 33.3%. Share buybacks amounted to ¥4.6B, making total shareholder returns ¥11.4B. The Total Return Ratio relative to FCF ¥13.8B was 82.6%, funded primarily from internal cash and leaving a ¥2.4B surplus. Dividend sustainability is high, supported by cash & deposits ¥96.2B and OCF ¥29.0B.
Project mix fluctuation risk: Gross margin 31.5% (-0.4pt) reflects temporary margin pressure as the share of large Instrumentation Systems projects increases. Instrumentation margin 14.2% trails Sensors 22.8% by 8.6pt, so changes in project composition materially affect margins. Profitability management and price revisions for Instrumentation projects should be monitored.
Working capital efficiency stagnation: DSO 85 days, DIO 159 days, CCC 199 days and OCF/EBITDA 0.70x indicate weaker cash conversion versus peers. Accounts receivable increase -¥13.5B is due to collection delays amid sales growth, and inventories ¥94.6B (work-in-progress ¥37.0B) correlate with progress on long-lead projects. Failure to improve receivables collection and inventory optimization could constrain FCF generation.
Increase in long-term borrowings and interest rate risk: Long-term borrowings were increased to ¥25.2B (YoY +160%). While Debt/EBITDA 0.89x is within acceptable range, rising interest rates could raise capital costs. Interest expense ¥0.3B is currently minor, but trends in borrowing costs and the proportion of fixed-rate debt are focal points for risk management.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.2% | 7.8% (4.6%–12.3%) | +2.4pt |
| Net Margin | 5.1% | 5.2% (2.3%–8.2%) | -0.1pt |
Operating margin 10.2% exceeds the industry median 7.8% by +2.4pt, indicating above-average profitability within manufacturing. Net margin 5.1% is roughly in line with the median 5.2%, with higher tax burden partially offsetting operating margin advantage.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.9% | 3.7% (-0.4%–9.3%) | +4.2pt |
Revenue growth 7.9% outperforms the industry median 3.7% by +4.2pt, driven by expansion in Instrumentation Systems and Sensors.
※Source: Company compilation
Contribution from high-margin segment: The Sensors business generated Operating Income ¥21.0B (margin 22.8%), making the largest contribution to corporate earnings. Instrumentation Systems’ revenue expansion (+17.4%) produced scale effects and helped drive group-level profit growth. The slight decline in gross margin to 31.5% (-0.4pt) was more than offset by SG&A ratio improvement (-0.8pt), resulting in higher operating margin 10.2% (+0.4pt), demonstrating effective cost discipline.
Room to improve working capital efficiency: With DSO 85 days, DIO 159 days, CCC 199 days and OCF/EBITDA 0.70x lagging peers, progress in receivables collection and inventory optimization could improve OCF from 1.42x Net Income toward 2x, expanding FCF and total return capacity. Smoothing deliveries of large Instrumentation projects and stricter order management are short-term improvement priorities.
Balancing growth investment and financial discipline: Capex ¥13.3B (1.48x depreciation) and additional long-term borrowings +¥15.5B front-load growth investment, while Debt/EBITDA 0.89x and Interest Coverage 111x maintain financial soundness. Payout Ratio 33.3% and Total Return Ratio 82.6% (vs FCF) are within sustainable bounds, preserving stable dividends and flexibility for opportunistic buybacks.
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 specific securities. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.