| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥113.9B | ¥98.2B | +16.0% |
| Operating Income / Operating Profit | ¥23.1B | ¥18.0B | +27.8% |
| Ordinary Income | ¥23.6B | ¥17.0B | +38.9% |
| Net Income / Net Profit | ¥16.5B | ¥11.7B | +41.1% |
| ROE | 3.8% | 2.7% | - |
FY2026 Q1 results recorded Revenue ¥113.9B (YoY +¥15.7B +16.0%), Operating Income ¥23.1B (YoY +¥5.0B +27.8%), Ordinary Income ¥23.6B (YoY +¥6.6B +38.9%), and Net Income ¥16.5B (YoY +¥4.8B +41.1%), achieving higher sales and profits. Revenue accelerated to double-digit growth for the first time in three years, maintaining a high Gross Margin of 52.2% while Operating Margin improved 1.9pt to 20.3% (prior 18.4%), and Net Profit Margin rose 2.6pt to 14.5% (prior 11.9%). Progress against Full Year guidance stands at Revenue 26.5%, Operating Income 30.0%, Net Income 27.6%, indicating an advance pace and leaving upside potential at the interim stage.
【Revenue】 Revenue of ¥113.9B grew +16.0% YoY, achieving double-digit growth. As the Group operates a single segment—Electrical Measuring Instruments Business—detailed decomposition of growth is not disclosed; however, a 0.8pt improvement to Gross Margin 52.2% (prior 51.4%) suggests expanded sales of high value-added products and pricing policy effects. Cost of Sales ¥54.5B increased +14.1%, below revenue growth of +16.0%, indicating effective cost management. Progress toward the Full Year plan of ¥430.0B is 26.5%, above the standard 25%, implying demand pull-forward and smooth shipment trends.
【Profit & Loss】 Operating Income ¥23.1B rose +27.8% YoY, exceeding revenue growth, with Operating Margin improving 1.9pt to 20.3%. SG&A ¥36.3B rose only +9.3% from ¥33.2B, below Revenue growth of +16.0%, demonstrating operating leverage. Ordinary Income ¥23.6B grew +38.9%, supported by non-operating income ¥0.5B (interest income ¥0.1B, dividend income ¥0.0B, subsidies ¥0.0B, etc.), while non-operating expenses ¥0.0B included foreign exchange losses ¥1.7B that were absorbed by core business profit growth. Pre-tax Income ¥23.3B less corporate taxes ¥6.8B (effective tax rate 29.1%) resulted in Net Income ¥16.5B, a substantial YoY increase of +41.1%. Extraordinary loss ¥0.3B (loss on retirement of fixed assets) had a minor impact at 1.8% of Net Income, indicating high quality of earnings. In conclusion, the company achieved revenue and profit growth through maintenance of high gross margin and restraint on SG&A.
【Profitability】Operating Margin 20.3% improved 1.9pt from 18.4%, driven by sustained high Gross Margin 52.2% and a 1.1pt decline in SG&A ratio to 31.9% (prior 33.0%). Net Profit Margin 14.5% rose 2.6pt from 11.9%, with pre-tax profitability improvements lifting net profit. ROE 3.8% (annualized) remains suppressed by a low-leverage structure, but Net Profit Margin improvement supports capital efficiency. 【Cash Quality】Financial income—interest income ¥0.1B and dividend income ¥0.0B—provides stable contribution, while foreign exchange loss ¥1.7B was recorded in non-operating expenses but absorbed by operating profit. Accounts receivable ¥44.4B rose +5.7% from ¥42.0B, and Inventory ¥15.9B rose +12.8% from ¥14.1B, both increases below revenue growth, indicating generally sound working capital management. 【Investment Efficiency】Total Assets ¥483.4B decreased -6.1% from ¥514.9B, mainly due to Cash and Deposits ¥145.1B declining -21.7% from ¥185.3B. Asset Turnover improved to 0.94x annualized (prior 0.76x), indicating enhanced asset efficiency. 【Financial Soundness】Equity Ratio 89.7% (prior 85.4%) improved for the third consecutive period, maintaining a strong net cash position with Debt-to-Equity Ratio 0.11x. Current Ratio 612.3% and Interest Coverage 891.8x indicate extremely low short-term payment and interest burdens, supporting high financial flexibility.
A cash flow statement was not disclosed, but balance sheet movements were analyzed. Cash and Deposits ¥145.1B decreased ¥40.2B from ¥185.3B, likely driven primarily by purchase of treasury stock ¥25.7B (up ¥8.9B from prior ¥16.8B) and cash outflows from operating activities. Current Assets ¥268.0B decreased ¥33.4B from ¥301.4B, mainly due to the cash decline; increases in Accounts Receivable ¥44.4B and Inventory ¥15.9B are regarded as within normal range given revenue growth. Fixed Assets ¥215.4B increased ¥1.8B from ¥213.6B, reflecting ongoing capital expenditures in Property, Plant and Equipment ¥175.2B. Total Liabilities ¥49.6B decreased ¥25.8B from ¥75.4B, driven by changes in trade payables ¥11.8B (prior ¥9.6B) and corporate taxes payable ¥2.7B (prior ¥7.1B). Strong profitability—Operating Income ¥23.1B and Gross Margin 52.2%—suggests sustainable operating cash generation, enabling a structure that can support both capex and shareholder returns from internal funds.
Earnings quality is high; Operating Income ¥23.1B comprises the majority of Ordinary Income ¥23.6B, indicating high dependence on core operations. Non-operating income ¥0.5B is small at 0.4% of Revenue and consists of recurring financial income (Interest Income ¥0.1B, Dividend Income ¥0.0B, Subsidies ¥0.0B). Non-operating expenses ¥0.0B include foreign exchange loss ¥1.7B, but operating profit growth absorbed this, yielding Ordinary Income growth of +38.9% YoY. Extraordinary items are negligible: Extraordinary Gain ¥0.0B (gain on sale of fixed assets ¥0.0B) and Extraordinary Loss ¥0.3B (loss on retirement of fixed assets ¥0.3B), totaling 1.8% of Net Income ¥16.5B and not impairing earnings sustainability. Ordinary Income ¥23.6B vs. Pre-tax Income ¥23.3B and Net Income ¥16.5B shows a -29.1% gap mainly due to Corporate Taxes ¥6.8B (effective tax rate 29.1%), a standard rate. Comprehensive Income ¥16.7B is nearly identical to Net Income ¥16.5B; FX translation adjustment ¥0.3B and Remeasurements of defined benefit plans -¥0.2B are minor, indicating low accrual risk. Revenue recognition and profit recognition quality are assessed as healthy.
Full Year guidance is maintained at Revenue ¥430.0B (YoY +6.1%), Operating Income ¥76.8B (YoY +13.1%), Ordinary Income ¥78.0B (YoY +9.8%), Net Income ¥60.0B, and EPS 443.25円. Q1 progress rates are Revenue 26.5%, Operating Income 30.0%, Ordinary Income 30.2%, Net Income 27.6%, all exceeding the standard 25% and showing front-loaded performance. Notably, Operating Income and Ordinary Income progress are over +5.0pt ahead, with improvements in Gross Margin and SG&A control exceeding expectations. Downside assumptions for the second half likely remain conservative, accounting for shipment pull-forward and seasonality, so the probability of upward revision is increasing. Dividend forecast is maintained at Annual 100円 (Payout Ratio 22.6%); given upside potential in Net Income and substantial Cash and Deposits ¥145.1B, there is scope for dividend increase at year-end.
Dividend policy forecasts Annual 100円, a conservative Payout Ratio of 22.6% against Full Year EPS forecast 443.25円. With Net Income at Q1 ¥16.5B (27.6% of the full-year ¥60.0B plan) and ample Cash and Deposits ¥145.1B, dividend sustainability is extremely high. Treasury stock acquisition -¥25.7B widened from -¥16.8B prior (increase of -¥8.9B), confirming continued share buybacks and total shareholder returns. Exact Total Return Ratio calculation requires disclosure of executed buyback amounts; however, adding buybacks to the 22.6% dividend suggests Total Return Ratio likely exceeds 30%, indicating a shareholder return stance aimed at improving capital efficiency. The net cash position with Debt-to-Equity Ratio 0.11x secures room for dividend increases or additional returns.
Working capital efficiency variability: Accounts Receivable ¥44.4B increased +5.7% from ¥42.0B and Inventory ¥15.9B increased +12.8% from ¥14.1B; while increases are contained relative to Revenue growth +16.0%, prolongation of collection periods or inventory turnover could create timing lags in operating cash generation and require additional working capital. Optimizing payment terms for Trade Payables ¥11.8B could shorten the cash conversion cycle, but delays in supply-demand adjustments pose retention risk.
Earnings volatility from FX fluctuations: Foreign exchange loss ¥1.7B was recorded in non-operating expenses, indicating that foreign currency transactions can affect Ordinary Income. FX loss relative to Operating Income ¥23.1B represents 7.4%; depending on hedging and price pass-through strategies, Ordinary Income volatility could expand. FX translation adjustment ¥0.3B in Comprehensive Income is minor, but FX risk on foreign-currency assets requires ongoing monitoring.
Risk of fixed SG&A increases: SG&A ¥36.3B rose +9.3% from ¥33.2B, below Revenue growth +16.0% enabling operating leverage, but fixed components such as personnel and R&D expenses could compress margins in revenue downcycles. Maintaining SG&A ratio 31.9% depends on continued revenue growth; demand swings or adverse product mix could pressure profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 20.3% | 6.8% (2.9%–9.0%) | +13.4pt |
| Net Profit Margin | 14.5% | 5.9% (3.3%–7.7%) | +8.6pt |
Profitability significantly exceeds manufacturing industry median, ranking top-class within the industry on both Gross Margin 52.2% and Operating Margin 20.3%.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 16.0% | 13.2% (2.5%–28.5%) | +2.8pt |
Revenue growth 16.0% exceeds the industry median 13.2%, confirming profitable growth.
※Source: Company compilation
Improvement of 1.9pt to Operating Margin 20.3% (prior 18.4%) and front-loaded progress at 30.0% for the Full Year Operating Income indicate structurally improved profitability driven by expanded sales of high value-added products and SG&A restraint, making an upward revision to Full Year results plausible. Maintenance of Gross Margin 52.2% supports pricing and product mix advantages and underpins sustainable profit growth.
Equity Ratio 89.7% and a net cash position secure scope to raise Total Return Ratio via higher dividends or additional share buybacks. Payout Ratio 22.6% is conservative; abundant Cash and Deposits ¥145.1B provide flexibility to strengthen shareholder returns. Expansion of Treasury Stock -¥25.7B reflects management’s orientation toward capital efficiency, drawing attention to the continuity of total return policies.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings disclosure data. It is not a recommendation to invest in any specific securities. Industry benchmark data are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; please consult professionals as necessary before making investment decisions.
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