| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥241.3B | ¥195.4B | +23.5% |
| Operating Income | ¥50.5B | ¥32.9B | +53.5% |
| Ordinary Income | ¥52.8B | ¥32.7B | +61.4% |
| Net Income | ¥39.9B | ¥23.0B | +73.7% |
| ROE | 8.7% | 5.2% | - |
For FY2026 Q2, Revenue was ¥241.3B (YoY +¥45.9B, +23.5%), Operating Income was ¥50.5B (YoY +¥17.6B, +53.5%), Ordinary Income was ¥52.8B (YoY +¥20.1B, +61.4%), and Net Income was ¥39.9B (YoY +¥16.9B, +73.7%), achieving both top-line and bottom-line growth. Gross profit margin improved to 52.2% (YoY +0.8pt) and operating margin improved to 20.9% (YoY +4.1pt), reflecting simultaneous revenue expansion and profitability improvement. Net profit margin expanded materially to 16.5% (YoY +4.8pt), demonstrating pronounced operating leverage. Operating Cash Flow was ¥48.8B (YoY +118.3%), and Free Cash Flow was ¥27.5B, showing strengthened cash generation alongside profit growth.
[Revenue] Revenue rose sharply to ¥241.3B (YoY +23.5%, +¥45.9B). Gross profit margin increased to 52.2% (YoY +0.8pt), supported by improved product mix and pricing actions. Gross profit was ¥126.0B (YoY +¥25.6B, +25.5%), outpacing revenue growth. Non-operating income totaled ¥2.4B, including dividend income ¥0.2B, foreign exchange gains ¥0.4B, and subsidy income ¥1.0B. Revenue growth was driven by increased demand and improved product composition; inventories increased to ¥18.2B (YoY +29.0%), indicating expanded production activity in preparation for subsequent demand.
[Profit & Loss] Selling, general and administrative expenses were limited to ¥75.5B (YoY +11.9%), and the SG&A-to-sales ratio fell to 31.3% (YoY -3.2pt), evidencing effective operating leverage. Operating Income improved to ¥50.5B (YoY +53.5%), with Operating Margin at 20.9% (YoY +4.1pt). Ordinary Income was ¥52.8B (YoY +61.4%); non-operating profit was positive ¥2.3B (non-operating income ¥2.4B − non-operating expenses ¥0.1B), contributing to the improvement. Extraordinary losses were only ¥0.3B (loss on disposal of fixed assets), exerting limited impact on Net Income. Income taxes were ¥12.6B (effective tax rate 24.0%), resulting in Net Income of ¥39.9B (YoY +73.7%). In conclusion, volume expansion, gross margin improvement, and lower SG&A ratio drove higher revenue and profits.
[Profitability] Operating Margin 20.9% (YoY +4.1pt), Net Margin 16.5% (YoY +4.8pt), Gross Margin 52.2% (YoY +0.8pt) — all profitability metrics improved. ROE was 8.7%, primarily driven by improved Net Margin (16.5%). EBITDA margin remained high at 25.4% (EBITDA ¥61.4B = Operating Income ¥50.5B + Depreciation ¥10.8B). [Cash Quality] Operating Cash Flow ¥48.8B vs. Net Income ¥39.9B yields an OCF/Net Income ratio of 1.22x, indicating solid cash backing. Free Cash Flow after CapEx of ¥14.8B was ¥27.5B. However, OCF/EBITDA ratio was 0.79x, below the benchmark (>=0.9x), as cash was partially pressured by a reduction in bonus reserves (change YoY -¥6.25B) and inventory increases (-¥3.2B). The accrual ratio was -1.7% ((Net Income ¥39.9B − Operating CF ¥48.8B)/Total Assets ¥531.0B), indicating high earnings quality. [Investment Efficiency] Total asset turnover was 0.454x (Revenue ¥241.3B ÷ Total Assets ¥531.0B, half-year basis). CapEx/Depreciation ratio was 1.37x (CapEx ¥14.8B ÷ Depreciation ¥10.8B), indicating ongoing growth investment. Working capital efficiency: DSO 66 days (Accounts receivable ¥43.5B ÷ Daily sales ¥1.34B × 180 days), DIO 216 days (Inventory ¥68.2B ÷ Daily COGS ¥0.64B × 180 days), DPO 49 days (Accounts payable ¥15.4B ÷ Daily COGS ¥0.64B × 180 days), resulting in CCC 233 days (DSO + DIO − DPO), showing inventory and receivables retention as cash conversion challenges. [Financial Soundness] Equity Ratio 86.2% (YoY +1.8pt), Current Ratio 463.6% (Current Assets ¥312.4B ÷ Current Liabilities ¥67.4B), Quick Ratio 436.6% — very strong short-term liquidity. D/E ratio 0.16x, interest-bearing debt limited; Cash and Deposits ¥181.3B (34.1% of total assets) support liquidity. Interest Coverage was 1025x (EBITDA ¥61.4B ÷ Interest expense ¥0.06B), indicating robust financial safety.
Operating Cash Flow was ¥48.8B (YoY +118.3%, +¥26.4B), generated from pretax income ¥52.5B after adjustments for working capital and taxes. Operating CF subtotal (before working capital changes) was ¥54.3B. From this, working capital movements included inventory increase -¥3.2B, trade receivables increase -¥0.9B, and trade payables increase +¥5.7B. Depreciation ¥10.8B was added back; however, the reversal of bonus reserves -¥6.25B and decrease in accrued expenses -¥3.61B pressured cash, while the increase in accounts payable +¥5.7B provided offsetting effects. After payment of income taxes ¥6.8B, Operating CF was ¥48.8B, indicating reasonably effective cash realization of operating profits. Investing Cash Flow was -¥21.3B, mainly CapEx -¥14.8B and other investing activities -¥5.2B. CapEx was undertaken for both growth and maintenance/update purposes; CapEx/Depreciation 1.37x indicates moderate proactive investment. Acquisition of investment securities was minor at -¥0.02B, with the primary investment focus on tangible fixed assets. Free Cash Flow (Operating CF + Investing CF) was ¥27.5B, preserving funding for growth investment and shareholder returns. Financing Cash Flow was -¥24.3B, primarily dividend payments -¥13.5B and share buybacks -¥10.8B, implementing shareholder returns within FCF. Cash and deposits at period-end were ¥181.3B (YoY +¥5.0B), and substantial liquidity supports flexible capital allocation.
Of Ordinary Income ¥52.8B, Operating Income accounted for ¥50.5B; non-operating profit ¥2.3B (income ¥2.4B − expense ¥0.1B) was only 4.4% of Ordinary Income, indicating most profits derive from core operations. Non-operating income included dividend income ¥0.2B, foreign exchange gains ¥0.4B, and subsidy income ¥1.0B — all within recurring ranges. Foreign exchange losses of ¥2.1B were recorded in non-operating expenses but largely offset by foreign exchange gains ¥0.4B, limiting impact on Net Income. Extraordinary losses ¥0.3B (loss on disposal of fixed assets) are only 0.8% of Net Income ¥39.9B, so one-off impacts are negligible. Operating CF ¥48.8B exceeded Net Income ¥39.9B (OCF/Net Income ratio 1.22x), and the accrual ratio -1.7% indicates strong cash backing of earnings. Comprehensive income was ¥41.5B vs. Net Income ¥39.9B, a difference of ¥1.6B composed of foreign currency translation adjustments ¥1.2B, valuation differences on securities ¥0.8B, and retirement benefit adjustments -¥0.3B, suggesting stability of earnings quality at the comprehensive income level. The difference between Ordinary Income and Net Income is mainly explained by income taxes ¥12.6B (effective tax rate 24.0%), reflecting transparency in profit structure.
Full Year guidance is unchanged at Revenue ¥477.0B (YoY +17.7%), Operating Income ¥95.0B (YoY +39.9%), Ordinary Income ¥98.4B (YoY +38.5%), Net Income ¥75.4B, and EPS ¥560.8. Progress through the first half vs. full-year guidance: Revenue 50.6% (¥241.3B ÷ ¥477.0B), Operating Income 53.2% (¥50.5B ÷ ¥95.0B), Ordinary Income 53.7% (¥52.8B ÷ ¥98.4B), Net Income 52.9% (¥39.9B ÷ ¥75.4B) — all above the standard 50% mid-year pace. Particularly, Operating Income progress is high, supported by gross margin improvement and lower SG&A in the first half. Full-year dividend forecast is maintained at ¥120, implying a projected payout ratio of 21.4%. No revisions to forecasts or dividend forecasts were made during the period; the company expects to achieve current guidance.
Interim dividend per share was ¥120, resulting in a payout ratio of 40.4% (Dividend ¥120 ÷ EPS ¥296.82). Full-year dividend forecast remains ¥120, implying a full-year payout ratio of 21.4% (Dividend ¥120 ÷ Forecast EPS ¥560.8). Dividend payments are approximately ¥13.5B (Issued shares 14,024k − Treasury shares 619k × ¥120), covered roughly 2.0x by FCF ¥27.5B, a healthy level. During the period, share buybacks of ¥10.8B were conducted; combined with dividends the total return was approximately ¥24.3B, yielding a Total Return Ratio of 61.0% (Total return ¥24.3B ÷ Net Income ¥39.9B). Total return coverage relative to FCF ¥27.5B was 0.88x, indicating shareholder returns were executed within free cash flow. Cash and deposits ¥181.3B (34.1% of total assets) provide ample liquidity to sustain dividends and nimble buybacks.
Inventory obsolescence risk: DIO 216 days, Inventory ¥68.2B (28.3% of Revenue) — inventory levels are high. Demand slowdown or shifts in product mix could trigger markdowns or obsolescence losses. Delays in normalizing inventory turnover could pressure both cash flow and profitability.
Receivables collection risk: DSO 66 days, Accounts receivable ¥43.5B (18.0% of Revenue) — receivables collection is longer than benchmark and worsening customer credit or changes to payment terms could lead to bad debt losses or collection delays. If DSO does not improve, Operating CF could remain pressured.
Working capital efficiency deterioration risk: CCC 233 days — a prolonged working capital cycle. In a revenue expansion scenario, working capital buildup could accelerate and degrade cash conversion. Fluctuations in bonus reserve reversals and changes in accounts payable settlement terms could increase Operating CF volatility.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 20.9% | 8.8% (3.0%–11.0%) | +12.2pt |
| Net Margin | 16.5% | 5.4% (1.1%–8.2%) | +11.1pt |
Profitability metrics substantially exceed industry medians and position the company in the upper tier of the manufacturing sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 23.5% | 11.7% (-5.4%–28.3%) | +11.8pt |
Revenue growth outpaces the industry median, placing the company among higher-growth peers in the manufacturing sector.
※ Source: Company aggregation
Large profitability improvement: Operating Margin 20.9% (YoY +4.1pt), Net Margin 16.5% (YoY +4.8pt) — profitability materially improved. Revenue expansion, gross margin improvement, and SG&A ratio reduction enabled effective operating leverage. The company ranks among the top in the industry on profitability, reflecting benefits from product mix improvement and pricing strategy. Mid-year progress rates are above standard: Revenue 50.6%, Operating Income 53.2%, Net Income 52.9%, indicating a favorable start toward meeting guidance.
Room to improve working capital efficiency: CCC 233 days (DSO 66 days, DIO 216 days, DPO 49 days) — long working capital cycle, with inventory and receivables retention constraining cash conversion. OCF/EBITDA 0.79x is below the standard (>=0.9x); reversal of bonus reserves and working capital increases pressured Operating CF. Normalizing inventory turnover and improving DSO would further strengthen cash generation.
Balance of financial soundness and shareholder returns: Equity Ratio 86.2%, Current Ratio 463.6%, D/E 0.16x — a very solid financial base, supported by Cash and Deposits ¥181.3B. Within FCF ¥27.5B, the company returned ¥13.5B in dividends and ¥10.8B in buybacks (total ¥24.3B), balancing growth investment and shareholder returns. Payout ratio 40.4% and FCF coverage 2.0x indicate sustainable return levels. Continued stable dividends and flexible capital policy are expected.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.