| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5184.6B | ¥5095.6B | +1.7% |
| Operating Income / Operating Profit | ¥426.7B | ¥490.0B | -12.9% |
| Ordinary Income | ¥508.5B | ¥554.5B | -8.3% |
| Net Income / Net Profit | ¥415.6B | ¥164.7B | +152.3% |
| ROE | 7.3% | 2.8% | - |
For the fiscal year ended March 2026, Revenue was ¥5,184.6B (YoY +¥89.0B +1.7%), Operating Income was ¥426.7B (YoY -¥63.3B -12.9%), Ordinary Income was ¥508.5B (YoY -¥46.0B -8.3%), and Net Income attributable to owners of the parent was ¥328.1B (YoY +¥164.1B +2.4%). While revenue increased, operating profit declined due to higher SG&A (YoY +¥94.9B +16.8%) and expanded corporate-level expenses compressing profitability. Operating margin fell -1.4pt to 8.2% and ordinary income margin declined -1.0pt to 9.8%. However, net income margin edged up slightly to 6.3% (+0.04pt) mainly due to net gains on sales of investment securities of ¥98.5B recorded in non-recurring items. The core Automotive Business reported Revenue of ¥4,471.4B (+1.6%) and Operating Income of ¥449.4B (-4.3%), with somewhat lower profitability that, combined with higher corporate expenses, weighed on consolidated operating profit. Cash generation remained robust with Operating Cash Flow (OCF) of ¥783.4B (+17.7%) and Free Cash Flow (FCF) of ¥294.4B. The company executed large shareholder returns including ¥800.0B share buybacks and ¥12.4B in dividends.
[Revenue] Revenue was ¥5,184.6B (YoY +1.7%), a modest increase. By segment, the core Automotive Business recorded ¥4,471.4B (+1.6%, 86.2% share), Electronic Applications Products was ¥1,125.7B (-3.2%, 21.7% share), and Components Business grew to ¥393.2B (+6.1%, 7.6% share). Automotive maintained growth supported by a gradual recovery in global vehicle production and new orders, while Electronic Applications Products declined due to end-market demand adjustments. Foreign exchange translation contributed a positive ¥374.2B, with yen depreciation boosting overseas revenue in yen terms. Cost of goods sold ratio slightly improved to 79.2% (prior year 79.3%), Gross Profit was ¥1,078.7B (YoY +¥20.2B +1.9%) and Gross Margin remained essentially stable at 20.8% (+0.1pt).
[Profitability] Operating Income was ¥426.7B (YoY -12.9%), a significant decline. SG&A rose to ¥652.0B (YoY +16.8%), well outpacing sales growth, pushing the SG&A ratio up to 12.6% (+1.6pt). The main driver was an increase in corporate-level expenses (expanded adjustment amount), with heavy upfront investments in basic research and administrative functions. Operating margin declined -1.4pt to 8.2%. By segment, Automotive operating margin was 10.0% (approx. -0.4pt), Electronic Applications Products 8.3% (+0.7pt), and Components 7.3% (+0.6pt); margin compression in the core Automotive Business weighed on consolidated operating income. Non-operating income was ¥100.0B (prior year ¥96.8B), supported by financial income such as Interest Income ¥40.7B, Dividend Income ¥36.8B, and Foreign Exchange Gains ¥4.8B. Non-operating expenses fell to ¥18.2B (prior year ¥32.3B), resulting in Ordinary Income of ¥508.5B (-8.3%) and an ordinary income margin of 9.8% (-1.0pt). Extraordinary gains were ¥101.4B (including investment securities sale gains ¥98.5B) and extraordinary losses were ¥47.9B (including impairment losses ¥23.3B), yielding a net +¥53.5B that boosted pre-tax profit. Income taxes were ¥139.2B, with an effective tax rate of 24.8%, a standard level. After deducting non-controlling interests of ¥94.7B, Net Income attributable to owners of the parent was ¥328.1B (+2.4%), with a net margin of 6.3% (+0.04pt). In summary, despite revenue growth, higher SG&A and margin declines in the core business led to operating-level profit contraction; contributions from non-operating and extraordinary items resulted in slightly higher final net profit.
The Automotive Business posted Revenue of ¥4,471.4B (YoY +1.6%) and Operating Income of ¥449.4B (YoY -4.3%), with a margin of 10.0%. While retaining its leading position, profitability moderated. Recovery in global vehicle production and increased new orders drove revenue, but rising raw material and energy costs and delayed price pass-through compressed margins. The Components Business achieved Revenue of ¥393.2B (+6.1%) and Operating Income of ¥28.8B (+15.6%), with a 7.3% margin, benefiting from a recovery in electronic device demand and production efficiency gains. The Electronic Applications Products Business recorded Revenue of ¥1,125.7B (-3.2%) and Operating Income of ¥93.0B (+5.6%), with an 8.3% margin; although revenue fell, improved product mix and fixed-cost efficiencies delivered higher profit. Corporate-level expense adjustments widened to -¥145.7B (prior year -¥93.4B), with increased basic research and administrative costs compressing the sum of segment profits to consolidated operating income.
[Profitability] Operating margin 8.2% (prior year 9.6%, -1.4pt), Ordinary income margin 9.8% (prior year 10.9%, -1.0pt), Net margin 6.3% (prior year 6.3%, +0.04pt). Operating-level profitability declined, but non-operating and extraordinary items preserved final net margin. ROE was 7.3%, consistent with Net Margin 6.3% × Total Asset Turnover 0.64 × Financial Leverage 1.41, with the decline mainly driven by lower operating margins. ROA (on an ordinary income basis) was a solid 6.5%, though scope for profitability improvement remains. [Cash Quality] OCF ¥783.4B is 1.88x of Net Income ¥415.6B and 2.39x of Net Income attributable to owners of the parent ¥328.1B, indicating strong cash conversion. OCF/EBITDA ratio was 0.93x (EBITDA = Operating Income ¥426.7B + Depreciation ¥418.1B = ¥844.9B), in a healthy range, and the accrual ratio of -5.6% indicates robustness. [Investment Efficiency] Total asset turnover was 0.64x, CapEx was ¥552.6B (10.7% of sales, 1.32x depreciation), reflecting continued proactive investment to underpin medium-term growth. [Financial Soundness] Equity Ratio was 70.7%, Financial Leverage 1.41x, Interest Coverage 47.5x (EBIT ¥426.7B / Interest Expense ¥9.0B), indicating very strong resilience to interest-bearing debt.
OCF was ¥783.4B (YoY +17.7%), robustly secured from Operating Cash Flow subtotal ¥864.1B after working capital adjustments (Inventory increase ¥37.0B, Accounts receivable change -¥27.4B, Accounts payable change -¥6.9B) and income tax payments of ¥139.1B. OCF/Net Income ratio was 1.88x and OCF/Net Income attributable to owners of the parent ratio was 2.39x, demonstrating good cash realization. Investing Cash Flow was -¥489.0B, composed of Capital Expenditure -¥552.6B, Proceeds from sale of tangible fixed assets +¥1.2B, Intangible assets investment -¥23.5B, Proceeds from acquisition of subsidiaries +¥82.1B, and net movement in time deposits +¥111.7B. FCF was ¥294.4B, comfortably covering dividend payments of approximately ¥123.7B (FCF coverage 2.38x). Financing Cash Flow was -¥317.1B, including Share buybacks -¥800.0B, Bond issuance +¥398.1B, Bond redemption -¥100.0B, Dividend payments -¥123.7B, and Dividends to non-controlling interests -¥149.8B, implementing large returns while maintaining liquidity through funding. Cash and cash equivalents at period-end were ¥1,359.3B (period-begin ¥1,284.4B, net increase +¥74.8B), ample.
Recurring earnings center on Operating Income of ¥426.7B, supplemented by Non-operating income ¥100.0B (Interest Income ¥40.7B, Dividend Income ¥36.8B, Equity-method investment income ¥10.5B, etc.). One-off items were Extraordinary Gains ¥101.4B (investment securities sale gains ¥98.5B, negative goodwill gains ¥100.6B, etc.) and Extraordinary Losses ¥47.9B (impairment losses ¥23.3B, loss on disposal of fixed assets ¥15.2B, etc.), netting +¥53.5B that lifted pre-tax profit. The net amount of one-off items represents about 16% of Net Income attributable to owners of the parent ¥328.1B — below a concern threshold but with limited reproducibility. Accrual quality is strong: OCF/Net Income 1.88x, OCF/EBITDA 0.93x, accrual ratio -5.6%, indicating solid cash backing of reported profits. The gap between Ordinary Income ¥508.5B and Net Income attributable to owners of the parent ¥328.1B is due to extraordinary items net +¥53.5B, income taxes ¥139.2B, and non-controlling interests ¥94.7B; the tax burden ratio of 24.8% is standard.
Full Year guidance projects Revenue ¥6,220.0B (YoY +20.0%), Operating Income ¥550.0B (+28.9%), Ordinary Income ¥580.0B (+14.1%), Net Income attributable to owners of the parent ¥340.0B (EPS ¥276.62), and Dividend ¥55. Achievement rates versus current results are: Revenue 83.4%, Operating Income 77.6%, Ordinary Income 87.7%, Net Income attributable to owners of the parent 96.5%, indicating the largest gap at the operating level. Upward pressure on SG&A and margin deterioration in the core Automotive Business are downside risks; next fiscal year will focus on expense control and margin recovery through price and mix improvements. The dividend forecast of ¥55 is conservatively set relative to the combined annual ¥104 (interim ¥49 + forecast year-end ¥55) and allows room for agile management depending on performance.
Dividends were interim ¥49 and year-end ¥55, totaling ¥104, with a Payout Ratio of 39.9% (Total dividends approx. ¥123.7B / Net Income attributable to owners of the parent ¥328.1B), a reasonable level. The company executed ¥800.0B in share buybacks, bringing total returns to approx. ¥923.7B (dividends + buybacks). This total significantly exceeded FCF ¥294.4B but was funded through on-hand liquidity and market financing (bond issuance ¥398.1B). Payout Ratio is within a sustainable range and FCF coverage is 2.38x, suggesting continuation of current dividend levels is feasible. Total Return Ratio including buybacks was approx. 281% (Total returns ¥923.7B / Net Income attributable to owners of the parent ¥328.1B), signaling a clear stance on improving capital efficiency and strengthening shareholder returns. However, portions of returns exceeding FCF relied on depleting capital buffers and financing, so sustainability warrants attention. The forecast dividend of ¥55 for next year is conservative, and flexibility is expected depending on performance and investment progress.
Revenue concentration risk: High revenue concentration in the Automotive Business at 86.2% (¥4,471.4B / ¥5,184.6B) exposes results to global vehicle production volatility, EV adoption and lighting technology generational shifts, and customer price pressure. This fiscal year the core business operating margin fell to 10.0% (-0.4pt), with delayed price pass-through and higher raw material costs compressing profits. Although margin differentials between segments (Automotive 10.0% vs Components 7.3%) are relatively stable, abrupt changes in automotive demand or delayed response to technological shifts could amplify profit volatility.
Cost-structure rigidity risk: SG&A rose to ¥652.0B (YoY +16.8%), far outpacing sales growth of +1.7%, raising the SG&A ratio to 12.6% (+1.6pt). Corporate-level expense adjustments widened to -¥145.7B (prior year -¥93.4B), reflecting heavy upfront investments in basic research and administrative expenses. Operating margin declined to 8.2% (-1.4pt), indicating cost-structure rigidity and limited leverage from revenue growth that are pressuring profitability. If sales fail to grow as planned, leverage effects may not materialize and operating margins could decline further.
Sustainability of total returns risk: Total returns of ¥923.7B (¥800.0B buybacks + ¥123.7B dividends) far exceeded FCF ¥294.4B, with excess funded by cash on hand and bond issuance (¥398.1B). While cash and cash equivalents ¥1,359.3B and Equity Ratio 70.7% indicate a solid financial base, continued total returns exceeding FCF could deplete liquidity, erode capital buffers, and increase reliance on additional financing. Reliance on non-recurring items such as investment securities sale gains ¥98.5B to fund returns raises questions about sustainability.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.2% | 7.8% (4.6%–12.3%) | +0.5pt |
| Net Margin | 8.0% | 5.2% (2.3%–8.2%) | +2.8pt |
The company’s operating margin is 0.5pt above the industry median and net margin is 2.8pt above the median, indicating favorable profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.7% | 3.7% (-0.4%–9.3%) | -2.0pt |
Revenue growth of 1.7% lags the industry median of 3.7% by 2.0pt, indicating relatively slower growth among manufacturers.
※ Source: Company compilation
Focus on operating-level profitability decline and cost management: Operating margin 8.2% (prior year 9.6%, -1.4pt) and SG&A ratio 12.6% (prior year +1.6pt) show SG&A growth outpacing sales and pressuring profitability. Expansion of corporate-level expenses (adjustment amount -¥145.7B, prior year -¥93.4B) reflects heavy upfront investments in basic research and administrative costs. Future focus will be on expense control and margin recovery through price and mix improvements. The core Automotive Business operating margin of 10.0% (approx. -0.4pt) is trending down, with rising raw material and energy costs and delayed price pass-through posing structural challenges. Next fiscal year guidance for Operating Income ¥550.0B (+28.9%) is ambitious, but with a current achievement rate of 77.6% there is a substantial gap; SG&A efficiency and Automotive profitability improvement are key to feasibility.
Assessment of strong cash generation and sustainability of large returns: OCF ¥783.4B (OCF/Net Income 1.88x, OCF/EBITDA 0.93x) shows strong cash conversion, and FCF ¥294.4B adequately covered dividends of approx. ¥124B (FCF coverage 2.38x). However, total returns including ¥800.0B buybacks totaling ¥923.7B far exceeded FCF and were funded through cash drawdown and bond issuance ¥398.1B. Cash and cash equivalents ¥1,359.3B, Equity Ratio 70.7%, and Interest Coverage 47.5x indicate a very strong financial base, but reliance on non-recurring items such as investment securities sale gains ¥98.5B to fund returns raises concerns about sustainability. Going forward, improving FCF levels and balancing return policy will be critical to reconcile capital efficiency with financial soundness.
This report is an AI-generated earnings analysis created by analyzing XBRL financial statement data. It does not constitute 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; please consult a professional advisor as necessary.