| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥1792.1B | ¥1776.2B | +0.9% |
| Operating Income | ¥119.6B | ¥88.2B | +35.5% |
| Ordinary Income | ¥133.5B | ¥124.5B | +7.2% |
| Net Income | ¥160.6B | ¥277.1B | -42.0% |
| ROE | 8.1% | 13.8% | - |
For FY2026, Revenue was ¥1792.1B (YoY +¥15.9B +0.9%), Operating Income was ¥119.6B (YoY +¥31.4B +35.5%), Ordinary Income was ¥133.5B (YoY +¥9.0B +7.2%), and Net Income attributable to owners of the parent was ¥160.6B (YoY -¥116.5B -42.0%). Despite marginal top-line growth, the operating stage delivered substantial profit growth: gross margin was maintained at 36.6% while SG&A ratio improved to 29.9%, driving Operating Margin up to 6.7% (+1.7pt). Ordinary Income benefited from non-operating gains including ¥14.4B foreign exchange gains, rising +7.2%. However, Net Income declined YoY due to a combination of a one-off gain on sale of investment securities (¥100.9B, similar level to prior year gain of ¥95.2B), special loss for business restructuring of ¥63.3B, and a high effective tax rate of 47.4%, resulting in a -42.0% YoY decrease. Visual Imaging led the turnaround with Operating Income +540.2% and a return to profitability, while Industrial Processes, despite profit decline, remained the largest contributor supporting gross profit.
【Revenue】 Revenue of ¥1792.1B (+0.9%) was a slight increase. By segment, Visual Imaging ¥838.8B (+3.7%, share 46.8%) led growth driven by recovery in cinema and imaging equipment demand; Industrial Processes ¥771.4B (-2.3%, share 43.0%) saw a decline due to some weakness in semiconductor lithography and FPD-related demand; Photonics Solutions ¥105.8B (+2.7%) and Life Sciences ¥62.6B (+2.4%) posted modest increases; Other ¥13.6B (-1.4%). Geographic disclosure is limited, but recognition of ¥14.4B foreign exchange gains implies a meaningful portion of revenue is overseas and yen weakness contributed to results. Cost of goods sold ratio improved to 63.4% from 64.9% last year (-1.5pt), lifting gross margin to 36.6% (prior 35.1%).
【Profitability】 Operating Income ¥119.6B (+35.5%) was achieved through both gross margin improvement and SG&A control. SG&A ¥535.6B (SG&A ratio 29.9%) was only slightly up from ¥533.9B, and with revenue growth and cost control, Operating Margin improved to 6.7% (+1.7pt). By segment, Visual Imaging Operating Income ¥46.7B (+540.2%, margin 5.6%) recovered sharply; Industrial Processes ¥64.9B (-32.6%, margin 8.4%) declined but still accounted for 54% of consolidated operating income; Photonics Solutions ¥5.6B (+235.9%), Life Sciences ¥1.4B (+113.0%) also posted large increases, improving mix. Non-operating items comprised non-operating income ¥28.4B (interest income ¥12.7B, FX gains ¥14.4B, dividend income ¥6.7B) versus non-operating expenses ¥14.5B (interest expenses ¥4.4B, FX losses ¥6.4B), netting +¥13.9B and lifting Ordinary Income to ¥133.5B (+7.2%). Extraordinary items included Extraordinary Gains ¥101.4B (mainly investment securities sale gain ¥100.9B) and Extraordinary Losses ¥82.7B (business restructuring costs ¥63.3B, impairment losses ¥13.0B, loss on disposal of fixed assets ¥4.5B), netting +¥18.7B and raising Profit Before Tax to ¥152.1B (prior ¥140.1B). After corporate taxes ¥72.1B (effective tax rate 47.4%) and non-controlling interest adjustments, Net Income attributable to owners of the parent was ¥160.6B (-42.0%). Prior year Net Income was ¥277.1B (effective tax rate 48.5%) supported by large one-off gains; in the current period, despite similar net one-off gains, higher tax burden and restructuring costs led to lower final profit—i.e., higher operating profit yet lower attributable net profit.
Visual Imaging (Revenue ¥838.8B, Operating Income ¥46.7B, margin 5.6%) delivered +3.7% revenue growth and +540.2% operating income growth, with margin expanding from 0.7% to 5.6% as cinema and imaging equipment demand recovered and restructuring effects emerged, leading overall profit growth. Industrial Processes (Revenue ¥771.4B, Operating Income ¥64.9B, margin 8.4%) had -2.3% revenue and -32.6% operating income, with margin down from 9.6% to 8.4%, but remained the core segment contributing 54% of consolidated operating income. Despite some softness in semiconductor lithography and FPD demand, it maintains high profitability. Photonics Solutions (Revenue ¥105.8B, Operating Income ¥5.6B, margin 5.3%) posted +2.7% revenue and +235.9% operating income, improving margin from 1.7% to 5.3%. Life Sciences (Revenue ¥62.6B, Operating Income ¥1.4B, margin 2.2%) grew +2.4% and achieved +113.0% operating income growth, with margin rising from 0.7% to 2.2%, but remains a low-margin area. Other (Revenue ¥13.6B, Operating Income ¥1.8B, margin 13.4%) saw -1.4% revenue but +123.2% operating income with high margin. Margin dispersion across segments: Industrial Processes 8.4% and Other 13.4% high; Visual Imaging 5.6% and Photonics Solutions 5.3% mid; Life Sciences 2.2% low. Visual Imaging’s profitability improvement and mix shift supported consolidated margin expansion.
【Profitability】Operating Margin 6.7% (prior 5.0%) improved +1.7pt, driven by higher gross margin 36.6% (prior 35.1%) and lower SG&A ratio 29.9% (prior 30.1%). EBITDA ¥205.3B (Operating Income ¥119.6B + Depreciation & Amortization ¥85.7B) yielded an EBITDA margin of 11.5%. ROE 8.1% (prior 13.8%) fell due to lower Net Income; ROA 4.0% (Ordinary Income basis 4.2%) was only marginally up from prior 3.9%. A sustained high effective tax rate of 47.4% (prior 48.5%) continues to suppress after-tax margins and ROE. 【Cash Quality】Operating Cash Flow (OCF) ¥181.4B is 1.13x Net Income ¥160.6B and 0.88x EBITDA ¥205.3B, indicating solid cash generation; accrual ratio -0.10 signals healthy earnings quality. OCF/Revenue is 10.1%; working capital improvements (Inventory decrease ¥87.5B, Trade receivables decrease ¥21.6B, Trade payables decrease -¥16.8B) contributed, but efficiency remains to be improved with DSO 81 days and Inventory Days 117 days. 【Capital Efficiency】Total Asset Turnover 0.54x (prior 0.60x) declined due to asset growth. Capital expenditure ¥86.0B roughly matched depreciation ¥85.7B (1.00x), indicating maintenance-level capex. Goodwill ¥70.6B and intangible assets ¥111.6B expanded from M&A activity, but Goodwill/EBITDA 0.34x suggests limited recovery burden; goodwill amortization ¥1.9B is 0.9% of EBITDA. 【Financial Soundness】Equity Ratio 59.9% (prior 67.4%) remains high; Current Ratio 270.7%, Quick Ratio 222.8% indicate strong liquidity. Interest-bearing debt ¥412B (Short-term borrowings ¥14.7B + Long-term borrowings ¥397.8B) yields Debt/EBITDA 2.01x and Interest Coverage (EBIT/Interest Expense) 27.1x, reflecting strong financial resilience. Cash and Deposits ¥757.5B and Marketable Securities ¥22.3B supply liquidity assets ¥779.8B; including investment securities ¥390.3B, financial assets exceed ¥1,170B.
OCF was ¥181.4B (prior ¥204.2B, -11.2%). Profit before tax ¥152.1B plus non-cash charges including Depreciation & Amortization ¥85.7B, impairment ¥13.0B, business restructuring costs ¥63.3B contributed, while working capital movements included Inventory decrease ¥87.5B and Trade receivables decrease ¥21.6B (positive), Trade payables decrease -¥16.8B (negative), Contract liabilities increase ¥17.2B supporting cash. After corporate taxes paid -¥75.4B, subtotal OCF was ¥298.1B leading to final OCF ¥181.4B. OCF/Net Income 1.13x and OCF/EBITDA 0.88x indicate good cash conversion; accrual ratio -0.10 evidences sound earnings quality. Investing CF was -¥141.1B, primarily Capital Expenditure -¥86.0B, intangible asset acquisitions -¥8.5B, M&A-related outflows -¥92.4B (business acquisition -¥92.4B, acquisition of subsidiary shares -¥70.6B), partially offset by proceeds from sale of investment securities ¥108.5B, resulting in net investing outflow -¥141.1B. Free Cash Flow was positive ¥40.4B (OCF ¥181.4B - CapEx ¥86.0B) but insufficient to fully cover dividend payments ¥62.3B. Financing CF included share buybacks -¥196.1B, long-term borrowings raised ¥315.0B, long-term borrowings repayment -¥14.1B, short-term borrowings increase ¥0.4B, netting a positive ¥42.0B. Cash & cash equivalents rose from ¥599.9B at the beginning of the period to ¥718.7B at year-end (+¥118.7B). Total shareholder returns (dividends ¥62.3B + share buybacks ¥196.1B = ¥258.4B) far exceeded Net Income ¥160.6B, funded by borrowings and investment securities sales—an episodic capital allocation. Working capital efficiency remains an improvement area (DSO 81 days, Inventory Days 117 days), and improving working capital is key to expanding FCF.
Core recurring earnings center on Operating Income ¥119.6B. Non-operating income ¥28.4B (2. Total revenue ratio 1.6%) comprised interest income ¥12.7B, FX gains ¥14.4B, dividend income ¥6.7B, remaining below 5% — a healthy level. Extraordinary items netted +¥18.7B (Extraordinary Gains ¥101.4B, mainly investment securities sale gain ¥100.9B; Extraordinary Losses ¥82.7B including restructuring ¥63.3B and impairment ¥13.0B), providing a one-off uplift equivalent to about 11.6% of Net Income ¥160.6B. Accrual quality (OCF ¥181.4B / Net Income ¥160.6B) is 1.13x and accrual ratio -0.10, with OCF/EBITDA 0.88x close to benchmark, indicating solid cash realization. The divergence between Ordinary Income ¥133.5B and Net Income ¥160.6B is due to net extraordinary gains +¥18.7B boosting Net Income while a high effective tax rate of 47.4% (corporate tax ¥72.1B on Pretax Income ¥152.1B) suppresses after-tax profit; if one-off charges such as restructuring and impairments moderate and tax burden normalizes, earnings quality should improve in subsequent periods.
For FY2027, management forecasts Revenue ¥2100.0B (YoY +17.2%), Operating Income ¥140.0B (YoY +17.1%), Ordinary Income ¥140.0B (YoY +4.9%), and Net Income attributable to owners of the parent ¥105.0B (estimate where explicit guidance was not provided), EPS ¥132.27, and year-end dividend ¥70. Revenue is expected to increase substantially (+17.2%), premised on continued recovery in Visual Imaging, reversal of Industrial Processes decline, and realization of M&A synergies. Operating Income is expected to rise +17.1% maintaining an Operating Margin of 6.7%, but Ordinary Income growth of +4.9% falling well short of operating income growth likely assumes fading FX gains and normalization of non-operating items. Progress rates are Revenue 85.3% (¥1792.1B/¥2100.0B) and Operating Income 85.4% (¥119.6B/¥140.0B), indicating near-term achievement versus the full-year plan; however, the plan assumes further growth acceleration in H2 and is subject to order flows and FX volatility. Dividend is planned at ¥70, assuming a payout ratio around 70% (based on EPS ¥132.27) and maintaining a stable dividend policy.
Year-end dividend is maintained at ¥70 (prior ¥70). Payout ratio is 73.8% (dividend ¥70 / EPS ¥94.88), a relatively high level. Total dividend amount ¥62.3B versus Free Cash Flow ¥40.4B yields a FCF-based payout coverage of 154% — insufficient to cover dividends from internal cash generation alone — but the company holds cash ¥757.5B and liquidity assets ¥779.8B, so dividend payment capability is not impaired. The company executed share buybacks of ¥196.1B (CF basis) this period, resulting in total shareholder returns ¥258.4B (dividends ¥62.3B + buybacks ¥196.1B), which substantially exceeded Net Income ¥160.6B producing a total return ratio of 161%, funded by investment securities sales ¥108.5B and long-term borrowings ¥315.0B—an episodic capital allocation. The dividend policy remains a stable ¥70 per share, and the projected payout ratio for next year is 52.9% (dividend ¥70 / forecast EPS ¥132.27), returning to a standard level. Sustainability of dividends going forward depends on FCF expansion via working capital efficiency improvements and growth in core profit excluding one-offs; optimizing the balance between dividends and buybacks is a medium-term priority.
Demand Cyclicality Risk: Major segments are exposed to end-market CAPEX cycles—Visual Imaging (Revenue ¥838.8B, share 46.8%) tied to cinema and imaging equipment, and Industrial Processes (Revenue ¥771.4B, share 43.0%) tied to semiconductor lithography and FPD. While Visual Imaging entered a recovery with +3.7% revenue, fluctuations in box office performance or FPD market softness could slow sales. Low overall Revenue growth +0.9% was influenced by Industrial Processes decline -2.3%, so imbalance between segment demand could constrain consolidated growth.
M&A Integration Risk: Goodwill ¥70.6B (prior ¥6.3B, +1012%) and intangible assets ¥111.6B (prior ¥51.1B, +119%) increased substantially following M&A, and M&A-related outflow -¥92.4B was recorded in investing CF. Goodwill/EBITDA 0.34x and goodwill amortization ¥1.9B (0.9% of EBITDA) indicate limited immediate recovery burden, but delayed realization of integration synergies (revenue/gross margin uplift, cost synergies) could reduce expected returns and raise impairment risk. Next year’s growth assumptions rely on M&A synergies, so monitoring integration KPIs (cross-sell, site consolidation benefits, etc.) is critical.
High Tax Burden and Cash Efficiency Risk: A sustained high effective tax rate 47.4% (prior 48.5%) continues to depress Net Income and ROE (8.1%). Working capital efficiency remains an issue (DSO 81 days, Inventory Days 117 days), and while OCF/EBITDA 0.88x is solid, heavy working capital constrains cash conversion. With dividends ¥62.3B vs FCF ¥40.4B (coverage 0.65x), the company funded total returns ¥258.4B (including ¥196.1B buybacks) via borrowings and asset sales. Sustainable dividends and ROE improvement require tax optimization and working capital efficiency gains (tighter credit and inventory management); failure to improve could weaken FCF generation and limit capital allocation flexibility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.7% | 7.8% (4.6%–12.3%) | -1.1pt |
| Net Margin | 9.0% | 5.2% (2.3%–8.2%) | +3.8pt |
Operating Margin 6.7% is -1.1pt below the industry median 7.8%, placing the company in the mid-range within manufacturing. Conversely, Net Margin 9.0% is +3.8pt above the median 5.2%, reflecting the uplift from extraordinary gains (sale of investment securities), positioning the company toward the upper end at the final profit stage.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.9% | 3.7% (-0.4%–9.3%) | -2.8pt |
Revenue growth +0.9% lags the industry median 3.7% by -2.8pt, placing the company in the low-growth cluster within manufacturing. Continued recovery in Visual Imaging and acceleration in Industrial Processes are key to improving industry ranking next year.
※Source: Company compilation
Operating-stage profitability improvements are evident: Operating Income +35.5%, Operating Margin 6.7% (+1.7pt), EBITDA margin 11.5% indicate recovery in earnings power. Visual Imaging led the turnaround with Operating Income +540.2%, improving segment mix and lifts to consolidated margins. Financial position is solid with Debt/EBITDA 2.01x, Current Ratio 270.7%, Interest Coverage 27.1x, and cash holdings ¥757.5B, minimizing liquidity risk. FY2027 plan (Revenue ¥2100.0B, Operating Income ¥140.0B) assumes revenue and profit growth contingent on M&A synergies and sustained recovery in core segments.
Dependence on one-off items and high tax burden suppress earnings quality. Net extraordinary gain +¥18.7B contributed about 11.6% of Net Income, and an effective tax rate of 47.4% pressured after-tax margins and ROE 8.1%. While OCF ¥181.4B and accrual ratio -0.10 indicate good cash realization, working capital efficiency (DSO 81 days, Inventory Days 117 days) has room for improvement; FCF ¥40.4B could not fully cover dividends ¥62.3B and total returns ¥258.4B were financed by borrowings and asset sales. Estimated ROIC 3.8% likely below cost of capital, so tax optimization, working capital improvement to expand FCF, and optimized capital allocation are key to sustainable growth and ROE improvement.
This report is an AI-generated financial analysis created by analyzing XBRL earnings disclosure data. It is not a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions should be made at your own responsibility, and, if necessary, consult a professional advisor.