| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2762.7B | ¥2617.6B | +5.5% |
| Operating Income | ¥230.7B | ¥142.4B | +62.1% |
| Ordinary Income | ¥256.8B | ¥141.3B | +81.8% |
| Net Income | ¥160.9B | ¥120.8B | +33.1% |
| ROE | 6.8% | 5.5% | - |
For the fiscal year ended March 2026, Revenue was ¥2,762.7B (YoY +¥145.1B, +5.5%), Operating Income was ¥230.7B (YoY +¥88.3B, +62.1%), Ordinary Income was ¥256.8B (YoY +¥115.5B, +81.8%), and Net Income attributable to owners of the parent was ¥160.9B (YoY +¥40.1B, +33.1%), representing revenue and profit growth. The Watch Business performed strongly with Revenue +11.3% and Operating Income +33.8%, driving consolidated profit. Gross margin improved to 44.2% (prior 43.3%), SG&A ratio declined to 35.9% (prior 37.9%), expanding Operating Margin to 8.4% (prior 5.4%) — a 3.0pt improvement. Extraordinary items were largely offset (gain on sale of fixed assets ¥22.2B vs. impairment loss ¥28.9B), resulting in limited net impact. Operating Cash Flow was ¥301.5B (YoY +86.8%), providing cash coverage of 1.9x Net Income. Long-term borrowings were reduced by ¥170.0B, improving financial soundness, while Inventory Days rose to 140 days (YoY +30 days) and Cash Conversion Cycle (CCC) deteriorated to 137 days (YoY +53 days), indicating weaker working capital efficiency.
Revenue: Revenue was ¥2,762.7B (YoY +5.5%). The core Watch Business achieved ¥1,849.7B (YoY +11.3%), representing 67.0% of total sales and delivering double-digit growth. The Consumer Business was ¥820.6B (YoY -0.0%), essentially flat. Regionally, overseas expansion of the Watch Business contributed, and foreign exchange gains of ¥11.6B supported revenue growth. Trade receivables were ¥280.6B (YoY +3.2%), growing below revenue growth and showing healthy collections. Inventories were ¥590.7B (YoY +0.2%), significantly below revenue growth with limited buildup, but Inventory Days deteriorated to 140 days (YoY +30 days), likely driven by product mix changes and precautionary inventory increases.
Profitability: Cost of sales was ¥1,541.1B (cost of sales ratio 55.8%), Gross Profit was ¥1,221.6B (Gross Margin 44.2%, YoY +0.9pt). SG&A was ¥990.9B (SG&A ratio 35.9%, YoY -2.0pt), including goodwill amortization of ¥1.7B. Operating Income was ¥230.7B (Operating Margin 8.4%, YoY +3.0pt), a substantial increase. Non-operating income included interest income ¥18.2B and foreign exchange gains ¥11.6B, while non-operating expenses included interest expense ¥5.7B and foreign exchange losses ¥14.1B, resulting in net non-operating income of ¥26.1B (YoY -¥0.1B). Ordinary Income was ¥256.8B (YoY +81.8%). Extraordinary items comprised Extraordinary Gains ¥39.0B (gain on sale of fixed assets ¥22.2B, gain on sale of subsidiary shares ¥15.7B, etc.) and Extraordinary Losses ¥33.7B (impairment loss ¥28.9B, business restructuring costs ¥19.9B, etc.), yielding Profit before Tax of ¥262.1B. After deducting Income Taxes of ¥80.1B (effective tax rate 30.6%), Net Income attributable to owners of the parent was ¥160.9B (Net Margin 5.8%, YoY +33.1%), resulting in a revenue- and profit-enhanced finish.
The Watch Business: Revenue ¥1,849.7B (YoY +11.3%), Operating Income ¥271.2B (YoY +33.8%), Operating Margin 14.7% (prior 13.6%, +1.1pt). Strong sales of higher-value models improved gross margins and disciplined SG&A contributed to margin expansion. As the primary profit generator, it led consolidated profitability. The Consumer Business: Revenue ¥820.6B (YoY -0.0%), essentially flat, while Operating Income improved to ¥34.1B (YoY +57.8%), Operating Margin 4.2% (prior 2.6%, +1.6pt). Cost controls in existing product lines (electronic dictionaries, calculators, etc.) boosted margins despite modest revenue change. Other businesses (molded parts, molds, etc.) are undisclosed segment-wise but reconcile to consolidated Operating Income of ¥230.7B after subtracting corporate costs of ¥62.1B.
Profitability: Operating Margin 8.4% (prior 5.4%, +3.0pt), Net Margin 5.8% (prior 4.6%, +1.2pt), Gross Margin 44.2% (prior 43.3%, +0.9pt) — all improved. ROE 6.8% (prior 3.6%, +3.2pt), ROA 7.5% (prior 4.1%, +3.4pt) — capital efficiency improved. Cash Quality: Operating Cash Flow (OCF) ¥301.5B is 1.9x Net Income ¥160.9B, and OCF/EBITDA multiple is 0.91x, indicating healthy cash conversion. Accrual ratio -0.51 indicates solid cash backing of earnings. Investment Efficiency: Total Asset Turnover 0.80x (prior 0.79x), relatively flat. Inventory Days (DIO) 140 days (prior 110 days, +30 days), CCC 137 days (prior 84 days, +53 days) — working capital efficiency has deteriorated. Financial Soundness: Equity Ratio 66.9% (prior 66.0%, +0.9pt), Current Ratio 309.0% (prior 384.3%, -75.3pt), Debt/Equity 10.6% (prior 19.2%, -8.6pt), Interest Coverage 40.8x (prior 30.5x) — financial resilience is strong. Long-term borrowings were compressed to ¥250.0B (prior ¥420.0B, -40.5%), and Debt/EBITDA multiple improved to 0.76x (prior 1.17x), indicating deleveraging progress.
Operating Cash Flow was ¥301.5B (prior ¥161.4B, +86.8%). The subtotal (before working capital changes) was ¥353.9B, from which working capital movements included inventory increase ¥28.0B, trade receivables increase ¥0.5B, and trade payables decrease ¥1.5B; after corporate tax payments ¥44.5B, the OCF was realized. Depreciation and amortization ¥102.2B resulted in EBITDA ¥332.9B and an OCF/EBITDA multiple of 0.91x, a high level. Investing Cash Flow was -¥89.1B, composed of Capital Expenditures -¥128.1B (1.25x depreciation, growth investment pace), Intangible asset acquisitions -¥37.9B, proceeds from sale of subsidiary shares ¥19.1B, etc. Free Cash Flow was ¥212.4B (prior ¥165.8B, +28.1%). Financing Cash Flow was -¥173.7B, including long-term borrowings repayment -¥151.3B, dividend payments -¥102.6B, and share buybacks -¥50.0B. As a result, Cash and Cash Equivalents increased to ¥1,506.6B (prior ¥1,403.7B, +¥102.9B), strengthening liquidity. The deterioration in Inventory Days and CCC suggests cash absorption from working capital and highlights that inventory reduction next fiscal year will be key to sustaining OCF.
Recurring earnings are centered on Operating Income ¥230.7B, with non-operating income ¥34.2B (interest income ¥18.2B, foreign exchange gains ¥11.6B, dividend income ¥1.7B, etc.), which is 1.2% of Revenue and limited. Subtracting non-operating expenses ¥8.1B (interest expense ¥5.7B, foreign exchange losses ¥14.1B, etc.) yields net non-operating income at the recurring level of ¥26.1B. Extraordinary Gains ¥39.0B (gain on sale of fixed assets ¥22.2B, gain on sale of subsidiary shares ¥15.7B, gain on sale of investment securities ¥1.2B) and Extraordinary Losses ¥33.7B (impairment loss ¥28.9B, business restructuring costs ¥19.9B, valuation loss on investment securities ¥3.3B, loss on disposal of fixed assets ¥1.5B) were recorded, producing a net one-time gain of approximately ¥5.3B. One-time items account for about 28% of Net Income ¥160.9B, so caution is warranted when assessing earnings quality. The accrual ratio of -0.51 (OCF ¥301.5B - Net Income ¥160.9B = +¥140.6B positive cash excess) and OCF/Net Income multiple 1.9x indicate solid cash backing of profits. The difference between Ordinary Income ¥256.8B and Net Income ¥160.9B is consistent with tax expense ¥80.1B and non-controlling interests -¥0.2B, showing no major distortion in profit structure.
Full-year forecast: Revenue ¥2,950.0B (YoY +6.8%), Operating Income ¥260.0B (YoY +12.7%), Ordinary Income ¥260.0B (YoY +1.2%), Net Income attributable to owners of the parent ¥185.0B, EPS ¥82.28. Given FY-to-date results (Revenue ¥2,762.7B, Operating Income ¥230.7B), the second half is assumed to maintain the revenue growth pace and slightly lift the full-year Operating Margin to 8.8%. Achieving guidance assumes maintaining the high-value product mix ratio in the Watch Business, continued SG&A discipline, and correction of Inventory Days to avoid discount pressure. Progress rates are 93.6% for Revenue and 88.7% for Operating Income; while remaining upside in the final quarter is limited, the full-year forecast is judged achievable.
Annual dividend is ¥45.0 per share (interim ¥22.5, year-end ¥22.5). The payout ratio is 1.3% (if total dividends are ¥2.1B against Net Income ¥160.9B) which appears very low, but considering the number of outstanding shares and actual total dividend amount, the total dividend is ¥102.6B, giving a payout ratio of 63.8%, within an appropriate range. Share buybacks of ¥50.0B were conducted; combined with dividends the total shareholder return amount is ¥152.6B, yielding a Total Return Ratio of 94.8%. Relative to Free Cash Flow ¥212.4B, the Total Return Ratio is 71.9%, indicating sustainability on an FCF basis. Cash and deposits ¥946.8B, Current Ratio 309.0%, and Debt/Equity 10.6% indicate strong financial soundness and no immediate concern for dividend stability. The discrepancy in payout ratio calculations may stem from share count treatment or aggregation methods of total dividends; effectively, shareholder returns are being delivered through dividends plus share buybacks.
Inventory build-up and discount pressure: Inventory Days at 140 days (YoY +30 days) and CCC 137 days (YoY +53 days) indicate deteriorating working capital efficiency. Inventory accumulation may signal demand-supply mismatch and could lead to price discounts or impairment risk. Although inventories increased only +0.2% vs. Revenue growth +5.5%, prolonged days of inventory may reflect product mix shifts or precautionary stock increases and pose margin pressure next fiscal year.
Dependence on one-off items: Net one-time gain of approximately ¥5.3B is about 3% of Net Income ¥160.9B, but Extraordinary Gains ¥39.0B and Extraordinary Losses ¥33.7B together mean one-time items account for ~28% of Net Income. If such items do not recur next fiscal year, underlying earning power may be lower and EPS growth sustainability becomes uncertain.
Business concentration risk: The Watch Business represents 67.0% of Revenue and the majority of Operating Income, indicating high portfolio concentration. Risks specific to the Watch Business — emergence of smartwatches and competing products, FX fluctuations, regional demand shifts — directly affect consolidated results, making reliance on a single business a driver of earnings volatility.
Revenue & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.4% | 7.8% (4.6%–12.3%) | +0.6pt |
| Net Margin | 5.8% | 5.2% (2.3%–8.2%) | +0.6pt |
Profitability exceeds the industry median, with Operating Margin and Net Margin both above median levels.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 5.5% | 3.7% (-0.4%–9.3%) | +1.8pt |
Revenue growth outpaces the industry median by +1.8pt, maintaining a top-tier growth pace within manufacturing.
※ Source: Company compilation
High profitability in the Watch Business is driving consolidated profit, with Operating Margin improving to 8.4% (prior 5.4%, +3.0pt). Gross Margin +0.9pt and SG&A ratio -2.0pt both fueled operating leverage, improving ROE to 6.8% (prior 3.6%, +3.2pt) and ROA to 7.5% (prior 4.1%, +3.4pt). Deleveraging (Debt/EBITDA 0.76x, prior 1.17x) and strong cash generation (OCF ¥301.5B, FCF ¥212.4B) have further reinforced financial solidity.
Inventory Days 140 days (YoY +30 days) and CCC 137 days (YoY +53 days) show deteriorated working capital efficiency, with inventory buildup potentially leading to discounting or impairment risk. Temporary items in extraordinary gains/losses account for ~28% of Net Income, so base earning power next year may be lower. Full-year forecast (Operating Income ¥260.0B, progress rate 88.7%) is within reach, but inventory reduction progress and FX control are key to achievement.
High concentration in the Watch Business (67.0% of sales and majority of Operating Income) increases single-business dependency and earnings volatility. Conversely, the Consumer Business improved profitability to 4.2% (prior 2.6%, +1.6pt) despite flat sales, gradually enhancing portfolio quality. Dividends ¥45.0 (payout ratio 63.8%) and share buybacks ¥50.0B are adequately funded by FCF ¥212.4B, balancing stability and return.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed before acting.
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