| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥618.9B | ¥546.8B | +13.2% |
| Operating Income | ¥44.3B | ¥34.7B | +27.8% |
| Ordinary Income | ¥58.9B | ¥14.8B | +297.9% |
| Net Income | ¥45.8B | ¥9.7B | +374.4% |
| ROE | 3.9% | 0.9% | - |
The Q1 2026 fiscal results (Feb–Apr 2026) recorded Revenue of ¥618.9B (YoY +¥72.1B +13.2%), Operating Income of ¥44.3B (YoY +¥9.6B +27.8%), Ordinary Income of ¥58.9B (YoY +¥44.1B +297.9%), and Net Income attributable to owners of the parent of ¥45.8B (YoY +¥36.2B +374.4%). Substantial profit increases were achieved across all profit measures. Operating margin improved by 82bp from 6.3% in the prior-year period to 7.2%, indicating improved profitability. The much larger increases in Ordinary Income and Net Income relative to Operating Income were mainly due to recorded foreign exchange gains of ¥15.1B and a reversal from a foreign exchange loss of ¥21.9B in the prior-year period. The ElectronicParts segment drove company-wide profits with high growth: Revenue +26.6% and Operating Income +86.6%. EPS of ¥25.09 rose from ¥5.30 in the prior-year period (+373.4%).
[Revenue] Revenue of ¥618.9B (YoY +13.2%) was achieved with revenue increases across all segments. Core ElectricalParts recorded ¥431.1B (+8.7%), accounting for 69.7% of company revenue and remaining resilient. ElectronicParts grew strongly to ¥179.1B (+26.6%), expanding its share to 29.0%. ToolingMachinery increased to ¥30.7B (+19.2%) but remained only 5.0% of the total. On an external sales basis after intersegment adjustments, the expansion of ElectronicParts clearly drove company growth.
[Profitability] Operating Income of ¥44.3B (YoY +27.8%) was supported by both revenue growth and margin improvement. Cost of goods sold ratio improved to 83.7% (prior 84.6%), raising gross margin to 16.3% (prior 15.4%)—an increase of 82bp. SG&A totaled ¥56.6B, with SG&A-to-sales ratio stable at 9.1% (prior 9.1%), reflecting absorption effects from scale expansion. Operating margin improved to 7.2% (prior 6.3%)—+82bp. Ordinary Income of ¥58.9B (YoY +297.9%) benefited from a large improvement in non-operating items. Non-operating income of ¥17.4B included foreign exchange gains of ¥15.1B, reversing the prior-year foreign exchange loss of ¥21.9B and improving non-operating profit by ¥37.0B YoY. Non-operating expenses of ¥2.8B were contained, centered on interest expense of ¥1.5B. Extraordinary items were net +¥1.0B (extraordinary gain ¥1.5B from subsidy income, extraordinary loss ¥0.5B from disposal loss of fixed assets). Profit before income taxes was ¥60.0B, with income taxes of ¥14.2B implying an effective tax rate of 23.7%. Net Income of ¥45.8B is a large YoY increase from ¥9.7B (+374.4%). In summary, the company had a strong start with both revenue and profit growth.
ElectricalParts posted Operating Income of ¥35.6B (prior ¥29.2B, +22.0%) with an operating margin of 8.3%. As the core segment it accounted for 80.4% of company Operating Income, providing a stable earnings base. ElectronicParts posted Operating Income of ¥16.7B (prior ¥8.9B, +86.6%) with an operating margin of 9.3%. Its share of operating profit expanded to 37.7%, contributing to company margin improvement through high growth and high profitability. ToolingMachinery posted Operating Income of ¥0.1B (prior ¥0.3B, -72.0%) with an operating margin of 0.2%. Despite revenue growth, profitability deteriorated significantly, presenting a company-level issue for margin. Segment profit adjustments were -¥8.1B (prior -¥3.7B), with increased allocations of head office expenses partly offsetting the improvement in company operating margin.
[Profitability] Operating margin of 7.2% improved by 82bp from 6.3% in the prior-year period, driven by higher gross margin and stable SG&A ratio. Net margin of 7.4% expanded by 5.6pt from 1.8% in the prior-year period, led by improvements in non-operating items. ROE was 3.9%, composed of net margin 7.4%, total asset turnover 0.250x (annualized 1.0x), and financial leverage 2.10x. [Cash Quality] Days sales outstanding were 189 days (Accounts receivable ¥320.5B ÷ quarterly Revenue ¥618.9B × 365 days ÷ 4), and inventory days were 137 days (Inventory ¥86.7B ÷ quarterly COGS ¥518.0B × 365 days ÷ 4), giving a working capital cycle of 146 days—indicating room to improve working capital efficiency. Interest coverage was 30.2x (Operating Income ¥44.3B ÷ Interest expense ¥1.5B), showing negligible interest burden. [Investment Efficiency] Total asset turnover was 0.250x (quarterly basis, annualized 1.0x), reflecting capital intensity. [Financial Health] Equity Ratio was 47.6% (prior 47.0%), current ratio 196.9%, quick ratio 181.6%—all favorable. Interest-bearing debt totaled ¥882.0B (Long-term borrowings ¥693.2B + Short-term borrowings ¥194.5B - Cash ¥466.0B = Net interest-bearing debt ¥416.0B), Debt/Equity Ratio 0.75x, Debt/Capital 37.0%—financial leverage at a healthy level.
As Operating Cash Flow, Investing Cash Flow, and Financing Cash Flow disclosures are not provided, funding trends were analyzed from balance sheet movements. Cash and deposits were ¥466.0B (prior ¥480.4B, -¥14.4B), a slight decline. Cash and cash equivalents including short-term investment securities of ¥45.0B (prior ¥50.0B) totaled ¥511.0B, indicating ample liquidity. Construction in progress rose significantly to ¥248.6B (prior ¥213.7B, +¥34.9B), suggesting ongoing capacity expansion investments. Total tangible fixed assets increased to ¥1,283.2B (prior ¥1,252.5B, +¥30.7B). Interest-bearing debt in total was ¥887.7B (Long-term borrowings ¥693.2B + Short-term borrowings ¥194.5B) (prior ¥868.4B, +¥19.3B), slightly higher, indicating some capex financed by borrowings. Retained earnings rose to ¥723.1B (prior ¥699.3B, +¥23.8B), reflecting internal retention of Net Income ¥45.8B. Working capital rose—Accounts receivable ¥320.5B (prior ¥301.3B, +¥19.2B), Inventory ¥86.7B (prior ¥82.1B, +¥4.6B), Accounts payable ¥254.6B (prior ¥233.3B, +¥21.3B)—but the CCC remains elevated.
Ordinary Income exceeded Operating Income by ¥14.6B, with non-operating income boosting total earnings. Of non-operating income of ¥17.4B, foreign exchange gains of ¥15.1B accounted for 86.8%, indicating a large one-off effect from currency movements. The prior-year period recorded a foreign exchange loss of ¥21.9B; the net FX impact year-over-year was +¥37.0B, representing 84% of the Ordinary Income increase of ¥44.1B. At the operating level, the increase was limited to ¥9.6B, so the large rise in Ordinary Income relied on non-operating tailwinds. Extraordinary items were net +¥1.0B, a minor impact on pre-tax profit of ¥60.0B. Income taxes of ¥14.2B imply an effective tax rate of 23.7%, with no peculiarity in tax burden. Other comprehensive income of ¥19.6B (mainly ¥19.5B from foreign currency translation adjustments) pushed comprehensive income to ¥65.4B, ¥19.6B above Net Income. Currency revaluation lifted comprehensive income, so when assessing sustainable earning power, attention should focus on the operating-level margin improvement (+82bp) excluding FX effects.
Full Year plan is unchanged at Revenue ¥2,540.0B (YoY +16.3%), Operating Income ¥145.0B (+14.6%), Ordinary Income ¥145.0B (+5.0%), and Net Income attributable to owners of the parent ¥100.0B. Q1 progress rates are: Revenue 24.4% (around the standard 25%), Operating Income 30.6% (+5.6pt vs. standard), Ordinary Income 40.7% (+15.7pt vs. standard), Net Income 45.8% (+20.8pt vs. standard), indicating profit measures are running ahead. The lead in Operating Income was supported by margin improvement, and the large lead in Ordinary Income and Net Income was mainly due to improved non-operating items (foreign exchange gains). The full year Ordinary Income forecast of ¥145.0B (YoY +5.0%) is below the Operating Income growth assumption (+14.6%), suggesting a conservative assumption that favorable FX year-over-year effects will fade. Whether the Q1 FX gain of ¥15.1B will be maintained through the year is uncertain; FX trends in H2 are a key variable for the full-year outcome. If ElectronicParts continues high growth, there is upside at the operating level and the company could beat plan on a core performance basis excluding FX.
The dividend forecast at Q1-end is maintained at an annual ¥6.00 (unchanged from prior year actual ¥6.00). The payout ratio relative to full-year EPS forecast of ¥54.72 is 11.0%, low, reflecting a prioritization of internal retention. With retained earnings of ¥723.1B and cash deposits of ¥466.0B, dividend funding is ample and there is no concern over dividend payment ability. As construction in progress of ¥248.6B increased, the company is in a growth phase prioritizing capacity expansion; therefore it emphasizes investment and internal retention over raising the payout ratio. No share buyback disclosure was made; shareholder returns are limited to dividends. After investment cycles conclude there may be room to gradually raise the payout ratio, but for now the company adopts a conservative shareholder returns policy that prioritizes growth investments and financial soundness.
Stagnation in working capital efficiency: DSO 189 days, inventory days 137 days, CCC 146 days—all high levels. As sales increase, working capital expansion could delay cash conversion of profits. There is room to compress AR ¥320.5B (prior ¥301.3B, +¥19.2B) and inventory ¥86.7B (prior ¥82.1B, +¥4.6B); strengthening collections and optimizing inventory are priorities.
Low profitability in the ToolingMachinery segment: Operating margin 0.2% (down -72.0% from 0.9% prior) indicates significantly deteriorated profitability. Revenue of ¥30.7B is only 5.0% of the company total and delivers almost no profit contribution, restraining company operating margin improvement. Urgent measures include improving product mix and correcting price/cost structure.
Foreign exchange risk: Of the Ordinary Income increase of ¥44.1B, ¥37.0B derives from improved FX gains/losses, indicating high FX dependence. The prior-year FX loss of ¥21.9B reversed to a FX gain of ¥15.1B this period; if FX reverts to yen appreciation, non-operating income could decline and Ordinary/Net Income could fall materially. While operating margin improvement strengthens operating earning power, FX hedging disclosure is lacking; divergence between the FX assumptions in the full-year plan and actual rates is a material earnings risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.2% | 8.8% (4.4%–14.3%) | -1.7pt |
| Net Margin | 7.4% | 7.3% (3.3%–10.6%) | +0.2pt |
Operating margin is 1.7pt below the industry median, but net margin is in line due to support from non-operating income.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 13.2% | 6.6% (-0.3%–14.8%) | +6.6pt |
Revenue growth exceeds the industry median by 6.6pt, placing the company in the high-growth cohort among manufacturers.
※Source: Company aggregation
The high growth of the ElectronicParts segment (Revenue +26.6%, Operating Income +86.6%, margin 9.3%) is driving company margin improvement and profit growth, indicating progression toward higher-value product mix. Continued expansion of this segment’s share could bring operating margin closer to the industry median of 8.8%.
Improvement in non-operating items produced the large increases in Ordinary and Net Income, but the contribution of FX gains (¥15.1B vs. prior-year FX loss ¥21.9B) is significant; FX reversion is an important H2 variable. The full-year Ordinary Income plan of ¥145.0B (YoY +5.0%) appears conservative assuming FX tailwinds fade; if operating-level performance (Operating margin +82bp) persists, there is upside.
The increase in construction in progress to ¥248.6B shows capacity expansion investments underway. Initial costs and higher depreciation from capex ramp-up may pressure operating margin near-term, but medium-to-long-term increased supply capacity should support sustainable revenue growth. Improving working capital efficiency (CCC 146 days) is key to enhancing cash generation and recovering invested capital.
This report is an AI-generated earnings analysis created by automatically analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; consult professionals as needed before investing.