| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥722.9B | ¥641.2B | +12.7% |
| Operating Income / Operating Profit | ¥36.5B | ¥11.8B | +210.0% |
| Ordinary Income | ¥52.2B | ¥12.4B | +320.1% |
| Net Income | ¥22.2B | ¥8.6B | +157.2% |
| ROE | 2.5% | 1.1% | - |
For the fiscal year ended March 2026, the company achieved substantial top-line and profit growth: Revenue ¥722.9B (YoY +¥81.7B +12.7%), Operating Income ¥36.5B (YoY +¥24.7B +210.0%), Ordinary Income ¥52.2B (YoY +¥39.8B +320.1%), and Net Income attributable to owners of the parent ¥39.5B (YoY +¥36.9B +1419.2%). Revenue expanded across all regions; gross margin improved to 30.3% (+2.0pt from 28.3% a year earlier). Selling, general and administrative expense growth was contained and fixed-cost leverage contributed, restoring Operating Margin to 5.0% (prior year 1.8%). At the ordinary-income level, subsidy income of ¥6.6B and equity-method investment income of ¥1.9B provided support, offsetting headwinds from interest expense of ¥6.4B and foreign exchange losses of ¥5.6B, expanding the Ordinary Income margin to 7.2% (prior year 1.9%). Comprehensive income reached ¥115.6B, 2.9x Net Income, with translation adjustments of ¥58.8B, valuation differences on available-for-sale securities of ¥7.3B, and retirement benefit adjustments of ¥10.7B materially boosting equity.
[Revenue] Revenue was ¥722.9B (YoY +12.7%), expanding broadly. By segment, Asia ¥385.5B (+14.1%) was the largest contributor, Japan ¥578.4B (+12.0%) followed, Europe ¥138.0B (+13.8%) remained healthy, and America ¥115.0B (+4.9%) showed slower growth. Gross profit was ¥218.7B (gross margin 30.3%), up ¥36.2B YoY and gross margin improved +2.0pt from 28.3% due to price realization, favorable product mix, yield improvement, and the operating effect of capital investments.
[Profitability] Operating Income reached ¥36.5B (YoY +210.0%), a substantial increase. SG&A was ¥182.2B (as a percentage of sales 25.2%) up ¥12.5B from ¥169.8B (26.5% of sales) in the prior year, but the increase was contained relative to revenue growth (+¥81.7B), enabling fixed-cost leverage. R&D expense was ¥24.5B (3.4% of sales), roughly flat, sustaining technology investment. Ordinary Income rose to ¥52.2B (YoY +320.1%), outpacing operating-level gains, supported by non-operating income of ¥23.8B (interest income ¥2.0B, subsidy income ¥6.6B, equity-method investment income ¥1.9B, etc.). Non-operating expenses were ¥8.0B, primarily interest expense ¥6.4B and foreign exchange losses ¥5.6B, but the year-on-year increase in these costs was limited. Extraordinary gains/losses were marginal at net +¥0.4B (gain on sale of investment securities ¥2.1B less impairment losses ¥1.1B), resulting in income before income taxes of ¥52.6B. Income taxes totaled ¥13.1B (effective tax rate 24.9%), and Net Income attributable to owners of the parent was ¥39.5B versus ¥2.6B a year earlier, delivering a strong revenue-and-profit result.
Japan recorded Revenue ¥578.4B (YoY +12.0%) and Operating Income ¥13.3B (YoY +226.4%), with a margin of 2.3%, a significant turnaround from a prior-year loss. Improved utilization at domestic production sites and cost reductions contributed. Asia posted Revenue ¥385.5B (+14.1%) and Operating Income ¥15.5B (+11.2%), with a margin of 4.0%, remaining the largest profit-contributing segment and sustaining stable growth. Europe delivered Revenue ¥138.0B (+13.8%) and Operating Income ¥5.9B (+24.1%), margin 4.3%, maintaining high profitability reflecting firm regional demand. America achieved Revenue ¥115.0B (+4.9%) but Operating Income declined to ¥1.1B (YoY -54.4%), margin down to 1.0%. Intensified local competition and rising costs compressed profitability, requiring turnaround measures.
[Profitability] Operating Margin of 5.0% improved +3.2pt from 1.8% a year earlier, driven by +2.0pt gross margin expansion and restraint in SG&A ratio (25.2% vs. 26.5% prior). ROE 2.5% rose from 0.3% the prior year, however decomposition into Net Profit Margin 5.5%, Total Asset Turnover 0.48x, and Financial Leverage 1.71x indicates substantial room to improve capital efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥88.5B, 2.24x Net Income ¥39.5B, indicating high quality, but relative to EBITDA ¥106.7B (Operating Income ¥36.5B + Depreciation ¥70.2B) the ratio is 0.83x, signaling weakness; working capital build-up (receivables increase ¥16.2B, inventories increase ¥5.4B) restrained cash conversion. DSO 81 days, DIO 97 days, and CCC 155 days indicate an elongated working capital cycle. [Investment Efficiency] Capital expenditure ¥74.2B was 1.06x depreciation ¥70.2B, reflecting selective capacity increases in addition to maintenance. Construction in progress was ¥44.2B (down 80% from ¥221.9B prior), indicating progress toward completion and commissioning of investments. R&D ratio 3.4% is within the electrical equipment industry standard range, supporting maintenance of technological competitiveness. [Financial Soundness] Equity Ratio 58.4% (prior 55.3%) improved, with Current Ratio 252% and Quick Ratio 232% indicating ample liquidity. Cash and deposits ¥290.0B are 2.9x short-term borrowings ¥98.8B, limiting maturity mismatch. Interest-bearing debt was ¥454.1B, Debt/Capital 33.9%, Interest Coverage 5.66x (EBIT ¥36.5B / interest expense ¥6.4B) acceptable, but Debt/EBITDA 4.26x is relatively high and in a leverage-alert range.
Operating Cash Flow was ¥88.5B (YoY +9.2%), generated from subtotal ¥96.6B less working capital changes (receivables increase ¥16.2B, inventories increase ¥5.4B, payables decrease ¥9.1B) and income taxes paid ¥8.4B. OCF/Net Income 2.24x indicates high quality, while OCF/EBITDA 0.83x suggests working capital retention impacts. Investing Cash Flow was -¥68.4B, driven mainly by capital expenditure ¥74.2B, exceeding depreciation ¥70.2B. The substantial decrease in construction in progress reflects transfers to completed assets; tangible fixed assets increased to ¥744.9B (prior ¥714.7B), indicating expanded production capacity and commissioning. Free Cash Flow was ¥20.1B (Operating CF ¥88.5B - Investing CF ¥68.4B), positive and sufficient to cover dividend payments of ¥11.2B. Financing Cash Flow was -¥5.1B, with long-term borrowings ¥40.1B and short-term borrowings increase ¥2.0B raised, while long-term repayments ¥32.0B and dividend payments ¥11.2B were made. Cash and cash equivalents at period end rose ¥26.1B to ¥274.1B (prior ¥247.9B), with foreign exchange translation gains of ¥11.1B also contributing.
Of Ordinary Income ¥52.2B, non-operating income ¥23.8B (3.3% of sales) includes interest income ¥2.0B, subsidy income ¥6.6B, and equity-method investment income ¥1.9B; some items are recurring while others are policy-driven or temporary. Extraordinary items were net +¥0.4B (gain on sale of investment securities ¥2.1B - impairment losses ¥1.1B, etc.) and had limited one-off impact on Net Income. Net Income attributable to owners of the parent ¥39.5B is lower than Ordinary Income ¥52.2B (-24%), due to tax burden ¥13.1B (effective tax rate 24.9%) and minor extraordinary items. Accrual quality is solid with OCF/Net Income 2.24x and accrual ratio (Net Income - OCF) / Total Assets -3.2%, indicating adequate cash backing for profits. Comprehensive Income ¥115.6B far exceeds Net Income ¥39.5B; Other Comprehensive Income ¥76.1B (translation adjustments ¥58.8B, valuation difference on securities ¥7.3B, retirement benefit adjustments ¥10.7B) boosted equity. As translation and market valuation items include transient elements, emphasis on Ordinary Income and cash flow is recommended when assessing sustainable earning power.
Full-year guidance is Revenue ¥774.0B (YoY +7.1%), Operating Income ¥28.3B (YoY -22.4%), Ordinary Income ¥33.0B (YoY -36.8%), Net Income attributable to owners of the parent ¥47.8B (YoY +21.0%), EPS ¥128.73, DPS ¥19.50. Compared with this fiscal-year actuals, progress rates are: Revenue 93.4%, Operating Income 129.0%, Ordinary Income 158.2%, Net Income 82.6%. While operating and ordinary income outperformed guidance, final profit is below forecast, suggesting conservative assumptions for non-operating/extraordinary items and potential tax variability in the guidance. The projected dividend of ¥19.50 per share is a reduction from this fiscal year’s ¥32, but the payout ratio relative to forecast EPS is 15.1%, a sustainable level. Variability in progress rates for the full-year forecast implies adjustments to margins and possible one-off costs in H2; the guidance stance appears cautious.
Annual dividend was ¥32 (interim ¥15, year-end ¥17), with dividend payout ratio relative to Net Income attributable to owners of the parent ¥39.5B at 28.3%, a conservative level. Total dividend payments were approximately ¥11.9B (dividend cash outflow plus adjustments from treasury share disposals), representing 55.7% of FCF ¥20.1B, comfortably covered by internal funds. No share buyback was confirmed; shareholder returns are limited to dividends. Dividend sustainability appears high given cash & deposits ¥290.0B, OCF ¥88.5B, and positive FCF. However, with Debt/EBITDA 4.26x and elevated leverage, expansion of payout through increased dividends would require working-capital compression and leverage reduction. The full-year dividend forecast of ¥19.50 is a cut from current-year ¥32, but payout ratio of 15.1% on forecast EPS ¥128.73 remains within sustainable bounds.
Working-capital efficiency deterioration: DSO 81 days, DIO 97 days, CCC 155 days reflect an extended working-capital cycle, with receivables up ¥16.2B, inventories up ¥5.4B, and payables down ¥9.1B compressing cash generation. OCF/EBITDA 0.83x is below industry average, and work-in-process ratio 36.7% is high, suggesting production process bottlenecks. Line efficiency improvements and inventory reduction are urgent.
Upside leverage and interest/FX risk: Interest-bearing debt ¥454.1B and Debt/EBITDA 4.26x are high, posing risk of increased interest payments in a rising-rate environment. This year interest expense was ¥6.4B and FX losses ¥5.6B, impacting Operating Income by an amount equivalent to 32.9% of Operating Income ¥36.5B. Short-term borrowings surged to ¥98.8B (YoY +197.8%), increasing rollover risk and sensitivity to rate changes. Although cash holdings are ample and liquidity is secured, early deleveraging is key to financial stability.
Deterioration of Americas segment profitability: America Operating Income ¥1.1B (YoY -54.4%), margin 1.0%, a material deterioration. Despite Revenue +4.9%, intensified local competition and cost inflation eroded profits. Continued margin weakness in the Americas could dilute the group’s profit mix and reduce diversification benefits. Business restructuring and profitability restoration in the Americas are essential.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.0% | 7.8% (4.6%–12.3%) | -2.7pt |
| Net Profit Margin | 3.1% | 5.2% (2.3%–8.2%) | -2.1pt |
Both operating and net margins are below industry medians, indicating significant room for profitability improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.7% | 3.7% (-0.4%–9.3%) | +9.0pt |
Revenue growth materially exceeds the industry median, leading the industry in top-line expansion.
※ Source: Company compilation
Significant improvement in profitability and accelerating profit momentum: Operating Margin improved to 5.0% (prior 1.8%) +3.2pt, driven by +2.0pt gross margin expansion and fixed-cost leverage. Revenue growth +12.7% significantly exceeds industry median +3.7%, accelerating margin improvement. Ordinary Income rose +320.1% aided by subsidy income ¥6.6B and equity-method investment income ¥1.9B. Comprehensive Income ¥115.6B is 2.9x Net Income, with translation adjustments of ¥58.8B materially boosting equity. Cash flow remained positive with OCF ¥88.5B and FCF ¥20.1B, sufficiently covering dividend payments. Earnings quality is high with OCF/Net Income 2.24x and good accrual quality.
Room to improve working-capital efficiency and leverage: OCF/EBITDA 0.83x points to working-capital retention, with DSO 81 days, DIO 97 days, CCC 155 days showing lengthening. Work-in-process ratio 36.7% suggests production bottlenecks; line efficiency and inventory compression are next improvement drivers. Debt/EBITDA 4.26x is elevated and short-term borrowings increased sharply YoY, although cash holdings ¥290.0B ensure liquidity. Early deleveraging and working-capital efficiency gains are keys to enabling dividend increases and financial stability. Americas segment posted Operating Income ¥1.1B (YoY -54.4%) with margin down to 1.0%; regional mix optimization and Americas turnaround are necessary for further company-wide profitability gains.
This report is an earnings analysis document automatically generated by AI from 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 own responsibility; consult a professional advisor as appropriate before making any investment decisions.
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