| 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 / Net Profit | ¥22.2B | ¥8.6B | +157.2% |
| ROE | 2.5% | 1.1% | - |
For the fiscal year ended March 2026, revenue was ¥722.9B (YoY +¥81.7B, +12.7%), Operating Income was ¥36.5B (YoY +¥24.7B, +210.0%), Ordinary Income was ¥52.2B (YoY +¥39.8B, +320.1%), and Net Income was ¥22.2B (YoY +¥13.6B, +157.2%), delivering year-over-year growth in both top and bottom lines. Recovery in electronic component demand and improved utilization rates contributed; gross margin improved to 30.3% (prior year 28.3%) (+2.0pt), and SG&A ratio was contained at 25.2%, resulting in an expansion of operating margin to 5.0% (prior year 1.8%) (+3.2pt). Regionally, Asia and Europe drove double-digit growth and Japan returned to profitability, while the Americas posted revenue growth but operating profit declined. Non-operating items included subsidy income of ¥6.6B and interest income of ¥2.0B, while foreign exchange losses of ¥5.6B were recorded, resulting in substantial year-over-year improvement at the ordinary income level.
【Revenue】 Revenue reached ¥722.9B (+12.7%). By segment, Asia ¥385.5B (+14.1%) showed the largest growth, supported by recovery in electronic component demand and robust orders from automotive and industrial equipment sectors. Europe ¥138.0B (+13.8%) also maintained double-digit growth. Japan ¥578.4B (+12.0%) saw growth in total sales including intercompany transactions, with both external and domestic demand remaining firm. Conversely, the Americas grew modestly to ¥115.0B (+4.9%), as prolonged inventory adjustments and pricing competition became evident. Across all segments, broad-based demand recovery lifted sales, with volume increases confirmed across resistor, IC, and composite component product groups.
【Profitability】 Operating Income improved substantially to ¥36.5B (+210.0%) from ¥11.8B the prior year. Gross margin improved by +2.0pt to 30.3%, with higher utilization and yield improvements compressing manufacturing costs. SG&A was ¥182.2B (25.2% of sales), increasing year-over-year, but sales growth outpaced SG&A increases, yielding fixed-cost absorption effects. By segment, Asia achieved Operating Income of ¥15.5B (margin 4.0%, +11.2%), securing stable earnings; Japan improved to ¥13.3B (margin 2.3%, +226.4%) from a loss; Europe delivered ¥5.9B (margin 4.3%, +24.1%) and remained solid; the Americas declined to ¥1.1B (margin 1.0%, -54.4%). Non-operating items contributed interest income ¥2.0B, equity-method income ¥1.9B, and subsidy income ¥6.6B, leading to non-operating income of ¥23.8B, while interest expense ¥6.4B and foreign exchange losses ¥5.6B emerged as ¥8.0B of non-operating expenses. Ordinary Income thus rose sharply to ¥52.2B (+320.1%). Extraordinary items—gain on sale of investment securities ¥2.1B and impairment loss ¥1.1B—largely offset, producing profit before tax ¥52.6B. Income taxes ¥13.1B (effective tax rate 24.9%) resulted in Net Income ¥22.2B (+157.2%). In conclusion, revenue growth across regions and improved manufacturing efficiency driving gross margin expansion led operating profit growth, and support from non-operating income delivered large increases at ordinary and net income levels.
The Asia segment recorded Revenue ¥385.5B (+14.1%) and Operating Income ¥15.5B (+11.2%) with a margin of 4.0%, driven by automotive and industrial equipment demand in Taiwan, China, Singapore, and other markets. The Japan segment posted Revenue ¥578.4B (+12.0%) and Operating Income ¥13.3B (a substantial improvement from prior-year Operating Loss ¥-10.6B), turning to a 2.3% margin due to higher utilization and fixed-cost absorption. Europe reported Revenue ¥138.0B (+13.8%) and Operating Income ¥5.9B (+24.1%) with a strong margin of 4.3%, aided by increased orders at its German base. The Americas recorded Revenue ¥115.0B (+4.9%) but Operating Income fell sharply to ¥1.1B (-54.4%), dropping the margin to 1.0%; pricing competition and inventory adjustments pressured profitability and region recovery remains a priority. Segment total Operating Income was ¥35.9B, and after intersegment adjustments of ¥0.6B, consolidated Operating Income was ¥36.5B.
【Profitability】Operating margin of 5.0% improved +3.2pt from 1.8%, supported by expansion of gross margin to 30.3% and containment of SG&A to 25.2%. ROE was 2.5%, low but reflecting improvement from prior-year net income levels. ROA (on an ordinary income basis) improved to 3.6% from 0.9% a year earlier. R&D expense was ¥24.5B (3.4% of sales), maintaining sustained investment to enhance product competitiveness. 【Cash Quality】Operating Cash Flow (OCF) was ¥90.7B, 4.1x Net Income ¥22.2B, aided by add-backs of non-cash charges (depreciation ¥71.0B) and working capital movements. OCF/Operating Income was 2.5x, indicating healthy conversion of profit to cash, but OCF/EBITDA (Operating Income + Depreciation) was only 0.84x, suggesting cash is tied up in working capital. Days Sales Outstanding (DSO) ~81 days, Days Inventory Outstanding (DIO) ~97 days, and Cash Conversion Cycle (CCC) ~155 days, all elongated, indicating significant scope for efficiency improvements. 【Investment Efficiency】Capital expenditures were ¥74.9B (10.4% of sales), 1.06x depreciation (¥71.0B), reflecting activation of construction-in-progress and capacity expansion. Construction-in-progress declined -80% from ¥222.0B to ¥44.2B as large investment projects were capitalized. Total asset turnover was low at 0.48x, pressured by accumulated inventory and receivables. 【Financial Soundness】Equity Ratio was high at 58.4%, with shareholders' equity ¥885.8B, up +13.4% from ¥781.1B. Current ratio 252.4% and quick ratio 232.4% indicate ample liquidity; cash and deposits were ¥290.0B versus short-term borrowings ¥98.8B (up +197.8% from prior year ¥33.2B), yielding cash/short-term interest-bearing debt of 2.9x. Interest-bearing debt totaled ¥454.1B (short-term borrowings ¥98.8B + long-term borrowings ¥355.3B), Debt/Equity ratio 51.3%, and Debt/EBITDA (EBITDA = Operating Income + Depreciation) was 4.2x, a somewhat elevated level. Interest coverage (Operating Income / Interest Expense) was 5.7x, indicating adequate serviceability, though sensitivity to rising interest rates should be monitored.
OCF was ¥90.7B (+11.9% YoY). Starting from profit before tax ¥52.6B plus non-cash charges including depreciation ¥71.0B, subtotal OCF was ¥98.8B. Working capital deterioration—accounts receivable increase -¥16.2B and trade payables decrease -¥9.1B—were absorbed, and income taxes paid -¥8.4B were deducted to arrive at OCF. Inventories yielded a cash inflow of +¥5.4B (inventory reduction), but increases in receivables and decreases in payables offset this, so working capital remained a cash drag overall. Investing Cash Flow was -¥70.6B, primarily due to capex -¥74.9B, partially offset by proceeds from sale/redemption of securities ¥14.8B and interest/dividend receipts ¥4.4B. Free Cash Flow (OCF + Investing CF) was positive ¥20.1B, supporting a structure to fund growth investments and dividends from internally generated funds. Financing Cash Flow was -¥5.1B: net long-term borrowings increased +¥8.1B (long-term borrowings procured ¥40.1B, repayments -¥32.0B), net short-term borrowings increased +¥2.0B, and dividends paid -¥14.8B. Cash and cash equivalents rose from ¥247.8B at the beginning of the period to ¥274.1B at the end (+¥26.1B), with foreign exchange translation adjustments contributing +¥11.1B. Interest paid was -¥6.1B, equivalent to 16.7% of Operating Income, indicating a notable interest burden. OCF/EBITDA was 0.84x, below 1x, so normalizing working capital and accelerating cash collection remain priorities.
There is a gap of +¥15.7B between Operating Income ¥36.5B and Ordinary Income ¥52.2B; this is largely explained by net non-operating items of +¥15.8B (non-operating income ¥23.8B less non-operating expense ¥8.0B). Breakdown of non-operating income: interest income ¥2.0B, equity-method income ¥1.9B, subsidy income ¥6.6B, and other ¥8.0B. Subsidy income appears to be a policy-driven, temporary factor. Non-operating expenses were mainly interest expense ¥6.4B and foreign exchange losses ¥5.6B; the FX loss equates to 15.3% of Operating Income, indicating high sensitivity to foreign-currency-denominated transactions. Extraordinary items—gain on sale of investment securities ¥2.1B and impairment loss ¥1.1B—nearly offset and had minimal impact, limiting effects on recurring earnings. OCF ¥90.7B is 4.1x Net Income ¥22.2B, with non-cash add-backs and working capital movements enabling cash generation well above accrual profit. The accrual ratio (Net Income - OCF) / Total Assets is -4.5%, negative, indicating strong cash backing of profit. Comprehensive income was ¥115.6B, ¥93.4B above Net Income ¥22.2B, mainly due to foreign currency translation adjustments ¥58.8B, valuation difference on available-for-sale securities ¥7.3B, and actuarial gains/losses ¥10.7B—other comprehensive income items that are balance-sheet valuation gains and not directly related to core operations, but they contributed to increases in shareholders’ equity and the Equity Ratio. Overall, the improvement in Operating Income reflects enhanced core operating profitability and is likely repeatable, while subsidy income and FX-related gains/losses are external, potentially transient factors; therefore, sustained profit improvements hinge primarily on operating performance.
Full year guidance is Revenue ¥774.0B (vs prior year +7.1%), Operating Income ¥28.3B (vs prior year -22.4%), Ordinary Income ¥33.0B (vs prior year -36.8%), Net Income attributable to owners of the parent ¥47.8B, EPS ¥128.73, and dividend ¥19.50 per share. While revenue is forecast to increase, Operating Income is projected to decline -22.4% year-over-year, reflecting conservative assumptions including cost increases, pricing competition, and cautious FX assumptions. Progress against the initial forecast is 93.4% for revenue and 129.0% for Operating Income, indicating significant outperformance at the operating level; Ordinary Income progress is 158.2% and also favorable. This upside has been driven significantly by non-operating income such as subsidy receipts and equity-method gains; the full-year guidance assumes lower non-operating income, hence the conservative stance. Dividend guidance is annual ¥19.50 (Q2-end ¥15, year-end ¥17), a reduction from prior-year actual ¥32, but payout ratio versus forecast Net Income ¥47.8B is about 15.4%, relatively low, leaving room for upside depending on actual results. Given the company is outperforming the forecast in the current period, there is potential for upward revision of the full-year forecast depending on second-half demand and FX / cost environment, while improvements in Americas profitability and normalization of working capital remain challenges.
Annual dividend paid was ¥32 (Q2-end ¥15, year-end ¥17). With Net Income ¥22.2B and total dividends of approximately ¥11.9B, the payout ratio was about 53.6%, a high level. Dividend per share increased by ¥7 from prior year ¥25, a +28.0% rise. There was no share repurchase, so Total Return Ratio equals the payout ratio at 53.6%. Dividend payments represented approximately 59.2% of Free Cash Flow ¥20.1B, slightly exceeding FCF coverage, but ample liquidity (cash and deposits ¥290.0B) secures dividend sustainability. Full-year guidance assumes a dividend of ¥19.50, a cut, which would lower the payout ratio to about 15.4% against forecast Net Income ¥47.8B, though actual outperformance could enable reconsideration or additional returns. No explicit dividend policy is stated, but past practice suggests pursuit of stable dividends around ~30% payout as a reference. In financing, despite dividend payments -¥14.8B, net long-term borrowings increased +¥8.1B, indicating a balanced approach to leverage while supporting growth investment and shareholder returns.
Demand-cycle volatility risk: Prolonged inventory adjustments in electronic components (resistors, ICs, composite components) led the Americas segment to a sharp operating profit decline to ¥1.1B (margin 1.0%, YoY -54.4%). If major customers continue to adjust inventories, order declines could spread to Asia and Europe, causing revenue volatility, higher fixed-cost burden, and deteriorating profitability. Working capital is elevated—accounts receivable ¥159.6B, inventories ¥49.6B—creating risks of impairment charges and bad debts in a demand slowdown.
FX volatility risk: Foreign exchange losses of ¥5.6B were recorded in non-operating items, representing 15.3% of Operating Income ¥36.5B. Foreign currency translation adjustments also swung +¥58.8B, indicating high sensitivity of foreign-currency assets and liabilities and transaction rates. A future appreciation of the yen could widen FX losses and reduce yen-converted overseas sales, pressuring Ordinary Income. Impacts on comprehensive income are also significant, introducing volatility in shareholders’ equity.
Financial leverage risk: Interest-bearing debt ¥454.1B and Debt/EBITDA 4.2x represent a relatively high leverage level, exposing the company to interest expense increases in a rising-rate environment. Short-term borrowings surged +197.8% YoY, increasing refinancing and repricing risk. Although interest coverage is 5.7x, a decline in Operating Income would reduce headroom and could tighten financing constraints.
Profitability / Return
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.0% | 7.8% (4.6%–12.3%) | -2.7pt |
| Net Margin | 3.1% | 5.2% (2.3%–8.2%) | -2.1pt |
Operating margin 5.0% is -2.7pt below the industry median 7.8%, placing the company around mid-to-lower rank within manufacturing. Net margin 3.1% is -2.1pt below the median 5.2%, indicating profitability below industry norms.
Growth / Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 12.7% | 3.7% (-0.4%–9.3%) | +9.0pt |
Revenue growth 12.7% significantly outpaces the industry median 3.7% by +9.0pt, placing the company among the industry leaders on growth.
※ Source: Company aggregation
Validation of profitability recovery trend and sustainability: Operating margin improved to 5.0% (+3.2pt), driven by gross margin expansion to 30.3% and fixed-cost absorption. Profit recoveries in Asia and Japan bolstered consolidated results, but the drop to 1.0% margin in the Americas suggests pricing pressure and demand weakening, revealing regional dispersion. The sustainability of core operating profitability excluding one-off items such as subsidy income ¥6.6B and FX losses ¥5.6B must be validated by forthcoming quarterly progress. Some of the operating upside was dependent on non-operating income, and the full-year guidance factoring in an operating profit decline signals management’s cautious view on the underlying operational strength.
Room to improve working capital efficiency and cash generation: OCF ¥90.7B secured positive Free Cash Flow ¥20.1B, but OCF/EBITDA 0.84x remains below 1x, with receivables ¥159.6B and inventories ¥49.6B constraining capital efficiency. DSO 81 days, DIO 97 days, and CCC 155 days are prolonged; optimizing inventory and accelerating receivables collection are priority measures. Capex ¥74.9B reflects capacity build-out and activation of construction-in-progress, yet low asset turnover 0.48x indicates material scope to improve asset efficiency. Normalizing working capital could push OCF/EBITDA above 1x and expand Free Cash Flow, thereby increasing room for shareholder returns and reducing financial leverage.
Monitor regional profitability structure and leverage: Asia (margin 4.0%) and Europe (4.3%) maintain stable/high margins, while the Americas’ steep decline to 1.0% will be a key test for the next period’s performance. Japan improved from losses to a 2.3% margin through fixed-cost absorption. Leverage (Debt/EBITDA 4.2x) is somewhat high and includes interest rate risk; a decline in Operating Income could impair interest coverage. The sharp rise in short-term borrowings (+197.8%) elevates refinancing risk, necessitating close monitoring of quarterly interest-bearing debt balances and cash generation. The wide gap between comprehensive income ¥115.6B and Net Income ¥22.2B is mainly driven by foreign currency translation adjustments +¥58.8B, indicating yen depreciation has boosted shareholders’ equity, but a reversal could roll back those gains.
This report is an earnings analysis document automatically generated by AI based on 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 disclosures. Investment decisions are your responsibility; consult professional advisors as needed.