| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3532.0B | ¥3151.1B | +12.1% |
| Operating Income | ¥376.4B | ¥231.3B | +62.7% |
| Ordinary Income | ¥448.9B | ¥277.6B | +61.7% |
| Net Income | ¥318.0B | ¥578.7B | -45.0% |
| ROE | 13.6% | 33.2% | - |
The fiscal year ended March 2026 reported Revenue 3,532B (YoY +381B +12.1%), Operating Income 376B (YoY +145B +62.7%), Ordinary Income 449B (YoY +171B +61.7%), and Net Income 318B (YoY -261B -45.0%). The company achieved revenue and profit growth, with Operating Margin improving to 10.7% (prior year 7.3%), a +3.4pt improvement. The decline in Net Income is mainly attributable to the prior-year one-off gain on sale of subsidiary shares of 244B; at the ordinary-income level the company delivered a significant +61.7% increase. ROE was 13.6% and Gross Margin improved to 19.7% (prior year 16.4%), indicating structural improvements in profitability. Marine Propulsion Systems and Logistics Systems served as the two pillars, generating approximately 75% of Operating Income. Equity-method investment income of 75B and foreign exchange gains of 22B boosted Ordinary Income.
[Revenue] Revenue was 3,532B (YoY +12.1%), with Marine Propulsion Systems 1,510B (+10.6%) as the largest contributing segment, followed by Peripheral Services 1,081B (+21.5%). Logistics Systems 653B (+3.9%) and New Business Development 450B (+8.7%) also expanded steadily. Externally, foreign exchange gains of 22B contributed to non-operating income and equity-method investees were increasingly consolidated. Order intake declined sharply to 3,158B (YoY -25.1%), but backlog remained at 4,627B (1.31x of Revenue), securing short-term utilization.
[Profitability] Operating Income was 376B (YoY +62.7%), with Operating Margin improving to 10.7% (prior year 7.3%), a +3.4pt improvement. Gross Margin rose to 19.7% (prior year 16.4%), a +3.3pt increase, while SG&A ratio was flat at 9.0% (prior year 9.0%), with absolute SG&A rising only +12.0%, below revenue growth. By segment, Logistics Systems’ margin improved dramatically to 21.4% (prior year 9.6%), and Marine Propulsion Systems’ margin rose to 9.6% (prior year 4.9%), +4.7pt. New Business Development maintained a high margin of 19.5% (prior year 16.5%). Ordinary Income was 449B (+61.7%), with equity-method investment income 75B and foreign exchange gains 22B adding on the non-operating line. Profit before tax was 401B, while corporate taxes were 12B (effective tax rate 2.9%), remaining low, resulting in Net Income of 318B. Net Income dropped -45.0% due to the prior-year special gain of 244B from sale of subsidiary shares, but the company’s performance at the ordinary-income level improved substantially. In conclusion, revenue and profit growth reflects structural improvement in profitability.
New Business Development posted Revenue 450B (YoY +8.7%) and Operating Income 88B (+28.4%), with a high margin of 19.5%. Strengthening after-sales services for industrial machinery and service solutions contributed. Marine Propulsion Systems had Revenue 1,510B (+10.6%) and Operating Income 145B (+93.6%), with margin improving to 9.6% (prior year 4.9%), +4.7pt, supported by recovery in marine engine demand and improved after-sales service mix. Logistics Systems reported Revenue 653B (+3.9%) and Operating Income 139B (+134.1%), with margin leaping to 21.4% (prior year 9.6%), driven mainly by high-margin progress on large projects such as container cranes. Peripheral Services achieved Revenue 1,081B (+21.5%) and Operating Income 8B (+151.1%), with margin turning positive to 0.8% (prior year 0.3%), aided by increased volumes in gas-related engineering and onshore power generation plants. Overall, the shift to higher-margin Logistics Systems and improved volume/mix in Marine Propulsion Systems were the primary drivers of profit expansion.
[Profitability] Operating Margin 10.7% (prior year 7.3%) improved +3.4pt; Gross Margin 19.7% (prior year 16.4%) rose +3.3pt; SG&A ratio steady at 9.0%, enabling fixed-cost absorption. ROE 13.6% exceeds the company’s historical levels. Net Margin 9.0% (prior year 18.4%) declined due to special gains in the prior year, but Ordinary Income-level profitability shows structural improvement. [Cash Quality] Operating Cash Flow (OCF) 284B vs Net Income 318B yields OCF/Net Income 0.89x, exceeding the 0.8 threshold, but increases in working capital (inventory +79B, accounts payable -105B) constrained cash. OCF/EBITDA is 0.62x, indicating weaker cash conversion. Free Cash Flow (FCF) was 310B, sufficient to cover dividends and buybacks. [Investment Efficiency] Total Asset Turnover 0.71x, ROA 9.1% (prior year 6.2%) indicates improved asset efficiency. Manufacturing KPIs: DSO 94 days, DIO 100 days, CCC 136 days, suggesting room to improve turnover; work-in-progress (WIP) 604B (77.5% of inventory) is the main cause of elongation. [Financial Soundness] Equity Ratio 47.3% (prior year 38.8%), Debt/EBITDA 1.47x, Interest Coverage 26.5x indicate strong financial resilience. Current Ratio 124.8%, Quick Ratio 119.6% ensure short-term payability, though short-term borrowings of 490B indicate high short-term liability dependence; Cash/Short-term Debt ratio is 1.16x. Contract liabilities (advances received) 429B, down -6.4% YoY.
Operating Cash Flow was 284B (YoY +91.3%), resulting from subtotal 406B less working capital increases (inventory +79B, accounts payable -105B, accounts receivable -153B improvement) and corporate tax payments of 103B. OCF/Net Income 0.89x and OCF/EBITDA 0.62x indicate weak cash conversion, driven by elevated WIP 604B and lengthening DSO to 94 days. Investing Cash Flow was +26B, net inflow as proceeds from sale of subsidiary shares 42B and subsidy receipts 16B exceeded capital expenditures of 91B. Financing Cash Flow was -104B, mainly due to share buybacks 92B, long-term borrowings repayments 87B, and dividend payments 35B. As a result, FCF was a substantial 310B, sufficiently covering dividends and buybacks; Payout Ratio 5.2% and total returns were covered within FCF and are sustainable. Cash increased to 571B (YoY +61.4%), providing capacity to address short-term borrowings of 490B. Controlling working capital will be key to strengthening cash generation next fiscal year.
Operating Income 376B represents recurring earnings, with equity-method investment income 75B and foreign exchange gains 22B added on the non-operating line to form Ordinary Income 449B. FX gains are somewhat transitory due to market conditions, while equity-method investment income reflects stable earnings at investees and is relatively recurring. Extraordinary items were net negative (extraordinary gains 3B; extraordinary losses 52B, including impairment losses 5B and business liquidation losses 6B), and the prior-year extraordinary gain of 244B from sale of subsidiary shares is the primary reason for the decline in Net Income. The effective tax rate was low at 2.9%, influenced by reversal of deferred tax assets and tax-effect adjustments; normalization risk warrants attention. Comprehensive Income was 632B, well above Net Income 318B, driven by valuation differences on securities 194B, pension adjustment 34B, and foreign currency translation adjustments 12B. Much of the increase in Comprehensive Income is attributable to Other Comprehensive Income (valuation gains), which do not accompany cash generation. The accrual in Operating Cash Flow (OCF 284B - Operating Income 376B = -92B) is negative, indicating profits have not been fully converted into cash. Overall, Ordinary-Income level profitability has structurally improved, but the persistence of a low effective tax rate and expansion of working capital are key points to monitor when assessing earnings quality.
The full-year company plan calls for Revenue 3,700B (YoY +4.8%), Operating Income 320B (-15.0%), Ordinary Income 370B (-17.6%), and Net Income 300B. Compared with actual results this period (Revenue 3,532B; Operating Income 376B; Ordinary Income 449B; Net Income 318B), Revenue achieved 95.5% of plan (shortfall), while Operating Income reached 117.6%, Ordinary Income 121.3%, and Net Income 106.0%, significantly exceeding targets. The company’s conservative guidance likely reflected concern over declining order intake (-25.1%) and profitability uncertainty on large projects. The next-year plan anticipates revenue growth but profit decline, indicating a policy of prioritizing profitable project selection and optimizing project mix. Backlog of 4,627B (1.31x of Revenue) secures short-term operations, but slowing new order momentum is a medium-term growth challenge. Dividend forecast was ¥30 vs actual ¥57, a significant overachievement; future return policy and balance with retained earnings will be watched.
Dividends were ¥15 in Q2 and ¥42 at year-end, totaling ¥57, with a Payout Ratio of 5.2% (dividends only ÷ parent-company Net Income 318B), kept at a low level. Share buybacks of 92B were executed, and combined returns totaled 127B; against FCF 310B, the Total Return Ratio is approximately 40%, within a healthy range. FCF coverage is 2.4x (FCF 310B ÷ total returns 127B), indicating sustainability. The low payout policy likely reflects increases in working capital and provisions for capital expenditures. Against BPS ¥2,270, dividends of ¥57 imply a dividend yield around 2.5% (based on assumed share price), reflecting a stance balancing growth investment and returns. If cash generation improves, scope exists for higher dividends and additional buybacks.
Order Intake Decline Risk: Order intake dropped sharply to 3,158B (YoY -25.1%). While backlog of 4,627B (1.31x of Revenue) secures short-term operations, there is risk of mid-term utilization decline and slower revenue growth. Orders for Marine Propulsion Systems fell -38.5% and Logistics Systems -12.6% in core segments, making enhancement of new project capture and balancing profitability selection critical.
Working Capital Expansion Risk: Persistently high WIP of 604B (77.5% of inventory), DSO 94 days, DIO 100 days, CCC 136 days have produced a gap between OCF 284B and Net Income 318B (OCF/Net Income 0.89x). Continued delays in large project progress or extended collection cycles would suppress cash generation, reducing investment and return capacity.
Short-term Liability Dependence Risk: Short-term borrowings of 490B and short-term liabilities ratio 56.7% indicate high dependence on short-term funding. In a rising interest-rate environment, refinancing costs and liquidity risk could materialize. While Cash/Short-term Debt ratio 1.16x provides near-term capacity, continued weak OCF could require additional short-term borrowings, increasing leverage and interest burden.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.7% | 7.8% (4.6%–12.3%) | +2.9pt |
| Net Margin | 9.0% | 5.2% (2.3%–8.2%) | +3.8pt |
The company’s Operating Margin of 10.7% exceeds the industry median 7.8% by +2.9pt, placing it among the higher-profitability players within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.1% | 3.7% (-0.4%–9.3%) | +8.4pt |
The company’s Revenue Growth Rate of 12.1% surpasses the industry median 3.7% by +8.4pt, indicating a superior growth profile within the industry.
※ Source: Company compilation
Structural improvement in profitability is clear, with Operating Margin improving to 10.7% (prior year 7.3%), a +3.4pt increase, and ROE reaching 13.6% indicating good capital efficiency. The leap in Logistics Systems margin to 21.4% (prior year 9.6%) and improvement in Marine Propulsion Systems to 9.6% (prior year 4.9%) contributed, evidencing effective segment-mix optimization. Equity-method investment income 75B and FX gains 22B boosted Ordinary Income, and profit-focused project selection appears effective.
Working capital expansion is constraining cash generation: OCF 284B vs Net Income 318B yields OCF/Net Income 0.89x and OCF/EBITDA 0.62x, indicating weakness. Elevated WIP 604B (77.5% of inventory) and lengthening DSO 94 days, CCC 136 days are primary causes; project progress control and collection enhancement will be key next fiscal year. While FCF 310B is sufficient to cover dividends and buybacks, improving working capital efficiency would expand capacity for growth investments.
Declining order intake (-25.1%) and short-term liability dependence (short-term borrowings 490B) are medium-term concerns. Backlog 4,627B (1.31x of Revenue) secures short-term operations, but recovery in new order momentum will determine medium-term growth sustainability. Cash/Short-term Debt ratio 1.16x secures near-term liquidity, but refinancing costs in a rising-rate environment and increasing working capital could test financial resilience.
This report was automatically generated by AI analyzing XBRL financial disclosure data and is an earnings analysis document. 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 own responsibility; consult a professional advisor as needed.