| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥120078.9億 | ¥126332.1億 | -4.9% |
| Operating Income / Operating Profit | ¥580.0億 | ¥698.0億 | -16.9% |
| Ordinary Income | ¥10.8億 | ¥2101.7億 | -99.5% |
| Net Income / Net Profit | ¥-2392.7億 | ¥603.0億 | -85.6% |
| ROE | -4.6% | 1.1% | - |
For the fiscal year ended March 2026, revenue was ¥120,078.9億 (YoY -¥6,253.2億 -4.9%), operating income was ¥580.0億 (YoY -¥118.0億 -16.9%), ordinary income was ¥10.8億 (YoY -¥2,090.9億 -99.5%), and net loss attributable to owners of the parent was ¥2,392.7億 (prior year net income ¥603.0億). This is a harsh set of results with lower revenue, lower profit, and a swing to a loss. Operating margin deteriorated by 0.1pt to 0.5% (prior year 0.6%), and at the ordinary income stage results plunged by 99.5% due to heavy financial costs including interest expense of ¥1,138.2億 and foreign exchange losses of ¥490.4億. Extraordinary losses totaled ¥5,768.4億, mainly due to impairment losses of ¥3,662.5億, expanding the final loss to ¥2,392.7億. By segment, the Automobile segment posted an operating loss of ¥2,928.9億 (margin -2.7%)—a large deficit—while Sales Financing recorded operating income of ¥2,979.4億 (margin 22.6%) and remained robust; income from the finance subsidiaries is barely supporting consolidated operating profit. By region, Asia fell sharply to ¥508.4億 (prior year ¥786.1億), down 35.3%, while North America was slightly down at ¥6,677.3億, suggesting demand softness and a worsening product mix in major markets.
[Revenue] Revenue was ¥120,078.9億 (YoY -4.9%), a decline. By segment, Automobile was ¥10,920.1億 (-6.2%), primarily due to large declines in sales in Asia (prior ¥786.1億 → this period ¥508.4億, -35.3%). North America was slightly down at ¥6,677.3億, Europe was ¥1,448.5億 (-10.0%), with demand softness and unit declines across major markets. Sales Financing grew to ¥1,318.0億 (+4.4%), with expanded financial services partially offsetting Automobile revenue declines. Regional revenue trends: Japan ¥1,741.6億 (-11.2%), North America ¥6,501.8億 (-1.5%), Europe ¥1,506.5億 (-6.4%), Asia ¥556.3億 (-23.0%), with declines across all regions and Asia notably weak. Gross profit was ¥15,399.6億 (gross margin 12.8%, prior 13.4%), a 0.6pt deterioration in gross margin.
[Profitability] Operating income was ¥580.0億 (YoY -16.9%), a decline. SG&A was ¥14,819.5億 (as a percent of sales 12.3%), with heavy advertising expenses ¥3,152.6億 and personnel costs ¥4,694.0億; SG&A compression was insufficient against lower sales, causing operating leverage to work in reverse. By segment, Automobile recorded an operating loss of ¥2,928.9億 (margin -2.7%), hit by pricing pressure and demand declines. Sales Financing posted operating income of ¥2,979.4億 (margin 22.6%, YoY +4.3%), robust and covering consolidated operating profit in full. At the ordinary income stage, non-operating expenses rose sharply to ¥1,975.9億 (prior ¥1,587.9億); interest expense of ¥1,138.2億 (prior ¥773.7億, +47.1%) and foreign exchange losses of ¥490.4億 (reversed from foreign exchange gains of ¥246.2億 prior) pressured profits, and ordinary income plunged to ¥10.8億 (-99.5%). Extraordinary items included impairment losses of ¥3,662.5億 and loss on sale/disposal of fixed assets of ¥37.9億, totaling extraordinary losses of ¥5,768.4億; extraordinary gains including gain on sale of fixed assets of ¥1,273.4億 amounted to ¥1,353.8億, but on a net basis resulted in a ¥4,414.6億 loss. Income taxes were ¥862.9億; despite a pre-tax loss of ¥4,403.8億, there was a tax burden, likely due to reversal of deferred tax assets and related impacts. Ultimately, net loss attributable to owners of the parent was ¥2,392.7億, a large swing from prior year net income of ¥603.0億. In conclusion, revenue and profit decline, a swing to loss, and the triple impact of core business margin deterioration, worsening financial and FX costs, and large impairments produced a severe result.
The Automobile segment recorded revenue of ¥10,920.1億 (YoY -6.2%) and an operating loss of ¥2,928.9億 (operating margin -2.7%), a significant deficit. Prior year operating loss was ¥2,679.8億 (margin -2.3%), so the loss widened. Revenue declines were driven by large sales drops in Asia (prior ¥786.1億 → this period ¥508.4億) and demand softness in North America and Europe; pricing pressure and a worsened product mix depressed margins. Gross margin deteriorated 0.6pt to 12.8% (prior 13.4%), fixed SG&A burdens were heavy, and operating leverage reversed. Regional operating results: North America improved to a profit of ¥686.6億 (prior loss ¥-383.2億), Europe was a loss of ¥-541.4億 (prior -¥987.7億), and Asia profit fell to ¥312.9億 (prior ¥572.7億). Segment cash flow for Automobile showed operating cash flow of -¥2,272.8億 (prior ¥1,574.6億), a large cash outflow highlighting weak cash-generating ability in the core business.
The Sales Financing segment posted revenue of ¥1,318.0億 (YoY +4.4%) and operating income of ¥2,979.4億 (operating margin 22.6%, YoY +4.3%), and remained robust. Operating income increased from prior year ¥2,856.5億, aided by expansion of retail finance and leasing businesses. The 22.6% margin remained at prior-year levels, maintaining high profitability. Segment CF showed operating cash flow of ¥1,021.9億 (prior ¥596.2億), a large increase that offset the Automobile operating CF deficit and supported consolidated operating CF into positive territory. Stable earnings and CF generation from finance subsidiaries underpin the consolidated results, but reliance on the finance business has increased as Automobile losses expanded.
[Profitability] Operating margin worsened 0.1pt to 0.5% (prior 0.6%), and gross margin fell 0.6pt to 12.8% (prior 13.4%). SG&A ratio improved 0.6pt to 12.3% (prior 12.9%), but could not absorb the gross margin deterioration, leaving operating margin low. ROE was -4.6% (prior -12.3%), narrowing the negative but still negative; deterioration in net margin to -2.0% (prior 0.5%) is a primary cause. ROA was 0.0% (prior 1.1%), indicating poor asset efficiency. [Cash Quality] Operating cash flow was ¥7,946.7億 versus a net loss of ¥2,392.7億, giving an operating CF / net income of -3.3x, so operating CF remained positive despite the loss. However, consolidated operating CF depends on financial subsidiaries (operating CF ¥1,021.9億) while Automobile operating CF was -¥2,272.8億, indicating weak cash generation in the core business. [Investment Efficiency] Total asset turnover fell to 0.61x (prior 0.66x), showing deteriorating asset efficiency. Inventories were ¥9,769.4億 (as a percent of sales 8.1%), down from ¥10,042.4億, but inventory days remain heavy at approximately 81 days. Tangible fixed assets were ¥45,304.0億 (22.9% of total assets), indicating a moderate capital intensity. [Financial Health] Equity ratio fell 2.1pt to 26.5% (prior 28.6%), and net assets decreased to ¥52,416.7億 (prior ¥54,453.5億). D/E ratio worsened to 2.78x (prior 2.51x), and interest-bearing debt increased to ¥37,223.3億 (prior ¥36,193.2億). Interest coverage was extremely low at 0.51x (operating income ¥580.0億 / interest expense ¥1,138.2億), indicating weak interest-bearing capacity. Current ratio improved to 156.0% (prior 152.7%) and quick ratio to 144.0% (prior 139.8%), so short-term liquidity is secured, but cash and deposits of ¥15,754.4億 are close to short-term borrowings ¥11,825.2億 plus bonds maturing within one year ¥4,080.7億 (total ¥15,905.9億), so attention to refinancing risk is necessary.
Operating cash flow was ¥7,946.7億 (YoY +5.4%), an increase. Operating cash flow subtotal (before working capital changes) was ¥12,258.4億; in working capital changes, inventory decrease contributed +¥2,978.7億, accounts receivable increase was -¥384.7億 (a detractor), and accounts payable increase contributed a small +¥56.2億. Payments for income taxes -¥1,234.0億 and interest payments -¥4,071.0億 were deducted, resulting in operating cash flow of ¥7,946.7億. By segment, Automobile operating CF was -¥2,272.8億 (prior ¥1,574.6億), a major outflow, while finance subsidiaries provided operating CF of ¥1,021.9億 (prior ¥596.2億), supporting consolidated CF. Investing CF was -¥9,143.0億 (prior -¥9,712.3億), mainly due to acquisition of tangible fixed assets -¥4,949.1億. Proceeds from sale of fixed assets ¥1,897.3億 helped investing CF liquidity, but dependence on non-recurring income is a concern. FCF (operating CF + investing CF) was -¥1,196.3億, a deficit, leaving little capacity to build equity. Financing CF was ¥519.0億, with inflows from long-term borrowings ¥16,326.2億 and bond issuance ¥11,766.1億, while outflows included long-term borrowings repayment -¥20,423.3億 and bond redemptions -¥7,693.3億; net increase in short-term borrowings ¥1,545.4億 supported liquidity. Cash dividends paid -¥561.0億 and dividends to non-controlling interests -¥448.8億 were cash outflows. Cash and cash equivalents at period-end increased to ¥22,648.0億 (prior ¥21,975.1億), but a large contribution came from foreign currency translation differences of ¥1,350.1億, so underlying cash generation remains weak.
Quality of earnings is low. Ordinary income was ¥10.8億 while the net amount of extraordinary items was -¥4,414.6億 (extraordinary losses ¥5,768.4億 - extraordinary gains ¥1,353.8億), significantly depressing final results. The ratio of one-off items is -¥4,414.6億 / ordinary income ¥10.8億, which is mathematically volatile, but in absolute terms the scale of extraordinary losses is large and earnings quality is severely impaired. The main cause of extraordinary losses was impairment losses of ¥3,662.5億, suggesting model cycle and asset profitability deterioration. Non-operating income ¥1,406.6億 included dividend income ¥1.3億 and FX gains ¥246.2億, while non-operating expenses ¥1,975.9億 included interest expense ¥1,138.2億 and FX losses ¥490.4億, for a net FX impact of -¥244.2億. Against operating income ¥580.0億, the FX impact of -¥244.2億 is -42.1% in scale, indicating high FX sensitivity that destabilizes earnings quality. Equity in earnings of affiliates was -¥26.4億, showing affiliates underperformed and external factors had a large impact at the ordinary income stage. Operating CF was positive at ¥7,946.7億, but the gap with net loss -¥2,392.7億 is due to non-cash impairment charges and reliance on finance subsidiary operating CF; Automobile’s operating CF was -¥2,272.8億, so the quality of earnings is structurally weak.
Full year guidance calls for revenue ¥130,000.0億 (YoY +8.3%), operating income ¥2,000.0億 (YoY +244.8%), and net income attributable to owners of the parent ¥200.0億. First-half results were revenue ¥120,078.9億, operating income ¥580.0億, and net loss ¥2,392.7億; progress against the full-year plan is 92.4% for revenue and 29.0% for operating income, both low. Achieving operating income target requires adding ¥1,420.0億 in the second half, implying improvement in operating margin from 0.5% in H1 to 1.5% for the full year, a roughly 1.0pt improvement. Forecast EPS is ¥5.72, and dividend forecast is ¥0.00 (continuation of no dividend). Plan achievement assumes large shrinkage of Automobile segment losses, price measures and mix improvement, cost reductions, no recurrence of impairments, and stabilization of interest and FX burdens. A required improvement of +1.0pt in operating margin is ambitious compared with historical trends, and will require recovery in sales volumes, further SG&A compression, and gross margin improvement. Given slow progress and structural deficits in Automobile, the achievement hurdle is high; if substantial second-half profit improvement does not materialize, downside revision risk to guidance remains.
For this period, dividends were ¥0.00 for both interim and year-end, continuing the no-dividend policy. Prior year also had no dividend, making this the second consecutive year with no dividend. Payout ratio cannot be calculated due to net loss. Share buybacks were ¥0.0億 (cash flow statement), effectively none, and total return ratio is also not calculable. Considering the net loss of ¥2,392.7億, FCF deficit of -¥1,196.3億, and weak interest coverage of 0.51x, continuation of no dividend to prioritize financial health restoration is a reasonable policy. Restoration of dividends will require Automobile segment to return to profitability and stable positive FCF (sufficient to cover capex, credit costs, and dividends). Even with cash and deposits of ¥15,754.4億 and an equity ratio of 26.5%, high interest-bearing debt ¥37,223.3億 and D/E ratio 2.78x and low interest coverage 0.51x imply high leverage; hence rebuilding retained earnings and reducing debt are priorities and timing of dividend resumption is uncertain.
Structural deficit and weak profitability in the Automobile segment: Operating loss ¥2,928.9億 (margin -2.7%) and operating CF -¥2,272.8億 show extremely weak cash generation in the core business. Large decline in Asia sales (prior ¥786.1億 → this period ¥508.4億, -35.3%) and demand softness in North America and Europe, pricing pressure, and worsened product mix are depressing margins. Continued low gross margin 12.8% (prior 13.4%) and operating margin 0.5% (prior 0.6%) could necessitate further impairments or fixed-cost reductions (headcount cuts, production capacity adjustments), risking medium-term growth potential.
High leverage and rising interest burden: D/E ratio 2.78x, interest-bearing debt ¥37,223.3億, and interest coverage 0.51x show extremely weak ability to bear interest costs. Interest expense ¥1,138.2億 is roughly twice operating income ¥580.0億, and in a rising-rate environment the burden would increase. Increase in short-term borrowings to ¥11,825.2億 (YoY +35.0%) and bonds maturing within one year ¥4,080.7億 increase short-term funding reliance, making refinancing risk and interest rate volatility risks. Cash and deposits ¥15,754.4億 are roughly equivalent to short-term liabilities ¥15,905.9億 (short-term borrowings + bonds due within one year), so maturity mismatch risk warrants attention.
High FX sensitivity and recurrence risk of extraordinary losses: FX impact -¥244.2億 (versus operating income -42.1%) shows exchange rate fluctuations significantly affect profits. Reversal to FX losses of ¥490.4億 from prior FX gains ¥246.2億 suggests hedging effectiveness and price pass-through challenges. Extraordinary losses included impairment losses ¥3,662.5億, revealing deterioration in model cycles and asset profitability. If demand softness or weakening product competitiveness continues, additional impairments or asset disposals may be necessary, leading to further declines in equity ratio (current 26.5%) and higher funding costs.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.5% | 7.8% (4.6%–12.3%) | -7.3pt |
| Net Income Margin | -2.0% | 5.2% (2.3%–8.2%) | -7.2pt |
The company's profitability is well below the industry median, placing it in the lower ranks for both operating and net income margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -4.9% | 3.7% (-0.4%–9.3%) | -8.6pt |
Revenue growth is 8.6pt below the industry median, suggesting demand declines in major markets and weakening competitiveness.
※ Source: Company compilation
The structural deficit in the Automobile segment (operating loss ¥2,928.9億, operating CF -¥2,272.8億) and increasing dependence on the high profitability of Sales Financing (operating income ¥2,979.4億, operating CF ¥1,021.9億) are notable. While earnings from finance subsidiaries provide short-term support for consolidated operating profit, if core business profitability and cash generation remain weak, this will be a medium-term drag on growth and valuation. The full-year forecast calls for improving operating margin from H1 0.5% to full-year 1.5% (approx. +1.0pt), but H1 progress of 29.0% is low and substantial H2 improvement is required, making the achievement hurdle high.
High leverage (D/E ratio 2.78x), heavy interest burden (interest expense ¥1,138.2億, interest coverage 0.51x), and increase in short-term borrowings (+35.0%) indicate financial vulnerability to rising interest rates. The recognition of extraordinary losses (impairments ¥3,662.5億) reduced the equity ratio to 26.5% and raises the risk of higher funding costs. Be mindful of increasing refinancing needs and maturity mismatch risk (cash and deposits ¥15,754.4億 vs. short-term liabilities ¥15,905.9億).
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on publicly available financial statement data. Investment decisions are your responsibility; please consult a professional as needed.