| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥34790.7B | ¥32356.5B | +7.5% |
| Operating Income | ¥2037.0B | ¥2294.6B | -11.2% |
| Profit Before Tax | ¥2305.8B | ¥2449.6B | -5.9% |
| Net Income | ¥1746.2B | ¥1809.2B | -3.5% |
| ROE | 10.5% | 11.8% | - |
For the fiscal year ended March 2026 (IFRS basis), Revenue was ¥34,790.7B (vs prior year +¥2,434.2B, +7.5%), Operating Income was ¥2,037.0B (vs prior year -¥257.6B, -11.2%), Ordinary Income/Profit Before Tax was ¥607.0B (vs prior year -¥244.4B, -28.7%), and Net Income attributable to owners of the parent was ¥1,348.8B (vs prior year -¥51.9B, -3.7%), resulting in higher revenue but lower profits. Revenue increased for the third consecutive year, but Operating Margin declined to 5.9% (down 1.2ppt from 7.1% prior year) and Gross Margin fell to 19.1% (down 1.4ppt from 20.5%), indicating deteriorating profitability. Non-operating items included Finance Income of ¥202.2B and Equity-Method Investment Income of ¥149.6B, but these were insufficient to offset the decline in operating-level profits, resulting in a significant reduction in Profit Before Tax. On the balance sheet, Total Assets were ¥36,631.4B (vs prior year +¥3,598.3B) and Equity Ratio was 40.4% (prior year 41.6%), maintaining stability. Operating Cash Flow was ¥2,474.2B and remained solid, but expansion of working capital (Trade Receivables +¥1,004.0B, Inventories +¥582.9B) restrained growth, with a YoY change of -2.6%.
[Revenue] External revenue in the Automotive Business was ¥32,772.8B (vs prior year +7.2%), and the Financial Services Business was ¥2,017.9B (vs prior year +13.7%), with both segments recording revenue growth. The Automotive Business expanded global sales centered on heavy trucks & buses and light trucks, while the Financial Services Business saw growth in vehicle leases and sales financing. Yen depreciation also contributed to revenue growth (Foreign exchange differences related to cash and equivalents +¥325.3B).
[Profitability] Cost of sales was ¥28,141.7B (vs prior year +9.2%), outpacing Revenue growth (+7.5%), resulting in Gross Margin declining to 19.1% (prior year 20.5%), down 1.4ppt. Elevated raw material and logistics costs and a worsening product mix increased cost ratios. Selling, General & Administrative Expenses were ¥4,661.7B (vs prior year +8.3%), rising faster than revenue growth and compressing Operating Margin. Consequently, Operating Income decreased to ¥2,037.0B (-11.2%). In non-operating items, Finance Income was ¥202.2B (+7.3%), Finance Costs were ¥83.2B (-33.5%), improving net finance result, and Equity-Method Investment Income increased to ¥149.6B (+63.2%), yet Profit Before Tax remained limited at ¥607.0B (-28.7%). After Income Taxes of ¥559.6B, Net Income attributable to owners of the parent was ¥1,348.8B (-3.7%), concluding the year with revenue up but profits down.
The Automotive Business posted external revenue of ¥32,772.8B (vs prior year +7.2%), Operating Income of ¥1,898.5B (vs prior year -12.1%), and Operating Margin of 5.8% (down 1.3ppt from 7.1%), delivering revenue growth but a substantial profit decline due to higher cost and SG&A ratios. The Financial Services Business posted external revenue of ¥2,017.9B (vs prior year +13.7%), Operating Income of ¥139.3B (vs prior year -4.0%), and Operating Margin of 6.9% (down 1.3ppt from 8.2%), with increased finance income from growth in lease receivables and vehicles for rent (¥4,157.0B, vs prior year +10.6%) but profitability was pressured by higher funding costs. Both segments grew revenue but declining margins pulled down consolidated performance.
[Profitability] ROE 9.5% (prior year 10.2%), Operating Margin 5.9% (prior year 7.1%), Net Income Margin 5.0% (prior year 5.6%) — all profitability indicators declined YoY. Gross Margin 19.1% (prior year 20.5%), SG&A Ratio 13.4% (prior year 13.3%), with higher costs and fixed expenses weighing on profitability. [Cash Quality] Operating Cash Flow was ¥2,474.2B, 1.42x Net Income of ¥1,746.2B, showing maintained cash generation, but the conversion from Operating Cash Flow subtotal of ¥3,038.6B to actual Operating CF was 81.4% due to increases in trade receivables and inventories—an improvement from 75.8% prior year but ongoing efficiency issues remain. [Investment Efficiency] Total Asset Turnover was 0.95x (prior year 0.98x), slightly lower, indicating a modest decline in asset efficiency. Capital Expenditures were ¥1,790.8B, 1.17x Depreciation & Amortization of ¥1,524.7B, indicating continued renewal and growth investment. [Financial Soundness] Equity Ratio 40.4% (prior year 41.6%), Debt/Equity ratio 0.48x, indicating stability. Interest-bearing debt (bonds & borrowings) rose to ¥7,440.1B (prior year ¥6,443.1B), but Cash and Cash Equivalents of ¥3,854.3B (prior year ¥3,587.1B) were maintained, leaving Net Interest-Bearing Debt at ¥3,585.8B.
Operating Cash Flow was ¥2,474.2B (vs prior year -2.6%), a slight decrease. Profit Before Tax of ¥2,305.8B plus Depreciation & Amortization of ¥1,524.7B produced an Operating CF subtotal of ¥3,038.6B, but increases in Trade Receivables (-¥454.5B) and Inventories (-¥277.9B) absorbed cash, and payments of Income Taxes (-¥564.4B) further reduced Operating CF. Investing Cash Flow was -¥1,700.0B (prior year -¥2,023.5B), driven primarily by Capital Expenditures of -¥1,790.8B (of which Automotive Business ¥1,690.0B, Financial Services Business ¥488.4B), partially offset by proceeds from sale of equity-method investments ¥24.1B and other investment disposals ¥167.0B. Free Cash Flow improved to ¥774.2B (prior year ¥306.1B), covering Dividends Paid of ¥648.3B by 1.19x. Financing Cash Flow was -¥832.4B: while long-term borrowings of ¥3,450.4B were raised, there were repayments of short-term borrowings -¥564.0B, long-term borrowings repayments -¥1,390.3B, bond redemptions -¥300.0B, and share buybacks -¥500.1B; shareholder returns (Dividends + Share Buybacks = ¥1,148.4B) exceeded FCF. After foreign exchange translation effects of +¥325.3B, Cash and Cash Equivalents at year-end were ¥3,854.3B (vs prior year +¥267.2B).
Earnings quality is generally sound. Relative to Operating Income of ¥2,037.0B, net other income (Other Income ¥108.9B less Other Expense ¥59.2B = +¥49.7B) accounts for only 2.4% of Operating Income, indicating limited one-off factors. Net finance income of ¥118.9B (Finance Income ¥202.2B including interest & dividends received less Finance Costs ¥83.2B) represents 0.3% of Revenue, and Equity-Method Investment Income of ¥149.6B is 6.5% of Profit Before Tax, indicating a relatively small reliance on non-operating items. Accruals (Net Income ¥1,746.2B − Operating CF ¥2,474.2B = -¥728.0B) equal -2.1% of Revenue, a small negative, with Operating CF exceeding Net Income, supporting solid cash backing for profits. Comprehensive Income of ¥2,745.8B exceeded Net Income of ¥1,746.2B by ¥999.6B, primarily due to Foreign Currency Translation Differences of ¥684.9B (impact of yen depreciation on overseas operations), Other Securities Valuation Gains of ¥204.4B, and Remeasurements of Defined Benefit Plans of ¥112.8B — recyclable items that boosted Comprehensive Income. The quality of recurring earnings is evaluated as high.
Full-year plan for the fiscal year ending March 2027 projects Revenue ¥37,000.0B (vs prior year +6.3%), Operating Income ¥2,600.0B (vs prior year +27.6%), and Net Income attributable to owners of the parent ¥1,600.0B (vs prior year +18.6%), expecting both revenue and profit growth. Operating Margin is assumed to recover to 7.0% (vs FY2026 5.9%, +1.1ppt), predicated on price revisions taking effect, normalization of raw material & logistics costs, product mix improvements, and absorption of fixed costs. As of the end of Q2, Revenue of ¥34,790.7B represents 94.0% of the full-year plan and Operating Income of ¥2,037.0B represents 78.3% of plan, implying that margin improvement is required in the second half. EPS forecast is ¥232.82, Dividend forecast ¥47 (Payout Ratio approx. 20%), indicating a stance toward strengthening shareholder returns based on the profit-growth plan.
Annual dividend was ¥92 per share (interim ¥46, year-end ¥46), with total dividends of ¥669.5B (of which attributable to owners of the parent ¥648.3B). Payout Ratio against Net Income attributable to owners of the parent of ¥1,348.8B was 48.2%, maintaining a mid-level payout and stable dividends. Dividends Paid of ¥648.3B were covered 1.19x by Free Cash Flow of ¥774.2B, indicating sound coverage. Additionally, share buybacks of ¥500.1B were executed, bringing total shareholder returns to ¥1,148.4B (Dividends + Share Buybacks), and Total Return Ratio reached 85.1%. Cancellation of treasury shares ¥1,249.9B (accounted as dividends in Financing CF) was conducted in parallel, demonstrating an active stance toward shareholder value enhancement. The dividend forecast for FY2027 is ¥47; if the earnings plan (Net Income attributable to owners of the parent ¥1,600.0B) is achieved, the payout ratio would fall to around 20%, creating room for further dividend increases. However, total returns including share buybacks exceeded FCF, so sustainability depends on working capital efficiency improvements and margin recovery.
Rising Cost-of-Goods-Sold Risk: Gross Margin deteriorated to 19.1% (down 1.4ppt from 20.5% prior year) due to elevated raw material & logistics costs and worsening product mix. Future movements in resource prices, FX, and supply-demand balance could further press cost ratios and erode profits.
Working Capital Efficiency Risk: Trade Receivables ¥7,609.1B (vs prior year +15.2%) and Inventories ¥7,400.9B (vs prior year +8.6%) increased more than Revenue growth (+7.5%), expanding working capital. Continued extension of credit or inventory obsolescence could reduce Operating CF generation and affect liquidity and investment capacity.
Interest Rate & Funding Cost Risk: Interest-bearing debt increased to ¥7,440.1B (vs prior year +15.5%). Although Finance Costs were ¥83.2B (vs prior year -33.5%) and currently low, a future rise in interest rates would increase interest expense and pressure Financing CF. Interest coverage on an operating income basis is about 24.5x, providing a buffer, but sensitivity to rates has risen due to an increase in long-term borrowings (¥5,483.2B, vs prior year +43.6%).
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 9.5% | 6.3% (3.2%–9.9%) | +3.2pt |
| Operating Margin | 5.9% | 7.8% (4.6%–12.3%) | -1.9pt |
| Net Income Margin | 5.0% | 5.2% (2.3%–8.2%) | -0.2pt |
ROE exceeds the industry median by 3.2ppt, indicating good capital efficiency, but Operating Margin lags the median by 1.9ppt, highlighting profitability challenges from higher costs and fixed expenses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.5% | 3.7% (-0.4%–9.3%) | +3.8pt |
Revenue growth outpaces the industry median by 3.8ppt, placing the company favorably on top-line expansion within the peer group.
※ Source: Company compilation
Structure of revenue growth with profit decline and improvement scenarios: In FY2026 the company achieved Revenue +7.5% but Operating Income -11.2% and Operating Margin down 1.2ppt. Declines in Gross Margin (19.1%, -1.4ppt YoY) and an increase in SG&A Ratio (13.4%, +0.1ppt YoY) pressured profits, and working capital expansion (Trade Receivables +¥1,004.0B, Inventories +¥582.9B) hindered cash conversion. The FY2027 guidance assumes a recovery to a 7.0% Operating Margin, but realization requires price revision pass-through, normalization of material & logistics costs, and compression of inventories and receivables.
Sustainability of shareholder returns and capital policy: With a Payout Ratio of 48.2% and Total Return Ratio (Dividends + Share Buybacks) of 85.1%, the company pursued active shareholder returns, but total returns of ¥1,148.4B exceeded FCF of ¥774.2B. Sustainability depends on improved working capital efficiency and expanded Operating CF. If the FY2027 guidance (Dividend ¥47, Payout Ratio ~20%) is achieved, capacity for higher dividends will emerge, but continuation of share buybacks will depend on margin recovery and CF improvement.
This report was generated automatically 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 using publicly disclosed financial statements. Investment decisions are your responsibility; please consult professionals as needed before making any investment decisions.