| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3472.0B | ¥3472.0B | +0.0% |
| Operating Income / Operating Profit | ¥205.4B | ¥197.2B | +4.1% |
| Ordinary Income | ¥202.3B | ¥179.8B | +12.5% |
| Net Income / Net Profit | ¥104.7B | ¥96.3B | +8.8% |
| ROE | 8.0% | 7.8% | - |
For the fiscal year ended March 2026, Revenue was ¥3472.0B (YoY +0.0%), Operating Income was ¥205.4B (YoY +¥8.2B +4.1%), Ordinary Income was ¥202.3B (YoY +¥22.5B +12.5%), and Net Income attributable to owners of the parent was ¥104.7B (YoY +¥8.4B +8.8%). Revenue was flat, but margin improvement progressed, with a Gross Profit Margin of 16.0% (YoY +0.8pt) and an Operating Margin of 5.9% (YoY +0.2pt), reflecting improved profitability. At the ordinary income level, foreign exchange gains of ¥19.1B contributed to double-digit growth. Net income was affected by special losses of ¥110.6B (including valuation losses on investment securities of ¥31.1B) and a high effective tax burden (corporate taxes et al. of ¥69.3B), but remained in positive territory YoY due to a similar level of special losses in the prior year. Operating Cash Flow was ¥330.1B (YoY +3.4%), capital expenditures were ¥265.2B, and Free Cash Flow was positive at ¥51.4B.
[Revenue] Revenue of ¥3472.0B was flat YoY. By region, the Americas grew with external sales of ¥1110.1B (YoY +6.2%) and Japan was steady at ¥415.4B (YoY +4.1%), while China ¥290.7B (YoY -7.8%), Asia ¥806.6B (YoY -1.5%), and Europe ¥849.2B (YoY -4.9%) declined, offsetting growth. Foreign exchange translation effects (non-operating foreign exchange gains of ¥19.1B) supported yen-converted sales, so on a real basis a slight decline is likely. Gross Profit Margin improved to 16.0% (YoY +0.8pt) due to optimization of raw materials and manufacturing efficiency.
[Profitability] Operating Income of ¥205.4B increased +4.1% YoY, with an Operating Margin of 5.9% (+0.2pt). SG&A was ¥349.1B (SG&A ratio 10.1%), up ¥19.7B from ¥329.4B in the prior year, but gross profit expansion absorbed the increase. Ordinary Income of ¥202.3B grew +12.5%, exceeding operating income growth, as non-operating income of ¥34.2B (foreign exchange gains ¥19.1B, dividend income ¥4.0B, etc.) offset non-operating expenses of ¥37.3B (including interest expense ¥21.9B). Income before taxes was compressed to ¥92.7B due to recording special losses of ¥110.6B (valuation loss on investment securities ¥31.1B, impairment losses ¥7.2B, loss on disposal of fixed assets ¥1.4B, etc.), and after corporate taxes et al. of ¥69.3B (effective tax rate 74.7%), Net Income was ¥104.7B (YoY +8.8%). Net income attributable to non-controlling interests was ¥10.8B; estimated Net Income attributable to owners of the parent after deduction is approximately ¥94B. In conclusion, the company achieved flat revenue, operating income growth, and net income growth on a balance of special loss recording.
The Japan segment reported external sales of ¥415.4B (YoY +4.1%) and Operating Income of ¥35.2B (down -19.9% from ¥43.9B), turning into a profit decline. The Americas segment posted external sales of ¥1110.1B (YoY +6.2%) and Operating Income of ¥59.1B (down -6.6% from ¥63.3B) as rising costs pressured margins. The Asia segment reported external sales of ¥806.6B (YoY -1.5%) but Operating Income improved to ¥95.9B (up +4.7% from ¥91.6B), showing notable margin improvement. The China segment had external sales of ¥290.7B (YoY -7.8%) with continued demand softness, but Operating Income improved significantly to ¥11.0B (up +103.7% from ¥5.4B). The Europe segment had external sales of ¥849.2B (YoY -4.9%) and swung to an operating profit of ¥2.9B (from an operating loss of -¥7.4B the prior year). Overall, company-wide operating income growth was driven by improved profitability in Asia, China, and Europe, outweighing declines in Japan and the Americas.
[Profitability] Operating Margin of 5.9% improved +0.2pt from 5.7% last year; Gross Profit Margin of 16.0% improved +0.8pt, supported by cost control and mix improvement. ROE was 8.0% (up +1.2pt from 6.8%), reflecting more efficient use of equity. [Cash Quality] Operating Cash Flow of ¥330.1B is 3.2x Net Income of ¥104.7B, supported by non-cash expenses including Depreciation & Amortization of ¥181.3B and accrual management (receivables collection +¥57.1B, payables payments -¥36.8B), maintaining high cash-generating capability. [Investment Efficiency] Capital expenditures of ¥265.2B are 1.46x depreciation (¥181.3B), indicating continued proactive growth investment; Construction-in-progress of ¥247.1B and a robust investment pipeline. ROA was 6.9% (up +0.6pt from 6.3%), showing improved asset returns. [Financial Soundness] Equity Ratio was 43.5% (unchanged from prior year), current ratio 127.3%, quick ratio 116.2%, maintaining healthy short-term liquidity. Debt/Equity ratio was 38.5%, Interest Coverage 9.39x, indicating appropriate leverage, though short-term borrowings increased to ¥452.1B (YoY +25.8%) and short-term liabilities ratio rose to 55.1%, indicating shortening of maturity profile.
Operating Cash Flow was ¥330.1B (YoY +3.4%). Starting from pre-tax income of ¥92.7B, addbacks included Depreciation & Amortization ¥181.3B and accrual adjustments (subtotal before working capital changes ¥422.8B). Working capital contributed with receivables collection +¥57.1B, inventory change +¥5.3B, and payables payments -¥36.8B, netting roughly neutral, and after corporate taxes et al. paid -¥78.9B the result was the closing figure. Investing Cash Flow was -¥278.6B, centered on capital expenditures of -¥265.2B; construction-in-progress of ¥247.1B and the expanding investment pipeline show continued growth investment. Financing Cash Flow was -¥79.7B, reflecting long-term borrowings repayment -¥108.8B, increase in short-term borrowings +¥55.8B, and dividend payments -¥32.8B, balancing duration shortening and shareholder returns. Free Cash Flow was positive ¥51.4B, confirming sustainable cash generation to cover dividends and CapEx. Cash and cash equivalents were ¥326.5B (YoY -0.6%), roughly flat, and liquidity is stably secured when factoring in FX effects of +¥26.2B.
Operating Income of ¥205.4B versus Ordinary Income of ¥202.3B indicates non-operating income/expense is nearly neutral and core earnings power is maintained. Non-operating income of ¥34.2B comprised mainly foreign exchange gains of ¥19.1B (also recorded in the prior year) and dividend income of ¥4.0B; FX-related factors depend on environment but continuity is expected. Special losses of ¥110.6B were mainly valuation losses on investment securities of ¥31.1B and fixed-asset related losses, indicating a largely one-off character; the prior year also recorded special losses of ¥27.9B and these were within initial expectations. Operating Cash Flow of ¥330.1B is 3.2x Net Income of ¥104.7B, supported by depreciation ¥181.3B and working capital efficiency (receivables collection +¥57.1B), indicating high quality of cash generation. Comprehensive income of ¥123.5B exceeded Net Income ¥104.7B, driven primarily by Foreign Currency Translation Adjustments of +¥102.1B as overseas asset valuations improved with yen weakness. The effective tax rate of 74.7% may reflect valuation allowance reversals or non-deductibility of valuation losses, and next fiscal year’s guidance (Net Income ¥65B) assumes normalization of tax burdens.
Full Year guidance plans Revenue ¥3350B (YoY -3.5%), Operating Income ¥185B (YoY -9.9%), Ordinary Income ¥160B (YoY -20.9%), EPS ¥99.18, and Dividend ¥20. No disclosure on progress against initial plan was provided, but compared with this fiscal year’s actuals (Revenue ¥3472B, Operating Income ¥205.4B) the outlook is conservative, likely factoring in demand slowdown and difficulties in absorbing cost increases. Operating Margin is expected to decline to 5.5% (from 5.9% this period, -0.4pt), Ordinary Income Margin to 4.8% (from 5.8% this period, -1.0pt). Dividend of ¥20 is a halving from this period’s ¥40, but based on assumed Net Income ¥65B (Payout Ratio approx. 20%) it returns to a sustainable level.
Annual dividend was ¥40 (interim ¥25, year-end ¥15), with total dividends of approximately ¥2.6B (based on 65,582 thousand shares outstanding). The Payout Ratio against Net Income attributable to owners of the parent of ¥104.7B was approximately 25% on an actual basis, and the company increased the dividend by ¥15 from prior year’s ¥25, demonstrating a stance to maintain/increase dividends despite recording special losses. Free Cash Flow of ¥51.4B covers the total dividend by about 2x, and shareholder returns were implemented within cash generation capacity. Next fiscal year’s planned dividend of ¥20 is a dividend cut, but on assumed Net Income ¥65B the Payout Ratio of about 20% emphasizes sustainability. No share buybacks were executed; the company continues a dividend-only return policy.
Short-term liability refinancing risk: Short-term borrowings increased to ¥452.1B (YoY +25.8%), raising the short-term liabilities ratio to 55.1%. Cash and cash equivalents of ¥326.5B cover only 27.7% of total short-term liabilities (¥1,178.6B). Attention is required for refinancing condition deterioration in the event of rising interest rates or credit environment deterioration. Long-term borrowings have been reduced to ¥368.0B, and liability duration shortening is progressing, raising the importance of maturity management.
Regional profitability volatility risk: Operating Income in Japan was ¥35.2B (YoY -19.9%) and in the Americas ¥59.1B (YoY -6.6%), with declines in key regions while improvements in Asia, China, and Europe support the company. Changes in regional mix have significant impact on company-wide profitability. China’s sales decline of -7.8% indicates continued demand softness, and attention is needed on sustainability of margin improvements.
Recurrence risk of special losses and tax burden: This period recorded special losses of ¥110.6B (valuation loss on investment securities ¥31.1B, impairment losses ¥7.2B, etc.) and a high effective tax rate of 74.7%. The next fiscal year guidance assumes disappearance of one-off factors, but recurrence of valuation losses or reversals of deferred tax assets could increase Net Income volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.9% | 7.8% (4.6%–12.3%) | -1.8pt |
| Net Profit Margin | 3.0% | 5.2% (2.3%–8.2%) | -2.2pt |
Operating Margin of 5.9% is 1.8pt below the industry median of 7.8%, and Net Profit Margin of 3.0% is 2.2pt below the median of 5.2%. Within manufacturing, profitability ranks mid-to-lower; continued gross margin improvement and cost structure optimization are key to narrowing the gap to industry averages.
※Source: Company compilation
Improvement in operating profitability and improved regional mix: Operating Margin 5.9% (YoY +0.2pt) and Gross Profit Margin 16.0% (YoY +0.8pt) show progress in core profitability, driven by margin improvements in Asia, China, and Europe leading company-wide operating income growth. The ability to offset declines in Japan and the Americas through regional mix improvements demonstrates benefits of global operations. Capital expenditures of ¥265.2B (1.46x depreciation) and construction-in-progress of ¥247.1B suggest mid-term productivity gains and potential for revenue expansion.
One-off nature of special losses and tax burden with a normalization scenario next fiscal year: Special losses ¥110.6B and an effective tax rate of 74.7% compressed Net Income, but Operating Cash Flow ¥330.1B being 3.2x Net Income indicates limited impairment of cash-generation capability. Next fiscal year guidance (Operating Income ¥185B, Net Income ¥65B) assumes disappearance of one-off factors and tax normalization, and the adjustment of dividends to ¥20 emphasizes sustainability.
Rising short-term liabilities composition and importance of maturity management: Short-term borrowings increased +25.8% YoY to ¥452.1B and short-term liabilities ratio rose to 55.1%, increasing refinancing sensitivity. Cash and cash equivalents of ¥326.5B cover 27.7% of total short-term liabilities, and importance of interest rate and credit risk management is increasing. Positive Free Cash Flow of ¥51.4B and stable Operating Cash Flow indicate resilience to changes in funding conditions, but continued monitoring of duration shortening is warranted.
This report is an earnings analysis document automatically generated by AI analyzing 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 publicly available financial statements. Investment decisions are your own responsibility; please consult a professional as necessary.