| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1613.3B | ¥1404.5B | +14.9% |
| Operating Income / Operating Profit | ¥88.8B | ¥66.6B | +33.4% |
| Ordinary Income | ¥94.8B | ¥68.9B | +37.5% |
| Net Income / Net Profit | ¥60.4B | ¥43.7B | +38.2% |
| ROE | 5.3% | 3.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1613.3B (YoY +¥208.8B +14.9%), Operating Income was ¥88.8B (YoY +¥22.2B +33.4%), Ordinary Income was ¥94.8B (YoY +¥25.9B +37.5%), and Net Income attributable to owners of the parent was ¥36.9B (YoY -¥23.3B -36.6%). At the operating level, double-digit top-line growth was achieved driven by sustained demand in the Special-purpose Vehicle Business and recognition of large projects in the Environmental Business. Gross margin improved to 18.5% (YoY +0.9pt) and operating margin to 5.5% (YoY +0.8pt), clearly demonstrating operating leverage. Ordinary Income benefited from ¥9.0B of foreign exchange gains which expanded the increase, while Net Income declined significantly YoY due to ¥57.5B of investment securities sale gains being offset by ¥65.6B of special losses and a high effective tax rate of 57.5%.
Revenue: Revenue of ¥1613.3B (+14.9%) expanded on two pillars: Special-purpose Vehicle Business ¥1352.7B (+13.9%) and Environmental Business ¥180.8B (+27.4%). The Special-purpose Vehicle Business, supported by firm domestic and overseas demand, saw growth in dump trucks, tailgate lifters, garbage collection vehicles, etc., and as the core segment (83.8% of revenue) drove top-line expansion. The Environmental Business achieved high growth of +27.4% due to recognition of large recycling facility projects and expansion of operation/maintenance contracts, increasing its revenue mix to 11.2%. The Parking Business is relatively small but stable, estimated at ¥80.4B.
Profitability: Cost of sales was ¥1314.9B (cost of sales ratio 81.5%) yielding gross profit ¥298.4B (gross margin 18.5%, YoY +0.9pt). SG&A was ¥209.6B (SG&A ratio 13.0%, YoY +0.1pt), including goodwill amortization of ¥8.7B, resulting in Operating Income ¥88.8B (operating margin 5.5%, YoY +0.8pt). By segment, Special-purpose Vehicle operating income ¥63.0B (margin 4.7%, +34.7%) and Environmental operating income ¥33.3B (margin 18.4%, +20.3%) lifted consolidated profit, with high profitability in Environmental improving the consolidated mix. Non-operating income was ¥17.2B (including ¥9.0B FX gains and ¥4.9B interest/dividend income) less non-operating expenses ¥11.2B (interest expense ¥5.0B, miscellaneous losses ¥6.2B) produced Ordinary Income ¥94.8B (+37.5%). Special gains ¥57.8B (investment securities sale gains ¥57.5B) and special losses ¥65.6B (investment securities valuation loss ¥2.0B, impairments ¥1.0B, etc.) resulted in net special losses of -¥7.8B. Pre-tax income of ¥87.0B less income taxes ¥50.0B (effective tax rate 57.5%) produced Net Income attributable to owners of the parent ¥36.9B (-36.6%). In conclusion: revenue and operating/ordinary profit increased, but Net Income declined due to net negative special items and a high tax burden.
Full-year guidance: Revenue ¥1,800.0B (YoY +11.6%), Operating Income ¥85.0B (YoY -4.3%), Ordinary Income ¥79.0B (YoY -16.6%), Net Income attributable to owners of the parent ¥50.0B (YoY +35.5%), EPS ¥129.85. Revenue is expected to continue growing, but the plan is conservative on operating profit, assuming an operating margin decline to 4.7% (from actual 5.5%, -0.8pt) to factor in possible upside in raw material and labor costs, start-up costs, and continued working capital burdens. The larger decline in Ordinary Income reflects conservative FX assumptions and changes in assumed financial income/expenses. Net Income is expected to increase as special items normalize and tax rates stabilize. Progress toward the full-year target stands at: Revenue 89.6%, Operating Income 104.5%, Ordinary Income 120.0%, Net Income 73.9% — indicating the company is ahead on operating and ordinary profit pace, but Net Income lags due to volatility in special items and tax rates. Achieving guidance assumes a slowdown in the second half at the operating level (equivalent to Revenue ¥186.7B and Operating Income -¥3.8B) and a substantial recovery in Net Income in H2 (approx. ¥13.1B). Tax rate normalization and working capital conversion are key to meeting guidance.
Annual dividend is ¥140 (interim ¥70, year-end ¥70), with a payout ratio of 152.2% (total dividends ¥58.8B ÷ Net Income ¥36.9B), substantially exceeding Net Income. FCF coverage is -0.70x (FCF -¥39.2B ÷ dividends ¥58.8B), indicating dividends exceeded cash generation and were supplemented by borrowings. The dividend policy appears to aim for a balance between profit-linked and stable dividends, but current-period returns exceeded Net Income and cash generation, reducing sustainability. Next-year guidance plans to reduce dividends to ¥60 (implying a payout ratio of approximately 46% on EPS ¥129.85), signaling an intent to restore payouts to levels consistent with cash flow. Sustainability going forward depends on recovery of FCF generation (working capital efficiency and realization of returns from capital expenditures), and balancing dividend stability with growth investment will be a key issue.
Working Capital Expansion Risk: DSO 67 days and inventories ¥320.9B (YoY +¥10.5B) have reduced cash conversion (OCF/EBITDA 0.25x), increasing cash tie-up and interest costs. A high WIP ratio of 52% indicates elongated production/installation processes, carrying risks of delivery delays and additional costs. If collection of receivables and inventory reduction lag, continued FCF deficits and increased reliance on borrowings may result.
Rising Leverage and Interest Risk: Interest-bearing debt ¥386.2B (YoY +¥118.8B) increased leverage with Debt/EBITDA 2.81x as CapEx and M&A were financed by long-term borrowings. Interest expense rose to ¥5.0B (from ¥1.8B prior year, +176.4%), increasing interest burden. Further rate hikes or additional investments could push Debt/EBITDA above 3.0x and raise interest burden relative to OCF, reducing financial flexibility.
Volatility of Non-recurring Items & Tax Rate Risk: This period’s net special losses -¥7.8B (sale gains ¥57.5B, valuation losses/impairments ¥65.6B) and effective tax rate 57.5% materially depressed Net Income, resulting in ROE 3.2% and muted capital efficiency. Recurrence of investment securities valuation losses or impairments and sustained high tax rates would enlarge Net Income volatility and undermine dividend capacity and ROE stability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.5% | 7.8% (4.6%–12.3%) | -2.2pt |
| Net Profit Margin | 3.7% | 5.2% (2.3%–8.2%) | -1.4pt |
Operating margin is 2.2pt below the industry median 7.8%, and Net Profit Margin is 1.4pt below the median 5.2%. While operating-level trends are improving, high tax rates and special items compress Net Profit Margin, placing the company in the lower-middle of the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.9% | 3.7% (-0.4%–9.3%) | +11.2pt |
Revenue growth 14.9% outpaces the industry median 3.7% by 11.2pt, demonstrating top-tier growth driven by double-digit expansion in the Special-purpose Vehicle and Environmental businesses.
※ Source: Company compilation
Continued operating improvement and Environmental business mix effects: The improvement trend in operating margin 5.5% (YoY +0.8pt) and gross margin 18.5% (YoY +0.9pt) was realized through sustained demand in Special-purpose Vehicles, price pass-through and maintenance of high profitability in the Environmental Business (18.4% margin). The increase of the Environmental Business share to 11.2% of revenue and its 37.5% contribution to operating income are structural drivers of mix improvement; backlog digestion and expansion of stock-like revenues (operation/maintenance) could further support consolidated margin expansion. If working capital efficiency (DSO/DIO reduction) and realization of returns on CapEx proceed, operating-level improvements could translate into cash generation and improved capital efficiency.
Recovery in cash flow quality and confirmation of dividend sustainability: FCF -¥39.2B (Operating CF ¥33.7B, Investing CF -¥72.9B) and working capital accumulation (accounts receivable -¥33.7B, inventories -¥30.6B) resulted in weak cash conversion 0.25x, and dividends ¥58.8B were funded by borrowings. Next-year dividend reduction to ¥60 (payout ratio approx. 46%) is aimed at restoring payouts to within cash generation. Going forward, recovery of FCF via improved receivables/inventory collection and smoothing of investment pace is a prerequisite for dividend sustainability and leverage management; progress reducing Debt/EBITDA from 2.81x and improving Operating CF/EBITDA to >0.5x are key items to watch.
Tax rate normalization and stabilization of Net Income quality: Effective tax rate 57.5% and net special losses -¥7.8B depressed Net Income to ¥36.9B (-36.6%) and ROE to 3.2%. Next-year guidance assumes Net Income ¥50.0B (+35.5%), premised on tax rate normalization (back toward ~40%) and normalization of special items. The risk of recurring investment securities valuation losses/impairments and tax volatility are central to Net Income quality and ROE improvement; maintaining Ordinary Income baseline strength at ¥94.8B while reducing volatility from non-recurring items is important for stabilizing earnings quality.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.