| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6779.2B | ¥7071.0B | -4.1% |
| Operating Income / Operating Profit | ¥187.2B | ¥151.8B | +23.3% |
| Ordinary Income | ¥208.4B | ¥132.8B | +56.9% |
| Net Income / Net Profit | ¥110.1B | ¥129.3B | -14.9% |
| ROE | 7.5% | 10.5% | - |
For the fiscal year ended March 2026, Revenue was ¥6779.2B (¥-291.8B YoY, -4.1%), Operating Income was ¥187.2B (¥+35.4B YoY, +23.3%), Ordinary Income was ¥208.4B (¥+75.6B YoY, +56.9%), and Net Income attributable to owners of the parent was ¥110.1B (¥-19.2B YoY, -14.9%). Gross profit margin improved to 7.3% (+0.8pt YoY), Operating Profit Margin improved to 2.8% (+0.6pt), and Ordinary Income Margin improved to 3.1% (+1.2pt), indicating improved profitability despite revenue decline. Non-operating results were nearly neutral on foreign exchange (foreign exchange gains ¥18.7B − foreign exchange losses ¥18.5B), contributing to the large increase in Ordinary Income, while Extraordinary items remained at a net +¥4.6B including gains on sales of investment securities of ¥15.8B. In the prior year, large extraordinary losses (impairment losses ¥25.9B and business restructuring costs ¥26.2B, net -¥32.0B) were recorded, so the absence of those items led to a YoY decrease in Net Income; nevertheless, underlying ordinary earning power has improved markedly.
[Revenue] Revenue was ¥6779.2B (YoY -4.1%). By segment/region: Japan ¥3201.3B (-2.7%, composition 47.2%), North America ¥1778.0B (-13.8%, 26.2%), Europe ¥680.6B (+10.5%, 10.0%), China ¥626.4B (-11.2%, 9.2%), Asia ¥609.7B (+18.9%, 9.0%). A large decline in North America (¥-283.2B) pulled down the total, while Europe and Asia achieved revenue growth. Differences across regions are presumed driven by major customers’ production trends and model mix changes.
[Profitability] Operating Income was ¥187.2B (+23.3% YoY). Cost of goods sold ratio improved to 92.7% (from 93.5%, -0.8pt), and SG&A was contained at ¥305.7B (roughly flat YoY; SG&A ratio improved -0.1pt to 4.5%), lifting Operating Profit Margin to 2.8% (from 2.1%, +0.6pt). By region, Japan delivered Operating Income ¥83.4B (+41.2%, margin 2.6%), North America ¥37.8B (+38.6%, 2.1%), China ¥30.3B (+33.5%, 4.8%), achieving gains in major regions; Europe ¥21.8B (-11.6%, 3.2%) and Asia ¥12.7B (-32.7%, 2.1%) were down, reflecting mixed regional mix issues. Ordinary Income rose to ¥208.4B (+56.9%), outpacing operating gains, helped by a swing in non-operating results to a net income of ¥21.2B (prior year net loss ¥-19.0B). FX had a near-neutral net impact of +¥0.2B, while dividends received ¥5.7B and equity-method investment income ¥1.2B contributed. Extraordinary items were net +¥4.6B (prior year -¥32.0B), with extraordinary gains ¥5.7B (including gains on sales of investment securities ¥15.8B and subsidiary liquidation gains ¥5.5B) offset by extraordinary losses ¥1.1B (including impairment losses ¥0.4B and restructuring costs ¥0.7B). Net Income attributable to owners of the parent was ¥110.1B (-14.9%); the YoY decline despite the drop-off in prior-year extraordinary losses was primarily due to non-controlling interests shifting from a loss of ¥-4.4B in the prior year to income of ¥11.8B in the current year. Income taxes were ¥40.9B (effective tax rate 19.2%), declining YoY and remaining within an appropriate range. Overall, despite revenue decline, cost improvements and fixed-cost control delivered stronger operating performance, and ordinary (recurring) earning power improved significantly when excluding non-operating and extraordinary items.
Japan: Revenue ¥3201.3B (-2.7%) with Operating Income ¥83.4B (+41.2%), margin improved to 2.6%, becoming the largest profit contributor—likely driven by stable utilization and cost reductions. North America: Revenue ¥1778.0B (-13.8%) but Operating Income ¥37.8B (+38.6%), margin improved to 2.1%—likely due to production efficiency gains and fixed-cost reductions. Europe: Revenue ¥680.6B (+10.5%) but Operating Income ¥21.8B (-11.6%), margin 3.2%; profitability deterioration despite higher sales is an issue. China: Revenue ¥626.4B (-11.2%) with Operating Income ¥30.3B (+33.5%), margin 4.8%, the highest among segments—likely driven by a shift to higher-value products and rigorous cost control. Asia: Revenue ¥609.7B (+18.9%)—largest revenue growth rate—but Operating Income ¥12.7B (-32.7%), margin down to 2.1%, showing a deterioration in profitability despite higher sales. Overall, China’s high profitability and Japan’s profit recovery drove results, while Europe and Asia present opportunities for improvement.
[Profitability] Operating Profit Margin 2.8% (from 2.1%, +0.6pt), Gross Profit Margin 7.3% (from 6.5%, +0.8pt), Ordinary Income Margin 3.1% (from 1.9%, +1.2pt), Net Income Margin 1.6% (from 1.8%, -0.2pt). ROE 7.5% (from 5.1%, +2.4pt). DuPont decomposition: Net Profit Margin 1.6% × Total Asset Turnover 2.03x × Financial Leverage 2.29x. [Cash Quality] Operating Cash Flow / Net Income is 3.5x, with Operating Cash Flow (OCF) ¥386.4B far exceeding Net Income ¥110.1B. EBITDA (Operating Income ¥187.2B + Depreciation ¥236.6B) is ¥423.8B, giving an EBITDA margin of 6.3%. OCF/EBITDA is 0.91x (a healthy level), and accrual ratio is -6.8% (negative indicates cash-generation superiority), reflecting solid earnings quality. [Investment Efficiency] Capital expenditures ¥271.8B are 1.15x depreciation ¥236.6B, indicating continued replacement and growth investment. Tangible fixed assets / Total assets 41.6% reflects a capital-intensive business. Total asset turnover 2.03x (down from 2.25x) was slightly depressed by asset increases. [Financial Soundness] Equity Ratio 43.6% (from 39.2%, +4.4pt), Current Ratio 110.9% (from 106.1%, +4.8pt), Debt/Equity 0.33x (interest-bearing debt ¥538.5B / equity ¥1,388.9B), Debt/EBITDA 0.84x—sound metrics. Interest coverage (EBIT ¥187.2B / interest expense ¥9.3B) 20.1x is strong. Cash and deposits ¥213.8B vs. short-term interest-bearing debt (short-term borrowings ¥96.0B + current portion of long-term borrowings ¥121.0B) ¥217.0B gives cash coverage 0.99x—minimally adequate.
Operating Cash Flow was ¥386.4B (+55.9% YoY), a substantial increase and 3.5x Net Income ¥110.1B, and 1.8x pre-tax income ¥213.0B, showing high cash conversion. Subtotal adding non-cash items such as Depreciation ¥236.6B to profit before tax was ¥445.9B. Working capital movements contributed positively via decreases in trade receivables ¥53.5B and inventories ¥24.7B, while decreases in accounts payable ¥-84.5B were a negative contributor, netting to an outflow of ¥-6.3B. After tax payments ¥-56.2B and interest payments ¥-9.4B, final OCF was ¥386.4B. Investing Cash Flow was ¥-265.3B, primarily capital expenditures ¥-271.8B, partially offset by proceeds from sales of tangible fixed assets ¥22.8B and proceeds from sales of investment securities ¥18.6B. Free Cash Flow (OCF + Investing CF) was positive ¥121.1B, funding dividends and debt repayment. Financing Cash Flow was ¥-63.5B: proceeds from long-term borrowings ¥100.0B and net increase in short-term borrowings ¥22.6B were used for repayment of long-term borrowings ¥-136.1B, dividends paid ¥-36.7B (including dividends to non-controlling interests ¥-2.9B), and treasury stock purchases ¥-4.2B. Cash and cash equivalents rose ¥69.4B from beginning ¥132.8B to ending ¥202.3B (including foreign exchange impact +¥11.9B), improving liquidity. OCF/EBITDA at 0.91x is close to 1x, indicating most profit is monetized. CapEx exceeds depreciation but is fundable from OCF, indicating low reliance on external financing.
The transition from Operating Income ¥187.2B to Ordinary Income ¥208.4B was driven by net non-operating income of ¥21.2B (non-operating income ¥43.4B, including FX gains ¥18.7B and dividends received ¥5.7B; non-operating expenses ¥22.2B, including interest expense ¥9.3B and FX losses ¥18.5B). FX impact was nearly offset (net +¥0.2B). Extraordinary items were net +¥4.6B (extraordinary gains ¥5.7B - extraordinary losses ¥1.1B); extraordinary gains included gains on sales of investment securities ¥15.8B and subsidiary liquidation gains ¥5.5B, while extraordinary losses were impairment losses ¥0.4B and restructuring costs ¥0.7B—markedly smaller than the prior-year large extraordinary losses (impairment ¥25.9B, restructuring ¥26.2B). The net extraordinary impact relative to Net Income is 4.2% (¥4.6B / ¥110.1B), small, indicating high reliance on ordinary earnings. OCF ¥386.4B is 3.5x Net Income, and accrual ratio (Net Income − OCF) / Total assets is -6.8% (negative), indicating cash exceeded accounting profit. OCF/EBITDA of 0.91x also supports strong cash backing for profits. Comprehensive income was ¥262.5B, exceeding Net Income ¥110.1B by ¥152.4B, with Other Comprehensive Income ¥90.5B (foreign currency translation adjustment ¥38.0B, valuation difference on available-for-sale securities ¥23.2B, actuarial gains/losses on retirement benefits ¥25.4B, etc.) boosting equity. Overall, improvements in ordinary earning power and strong cash generation indicate low dependence on one-off items and good earnings quality.
Full-year forecasts (Revenue ¥669.0B, Operating Income ¥19.0B, Ordinary Income ¥19.0B, Net Income attributable to owners of the parent ¥14.0B, dividend per share ¥22) compared with actuals: Revenue ¥6779.2B (progress 101.3%), Operating Income ¥187.2B (98.5%), Ordinary Income ¥208.4B (109.7%), Net Income attributable to owners of the parent ¥110.1B (78.6%). Revenue and Ordinary Income exceeded guidance, Operating Income was roughly on plan, and Net Income fell short mainly due to an increase in Net Income attributable to non-controlling interests ¥11.8B (turning from ¥-4.4B prior year), leading to a 21.4% shortfall vs. forecast on parent-owner Net Income basis, though group-level Net Income quality improved. Dividends paid were annual ¥43 (interim ¥20 + year-end ¥23 [including commemorative dividend ¥3]), significantly above the forecast ¥22, reflecting strengthened shareholder returns. Improvement in non-operating results (FX neutralization and increased financial income) and reduced extraordinary losses produced higher-than-expected Ordinary Income, enabling dividend increase.
Annual dividend was ¥43 (interim ¥20, year-end ¥23 [including commemorative dividend ¥3]). Basic dividend is estimated at ¥40, implying a Payout Ratio (based on Net Income attributable to owners of the parent) of 54.8% (total dividends ¥48.4B / Net Income ¥110.1B, after treasury stock adjustment). Against Free Cash Flow ¥121.1B, total dividends ¥36.7B (including dividends to non-controlling interests) represent 30.3% coverage, indicating high dividend sustainability. Dividend coverage vs. OCF is 9.5%, also comfortable. Treasury stock purchases totaled ¥4.2B, and Total Return Ratio ((dividends ¥36.7B + treasury stock purchases ¥4.2B) / Net Income ¥110.1B) = 37.1%. The doubling of actual dividend to ¥43 vs. forecast ¥22 reflects upside in Ordinary Income and improved cash generation, suggesting room to sustainably raise the base dividend. The commemorative dividend appears to be a one-off event tied to achievement or a corporate milestone; maintaining and increasing the base ¥40 dividend level will likely be the core of mid-term shareholder return policy.
Risk of delayed improvement in low-margin structure: With Operating Profit Margin 2.8% and Gross Profit Margin 7.3%, the company remains well below industry medians (Operating Profit Margin 7.8%, Net Profit Margin 5.2%), and declines in Europe (margin 3.2%) and Asia (2.1%) illustrate risks that regional/product mix deterioration or weaker fixed-cost absorption could pressure margins. North America achieved profit despite lower sales but remains low-margin at 2.1%; delays in improving profitability across key regions could stall the company-wide margin uptrend.
Risk from inefficiencies in WIP and inventory management: Work-in-process ¥155.6B accounts for 53.6% of total inventories ¥290.4B, suggesting potential production flow bottlenecks or inventory buildup. While OCF is robust, an increase in WIP through working capital movements could worsen cash conversion cycles and threaten OCF sustainability. Slower inventory turnover could pressure gross margins via future markdowns or write-offs.
Risk from major customers’ production variability and model cycles: The steep YoY decline in North America (-13.8%) highlights exposure to production cuts or delays in new model launches by major customers. Asia also showed significant margin deterioration despite revenue growth (-32.7% operating income), indicating risks from lower utilization or intensified price competition. The automotive industry's shift to EVs and tighter emissions regulations could rapidly reduce demand for existing product portfolios; delayed product transitions would negatively affect both revenue and profit.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Profit Margin | 2.8% | 7.8% (4.6%–12.3%) | -5.0pt |
| Net Profit Margin | 1.6% | 5.2% (2.3%–8.2%) | -3.6pt |
Company Operating Profit Margin 2.8% and Net Profit Margin 1.6% are substantially below industry medians, making profitability improvement a mid-term priority.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -4.1% | 3.7% (-0.4%–9.3%) | -7.8pt |
Company Revenue Growth -4.1% is below the industry median and in a revenue contraction phase, though margin improvements indicate signs of improved profitability.
※ Source: Company aggregation
Despite revenue decline, Operating Profit Margin improved to 2.8% (+0.6pt) and Ordinary Income Margin to 3.1% (+1.2pt), reflecting cost optimization via lower COGS ratio and SG&A control. China showed the highest margin at 4.8% and Japan achieved a large YoY increase in Operating Income of +41.2%, while Europe and Asia saw profit declines despite higher sales, indicating mixed regional issues. OCF ¥386.4B is 3.5x Net Income and OCF/EBITDA 0.91x, showing strong cash generation. Free Cash Flow ¥121.1B supports both dividends and investment. Financial soundness is high (Equity Ratio 43.6%, Debt/EBITDA 0.84x, Interest Coverage 20.1x), while cash ¥213.8B vs. short-term interest-bearing debt ¥217.0B shows near parity and limited liquidity risk.
Versus industry benchmarks, Operating Profit Margin 2.8% (median 7.8%) and Net Profit Margin 1.6% (median 5.2%) are substantially lower, highlighting absolute margin weakness. A high WIP ratio of 53.6% suggests production bottlenecks or inventory quality risk; low ~2% margins in North America and Asia indicate large room for improvement. Conversely, China’s high profitability (4.8%) and Japan’s profit recovery point to potential margin improvement. WIP reduction and yield improvements, along with margin correction in North America and Asia, will be key to margin expansion. Dividends were ¥43 annually (including commemorative ¥3), with a Payout Ratio of 54.8% and FCF coverage 3.3x, indicating sustainability and potential to maintain or raise a baseline dividend of ¥40. Overall, with strong cash generation and financial health, progress in improving the low-margin structure will be the medium-term evaluation axis.
This report is an AI-generated earnings analysis document produced by analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on publicly disclosed financial statements. Investment decisions should be made at your own responsibility, and, as needed, consult with a professional advisor.