| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4815.3B | ¥4383.2B | +9.9% |
| Operating Income / Operating Profit | ¥349.3B | ¥226.7B | +54.1% |
| Profit Before Tax | ¥349.3B | ¥219.9B | +58.8% |
| Net Income / Net Profit | ¥306.4B | ¥166.0B | +84.6% |
| ROE | 11.8% | 7.1% | - |
For the fiscal year ended March 2026, KYB recorded Revenue ¥4815.3B (YoY +¥432.1B +9.9%), Operating Income ¥349.3B (YoY +¥122.6B +54.1%), Ordinary Income ¥194.4B (YoY +¥40.7B +26.5%), and Net Income attributable to owners of the parent ¥290.4B (YoY +¥140.4B +94.9%), achieving year-over-year increases across all four key metrics with significant profit expansion. Operating margin improved to 7.3% (up +2.1pt from 5.2% a year earlier) and net margin improved to 6.0% (up +2.6pt from 3.4%), indicating marked enhancement in profitability. The core Automotive Components (AC) segment drove performance with Revenue +11.8% and Operating Income +36.1%; the Hydraulic Components (HC) segment recorded Operating Income improvement of +159.4% year-on-year, and the Aircraft Equipment segment rebounded sharply with Revenue +82.7%. By geography, Revenue increased in Japan, Europe, the U.S., China, and Southeast Asia, with particularly strong contributions from Europe (Revenue ¥1007B, +19.4%) and Japan (Revenue ¥1841B, +12.4%).
[Revenue] Revenue reached ¥4815.3B (YoY +9.9%), near double-digit growth. By segment, AC delivered ¥3440.7B (+11.8%, sales mix 71.5%) and led the company, supported by a recovery in demand and pricing actions for hydraulic dampers for four-wheel and two-wheel vehicles and power steering products. HC recorded ¥1238.7B (+6.6%, sales mix 25.7%) with improved utilization in construction machinery hydraulic equipment, and Aircraft Equipment grew to ¥67.2B (+82.7%, sales mix 1.4%) driven by recovery in air travel demand. By region, Japan ¥1841B (+12.4%), Europe ¥1007B (+19.4%), U.S. ¥558B (+6.6%), China ¥295B (+21.1%), and Southeast Asia ¥334B (+9.6%) all exceeded prior-year levels, with expansion in Europe and demand recovery in Japan driving growth. Top-line expansion was driven by volume increases, price pass-through, and a favorable FX effect (yen weakness).
[Profitability] Cost of sales was ¥3835.9B (cost ratio 79.7%), improving by +2.8pt YoY, yielding Gross Profit ¥979.4B (gross margin 20.3%, up +1.4pt from 18.9%). SG&A was ¥685.6B (SG&A ratio 14.2%), rising roughly in line with revenue (YoY +9.1%), but absorbed by revenue growth to improve the SG&A ratio by -0.1pt from 14.3%. Operating Income was ¥349.3B (operating margin 7.3%), a YoY increase of +54.1%, improving operating margin by +2.1pt from 5.2%. By segment, AC Operating Income was ¥233.6B (margin 6.8%, +36.1%), HC Operating Income was ¥44.6B (margin 3.6%, +159.4%), and Aircraft Equipment turned profitable at ¥4.4B (margin 6.5%). Other income amounted to ¥110.0B and other expenses ¥82.3B, netting ¥27.6B, which included a negative goodwill gain of ¥61.5B (related to subsidiary acquisition) while impairment losses of ¥63.3B (¥9.8B in AC, ¥52.9B in HC, etc.) were recorded in non-operating expenses. Equity-method investment income contributed ¥27.8B (prior year ¥23.4B). Financial income ¥22.2B and financial expense ¥22.2B largely offset, resulting in Ordinary Income ¥194.4B (+26.5%). Profit Before Tax rose substantially to ¥349.3B (prior year ¥220.0B); after deducting corporate income tax expense ¥42.9B (effective tax rate 12.3%, down -12.2pt from 24.5% prior), Profit for the Period was ¥306.4B (+84.6%), and Net Income attributable to owners of the parent was ¥290.4B (+94.9%). The decline in the effective tax rate may reflect recognition of deferred tax assets and tax adjustments related to subsidiary acquisitions. In conclusion, revenue growth, margin expansion, and fixed-cost absorption yielded substantial operating profit improvement. One-off items (negative goodwill and impairments) were net negative, but the low effective tax rate boosted final profit, resulting in strong topline and bottom-line growth.
The AC (Automotive Components) segment recorded Revenue ¥3440.7B (YoY +11.8%), Operating Income ¥233.6B (YoY +36.1%), and margin 6.8% (flat from prior year), delivering strong growth in both revenue and profits. Volume increases and price revisions for hydraulic dampers and power steering products for four-wheel and two-wheel applications, and expanded sales in Europe and Japan, were the main drivers. The HC (Hydraulic Components) segment reported Revenue ¥1238.7B (+6.6%), Operating Income ¥44.6B (+159.4%), and margin 3.6% (up +1.9pt from 1.7%), reflecting a dramatic improvement in profitability due to higher utilization in construction machinery hydraulic equipment and cost reduction measures. Aircraft Equipment achieved Revenue ¥67.2B (+82.7%), Operating Income ¥4.4B (+212.2%), and margin 6.5%, turning profitable amid a sharp recovery in air travel demand. Other segments (e.g., Special Vehicle business) recorded Revenue ¥68.7B (-36.5%), Operating Income ¥11.4B (-14.4%), and margin 16.6%—sales declined but high margins were maintained. AC accounted for roughly 67% of consolidated Operating Income, and HC’s profitability recovery materially contributed to improving the company-wide margin.
[Profitability] ROE 12.2% (up +5.5pt from 6.7%) markedly above historical levels. Decomposition shows Net Profit Margin 6.0% (up +2.6pt from 3.4%), Total Asset Turnover 0.98x (Revenue ¥4815B ÷ Total Assets ¥4937B), and Financial Leverage 1.90x (Total Assets ¥4937B ÷ Equity ¥2599B), indicating performance led by profitability improvement. Operating margin 7.3% (up +2.1pt from 5.2%) and EBITDA margin 11.3% (EBITDA ¥543.6B = Operating Income ¥349.3B + Depreciation ¥194.3B) show strong operating earning capacity. Gross margin was 20.3% (up +1.4pt from 18.9%) driven by price pass-through and cost ratio improvements.
[Cash Quality] Operating Cash Flow (OCF) ¥195.1B vs. Net Income attributable to owners of the parent ¥290.4B yields OCF/Net Income ratio 0.67x, indicating weak cash conversion of profits. Trade receivables increased YoY by ¥209.3B (DSO approx. 99 days), inventories increased by ¥74.0B (DIO approx. 71 days), and trade payables decreased by ¥104.3B, worsening working capital and suppressing cash generation. OCF/EBITDA is 0.36x, low, so improving cash conversion efficiency is a priority.
[Investment Efficiency] Capital expenditures ¥223.1B (CapEx/Sales 4.6%) rose from ¥170.5B prior year (+¥52.6B), reflecting active growth investments. CapEx exceeded depreciation expense ¥194.3B, supporting capacity expansion and digitalization investments. Equity-method investment balance ¥143.5B (prior ¥117.0B) shows expanded associate investments, with equity-method profit ¥27.8B (prior ¥23.4B) contributing steadily.
[Financial Soundness] Equity Ratio 50.6% (up +1.9pt from 48.7%) and current ratio 182.8% (Current Assets ¥2762B ÷ Current Liabilities ¥1511B) remain healthy. Total interest-bearing debt ¥1140.2B (short-term ¥514.2B + long-term ¥626.0B) against cash ¥501.8B yields Net Interest-Bearing Debt ¥638.4B and Net Debt/EBITDA 1.17x, within a conservative range. Interest coverage is approximately 15.7x (Operating Income ¥349.3B ÷ Financial Expense ¥22.2B), indicating sufficient capacity to service interest.
Operating Cash Flow was ¥195.1B (down -55.5% from ¥438.5B prior) and fell below Net Income attributable to owners of the parent ¥290.4B (OCF/Net Income 0.67x). The primary cause was working capital deterioration: an increase in trade receivables of -¥105.7B (prior year saw an improvement of +¥129.4B), inventories increase -¥5.8B (prior year +¥5.8B improvement), and decrease in trade payables -¥168.5B (prior year -¥189.2B deterioration), reflecting slower collections, inventory buildup, and shortened payable cycles. Non-cash add-backs included depreciation ¥194.3B and impairment losses ¥63.3B, but working capital deterioration offset these. Investing Cash Flow was -¥66.2B (prior -¥341.3B), mainly comprising CapEx -¥223.1B, proceeds from acquisition of subsidiary shares +¥89.2B (an M&A transaction accompanied by recognition of negative goodwill), and sale of other financial assets +¥90.8B. Prior-year investing cash outflow included deposit for acquisition of subsidiary shares -¥162.2B, so investing CF improved YoY. Free Cash Flow was ¥128.9B (OCF ¥195.1B + Investing CF -¥66.2B), positive and improved from prior-year FCF ¥97.1B. Financing Cash Flow was -¥123.2B, reflecting net repayment of short-term borrowings -¥227.9B, new long-term borrowings +¥277.0B, bond issuance +¥99.5B, dividend payments -¥70.6B, and share buybacks -¥125.1B, restructuring interest-bearing debt while returning capital to shareholders. Cash and cash equivalents were ¥501.8B (up ¥27.5B from ¥474.3B prior), maintaining liquidity; normalizing working capital to improve OCF is the key going forward.
Operating Income ¥349.3B can be regarded as recurring operating profit, but Other Income ¥110.0B includes a negative goodwill gain of ¥61.5B (related to subsidiary acquisition), which temporarily boosted Net Income. Other Expenses ¥82.3B include impairment losses ¥63.3B (fixed asset impairments in AC ¥9.8B, HC ¥52.9B, etc.), recognized as one-off losses. On a net basis, one-off items were a negative contributor, and they are a source of earnings volatility. Equity-method investment income ¥27.8B is assessed as a stable recurring income contributor. Financial income and financial expense of ¥22.2B each largely offset, limiting the impact of non-operating items. Accrual quality measured by the divergence between Profit for the Period ¥306.4B and Operating Cash Flow ¥195.1B (difference ¥111.3B) yields an accrual ratio of approx. 1.9% (¥111.3B ÷ Total Assets ¥4937B), which is within a reasonable range, but OCF below Net Income signals concern over cash quality. The difference between Comprehensive Income ¥492.9B and Profit for the Period ¥306.4B (+¥186.5B) stems from Other Comprehensive Income ¥186.5B (translation adjustments +¥104.6B, changes in fair value of financial assets +¥64.9B, etc.), indicating FX and securities valuation gains added to equity. The gap between Ordinary Income and Net Income reflects the reduced effective tax rate (12.3%), which boosted final profit; potential temporary tax adjustments should be noted.
For FY ending March 2027, the company forecasts Revenue ¥4895.0B (YoY +1.7%), Operating Income ¥240.0B (YoY -31.3%), and Net Income attributable to owners of the parent ¥170.0B (YoY -41.5%), indicating a cautious outlook of revenue growth with declining profitability. Dividend guidance is an annual ¥81.00 (year-end), implying a Payout Ratio of about 47.6% (based on forecast Net Income ¥17.0B), up from the prior-year payout ratio of 27.1%. The projected large decline in Operating Income reflects assumed loss of one-off gains recognized this period (e.g., negative goodwill), anticipated cost increases in raw materials and labor, a yen appreciation bias in FX assumptions, and conservative volume assumptions (expectation of slower automobile production). Revenue is expected to grow only +1.7%, with Operating Margin projected to decline to 4.9% (from 7.3% this period, -2.4pt), incorporating higher costs and reduced fixed-cost absorption. Progress rates are undisclosed at the time of guidance; monitoring first-half achievement, working capital normalization, and continued price pass-through could provide upside risk. Valuation references such as forecast PER (Price / Forecast EPS ¥130.65) and PBR (Price / BPS ¥5,491.63) are provided as market comparatives.
Dividends paid were annual ¥156.00 (interim ¥75 + year-end ¥81), with a Payout Ratio of 27.1% (total dividends ¥78.7B against Net Income attributable to owners of the parent ¥290.4B), a conservative level. Prior-year dividend was annual ¥110.00 (after stock split adjustment), representing an effective increase of +41.8%. With total dividends ¥78.7B and Free Cash Flow ¥128.9B, dividend coverage by FCF was 1.64x, supporting sustainability of dividends. Share buybacks amounted to ¥125.1B; combined with dividends the total shareholder return was ¥203.8B (dividends + buybacks), and the Total Return Ratio was 70.2% (total return ¥203.8B ÷ Net Income ¥290.4B), reflecting an aggressive shareholder return stance. However, total returns ¥203.8B exceeded FCF ¥128.9B, implying returns exceeded FCF on an FCF basis (FCF/total return 0.63x). Treasury stock balance stood at ¥229.3B (approx. 8.8% of equity), contributing to improved capital efficiency while consuming liquidity. Next-year forecast dividend is annual ¥81.00 (year-end only disclosed), with forecast payout ratio about 47.6%—management appears to prioritize maintaining dividends under the profit decline scenario and intends to execute buybacks flexibly. DOE (Dividend on Equity) is about 2.6% (dividends ¥78.7B ÷ Equity ¥2599B), relatively low, and there is no explicit dividend policy benchmark disclosed.
Working Capital Management Risk: Trade receivables increased YoY by ¥209B, lengthening DSO to about 99 days, and inventories increased by ¥74B with DIO around 71 days, indicating inventory buildup. Operating Cash Flow ¥195B is substantially below Net Income ¥290B (OCF/Net Income 0.67x), reducing cash conversion efficiency. Delays in normalizing working capital could strain liquidity and constrain investment and return capacity. Slower collections may lead to bad debt or discount requests, and inventory accumulation could result in valuation losses and higher storage costs in a downturn.
Segment / Customer Concentration Risk: The AC segment accounts for 71.5% of sales, making performance highly sensitive to demand cycles, price competition, and model-mix shifts in the four-wheel and two-wheel vehicle markets. Sales to major customer Toyota Motor Corporation are estimated at approximately ¥1012B (about 10.5% of total), so production adjustments or changes in trading terms by this customer would directly affect earnings. Geographically, Europe and Japan account for about 60% of sales, posing significant downside risk if economic activity slows in those regions.
Raw Material & FX Risk: Increases in prices for steel, non-ferrous metals, and resins could compress gross margins, and delays in passing through costs may harm profitability. FX risk is material given high overseas sales exposure (about 62% across Europe, U.S., and Asia), and yen appreciation would hurt margins. The company recorded impairment losses of ¥63B, and additional impairment risk may materialize if fixed asset profitability deteriorates.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 12.2% | 6.3% (3.2%–9.9%) | +5.9pt |
| Operating Margin | 7.3% | 7.8% (4.6%–12.3%) | -0.5pt |
| Net Profit Margin | 6.4% | 5.2% (2.3%–8.2%) | +1.2pt |
ROE is +5.9pt above the industry median, placing KYB in the upper range; net profit margin also exceeds the median, while operating margin is slightly below the median by -0.5pt, indicating room for further operating improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 9.9% | 3.7% (-0.4%–9.3%) | +6.2pt |
Revenue growth outpaces the industry median, positioning the company in a high-growth group within manufacturing.
※ Source: Company compilation
Marked improvement in profitability vs. divergence in cash conversion: Operating margin 7.3% (up +2.1pt) and ROE 12.2% (up +5.5pt) place the company among industry leaders, yet Operating Cash Flow substantially lags Net Income (OCF/Net Income 0.67x). Working capital deterioration (DSO 99 days, DIO 71 days, and reduction in payables) suppresses cash generation; progress in reducing DSO, compressing inventory, and optimizing payables in coming quarters will determine FCF improvement and shareholder return capacity. Confirmation of working capital normalization would support a favorable reassessment of both profitability improvements and cash generation.
Conservatism in next-year guidance and potential upside: Management’s plan of Operating Income ¥240B (YoY -31%) is cautious, likely reflecting the loss of one-off gains this period and anticipated cost pressures. Continued price pass-through in AC, durable profitability improvement in HC, and sustained aircraft demand recovery could underpin results, and favorable FX or raw material trends may provide upside. The dividend forecast (payout ~48%) leaves room for dividend maintenance even under reduced earnings.
This report was automatically generated by AI analyzing XBRL financial statement data and is intended as an earnings analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the company from public financial statements as reference information. Investment decisions are your responsibility; consult a professional advisor as needed.