| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥4815.3B | ¥4383.2B | +9.9% |
| Operating Income | ¥349.3B | ¥226.7B | +54.1% |
| Profit Before Tax | ¥349.3B | ¥219.9B | +58.8% |
| Net Income | ¥306.4B | ¥166.0B | +84.6% |
| ROE | 11.8% | 7.1% | - |
For the fiscal year ended March 2026, results came in at Revenue ¥4,815.3B (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%), delivering higher sales and significantly higher profits. Operating margin improved to 7.3% from 5.2% a year earlier (+2.1pt), driven by price revision effects in the AC Business and margin recovery in the HC Business. By region, Europe (+19.4%) and Japan (+12.4%) led revenue growth; by segment, the AC Business recorded Revenue ¥3,440.7B (+11.8%) and Operating Income ¥233.6B (+36.1%), while the HC Business achieved Revenue ¥1,238.7B (+6.6%) and Operating Income ¥44.6B (+159.4%), with major segments delivering both revenue and profit growth. Gross profit margin expanded to 20.3% (prior year 18.9%, +1.4pt) as price pass-through and cost efficiencies took effect. However, Operating Cash Flow was ¥195.1B, only 0.64x of Net Income, as working capital deterioration (higher receivables, lower payables) constrained cash generation.
[Revenue] Revenue was ¥4,815.3B (+9.9%), with the two core businesses—AC Business (+11.8%) and HC Business (+6.6%)—expanding steadily. By region: Japan ¥1,841B (+12.4%), Europe ¥1,007B (+19.4%), U.S. ¥558B (+6.6%), China ¥295B (+21.1%), Southeast Asia ¥334B (+9.6%), with all regions achieving revenue growth; Europe and China were notable drivers. The Aircraft Equipment Business also showed recovery at ¥67.2B (+82.7%). AC Business growth reflected volume increases and price revisions for hydraulic dampers for passenger cars and motorcycles; HC Business benefited from demand recovery for construction machinery hydraulic equipment and margin-improvement measures. Sales to the Toyota Group were approximately ¥504B, about 10.5% of the total.
[Profitability] Operating Income was ¥349.3B (+54.1%), with Operating Margin improving to 7.3% (prior year 5.2%, +2.1pt). Gross margin expanded to 20.3% (+1.4pt) as price pass-through and cost efficiency measures succeeded. SG&A ratio slightly declined to 14.2% from 14.3% a year ago, indicating good expense control. By segment, AC Business margin rose to 6.8% (prior year 5.6%), and HC Business to 3.6% (prior year 1.5%). Other income of ¥110.0B included ¥61.5B of gain on bargain purchase related to M&A, while impairment losses of ¥63.3B (mainly due to HC Business site rationalization) were recorded, so one-off items affected results. Ordinary Income was ¥194.4B (+26.5%), growing less than Operating Income due to near-balanced financial items (financial income ¥22.2B; financial expenses ¥22.2B). Net Income was ¥306.4B (+84.6%), substantially higher as the effective tax rate fell to 12.3% from 24.5% a year earlier, amplifying after-tax profit. In conclusion, core business revenue growth plus price revisions and cost efficiencies drove strong revenue and profit expansion.
The AC Business delivered Revenue ¥3,440.7B (+11.8%), Operating Income ¥233.6B (+36.1%), and margin 6.8% (prior year 5.6%, +1.2pt), with volume increases for hydraulic dampers for passenger cars and motorcycles and price revision effects driving margin improvement. The HC Business produced Revenue ¥1,238.7B (+6.6%), Operating Income ¥44.6B (+159.4%), and margin 3.6% (prior year 1.5%, +2.1pt), with margin restoration measures and demand recovery for construction machinery hydraulic equipment contributing. However, an impairment loss of ¥52.9B was recorded and other expenses increased by ¥53.0B. The Aircraft Equipment Business showed significant recovery with Revenue ¥67.2B (+82.7%), Operating Income ¥4.4B (+212.2%), and margin 6.5% (prior year 1.4%), driven by a rebound in demand for aircraft landing gear and related products. Other businesses (special vehicles, etc.) recorded Revenue ¥68.7B (▲36.5%), Operating Income ¥11.4B (▲14.4%), and maintained a high margin of 16.6% but saw revenue and profit decline due to business contraction.
[Profitability] Operating Margin was 7.3% (prior year 5.2%, +2.1pt), Net Income Margin was 6.4% (prior year 3.4%, +3.0pt), and Gross Margin expanded to 20.3% (prior year 18.9%, +1.4pt). ROE improved markedly to 12.2% (prior year 6.7%), exceeding the industry median ROE of 6.3% by +5.9pt. ROA improved to 7.3% (prior year 4.7%); the combination of Total Asset Turnover 0.98x, Net Income Margin 6.4%, and leverage 1.90x explains the ROE level. [Cash Quality] Operating Cash Flow was ¥195.1B, only 0.64x of Net Income ¥306.4B, with Accounts Receivable increasing by ¥105.7B and Accounts Payable decreasing by ¥168.5B, pressuring working capital. OCF/EBITDA (Operating CF/EBITDA) was 0.36x, low, indicating room to improve cash conversion. FCF was ¥128.9B (Operating CF ¥195.1B - CapEx ¥223.1B + others), covering dividends of ¥70.6B by 1.83x, but below total shareholder returns of ¥195.7B which included ¥125.1B of share buybacks. [Investment Efficiency] Capital expenditure was ¥223.1B (4.6% of Revenue), exceeding depreciation of ¥194.3B, reflecting continued active investment. Both AC and HC businesses are expanding capacity and investing in automation. [Financial Soundness] Equity Ratio improved to 50.6% (prior year 48.7%, +1.9pt), Net Debt/EBITDA is approximately 1.2x, a conservative level. Current ratio is about 183%; with total interest-bearing debt of ¥1,140.2B and cash of ¥501.8B, net interest-bearing debt is about ¥638B. Interest Coverage (Operating Income/Financial Expense) is approximately 15.7x, indicating strong financial safety.
Operating CF was ¥195.1B (YoY ▲55.5%), a large decline and only 0.64x of Net Income ¥306.4B. The main cause was working capital deterioration: accounts receivable rose ¥105.7B (DSO approx. 99 days), while accounts payable decreased ¥168.5B (shortened DPO), together causing about ¥274B of cash outflow. Inventories rose only ¥5.8B (DIO approx. 71 days), but extended receivable collection and accelerated payable settlement occurred simultaneously. Before working capital changes, cash generated was sufficient: Profit Before Tax ¥349.3B vs. subtotal Operating CF ¥241.2B after adjusting non-cash items (depreciation ¥194.3B; impairment ¥63.3B) and one-off gains (gain on bargain purchase ¥61.5B). Investing CF was ▲¥66.2B: CapEx ▲¥223.1B was offset by ¥89.2B proceeds from subsidiary share disposals related to M&A and ¥90.8B sale of financial assets. Financing CF was ▲¥123.2B: shareholder returns totaling ¥195.7B (dividends ¥70.6B; share buybacks ¥125.1B) and repayment of short-term borrowings ▲¥227.9B were funded partially by long-term borrowings ¥277.0B and bond issuance ¥99.5B. FCF was ¥128.9B, covering dividends 1.83x, but below total returns; normalization of working capital is key to restoring cash generation.
Recurring earnings center on Operating Income ¥349.3B, supplemented by equity-method investment income ¥27.8B. One-off items include gain on bargain purchase ¥61.5B (M&A-related) in Other Income and impairment losses ¥63.3B (mainly HC Business site rationalization) in Other Expenses, which largely offset each other on a net basis. Non-operating income was limited at financial income ¥22.2B (including dividend income ¥24.3B), only 0.5% of Revenue. The accrual ratio (Net Income - Operating CF)/Total Assets is about 2.3%, within an acceptable range, but Operating CF trailing Net Income indicates room to improve cash quality. The gap between Ordinary Income ¥194.4B and Net Income ¥306.4B is mainly due to a low tax burden: Profit Before Tax ¥349.3B vs. income taxes ¥42.9B (effective tax rate 12.3%), suggesting possible one-off tax effects. Comprehensive income was ¥492.9B, ¥186.5B higher than Net Income, boosted by foreign currency translation differences ¥104.6B and valuation gains on financial assets ¥64.9B. The sustainability of earnings is high at the Operating Income level because improvements are based on structural factors (price revisions and cost reductions), but loss of one-off gains and tax effects could slow full-year Net Income next fiscal year.
For the fiscal year ending March 2027, the company projects Revenue ¥4,890.0B (+1.6%), Operating Income ¥240.0B (▲31.3%), and Net Income ¥170.0B (▲44.5%), a cautious outlook. Operating Margin is projected at 4.9% (down ▲2.4pt from actual 7.3%), and Net Income Margin at 3.5% (down ▲2.9pt from actual 6.4%), reflecting significant deterioration in profitability. The outlook assumes the lapse of one-off gains such as the ¥61.5B gain on bargain purchase recorded this period, higher costs for raw materials and labor, a yen appreciation bias in FX assumptions (details undisclosed), and conservative demand assumptions. The dividend forecast is annual ¥81 (year-end only), implying a forecast payout ratio of 62.0% (forecast EPS ¥130.65), a sharp rise from the current payout ratio of 27.1%, indicating a policy to maintain dividends despite expected earnings decline. Progress rates vs. the full-year forecast were Revenue 99.8%, Operating Income 145.6%, and Net Income 180.3%, meaning FY results materially exceeded initial company guidance, suggesting the company’s initial plan was highly conservative. Next fiscal year’s guidance similarly reflects a conservative stance, leaving upside potential based on actual performance.
Annual dividend was ¥156 (interim ¥75, year-end ¥81), with a payout ratio of 27.1% (based on Net Income attributable to owners of the parent), a conservative level. Total dividends amounted to ¥70.6B, covered 1.83x by FCF ¥128.9B, indicating high dividend sustainability. Additionally, share buybacks of ¥125.1B were executed, raising treasury stock to ¥229.3B (▲8.8% of net assets). Total shareholder returns (dividends + buybacks) were ¥195.7B, yielding a Total Return Ratio of 63.9% (based on Net Income attributable to owners of the parent), an aggressive level. However, total returns exceeded FCF by ¥66.8B. For FY2027 the company plans a year-end dividend of ¥81, implying full-year dividends equivalent to ¥162 (assuming two payouts of ¥81 each, pre-stock-split adjustment). Forecast payout ratio of 62.0% marks a large increase from this period, indicating intent to maintain dividends even under earnings decline. Share repurchases are expected to be executed flexibly, but improvement in FCF and alignment with investment needs will be important for prudent deployment.
Working Capital Management Risk: Operating CF was only 0.64x of Net Income, with receivable collection delays (DSO approx. 99 days) and accelerated payable payments (Accounts Payable ▲¥168.5B) occurring concurrently. High Accounts Receivable balance ¥1,308.1B (27.2% of Revenue) is elevated; deterioration in customer payment behavior or extended payment terms by region/currency could pressure cash flows. Delays in normalizing working capital would constrain sustainability of total shareholder returns (dividends + buybacks) and M&A capacity.
Segment Concentration Risk: The AC Business accounts for 71.5% of Revenue and 66.9% of Operating Income, so demand fluctuations or intensified price competition in passenger car and motorcycle markets could materially affect results. In particular, sales to the Toyota Group represent about 10.5% of total, so production adjustments or price concession requests from major customers could compress margins. The HC Business recorded impairment losses of ¥52.9B; site restructuring costs and insufficient fixed-cost absorption remain downside risks for profitability.
One-off Gains Lapse and Full-Year Outlook Risk: The FY2026 gain on bargain purchase ¥61.5B and low effective tax rate 12.3% (prior year 24.5%) boosted Net Income; for FY2027 the lapse of such one-offs is expected to result in Operating Income ▲31.3% and Net Income ▲44.5%. Rising raw material and labor costs plus conservative FX assumptions increase downside risk if price pass-through is delayed. High projected payout ratio 62.0% increases the risk of dividend cuts if cash generation weakens.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 12.2% | 6.3% (3.3%–9.9%) | +5.9pt |
| Operating Margin | 7.3% | 7.8% (4.6%–12.3%) | -0.5pt |
| Net Income Margin | 6.4% | 5.2% (2.3%–8.2%) | +1.2pt |
ROE is top-tier in the industry with high capital efficiency, and Net Income Margin also exceeds the median. Operating Margin is around the industry median but there is room for improvement through price revisions and cost reductions.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 9.9% | 3.7% (-0.4%–9.3%) | +6.2pt |
Revenue growth is among the industry leaders, driven by demand recovery and price revision effects in both AC and HC businesses.
※Source: Company aggregation
Sustainability of Profitability Improvement: Operating Margin improved to 7.3% (prior year 5.2%, +2.1pt) and Gross Margin to 20.3% (prior year 18.9%, +1.4pt) as price revisions and cost reductions were effective across AC and HC businesses. ROE at 12.2% far exceeds the industry median of 6.3%, highlighting strong capital efficiency. However, next fiscal year guidance assumes Operating Margin falling to 4.9% (▲2.4pt) due to lapse of one-off gains and cost increases. Continued price pass-through and maintenance of fixed-cost absorption are key to sustaining profitability.
Room to Improve Cash Conversion Efficiency: Operating CF was ¥195.1B, only 0.64x of Net Income ¥306.4B, with receivable collection delays (DSO approx. 99 days) and decreased payables (▲¥168.5B) pressuring working capital. OCF/EBITDA is 0.36x, below industry average. Compressing Accounts Receivable ¥1,308.1B (27.2% of Revenue) and optimizing payable terms could substantially improve cash generation. If working capital normalizes, FCF could expand to over ¥300B, supporting sustainability of total returns and growth investment capacity.
Balance between Financial Soundness and Shareholder Returns: Equity Ratio 50.6% and Net Debt/EBITDA approx. 1.2x indicate sound financials, while Total Return Ratio 63.9% is aggressive. Dividend payout ratio 27.1% is conservative and FCF coverage 1.83x is adequate, but total returns including buybacks (¥195.7B) exceeded FCF ¥128.9B. Next fiscal year’s forecast payout ratio of 62.0% is a substantial increase and, while signaling a commitment to maintain dividends amid falling earnings, sustainability will depend on working capital improvement and FCF expansion. The company has ample M&A capacity, and diversification of the business portfolio could accelerate growth.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are compiled by the firm based on publicly disclosed financial statements and are provided for reference. Investment decisions are your responsibility; please consult professional advisers as needed.