| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥294.3B | ¥282.4B | +4.2% |
| Operating Income | ¥11.7B | ¥14.4B | -19.1% |
| Ordinary Income | ¥15.9B | ¥18.1B | -11.9% |
| Net Income | ¥13.2B | ¥10.7B | +23.7% |
| ROE | 1.6% | 1.3% | - |
FY2026 Q1 results: Revenue ¥294.3B (YoY +¥11.9B +4.2%), Operating Income ¥11.7B (YoY -¥2.7B -19.1%), Ordinary Income ¥15.9B (YoY -¥2.2B -11.9%), Quarterly Net Income attributable to owners of the parent ¥13.2B (YoY +¥2.5B +23.7%). The pattern is higher revenue but lower operating profit: despite top-line growth, gross margin decline and increased SG&A eroded operating profitability. Non-operating income—equity-method investment income ¥4.8B and interest income ¥1.0B—along with a reduced effective tax rate of 17.0% and the absence of prior-year restructuring costs ¥3.6B lifted the bottom line by over 20%. The single segment is the Automotive Business (automotive parts); operating margin 4.0% declined from 5.1% a year ago (-1.1pt), while net margin 4.5% improved from 3.8% (+0.7pt), widening the gap between core operating performance and final profit.
[Revenue] Revenue ¥294.3B, up ¥11.9B (+4.2%) YoY. Single segment: Automotive Parts Business. Detailed disaggregation by product/region is not provided, but steady demand for automotive lighting and price revisions are inferred to have driven revenue growth. Cost of goods sold ¥242.8B (prior year ¥232.4B) increased by ¥10.4B; COGS ratio rose to 82.5% from 82.3% (+0.2pt). Gross margin 17.5% down 0.2pt from 17.7%, with continued pressure from raw material and logistics costs. Inventory composition: raw materials ¥37.0B, work in progress ¥27.6B, finished goods ¥17.4B — a relatively high WIP ratio suggests possible production bottlenecks.
[Profitability] Operating Income ¥11.7B, down ¥2.7B (-19.1%) YoY. Gross profit ¥51.5B (prior year ¥50.0B) increased ¥1.6B, but SG&A ¥39.9B (prior year ¥35.6B) rose ¥4.3B (+12.1%), producing negative operating leverage far exceeding the revenue growth rate of +4.2%. Operating margin 4.0% declined 1.1pt from 5.1% a year ago. Non-operating income ¥5.9B was driven by equity-method investment income ¥4.8B (prior year ¥3.8B) and interest income ¥1.0B (prior year ¥0.6B), offsetting foreign exchange losses ¥1.1B. Non-operating expenses ¥1.6B (prior year ¥1.0B) were mainly interest expense ¥0.4B and foreign exchange losses ¥1.1B. Ordinary Income ¥15.9B, down ¥2.2B (-11.9%), with ordinary margin 5.4% down 1.0pt from 6.4%. Extraordinary loss ¥3.6B relates to restructuring costs, same amount as prior year. Profit before tax ¥15.9B (prior year ¥14.1B) with income taxes ¥2.7B, giving an effective tax rate of 17.0% (prior year 24.4%). Net Income attributable to owners of the parent ¥13.2B, up ¥2.5B (+23.7%); net margin 4.5% improved 0.7pt from 3.8%. In summary, revenue up but operating profit down, while final profit increased due to non-operating items and tax effects.
[Profitability] Operating margin 4.0% down 1.1pt from 5.1%, driven by a 0.2pt decline in gross margin and higher SG&A ratio. Net margin 4.5% improved 0.7pt from 3.8%, but this reflects non-operating items (equity-method income) and a lower tax rate; core operating profitability weakened. ROE 1.6% (annualized roughly 6.4%) remains low, though improved from 1.3% (annualized ~5.2%) a year ago; capital efficiency remains limited.
[Cash Quality] DSO (days sales outstanding) = Accounts receivable ¥147.9B ÷ (Revenue ¥294.3B ÷ 90 days) = 45 days, standard. DIO (days inventory outstanding) = Inventory ¥82.4B ÷ (COGS ¥242.8B ÷ 90 days) = 31 days, within a healthy range. Warranty reserve ¥4.0B is 0.14% of sales, indicating controlled quality costs.
[Investment Efficiency] Total assets ¥1,245.0B vs. Operating Income ¥11.7B yields operating income to total assets of 0.9%. Tangible fixed assets ¥368.4B are 29.6% of total assets, indicating a capital-intensive structure. Construction in progress ¥17.2B indicates continued capital investment.
[Financial Soundness] Equity Ratio 64.9%, improved 3.1pt from 61.8% a year ago, indicating a solid financial base. Current ratio 194.7% (current assets ¥643.4B ÷ current liabilities ¥330.4B), quick ratio 189.5% — short-term liquidity adequate. Interest-bearing liabilities consist primarily of short- and long-term lease liabilities totaling about ¥55.3B; interest coverage = Operating Income ¥11.7B ÷ interest expense ¥0.4B ≈ 29x, indicating strong interest-bearing capacity.
No cash flow statement disclosure provided; analysis inferred from balance sheet movements. Cash and deposits ¥114.6B decreased ¥9.7B from ¥124.3B a year ago, suggesting use for working capital or investment. Short-term loans receivable ¥273.2B decreased ¥58.4B from ¥331.6B, indicating cash collection. Accounts receivable ¥147.9B rose ¥22.0B from ¥125.9B, reflecting increased cash tied to sales growth. Accounts payable ¥140.2B rose ¥4.8B from ¥135.4B, while electronic recorded obligations (trade) ¥75.1B declined ¥52.4B from ¥127.5B, suggesting a shift in payment methods that may have accelerated short-term cash outflows. Inventory ¥82.4B (raw materials ¥37.0B, WIP ¥27.6B, finished goods ¥17.4B) decreased ¥3.1B from ¥85.5B, but the high WIP ratio suggests production flow stagnation. Tangible fixed assets ¥368.4B decreased ¥9.2B from ¥377.6B due to depreciation; construction in progress ¥17.2B increased ¥0.3B from ¥16.9B, indicating continued reinvestment. Considering depreciation as a non-cash expense relative to Operating Income ¥11.7B, Operating Cash Flow is likely modestly positive, but improving working capital efficiency (reducing AR and WIP) is key to enhancing cash generation.
Operating Income ¥11.7B arises from recurring business activities but declined 19.1% YoY due to lower gross margin and higher SG&A. Ordinary Income ¥15.9B was significantly supported by non-operating income ¥5.9B: equity-method investment income ¥4.8B (prior year ¥3.8B) and interest income ¥1.0B (prior year ¥0.6B). Equity-method income represents about 41% of Operating Income, indicating high dependence on non-operating factors. Non-operating expenses ¥1.6B include foreign exchange losses ¥1.1B, equivalent to roughly 9% of Operating Income, exposing FX risk. Extraordinary items are limited to restructuring costs ¥3.6B, similar to prior year, suggesting recurring structural adjustment costs. Net Income ¥13.2B vs. income taxes ¥2.7B yields an effective tax rate of 17.0%, low and supportive of the bottom line. Comprehensive income ¥14.9B exceeds net income by ¥1.7B; other comprehensive income ¥1.7B (FX translation adjustment -¥2.0B, equity-method investee OCI ¥3.9B, etc.) contributed. Given weakening operating performance and dependence on non-operating and tax effects, quality of earnings requires operating improvement.
Full Year (FY) forecast: Revenue ¥1,180.0B (YoY +0.8%), Operating Income ¥59.0B (YoY +1.4%), Ordinary Income ¥66.0B (YoY -12.8%), Net Income attributable to owners of the parent ¥50.0B (EPS forecast ¥52.01). Q1 progress rates: Revenue 24.9%, Operating Income 19.8%, Ordinary Income 24.1%, Net Income 26.4%. Revenue, ordinary income and net income are roughly in line with normal pacing, but Operating Income lags the standard 25% by about 5pt—reflecting margin compression and rising SG&A. Achieving full-year targets requires recovery in gross margin and containment of SG&A from Q2 onward. Full-year operating margin assumed at 5.0% (improvement of 1.0pt from Q1 4.0%), premised on production efficiency gains and SG&A control. Ordinary Income forecasts a -12.8% YoY decline for the year, consistent with Q1 -11.9% and reflecting a conservative assumption on equity-method income volatility. No revisions to forecasts this quarter; plan line maintained.
Q1 dividend paid ¥7.0 per share; full-year forecast ¥9.0 per share (annual ¥9.0). Dividend payout ratio vs. full-year EPS forecast ¥52.01 is about 17.3%, conservative. Prior year dividend was also ¥9.0, indicating a stable dividend policy. Shares outstanding 96,431 thousand shares (after deduction of treasury stock 182 thousand shares: 96,249 thousand shares outstanding for dividend calculation), implying total dividend payout approximately ¥870M. Despite a low payout ratio, given low operating margin 4.0% and Net Income ¥13.2B dependent on non-operating items, the payout level reflects a sustainability-focused approach. Cash and deposits ¥114.6B and modest operating cash flow support dividend capacity. No share buyback disclosed; returns currently limited to dividends, so Total Return Ratio = Payout Ratio. Future dividend increases depend on improvement in core operating profitability and stable cash generation.
Profitability deterioration risk: Operating margin 4.0% declined 1.1pt from 5.1% a year ago, driven by a 0.2pt drop in gross margin and a 3.3pt rise in SG&A ratio (SG&A up 12.1%). Continued raw material and logistics cost pressure and SG&A growing faster than sales would make achieving the full-year 5.0% operating margin difficult. Warranty reserve ¥4.0B is 0.14% of sales, indicating quality costs are managed, but high WIP ¥27.6B suggests potential production bottlenecks, risking delivery performance and yield deterioration.
Working capital efficiency risk: Accounts receivable ¥147.9B increased ¥22.0B YoY, raising concerns about lengthening collection cycles; WIP ¥27.6B signals production flow stagnation. Electronic recorded obligations ¥75.1B declined ¥52.4B from ¥127.5B, and changes in payment terms may have accelerated short-term cash outflows. Tighter working capital ties up funds, pressuring Operating Cash Flow and constraining CAPEX and shareholder returns.
Non-operating dependence risk: Of Ordinary Income ¥15.9B, about 30% (non-operating income ¥5.9B) comes from equity-method income ¥4.8B and interest income ¥1.0B. Equity-method income equals roughly 41% of Operating Income, so investee performance volatility could increase company earnings volatility. Foreign exchange loss ¥1.1B (~9% of Operating Income) reveals FX exposure. The net income improvement depends on the reduction of the effective tax rate to 17.0%; without core operating improvement, earnings quality remains fragile.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.0% | 6.8% (2.9%–9.0%) | -2.9pt |
| Net Margin | 4.5% | 5.9% (3.3%–7.7%) | -1.4pt |
Both operating and net margins are below manufacturing medians; profitability ranks in the lower tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.2% | 13.2% (2.5%–28.5%) | -8.9pt |
Revenue growth is well below the median, indicating relatively low growth within manufacturing.
※ Source: Company compilation
Improving operating profitability is the top priority. Operating margin 4.0% is 2.9pt below the industry median 6.8%, driven by gross margin decline and SG&A outpacing sales. Achieving full-year operating margin 5.0% requires cost improvements from Q2 onward (materials cost control, improved production yields) and SG&A discipline (containment of the +12.1% increase), with monitoring of progress.
Correcting working capital efficiency is key to generating operating cash flow. The ¥22.0B increase in accounts receivable and high WIP ¥27.6B are cash constraints; stronger collections management and production flow improvements (reducing WIP) will directly improve short-term cash efficiency. The ¥52.4B reduction in electronic recorded obligations suggests changes in payment terms and a risk of accelerated cash outflows—attention to prepayment risk required.
Note the shift toward dependence on non-operating income. Equity-method investment income ¥4.8B equals roughly 41% of Operating Income, meaning investee performance materially affects company earnings. Foreign exchange loss ¥1.1B (~9% of Operating Income) highlights FX risk. The +23.7% increase in net income depends on non-operating items and a lower tax rate; without operating improvements, sustainability is questionable.
This report was automatically generated by AI analyzing XBRL financial statement summary data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor if necessary.