| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1420.1B | ¥1363.0B | +4.2% |
| Operating Income | ¥83.7B | ¥70.9B | +18.1% |
| Ordinary Income | ¥74.0B | ¥68.2B | +8.5% |
| Net Income | ¥40.1B | ¥36.5B | +9.8% |
| ROE | 4.4% | 4.4% | - |
The fiscal year ended March 2026 closed with Revenue of ¥1420.1B (YoY +57.1B, +4.2%), Operating Income of ¥83.7B (YoY +12.8B, +18.1%), Ordinary Income of ¥74.0B (YoY +5.8B, +8.5%), and Net Income attributable to owners of the parent of 43.96B (YoY +16.76B, +61.6%), marking revenue and profit growth. Operating margin improved to 5.9% (+0.7pt from 5.2% year-over-year), driven by higher margins in non-automotive segments boosting companywide profitability. At the ordinary income stage, interest expense of ¥14.6B weighed on results; non-operating expenses of ¥22.6B exceeded non-operating income of ¥12.9B, reducing profits by approximately ¥9.7B from operating income. Extraordinary items included a gain on sale of investment securities of ¥10.7B, but extraordinary losses of ¥17.9B outweighed this, resulting in Profit Before Tax of ¥84.8B, tax expense of ¥31.0B, and deduction of non-controlling interest of ¥9.8B, yielding Net Income of ¥40.1B. Operating Cash Flow (OCF) of ¥137.2B was 3.42x Net Income, Free Cash Flow was positive at ¥59.0B, and dividend resources were adequately secured.
[Revenue] Revenue increased to ¥1420.1B (+4.2% YoY). By segment, the Powertrain Business, at ¥756.8B (+4.3%), remains the core, accounting for 53.3% of consolidated revenue. Non-automotive areas led growth, with Marine & Energy at ¥198.2B (+10.6%) and Life Business at ¥232.6B (+9.4%) delivering double-digit increases. Conversely, the Frontier Business declined to ¥230.7B (-2.6%), and Other Businesses contracted to ¥22.2B (-7.4%). Gross profit was ¥357.6B (gross margin 25.2%), a 0.4pt improvement from 24.8% a year earlier, supported by cost containment and improved price mix.
[Profitability] Operating Income of ¥83.7B (+18.1%) grew substantially faster than revenue, with Operating Margin improving to 5.9% from 5.2% a year earlier (+0.7pt). SG&A was ¥273.9B (SG&A ratio 19.3%), rising roughly in line with revenue growth (+4.2%), enabling operating leverage. Segment margin drivers included Marine & Energy at 20.6% and Life at 17.5%, with high margins in non-automotive segments lifting the company average; Powertrain improved to 13.0% YoY. Frontier was a loss-making -3.3%, narrowing from the prior-year deficit but remaining negative, indicating room for improvement. Ordinary Income of ¥74.0B (+8.5%) lagged operating income growth, as non-operating expenses including interest expense of ¥14.6B and foreign exchange loss of ¥3.4B pressured results. Extraordinary items included ¥10.7B gain on sale of investment securities but were outweighed by ¥17.9B of extraordinary losses, resulting in Profit Before Tax of ¥84.8B. After corporate tax and other of ¥31.0B (effective tax rate 36.6%) and non-controlling interest of ¥9.8B, Net Income attributable to owners of the parent was 43.96B (+61.6%), a substantial increase. Conclusion: revenue and profit growth.
The Powertrain Business recorded Revenue of ¥756.8B (+4.3%), Operating Income of ¥98.1B (+5.6%), and margin of 13.0%, remaining the company’s core. Marine & Energy posted Revenue of ¥198.2B (+10.6%), Operating Income of ¥40.9B (+10.1%), and margin of 20.6%, achieving high-profit double-digit growth. Life Business delivered Revenue of ¥232.6B (+9.4%), Operating Income of ¥40.6B (+30.3%), and margin of 17.5%, with notable profit expansion contributing materially to mix improvement. Frontier Business had Revenue of ¥230.7B (-2.6%) and an operating loss of ¥7.5B (improved from -¥13.6B prior year), showing recovery but still negative; turnaround remains a challenge. Other Businesses generated Revenue of ¥22.2B (-7.4%), Operating Income of ¥4.7B (+12.3%), and margin of 21.0%, maintaining high profitability despite scale. Aggregate segment operating profit was ¥172.0B; after company-wide expenses of ¥86.2B and intersegment eliminations of ¥6.8B, consolidated Operating Income was ¥83.7B.
[Profitability] Operating margin of 5.9% improved +0.7pt from 5.2% a year earlier, with gross margin 25.2% (prior 24.8%) and SG&A ratio 19.3% (prior 19.6%) both improving. ROE 4.4% rose from 3.8% a year earlier, but combined with Net Profit Margin of 2.8%, Asset Turnover of 0.68x, and Financial Leverage of 2.29x, returns remain relatively low. [Cash Quality] OCF ¥137.2B is 3.42x Net Income of ¥40.1B, indicating strong cash backing for profits. Accrual ratio of -4.5% is favorable, showing the company absorbed increases in receivables and inventories while maintaining cash generation. [Investment Efficiency] Total Asset Turnover of 0.68x edged down from 0.69x prior year. Inventory turnover days are 156 days (inventory ¥198.9B), receivables turnover days 76 days (trade receivables ¥294.0B), payables turnover days 55 days, and Cash Conversion Cycle of 196 days remains heavy, indicating substantial room to improve working capital efficiency. [Financial Soundness] Equity Ratio 43.7% (prior 41.7%) improved; Current Ratio 151.2%, Quick Ratio 124.5% indicate healthy short-term liquidity. Cash and deposits ¥294.7B versus short-term borrowings ¥271.9B yield a Cash/Short-term Debt ratio of 1.08x, warranting monitoring of refinancing. Debt/EBITDA 3.08x and Interest Coverage 5.75x place debt-servicing capacity within investment-grade ranges, but short-term debt ratio 48.3% shows high short-term dependence.
OCF was ¥137.2B (+25.6% YoY), 3.42x Net Income of ¥40.1B, supported by non-cash depreciation of ¥99.1B and Profit Before Tax of ¥84.8B. Working capital build — trade receivables increase of ¥7.3B and inventories increase of ¥16.7B — and tax payments of ¥31.0B were deducted, resulting in robust cash generation. Investing Cash Flow was -¥78.2B, driven mainly by capital expenditures of ¥96.3B, partially offset by proceeds from sale of investment securities of ¥12.4B. Financing Cash Flow was -¥47.7B, with repayment of long-term borrowings ¥54.3B and dividend payments ¥10.9B as primary outflows, partially covered by long-term borrowings of ¥66.0B; share buybacks of ¥1.8B were also executed. Free Cash Flow remained positive at ¥59.0B, enabling dividends and buybacks to be funded from internal cash. Cash and deposits totaled ¥294.7B, up +4.8% YoY, indicating stable liquidity on hand.
Core earnings are composed of Operating Income ¥83.7B, while non-operating income of ¥12.9B (0.9% of sales) was limited, consisting of interest income ¥4.7B, dividend income ¥1.8B, and foreign exchange gains ¥0.9B among other items. One-off items included gain on sale of investment securities ¥10.7B, but extraordinary losses ¥17.9B (including ¥1.0B impairment/retirement of fixed assets) outweighed gains, netting a ¥7.2B reduction to Net Income. Comprehensive Income was ¥120.2B, significantly above Net Income of ¥40.1B; other comprehensive income of ¥80.1B comprised foreign currency translation adjustments ¥46.4B, actuarial adjustments related to retirement benefits ¥16.2B, and valuation differences on securities ¥2.2B, among others. OCF at 3.42x Net Income and accrual ratio -4.5% demonstrate strong cash backing of profits. However, OCF of ¥137.2B falls below EBITDA (Operating Income ¥83.7B + D&A ¥99.1B = ¥182.8B), reflecting working capital build (receivables and inventories), which indicates a near-term quality issue.
Full-year plan: Revenue ¥1450.0B (+2.1% YoY), Operating Income ¥95.0B (+13.5%), Ordinary Income ¥90.0B (+21.6%), Net Income attributable to owners of the parent ¥50.0B, EPS ¥106.68, annual dividend ¥18.0. Achievement rates against plan were Revenue 97.9%, Operating Income 88.1%, Ordinary Income 82.2%, Net Income 88.0%, EPS 87.9%, indicating slight underperformance on profitability. Non-operating expenses and extraordinary losses appear to have suppressed progress at the ordinary and net income stages. Dividends actual at ¥31.0 exceeded planned ¥18.0 significantly, suggesting the plan was conservatively managed. To meet remaining plan targets, earnings accumulation is required, but continued high margins in non-automotive segments and improvement in loss-making businesses could make targets attainable.
Annual dividend was ¥31.0 (interim ¥12.0 + year-end ¥19.0); payout ratio relative to Net Income attributable to owners of the parent of 43.96B is 31.2%, a reasonable level. Total dividends paid amounted to ¥14.6B, and Free Cash Flow coverage of dividends is 4.01x, indicating ample cushion. Share buybacks of ¥1.8B were executed; combined returns (dividends + buybacks) totaled ¥16.4B, and Total Return Ratio was 37.3%, delivered within FCF capacity. Next fiscal year dividend guidance of ¥18.0 is conservative, reflecting a balanced policy considering earnings outlook and investment needs. With cash and deposits of ¥294.7B and stable OCF generation, dividend sustainability is high.
Business concentration risk: The Powertrain Business accounts for 53.3% of revenue and roughly 60% of Operating Income, making results sensitive to auto market conditions and electrification trends. Continued losses in the Frontier Business also expose portfolio vulnerability.
Working capital risk: Receivables turnover days 76, inventory turnover days 156, and Cash Conversion Cycle 196 indicate heavy working capital. Accumulation of receivables and inventory can pressure cash conversion. If high levels of raw materials and work-in-progress (WIP ¥143.6B, raw materials ¥110.5B) persist, liquidity strain could increase.
Financial liquidity risk: Short-term borrowings of ¥271.9B versus cash ¥294.7B yield Cash/Short-term Debt ratio 1.08x and short-term debt ratio 48.3%, indicating high short-term dependence. Rising interest rates or a deteriorating refinancing environment could materialize in higher interest expense and rollover risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.9% | 7.8% (4.6%–12.3%) | -1.9pt |
| Net Profit Margin | 2.8% | 5.2% (2.3%–8.2%) | -2.4pt |
Profitability trails the industry median by 1.9pt (Operating Margin) and 2.4pt (Net Profit Margin), placing the company in the lower tier within manufacturing.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.2% | 3.7% (-0.4%–9.3%) | +0.5pt |
Revenue growth outpaced the industry median by 0.5pt, maintaining mid-to-upper growth among manufacturers.
※ Source: Company compilation
High profitability in non-automotive segments: Marine & Energy (margin 20.6%) and Life (17.5%) have driven operating margin improvement and partially mitigated Powertrain concentration risk. Expansion of non-automotive areas will be key to continued margin enhancement.
Robust cash generation but working capital issues: OCF ¥137.2B and FCF ¥59.0B support dividend and investment funding from internal cash, but working capital buildup (CCC 196 days) slows cash conversion. Inventory reduction and improved receivables turnover could materially improve OCF/EBITDA and ROIC.
Financial stability with short-term debt reliance: Equity Ratio 43.7% and Interest Coverage 5.75x indicate broadly sound financial footing, but short-term debt ratio 48.3% and Cash/Short-term Debt 1.08x signify high short-term dependence, necessitating attention to refinancing and interest-rate sensitivity.
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 reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.