| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2021.7B | ¥1898.8B | +6.5% |
| Operating Income / Operating Profit | ¥135.1B | ¥96.5B | +40.0% |
| Ordinary Income | ¥140.3B | ¥102.8B | +36.5% |
| Net Income / Net Profit | ¥104.1B | ¥74.1B | +40.5% |
| ROE | 7.7% | 5.8% | - |
FY2026 results delivered Revenue ¥2021.7B (YoY +¥122.8B +6.5%), Operating Income ¥135.1B (YoY +¥38.6B +40.0%), Ordinary Income ¥140.3B (YoY +¥37.5B +36.5%), and Net Income ¥104.1B (YoY +¥30.0B +40.5%), achieving higher sales and substantially higher profits. Operating margin improved to 6.7% (up +1.6pt from 5.1% prior year) and gross margin to 15.0% (up +1.4pt from 13.6%), indicating marked profitability improvement. Operating leverage was significant: Operating Income growth +40.0% versus Revenue growth +6.5%. Margin improvements in the Automotive Business and a return to profitability in the Construction Machinery Business boosted consolidated profit, while SG&A ratio declined to 8.3% (down -0.2pt from 8.5%) reflecting cost control.
【Revenue】 Revenue expanded to ¥2021.7B (YoY +6.5%). By segment, Automotive Business grew to ¥1670.8B (YoY +5.4%, sales mix 82.6%) as the core business performed well. Construction Machinery Business achieved ¥351.3B (YoY +14.7%, mix 17.4%) realizing double-digit growth as demand recovered. Other businesses recorded ¥29.4B (YoY -0.6%) and were essentially flat. Top-line growth was likely supported by higher automobile production volumes, recovery in construction machinery demand, and an improved product mix.
【Profitability】 Gross profit increased by ¥54.2B to ¥303.4B (gross margin 15.0%, up +1.4pt). Improvement in cost of sales is attributed to the peaking of raw material costs, improved production efficiency, and favorable product mix. SG&A was ¥168.3B (8.3% of sales), up ¥7.2B YoY, but growth was controlled, resulting in a -0.2pt decline in SG&A ratio. Operating Income rose to ¥135.1B (Operating margin 6.7%), a large YoY increase of +40.0%, with margin up +1.6pt. By segment, Automotive Business Operating Income was ¥160.5B (margin 9.6%, YoY +21.9%), and Construction Machinery Business returned to profit at ¥9.4B (margin 2.7%, YoY +327.7%), expanding the profit base. Non-operating income totaled ¥9.7B (including dividend income ¥3.5B and foreign exchange gains ¥2.7B), while non-operating expenses were ¥4.5B (mainly interest expense ¥3.7B), resulting in Ordinary Income ¥140.3B (YoY +36.5%). Extraordinary gains were ¥4.8B (gain on sale of investment securities ¥4.5B) and extraordinary losses were ¥10.9B (mainly impairment/loss on disposal of fixed assets ¥6.9B), yielding Profit Before Tax ¥134.2B. After corporate taxes ¥30.1B and non-controlling interests ¥19.4B, Net Income attributable to owners of the parent was ¥104.1B (YoY +40.5%, Net margin 5.1%). Conclusion: the company achieved revenue growth with margin expansion.
Automotive Business: Revenue ¥1670.8B (YoY +5.4%), Operating Income ¥160.5B (YoY +21.9%), margin 9.6%. Increased automobile production and improved product mix drove higher top-line and profits, with margin improving approximately 1.8pt YoY. Construction Machinery Business: Revenue ¥351.3B (YoY +14.7%), Operating Income ¥9.4B (turned from a ¥-4.2B loss to profit, margin 2.7%) with substantial improvement due to recovery in construction machinery demand and cost reductions. Other Business (e.g., automated parking systems) Revenue ¥29.4B (YoY -0.6%), Operating Income ¥1.9B (YoY +18.1%, margin 6.4%) maintained profitability despite small scale. Aggregate segment Operating Income before corporate allocations was ¥171.8B; after deducting head office SG&A ¥36.7B, consolidated Operating Income was ¥135.1B.
【Profitability】Operating margin 6.7% (up +1.6pt from 5.1% prior year), Net margin 5.1% (up +1.2pt from 3.9%), showing clear margin expansion. ROE was 7.7% (improved from approximately 5.5% prior year), supported by Net margin improvement and a slight increase in total asset turnover to 0.98x (from 0.96x). 【Cash Quality】Operating Cash Flow / Net Income was 2.15x, indicating high cash backing of profits; Operating Cash Flow (OCF) was ¥223.4B (approx. 2.1x Net Income ¥104.1B). 【Investment Efficiency】Capital expenditures amounted to ¥177.8B (8.8% of sales), exceeding depreciation of ¥125.0B, with Investment/Depreciation ratio 1.42x, indicating continued proactive investment. Construction in progress was ¥89.6B (down -31.0% from ¥129.9B prior year), reflecting progression of projects into operation and expected contribution to earnings in subsequent periods. 【Financial Soundness】Equity Ratio was 65.0% (prior year 64.5%), maintaining a high level. Interest-bearing debt was ¥696B (short-term borrowings ¥60.3B, long-term borrowings ¥9.3B), significantly reduced from prior year. Debt/Equity ratio was 0.54x, indicating low leverage, and Interest Coverage (Operating Income / Interest Expense) was 36.8x, showing minimal interest burden. Current ratio was 163.2%, quick ratio 159.9%, indicating ample short-term liquidity. Cash and deposits were ¥222.1B, 3.7x short-term borrowings.
Operating Cash Flow was ¥223.4B (YoY +20.1%), robust. Operating CF subtotal was ¥245.5B, with net -¥22.1B from changes in working capital. Breakdown: increase in trade receivables -¥72.0B (impacted by sales growth and lengthening collection terms), increase in trade payables +¥26.2B, decrease in inventories +¥14.8B, increase in contract liabilities +¥8.8B; the increase in receivables was the main cash absorption factor. After corporate taxes paid -¥23.7B, OCF was ¥223.4B; considering depreciation ¥125.0B, OCF/EBITDA ratio was 0.86x, indicating room to improve working capital efficiency. Investing Cash Flow was -¥172.3B, mainly due to capital expenditures -¥177.8B (investment to expand buildings and machinery), partially offset by proceeds from sale of investment securities +¥8.2B. Free Cash Flow was ¥51.1B, an improvement YoY. Financing Cash Flow was -¥94.2B, including dividends paid -¥34.8B, share buybacks -¥15.0B, and net repayment of borrowings -¥15.6B (short-term borrowings -¥15.6B, net long-term borrowings reduction -¥1.7B), executing both de-leveraging and shareholder returns. Ending cash was ¥221.8B (from ¥262.5B at beginning, down -¥40.7B), but liquidity remains ample.
Operating Income ¥135.1B plus non-operating income ¥9.7B (mainly foreign exchange gains ¥2.7B and dividend income ¥3.5B) resulted in Ordinary Income ¥140.3B. The majority of non-operating income is recurring dividend income and foreign exchange gains, with limited one-off nature. Extraordinary gains ¥4.8B (gain on sale of investment securities ¥4.5B) and extraordinary losses ¥10.9B (impairment/disposal of fixed assets ¥6.9B) yielded net extraordinary loss -¥6.1B, reflecting one-time costs tied to fixed-asset renewal investments. Comprehensive income was ¥135.4B, exceeding Net Income ¥104.1B by ¥31.3B, comprised of foreign currency translation adjustments +¥17.2B, valuation difference on available-for-sale securities +¥3.4B, and remeasurements of defined benefit plans +¥10.7B. Comprehensive Income / Net Income ratio was 1.30x, with FX valuation gains and market value increases in pension assets driving other comprehensive income. Comparing OCF to Net Income, OCF ¥223.4B / Net Income ¥104.1B = 2.15x, indicating high-quality cash backing of profits and limited accrual concerns. Days Sales Outstanding (DSO) extended slightly to 81 days, indicating a lengthening collection cycle and room to improve working capital efficiency, but overall earnings quality is assessed as robust.
The company plan for FY2027 (year ending March 2027) forecasts Revenue ¥1900.0B (YoY -6.0%), Operating Income ¥114.0B (YoY -15.6%), Ordinary Income ¥115.0B (YoY -18.0%), and Net Income ¥70.0B (EPS forecast ¥71.70, YoY -32.8%), projecting declines in sales and profits. Revenue progression against plan is already 2021.7B / 1900.0B = 106.4%, surpassing the full-year plan, suggesting the forecast is based on conservative assumptions. Assumptions likely include a pause in construction machinery demand recovery, an adjustment phase in automobile production, and risks of renewed increases in raw material and energy costs. Planned operating margin is 6.0% (down -0.7pt from actual 6.7%), implying assumed deterioration in gross margin and reduced fixed-cost absorption. Dividend guidance is ¥22 per annum (payout ratio approximately 31%), a cut from the actual ¥37, but there remains room to maintain dividends even under conservative profit assumptions. Given that full-year results already exceed plan, there is significant upside potential for upward revisions and actual outcomes may beat plan.
Annual dividend was ¥37 (interim ¥16, year-end ¥21), a large increase from prior year ¥13, with a payout ratio of 42.8% (prior year approximately 21.3%). Against Net Income attributable to owners of the parent ¥104.1B, total dividends amounted to approximately ¥36.3B, which were well covered by Operating Cash Flow ¥223.4B and Free Cash Flow ¥51.1B. Share buybacks totaled ¥15.0B, making total return approximately ¥51.3B, roughly in line with Free Cash Flow ¥51.1B, implying Total Return Ratio on an FCF basis of about 100%. Dividend coverage was OCF/Dividends 6.2x and FCF/Dividends 1.4x, levels consistent with sustainability. The FY2027 dividend forecast ¥22 represents a reduction versus actual, but under the conservative profit plan (Net Income ¥70.0B), the payout ratio would be about 31%, leaving room for increases if actual results beat plan. Given the very strong financial position and robust cash generation, downside risk to dividends is assessed as limited.
Customer / Product Concentration Risk: The Automotive Business accounts for 82.6% of sales, leaving performance highly exposed to major OEM customers' production plans and model mix changes. Approximately 119% of Operating Income (segment profit ¥160.5B / consolidated Operating Income ¥135.1B) was generated by this segment, embedding the risk that automotive market downturns or production cuts by key customers would directly hit earnings.
Working Capital Efficiency Issues: DSO is 81 days, extended from prior year, and trade receivables rose to ¥450.3B (up +25.0% from ¥360.3B), growing much faster than revenue (YoY +6.5%). Work-in-process ¥102.5B is 67.6% of inventories ¥151.5B, indicating high proportion and suggesting production flow stagnation or room to improve setup efficiency. Delays in working capital improvement constrained OCF/EBITDA to 0.86x and limit Free Cash Flow upside.
Upside Risk in Raw Material & Energy Costs: With a relatively thin gross margin of 15.0%, the company is sensitive to renewed price increases in steel, aluminum, and energy costs. The company plan's profit downgrade likely embeds such cost increases, but if price pass-through is delayed, margins face downside risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.7% | 7.8% (4.6%–12.3%) | -1.1pt |
| Net Margin | 5.1% | 5.2% (2.3%–8.2%) | -0.0pt |
Operating margin is 1.1pt below industry median but shows catch-up trend with YoY +1.6pt improvement. Net margin is in line with the median; excluding extraordinary items, profitability sits in the industry-standard range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.5% | 3.7% (-0.4%–9.3%) | +2.8pt |
Revenue growth outperformed the industry median by +2.8pt, positioning the company near the upper quartile. Double-digit growth in Construction Machinery and stable growth in Automotive drove the performance.
※Source: Company aggregation
The company achieved both Revenue growth +6.5% and Operating margin improvement +1.6pt, resulting in Operating Income growth of +40.0% YoY. Improvement to a 9.6% margin in Automotive Business and the return to profitability in Construction Machinery Business indicate broadening profit base. Gross margin 15.0% (up +1.4pt) reflects cost improvements and favorable product mix. OCF ¥223.4B is about 2.1x Net Income and high quality; Free Cash Flow ¥51.1B nearly covers dividend and buybacks totaling approx. ¥51.3B, demonstrating discipline in shareholder returns and de-leveraging.
Financial soundness is extremely robust: Equity Ratio 65.0%, Debt/Equity 0.54x, Interest Coverage 36.8x, indicating low leverage and minimal interest burden. Current ratio 163.2% and Cash/short-term borrowings 3.7x indicate ample short-term liquidity. CapEx ¥177.8B (8.8% of sales, Investment/Depreciation 1.42x) was deployed proactively; the decline in construction in progress (-31.0%) suggests projects progressing to operation and expected support for margins from increased depreciation and utilization in FY2027 onward.
However, the company plan is conservative (Revenue -6.0%, Operating Income -15.6%) despite full-year results already exceeding plan. Elevated trade receivables (+25.0%) and DSO 81 days, along with high WIP ratio 67.6%, indicate room to improve working capital efficiency; OCF/EBITDA 0.86x signals not all profits have converted to cash. Shortening DSO and reducing WIP could further boost Free Cash Flow, and the dividend forecast ¥22 (payout ~31%) allows for potential increases if results beat plan. Concentration in Automotive (82.6% of sales) and relatively thin gross margin 15.0% are downside risk factors in the event of sudden demand shocks or a resurgence in raw material costs; progress in working capital efficiency and cost control will be key to medium-term earnings strength.
This report was auto-generated by AI 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 public financial statements. Investment decisions are your responsibility; consult a professional as needed.