| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥9476.1B | ¥9167.1B | +3.4% |
| Operating Income | ¥514.4B | ¥448.7B | +14.6% |
| Ordinary Income | ¥587.9B | ¥491.5B | +19.6% |
| Net Income | ¥160.0B | ¥508.6B | +35.1% |
| ROE | 2.4% | 7.5% | - |
For the fiscal year ended March 2026, Revenue was ¥9476B (YoY +¥309B +3.4%), Operating Income was ¥514B (YoY +¥66B +14.6%), and Ordinary Income was ¥588B (YoY +¥96B +19.6%), indicating steady expansion of the core business. However, recognition of Special Losses of ¥273B (including impairment losses of ¥215B) compressed Net Income to ¥160B (from ¥509B a year earlier, ▼¥349B ▼68.6%). Gross margin improved to 11.8% (from 10.5% a year ago, +1.3pt), and Operating Margin expanded to 5.4% (from 4.9% a year ago, +0.5pt). By region, Japan and Asia drove profit growth, while the Americas saw depressed margins due to impairments. Cash flow remained solid with Operating Cash Flow (OCF) of ¥999B (+13.1%), enabling both share buybacks of ¥478B and dividends. While operating-level profitability is on an improving trend, the temporary compression of Net Income pushed the Payout Ratio above 100%.
[Revenue] Revenue of ¥9476B (YoY +3.4%) was driven by Japan ¥3893B (+4.8%), Asia ¥1636B (+5.0%), and the Americas ¥3290B (+4.2%). China declined to ¥605B (▲12.7%) reflecting local market slowdown, and Europe was slightly down at ¥354B (▲2.9%). By business, Automotive Lighting-related sales accounted for ¥8860B, representing 94% of total, with Electrical Equipment other than automotive lighting contributing ¥408B and Other ¥201B. External sales after intersegment eliminations comprised 38.8% Japan, 34.7% Americas, and 17.2% Asia. Foreign exchange and volume effects contributed to the top-line increase, supported by a favorable mix from higher-function products such as LED headlamps.
[Profitability] Cost of sales was ¥8361B, achieving a gross margin of 11.8% (improved +1.3pt from the prior-year 10.5% equivalent). Cost optimization and price pass-through absorbed SG&A increases to ¥600B (from ¥518B prior year, +15.9%), resulting in Operating Income of ¥514B (+14.6%) and an Operating Margin of 5.4% (from 4.9%, +0.5pt). Non-operating income of ¥92B (including interest income ¥46B, dividend income ¥17B, and foreign exchange gains ¥1B) bolstered profits, producing Ordinary Income of ¥588B (+19.6%), a double-digit increase. However, Special Losses of ¥273B (impairment losses ¥215B, loss on disposal of fixed assets ¥27B) compressed Pre-tax Income to ¥363B, and a high effective tax rate of 43.1% resulted in Net Income of ¥160B (from ¥509B prior year, ▼68.6%). Net income attributable to owners of the parent after deducting non-controlling interests of ¥41B was ¥165B (▼64.2%). In conclusion, while revenue and operating profitability increased, one-off special losses led to a substantial decline in final profits.
The Japan segment reported Revenue ¥3893B (+4.8%) and Operating Income ¥248B (+9.6%), yielding a margin of 6.4%. Domestic demand resilience and exports supported the company as the largest source of earnings. The Americas achieved Revenue ¥3290B (+4.2%) but Operating Income declined sharply to ¥35B (▲33.1%), with margin falling to 1.1%. The Americas recognized impairment losses of ¥123B this period, and deterioration in profitability and asset reviews weighed on results. China continued to struggle with Revenue ¥605B (▲12.7%) but returned to profit with Operating Income ¥5B (+148.3%), a margin of 0.9%, showing signs of recovery despite ¥72B of impairments. Asia recorded Revenue ¥1636B (+5.0%) and Operating Income ¥189B (+12.1%), maintaining a high margin of 11.6% due to demand expansion and efficient operations in Thailand, Indonesia, Taiwan, etc. Europe posted Revenue ¥354B (▲2.9%) but Operating Income recovered strongly to ¥8B (+201.0%), margin 2.3%, turning to profitability from a prior-year loss as restructuring effects materialized.
[Profitability] Operating Margin improved to 5.4% (from 4.9% prior year, +0.5pt), and Gross Margin rose to 11.8% (from 10.5% prior-year equivalent, +1.3pt), indicating improved earning power. ROE (shareholders’ equity basis) was 2.4% (from 8.7% prior year, ▼6.3pt), and ROA (Ordinary Income basis) improved to 6.5% (from 5.3%, +1.2pt). The decline in ROE was mainly due to compression of Net Income from Special Losses, while operating-level profitability improved. [Cash Quality] OCF of ¥999B is 6.2x Net Income and the OCF/EBITDA ratio is 1.03x, showing strong cash backing for earnings. FCF (OCF + Investing CF) was ¥891B, ample enough to cover dividends and buybacks. [Investment Efficiency] Capital expenditures of ¥546B were 1.19x depreciation expense of ¥457B, indicating continued moderate renewal and expansion. PPE turnover was 4.3x (Total Revenue / PPE), showing efficiency. [Financial Soundness] Equity Ratio was 74.6% (from 70.5% prior year, +4.1pt), Current Ratio 288% (from 315%, ▼27pt but still high), and Quick Ratio 238%, indicating robust liquidity. Effectively debt-free (short-term borrowings ¥19B, cash ¥2649B) with minimal reliance on interest-bearing debt; Debt/EBITDA ratio was 0.02x.
OCF rose to ¥999B (from ¥883B prior year, +13.1%), calculated from OCF subtotal ¥1091B less changes in working capital (inventory +¥27B, trade receivables ▲¥72B, trade payables ▲¥77B, total ▲¥122B) and income taxes paid ▲¥133B. Depreciation ¥457B and interest/dividend received ¥63B supported profits, and non-cash impairment of ¥215B was added back to cash flow. Investing Cash Flow was ▲¥108B, with capital expenditures ▲¥546B offset by gains on sales of investment securities ¥100B and drawing down deposits (net time deposit movement equivalent +¥390B). FCF improved substantially to ¥891B (from ¥473B prior year, +88.5%). Financing Cash Flow was ▲¥714B, primarily due to share buybacks ▲¥478B, dividends ▲¥157B (including parent and non-controlling interests), and repayment of short-term borrowings ▲¥40B. Cash and cash equivalents increased to ¥1253B (from ¥1013B at the beginning of the period, +24.0%), with foreign exchange effects contributing +¥64B. The accrual ratio for OCF was ▲9.2%, indicating healthy quality of cash flow and no evidence of working capital manipulation.
Despite Ordinary Income of ¥588B, Net Income was only ¥160B, mainly due to Special Losses of ¥273B (impairments ¥215B, loss on disposal of fixed assets ¥27B, business liquidation losses ¥16B) and a high effective tax rate of 43.1%. Impairments were concentrated in the Americas ¥123B and China ¥72B, and can be considered temporary measures to clean up unprofitable assets. Non-operating income of ¥92B was centered on interest income ¥46B and dividend income ¥17B, representing recurring income from financial asset management with high persistence. Comprehensive Income of ¥634B greatly exceeded Net Income of ¥206B (including non-controlling interests), with foreign currency translation adjustments +¥354B, valuation difference on available-for-sale securities +¥56B, and retirement benefit adjustments +¥19B bolstering equity. OCF of ¥999B is 6.2x Net Income and the accrual ratio of ▲9.2% is favorable, indicating strong cash backing for profits. The low Net Income margin this period stems from Special Losses; considering improving operating profitability and robust OCF, the underlying quality of earnings is judged to be fundamentally sound.
For FY2027 ending March 2027, guidance is Revenue ¥9330B (YoY ▲1.5%), Operating Income ¥600B (YoY +16.6%), Ordinary Income ¥655B (YoY +11.4%), and Net Income ¥395B (YoY +138.8%). Although Revenue is expected to decline, reductions in depreciation burden post-impairment, fixed cost compression, and a better mix toward high-margin segments (Asia) are expected to expand Operating Margin to 6.4% (from 5.4% this period, +1.0pt). The significant recovery in Net Income assumes the absence of Special Losses. Assumed FX rates are USD/JPY = 150.0 and CNY/JPY = 22.0. Compared with this period’s results, first-half achievement rate for Revenue is 101.5% and the full-year shortfall of ▲1.5% reflects a conservative outlook for the second half. Progress toward Operating Income target is 85.7% (¥514B/¥600B); if the current YoY growth rate of +14.6% persists, there is upside potential. Key focus points are the sustainability of restructuring effects and the pace of profitability recovery in the Americas.
Annual dividend is ¥56 per share (interim ¥28, year-end ¥28), and the Payout Ratio based on reported figures is approximately 104%, temporarily high due to one-off impairment-driven compression of Net Income. On an OCF basis, total dividends of ¥157B represent 17.6% of FCF ¥891B, a sustainable level. Share buybacks of ¥478B were executed, bringing total shareholder returns to approximately ¥635B. While Total Return Ratio appears high relative to Net Income this period, FCF coverage is 5.17x (FCF ¥891B / total returns ¥635B), providing comfortable headroom, and the effectively debt-free balance sheet and ample liquidity (cash ¥2649B) support the sustainability of shareholder returns. Next fiscal year’s forecasted Net Income recovery to ¥395B and disclosed interim dividend ¥28 (only interim disclosed) imply a normalized Payout Ratio. Treasury stock has increased to ▲10.7% of Total Assets; any further repurchases will need to be evaluated against capital efficiency.
Risk of prolonged profitability deterioration in the Americas and China and delays in structural reforms: Americas Operating Margin 1.1% (prior 1.7%) and China 0.9% remain low, and impairments totaling ¥195B were recorded in these regions this period. If restructuring progress stalls, additional asset write-downs or higher fixed costs could stall margin recovery. While guidance assumes Operating Income +16.6%, slower improvement in the Americas could make this target difficult to achieve.
Risk of rising raw material and logistics costs and delayed price pass-through: Although Gross Margin improved to 11.8%, SG&A rose +15.9% YoY, outperforming Revenue growth of +3.4%. Continued increases in labor, logistics, and R&D costs could reduce operating leverage and undermine next-year margin expansion. Negotiating power for price revision and cost absorption through in-house production and automation will be crucial.
FX volatility and deviation from assumed exchange rates: Next-year guidance assumes USD/JPY = 150.0 and CNY/JPY = 22.0. This period, foreign currency translation adjustments added +¥354B to OCI, but a stronger yen would reverse this and pressure equity. Approximately 65% of Revenue is generated overseas, so yen-converted figures are sensitive to exchange rates; limited hedging effectiveness would increase earnings volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.4% | 7.8% (4.6%–12.3%) | -2.3pt |
| Net Margin | 1.7% | 5.2% (2.3%–8.2%) | -3.5pt |
Operating Margin is 2.3pt below the industry median, and Net Margin is 3.5pt below. The one-off impairment of ¥273B depressed Net Margin this period, but even operating-level margin of 5.4% falls short of the median 7.8%, indicating structural room for profitability improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.4% | 3.7% (-0.4%–9.3%) | -0.3pt |
Revenue growth is roughly in line with the median, representing a standard pace within the industry. High growth in Asia offset weakness in the Americas and China.
※ Source: Company compilation
Realization of restructuring effects and scope for Operating Margin improvement: The company recorded impairments of ¥215B this period, cleaning up unprofitable assets in the Americas and China. Guidance anticipates Operating Margin expansion to 6.4% (+1.0pt), supported by fixed cost compression and lower depreciation expense. The speed of profitability recovery in the Americas and the sustainability of high-margin mix in Asia are key to achieving guidance.
Strong cash generation and capacity for shareholder returns: FCF ¥891B, OCF/Net Income 6.2x, and an effectively debt-free balance sheet (cash ¥2649B, borrowings ¥19B) underpin shareholder returns. Despite high total returns of approximately ¥635B this period, FCF coverage of 5.17x provides ample cushion. Net Income recovery next year should normalize the Payout Ratio.
Earnings normalization after one-off factors and potential industry ranking improvement: Net Margin of 1.7% is depressed by impairments, but improvements in gross margin (+1.3pt) and solid OCF indicate healthy earnings quality. If Special Losses dissipate and Net Income recovers to ¥395B next year, Net Margin could improve to around 4.2%, narrowing the gap with the industry median 5.2% and reducing valuation discrepancy.
This report is an earnings analysis document 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 publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor if necessary.