| Indicator | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥2408.8B | ¥2197.2B | +9.6% |
| Operating Income | ¥165.6B | ¥119.1B | +39.1% |
| Ordinary Income | ¥184.8B | ¥126.0B | +46.6% |
| Net Income | ¥162.6B | ¥110.8B | +46.7% |
| ROE | 2.4% | 1.6% | - |
The Company reported higher revenue and earnings for the quarter, with the operating margin rising significantly, primarily due to revenue growth and improved profitability in the Asian and Americas businesses. Revenue was ¥2,408.8B (+9.6% YoY), Operating Income was ¥165.6B (+39.1%), Ordinary Income was ¥184.8B (+46.6%), and Net Income attributable to owners of the parent was ¥146.6B (+44.8%). The Operating Income margin improved to 6.9%, from 5.4% in the previous year, an improvement of approximately 1.5pt, driven by the higher margin in the Asian business (Operating Income margin of 14.2%) and a lower SG&A ratio. The growth rates for Ordinary Income and Net Income also included temporary factors such as the elimination of foreign exchange losses recorded in the previous year and a ¥26.3B gain on the sale of investment securities.
【Revenue】Revenue was ¥2,408.8B (+9.6% YoY), with growth in Asia (+21.6%) and the Americas (+17.7%) driving the increase by region. Japan maintained revenue growth of +7.0%, while China declined by -29.8% and Europe declined by -13.5%, resulting in divergent performance across regions. By business, the core automotive lighting-related business steadily expanded to ¥2,288.9B (+9.8%), accounting for approximately 95% of total Company revenue.
【Profit and Loss】Operating Income was ¥165.6B (+39.1%), and the Operating Income margin improved to 6.9%, from 5.4% in the previous year. The primary factors were an improvement in the gross margin (12.8%, compared with 12.2% in the previous year) and a decline in the SG&A ratio (5.9%, compared with 6.8% in the previous year). Ordinary Income increased by +46.6% to ¥184.8B, exceeding the growth in Operating Income, due to a reduction in non-operating expenses, including foreign exchange losses recorded in the previous year (¥18.1B in the previous year → ¥3.2B in the current period); this includes temporary factors. The Company recorded extraordinary gains of ¥26.7B (including a ¥26.3B gain on the sale of investment securities, a temporary factor), resulting in Profit Before Tax of ¥208.8B (+63.9%). Net Income attributable to owners of the parent was ¥146.6B (+44.8%), while consolidated Net Income including non-controlling interests was ¥162.6B (+46.7%). The Company therefore reported higher revenue and earnings.
By region, Asia and the Americas drove higher revenue and earnings, while China fell into the red and Europe remained around break-even.
By business, the core automotive lighting-related business drove overall performance, with revenue of ¥2,288.9B (+9.8%) and profit of ¥189.4B (+23.4%). The sensor business (LiDAR) declined to revenue of ¥7.9B (¥4.2B in the previous year), but its Operating Loss narrowed to ¥13.4B (¥20.0B in the previous year).
【Profitability】The Operating Income margin was 6.9% (5.4% in the previous year), an improvement of approximately 145bp, while the Net Income margin (attributable to owners of the parent) also improved to 6.1% (4.6% in the previous year), an improvement of approximately 147bp. The gross margin improved to 12.8% (12.2% in the previous year), while the SG&A ratio declined to 5.9% (6.8% in the previous year), indicating that improvements in the cost structure contributed to the higher margins. Basic EPS was ¥55.77 (¥35.72 in the previous year, +56.1%); in addition to earnings growth, the decrease in the number of shares outstanding resulting from share repurchases contributed to the increase.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥295.3B, equivalent to 1.8x consolidated Net Income of ¥162.6B and 2.0x Net Income attributable to owners of the parent of ¥146.6B, indicating strong cash backing for earnings.【Investment Efficiency】ROE was 2.4% (Q1, non-annualized), remaining stable as a comparison of quarterly earnings with equity attributable to owners of the parent. Total asset turnover was approximately 0.26x on a quarterly basis, with no significant change.【Financial Soundness】The Equity Ratio was 74.5% (74.6% in the previous year), remaining virtually flat and at a high level. Cash and deposits increased to ¥2,775.0B (¥2,649.2B in the previous year). Interest-bearing debt was minimal, consisting only of ¥16.2B in short-term borrowings, indicating a low level of financial leverage.
Operating Cash Flow was ¥295.3B, down -12.5% YoY despite higher earnings. The primary factors were an increase in income taxes paid to ¥92.3B (¥48.3B in the previous year) and a decrease in notes and accounts payable (-¥66.8B), while a decrease in notes and accounts receivable (+¥170.2B) made a positive contribution. Investing Cash Flow was -¥265.0B. Although capital expenditures were contained at ¥123.0B (down from ¥165.6B in the previous year), Investing Cash Flow reversed sharply from +¥296.0B in the previous year due to excess placements of time deposits (whereas withdrawals exceeded placements in the previous year). Financing Cash Flow was -¥137.4B and included share repurchases of ¥22.5B and dividend payments. Free Cash Flow (Operating Cash Flow + Investing Cash Flow) remained positive at +¥30.3B, while the Company maintained cash and deposits of ¥2,775.0B despite making investments and returning capital to shareholders.
The reason Ordinary Income growth (+46.6%) exceeded Operating Income growth (+39.1%) was the substantial decrease in non-operating expenses, including foreign exchange losses recorded in the previous year, from ¥18.1B to ¥3.2B. Current-period non-operating income remained stable, centered on dividend income of ¥7.8B. Extraordinary gains of ¥26.7B (including a ¥26.3B gain on the sale of investment securities) were non-recurring; excluding these gains, the level equivalent to Profit Before Tax would have remained at Ordinary Income of ¥184.8B. Comprehensive Income was ¥197.1B, exceeding Net Income attributable to owners of the parent of ¥146.6B. This difference was primarily attributable to foreign currency translation adjustments of +¥75.7B (an increase in the net assets of overseas subsidiaries due to the weaker yen), partially offset by valuation differences on available-for-sale securities of -¥37.1B. The fact that Operating Cash Flow was 1.8x consolidated Net Income of ¥162.6B also represents an appropriate level from the perspective of cash backing for earnings.
The Q1 progress rates against the full-year Company plan were 25.8% for Revenue, 27.6% for Operating Income, and 28.2% for Ordinary Income, indicating progress ahead of the simple quarterly allocation of 25%. The full-year plan assumes exchange rates of USD/JPY150 yen and CNY/JPY22 yen. While Revenue is planned to decline by -1.5% YoY, Operating Income is expected to increase by +16.6% and Ordinary Income by +11.4%. No revisions have been made to the earnings forecast as of the current quarter. The full-year plan calls for higher earnings despite lower revenue, and progress in correcting profitability in the China and Europe businesses, as well as the foreign exchange assumptions for the second half, will be key areas of focus for achieving the plan.
The full-year dividend forecast is ¥28.00 per share, unchanged from the previous year’s actual dividend of ¥28. The Payout Ratio against forecast EPS of ¥150.53 is approximately 18.6% (¥28/¥150.53), and a similar Payout Ratio is derived from total dividends of approximately ¥73.5B based on the full-year Net Income forecast of ¥395.0B. During Q1, the Company repurchased ¥22.5B of its own shares (¥27.4B in the same period of the previous year), funded within quarterly Free Cash Flow of ¥30.3B. Given the financial base of cash and deposits of ¥2,775.0B and an Equity Ratio of 74.5%, there is little concern regarding the sustainability of combined dividends and share repurchases.
Deterioration in the profitability of the China business: Revenue -29.8% and an Operating Loss of ¥1.4B (a shift into the red from a profit of ¥6.6B in the previous year, with a margin of -1.1%). Demand adjustments in the Chinese market are affecting the regional mix.
Contraction and low profitability in the Europe business: Revenue declined by -13.5%, while Operating Income remained nearly zero (¥0.04B, with a margin of 0.0%), limiting its contribution to earnings.
Variability in cash generation due to working capital fluctuations: Operating Cash Flow was ¥295.3B, down -12.5% YoY, with higher income tax payments (-¥92.3B, compared with -¥48.3B in the previous year) and a decrease in notes and accounts payable (-¥66.8B) acting as downward pressures. Inventories continued to increase, rising +4.1% YoY to ¥1,006.1B, and inventory levels could affect cash-generation capacity.
Profitability and Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income margin | 6.9% | 8.8% (4.4%–14.3%) | -2.0pt |
| Net Income margin | 6.7% | 7.3% (3.3%–10.6%) | -0.5pt |
Both the Operating Income margin and Net Income margin are slightly below the industry median.
Growth and Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 9.6% | 6.6% (-0.3%–14.8%) | +3.0pt |
The Revenue growth rate is above the industry median.
※Source: Compiled by the Company
The improvement in the Operating Income margin to 6.9% (5.4% in the previous year) indicates a structural improvement in profitability driven by higher margins in the Asian business (Operating Income margin of 14.2%) and a decline in the SG&A ratio (5.9%, compared with 6.8% in the previous year).
The primary reason Ordinary Income growth (+46.6%) exceeded Operating Income growth (+39.1%) was the elimination of foreign exchange losses recorded in the previous year. Extraordinary gains of ¥26.7B (including a gain on the sale of investment securities) also increased Profit Before Tax. Full-year progress rates were 25.8% for Revenue, 27.6% for Operating Income, and 28.2% for Ordinary Income, indicating that progress was ahead of plan as of the quarter.
The change in the depreciation method for buildings and structures (declining-balance method → straight-line method), which increased Japan segment profit by ¥1.5B, as well as the shift of China into the red and Europe toward break-even, are structural points of focus identifiable from the financial results data for future profitability improvement.
This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥2,351 |
| base | ¥2,393 |
| bull | ¥2,426 |
| Calculation Assumption | Value |
|---|---|
| Book value per share (BPS) | ¥2,598 |
| Adjusted forecast EPS | ¥165.6 |
| Cost of equity r | 9.15% (10-year JGB 2.65% + equity risk premium 6.00% + size premium 0.50%) |
| Residual income persistence coefficient ω / explicit forecast period | 0.62 / 5 years |
| Assumed Payout Ratio | 18.6% |
| Forecast EPS confidence adjustment | ×1.100 (based on progress ahead of the full-year forecast) |
| implied PBR / PER | 0.92x / 14.5x |
Sensitivity: ¥2,325–¥2,464 at a ±1% change in the cost of equity, and ¥2,386–¥2,398 at a ±0.1 change in ω.
Notes:
(Model: Residual income model / Interest rate reference month: 2026-06 / This value is not a forecast or guarantee of future share prices)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings-release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional where necessary.
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These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.