| Indicator | Current Period | Prior Year Comparable | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3486.0B | ¥3493.5B | -0.2% |
| Operating Income | ¥239.1B | ¥209.3B | +14.2% |
| Ordinary Income | ¥239.4B | ¥197.9B | +21.0% |
| Net Income | ¥100.5B | ¥154.3B | -34.9% |
| ROE | 7.5% | 13.9% | - |
For the fiscal year ended March 2026, Revenue was ¥3,486.0B (YoY -¥7.5B -0.2%), Operating Income was ¥239.1B (YoY +¥29.8B +14.2%), Ordinary Income was ¥239.4B (YoY +¥41.5B +21.0%), and Net Income was ¥100.5B (YoY -¥53.8B -34.9%). Although Revenue slightly declined, SG&A cost control and an improved segment mix raised the Operating Margin from 5.99% to 6.86% (+0.87pt). At the ordinary income level, a ¥8.0B contribution from equity-method investment income supported double-digit growth. Net Income declined sharply YoY mainly due to Special Losses totaling ¥69.9B, including impairment losses of ¥56.8B, resulting in a -34.9% decrease. Against the full-year guidance (Revenue ¥3,400B, Operating Income ¥190B), results were substantially above plan with Revenue at 102.5% and Operating Income at 125.9%, indicating underlying earnings power exceeded the conservative company forecast.
[Revenue] Revenue was ¥3,486.0B (-0.2%), a marginal decline. The Transportation Equipment-related Business reported ¥3,205.7B (-0.9%) and accounted for 91.9% of consolidated Revenue; core automotive parts demand remained around a flat level. The Information Services Business grew to ¥257.4B (+14.4%), maintaining double-digit growth and increasing its share to 7.4% of consolidated Revenue. This shift in segment composition, with high-growth Information Services, contributed to consolidated margin improvement. Other businesses were ¥52.3B (-15.1%), a limited 1.5% share. Geographic breakdown is not disclosed, but there were Foreign Exchange Gains of ¥1.7B in non-operating income and Foreign Exchange Losses of ¥12.2B in non-operating expenses, implying a net FX headwind of about ¥10B.
[Profitability] Cost of Sales was ¥2,916.2B, producing Gross Profit of ¥569.8B and a low Gross Margin of 16.3%. SG&A was controlled at ¥330.7B (prior year ¥333.6B, -0.8%), delivering Operating Income of ¥239.1B (+14.2%) and an Operating Margin of 6.86%. Non-operating income was ¥47.8B (interest income ¥18.5B, equity-method investment income ¥8.0B, dividend income ¥5.3B, etc.) and non-operating expenses were ¥47.4B (interest expense ¥27.6B, FX losses ¥12.2B, etc.), largely offsetting each other and lifting Ordinary Income to ¥239.4B (+21.0%). Extraordinary gains were ¥7.5B (gain on sale of marketable securities ¥5.8B, etc.), and Extraordinary losses totaled ¥69.9B (impairment losses ¥56.8B, business restructuring costs ¥5.3B, etc.), compressing Profit Before Tax to ¥177.1B. Income taxes were ¥65.5B (effective tax rate 37.0%), and non-controlling interests were -¥6.6B, resulting in Net Income of ¥100.5B (-34.9%). Comprehensive income was ¥240.9B, with foreign currency translation adjustments of ¥85.4B and retirement benefit adjustments of ¥38.9B contributing to capital improvement. By segment, Transportation Equipment-related Operating Income was ¥200.8B (+10.6%, margin 6.3%), Information Services was ¥30.0B (+38.4%, margin 11.6%), where high profitability in Information Services pushed up consolidated margins. In summary: revenue down with operating/ordinary profit up; large one-off losses caused a steep decline in final Net Income.
The Transportation Equipment-related Business reported Revenue of ¥3,205.7B (-0.9%) and Operating Income of ¥200.8B (+10.6%), a 6.3% operating margin. Core products such as wiper systems, starter motors, and fan motors saw volumes broadly flat, while cost improvements and price pass-through stabilized margin improvements. The Information Services Business posted Revenue of ¥257.4B (+14.4%) and Operating Income of ¥30.0B (+38.4%), an 11.6% operating margin, led by steady system integration and software development demand, driving consolidated profit growth. Other businesses recorded Revenue of ¥52.3B (-15.1%) and Operating Income of ¥8.1B, a limited contribution. By segment balance sheet, Transportation Equipment-related assets were ¥3,182.6B with liabilities of ¥2,028.7B and an asset turnover of 1.01x; Information Services had assets of ¥279.1B and liabilities of ¥115.2B, showing favorable asset efficiency.
[Profitability] Operating Margin of 6.9% improved by +0.91pt from 5.99% last year but remains -0.9pt below the industry median of 7.8%. Net Margin of 2.9% deteriorated -1.5pt from 4.4% last year and is -2.3pt below the industry median of 5.2%, pressured by one-off losses and high interest expense. ROE 7.5% (estimated from prior year data, Net Income / average shareholders' equity) edged down with an increase in the equity ratio, though profitability on a comprehensive income basis improved. Gross Margin at 16.3% is low, indicating substantial scope for cost improvements in manufacturing.
[Cash Quality] Operating Cash Flow / Net Income = 2.85x (OCF ¥286.1B / Net Income ¥100.5B), showing solid cash backing for earnings. The accrual ratio (Net Income - Operating CF) / Total Assets is -5.3%, indicating a cash-generative earnings profile. Working capital changes included Inventory increase -¥34.1B and Accounts Receivable increase -¥4.8B, totaling about ¥39B of cash outflow, which was absorbed within Operating CF.
[Investment Efficiency] Capex was ¥114.0B / Depreciation ¥134.6B = 0.85x, indicating somewhat restrained replacement investment. Construction in progress was ¥93.3B (prior year ¥63.7B, +46.5%), showing progress in efficiency-related investment. ROA (on Ordinary Income basis) was 6.9%, and Total Asset Turnover was 1.00x, indicating standard asset efficiency.
[Financial Soundness] Equity Ratio improved to 38.3% (prior year 33.3%, +5.0pt), strengthening the capital base. Current Ratio 173.7% and Quick Ratio 165.7% indicate solid short-term liquidity. Interest-bearing debt (short-term borrowings ¥730B + long-term borrowings ¥646B + bonds etc.) totals approximately ¥1,387B versus cash and deposits of ¥1,035B, yielding Net Interest-bearing Debt of ¥352B. Debt/EBITDA is 3.7x (interest-bearing debt / EBITDA ≈ ¥377B), indicating moderate leverage. Interest Coverage (Operating Income / Interest Expense) is 8.7x, so interest burden is acceptable, though interest expense of ¥27.6B consumes 11.5% of EBIT ¥239B.
Operating CF was ¥286.1B (prior year ¥380.2B, -24.8%). Starting from Profit Before Tax ¥177.1B, add-backs included Depreciation ¥134.6B and non-cash impairment losses ¥56.8B, with working capital outflows Inventory -¥34.1B and Accounts Receivable -¥4.8B and tax payments -¥53.0B. From an operating CF subtotal of ¥339.6B, working capital movements and taxes produced a net Operating CF of ¥286B. Investing CF was -¥116.8B, consisting of Capex -¥114.0B, proceeds from subsidiary sales ¥2.0B, and proceeds from sales of tangible fixed assets ¥5.9B, etc. Free CF was ¥169.3B, which funded Dividend Payments ¥10.4B and Financial CF outflows of -¥172.9B driven by debt repayments, resulting in an increase in cash of ¥34.9B. In Financial CF, proceeds from long-term borrowings were ¥366.4B vs. repayments -¥501.3B, net short-term borrowings -¥0.5B, and lease repayments -¥24.9B, yielding a net outflow of -¥172.9B. Operating CF / EBITDA of 0.76x is somewhat low, suggesting scope to improve working capital efficiency. Cash and deposits of ¥1,035B exceed short-term borrowings of ¥730B, leaving substantial liquidity.
Operating Income ¥239.1B and Ordinary Income ¥239.4B are nearly identical, indicating neutral non-operating net impact. Of non-operating income ¥47.8B, interest income ¥18.5B reflects returns on cash balances and is recurring; equity-method income ¥8.0B and dividend income ¥5.3B are also ongoing revenue sources. Of non-operating expenses ¥47.4B, interest expense ¥27.6B is recurring due to interest-bearing debt, while FX losses ¥12.2B are market-driven and more transitory. Extraordinary items included impairment losses ¥56.8B and business restructuring costs ¥5.3B, totaling ¥69.9B, which significantly reduced Profit Before Tax from Ordinary Income. Excluding these one-off items, the performance at the Ordinary Income level of ~¥239B represents the company’s underlying earnings power. Comprehensive Income ¥240.9B far exceeded Net Income ¥100.5B, with Other Comprehensive Income of ¥129.3B (FX translation adjustments ¥85.4B, retirement benefit adjustments ¥38.9B) strengthening equity. Operating CF ¥286B is 2.85x Net Income, confirming strong cash backing. The accrual (Net Income - Operating CF) of -¥185.6B confirms a cash-oriented earnings structure where cash generation exceeds accounting profit.
Full-year plan was Revenue ¥3,400B (actual ¥3,486B, progress 102.5%), Operating Income ¥190B (actual ¥239B, progress 125.9%), and Ordinary Income ¥185B (actual ¥239B, progress 129.4%), with actuals significantly above plan. The planned Revenue decline of -2.5% YoY narrowed to an actual -0.2% decline, and Operating Income shifted from a planned -20.5% to an actual +14.2% increase. The company’s plan was conservative; in practice cost improvements and stronger-than-expected growth in Information Services contributed more than anticipated. The company had forecast zero annual dividend, but implemented a year-end dividend of ¥25 per share (ordinary dividend ¥20 + commemorative dividend ¥5). Actual EPS was ¥240.19 vs. forecast ¥233.22, a ¥7 upside. Key drivers of the variance versus forecast appear to be SG&A restraint, Information Services outperformance, and differences in FX assumptions.
A year-end dividend of ¥25 per share (ordinary dividend ¥20 + commemorative dividend ¥5) was paid; no interim dividend. Payout Ratio was 4.0% (total dividends ¥4.5B / Net Income ¥100.5B), very low, and no share buybacks were executed, so Total Return Ratio equals the payout ratio at 4.0%. Free CF of ¥169.3B vs. dividend payments of ¥10.4B yields an FCF coverage ratio of 16.3x, indicating ample room and high dividend sustainability. Although the company had forecast a year-end dividend of ¥0 on a guidance basis last year, it has tended to pay some amount in practice and did so again this year with ¥25 at year-end. The low payout ratio is interpreted as a preference for stable dividends, taking into account volatility in Net Income due to one-off losses. With cash and deposits ¥1,035B and Net Interest-bearing Debt ¥352B, there is scope for dividend increases, but company policy appears to prioritize stabilizing earnings on an underlying basis.
Customer / Business Concentration Risk: The Transportation Equipment-related Business accounts for 91.9% of Revenue and 84.1% of Operating Income, indicating high concentration. Automotive parts demand is sensitive to electrification trends, model cycles, and geopolitical factors; production adjustments by major customers or delays in electrification shifts could directly hit earnings. Continued flat Revenue suggests demand saturation; diversification into new areas is an ongoing challenge.
Interest Burden and Short-term Debt Risk: Interest expense of ¥27.6B absorbs 11.5% of Operating Income ¥239B; in a rising interest rate environment this would pressure profits. Short-term borrowings of ¥730B account for 55.8% of current liabilities, raising refinancing risk and sensitivity to worsening borrowing conditions. While cash and deposits ¥1,035B can cover short-term needs, structural deleveraging and longer-term stability are key.
Volatility from One-off Items: Special losses of ¥69.9B (including impairment losses ¥56.8B and restructuring costs ¥5.3B) absorbed roughly 70% of Net Income. The prior year also included impairments of ¥16.1B; recurring one-off losses increase volatility in final earnings and complicate EPS-based valuation. The low Gross Margin of 16.3% suggests potential need for business restructuring and leaves possibility of further loss recognition during asset efficiency improvements.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.9% | 7.8% (4.6%–12.3%) | -0.9pt |
| Net Margin | 2.9% | 5.2% (2.3%–8.2%) | -2.3pt |
Operating Margin is 0.9pt below the industry median but on an improving trend due to cost controls. Net Margin trails the median by 2.3pt owing to one-off losses, placing the company slightly behind peers on profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.2% | 3.7% (-0.4%–9.3%) | -3.9pt |
Revenue growth lags the industry median by 3.9pt, constrained by plateauing demand in the core Transportation Equipment segment. Information Services’ double-digit growth ranks high within the industry, but on a consolidated basis volumes remain broadly flat.
※ Source: Company compilation
Cost improvements and a favorable shift in business mix enabled double-digit increases at the operating and ordinary income levels, resulting in a substantial upside to full-year guidance. SG&A restraint and expansion of the Information Services Business (Operating Margin 11.6%) lifted consolidated margin by +0.87pt, confirming improvement in underlying earnings power. Despite a low Gross Margin of 16.3%, changes in segment mix and ongoing efficiency investments are key to further margin uplift.
While Net Income fell sharply YoY (-34.9%) due to one-off losses (impairments ¥56.8B, etc.), Comprehensive Income rose dramatically to ¥240.9B from ¥79.4B last year (+203%). FX translation adjustments ¥85.4B and retirement benefit adjustments ¥38.9B strengthened equity, improving the Equity Ratio to 38.3%. The company’s underlying earnings are best represented by Ordinary Income (~¥239B), and continued cash generation (Operating CF ¥286B, Free CF ¥169B) is sufficient to fund dividends and investment. Reducing interest burden and lifting Gross Margin are prerequisites for achieving double-digit ROE and sustainable profit growth.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm from publicly disclosed financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.