| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2608.4B | ¥2566.2B | +1.6% |
| Operating Income | ¥189.3B | ¥173.3B | +9.2% |
| Profit Before Tax | ¥215.7B | ¥200.5B | +7.6% |
| Net Income | ¥188.1B | ¥159.0B | +18.3% |
| ROE | 9.1% | 8.6% | - |
The fiscal year ended March 2026 closed with Revenue of ¥2608.4B (YoY +¥42.2B +1.6%), Operating Income of ¥189.3B (YoY +¥16.0B +9.2%), Ordinary Income of ¥164.5B (YoY +¥40.2B +32.4%), and Net Income of ¥188.1B (YoY +¥29.0B +18.3%), resulting in both top-line and bottom-line growth. Operating margin improved to 7.3% (up +0.5pt from 6.8% a year earlier) and Net margin improved to 7.2% (up +1.0pt from 6.2%), reflecting enhanced profitability. Growth in the Motorcycle Business (+3.6%) was the driver, the Automotive Business was flat, and the Non-Mobility Business remained loss-making due to early-stage investments. SG&A ratio improved to 11.4% (down -0.9pt from 12.3%) reflecting efficiency gains, while gross margin declined to 18.5% (down -0.7pt from 19.2%). Net financial income was ¥2.65B (¥26.5B) (prior year ¥27.3B), and the effective tax rate was low at 12.8% (prior year 20.7%), contributing to lower tax burden. Versus full-year guidance (Revenue ¥2600.0B; Operating Income ¥200.0B; Net Income ¥151.0B), Revenue was roughly in line, Operating Income was -5.4% below guidance, and Net Income exceeded guidance by +24.6%. ROE improved to 9.6% (up +1.0pt from 8.6%) and is above the company’s historical levels.
Revenue of ¥2608.4B (YoY +¥42.2B +1.6%) showed a slight increase. By segment, Motorcycle Business totaled ¥1246.9B (+3.6%, 47.8% of sales) driven by volumes and regional mix; Automotive Business ¥1359.8B (-0.1%, 52.1% of sales) was flat; Non-Mobility Business ¥1.7B (+79.8%, 0.1% of sales) expanded from additional new projects, remaining small but high-growth. Gross margin fell to 18.5% (down -0.7pt from 19.2%) due to headwinds from higher raw material and energy costs, though product mix and price pass-through limited the decline. SG&A decreased in absolute terms to ¥296.4B (prior year ¥315.9B, -¥19.5B), and SG&A ratio improved to 11.4% (down -0.9pt from 12.3%).
On the income statement, Operating Income of ¥189.3B (YoY +¥16.0B +9.2%) increased as SG&A reductions offset the gross margin decline. Operating margin was 7.3% (up +0.5pt). Financial income was ¥29.3B (prior year ¥32.9B) and financial expenses were ¥2.8B (prior year ¥5.5B), producing net financial income of ¥26.5B (prior year ¥27.3B), aided by lower interest burden. Equity-method losses were -¥0.1B (prior year -¥0.1B) unchanged. Ordinary Income was ¥164.5B (prior year ¥124.3B?? — note: previously stated change +¥40.2B +32.4%), Profit Before Tax was ¥215.7B (prior year ¥200.5B, +¥15.2B +7.6%), and income taxes were ¥27.6B (effective tax rate 12.8%, down -7.9pt from 20.7%), resulting in Net Income of ¥188.1B (prior year ¥159.0B, +¥29.0B +18.3%). Net margin improved to 7.2% (up +1.0pt). Comprehensive income was ¥290.1B (prior year ¥96.2B), with Other Comprehensive Income of ¥102.1B (prior year -¥62.8B), of which foreign currency translation differences of ¥92.7B (prior year -¥32.2B) were the largest driver. Conclusion: revenue and profit growth.
The Motorcycle Business reported Revenue of ¥1246.9B (YoY +3.6%) and Operating Income of ¥122.3B (YoY +1.2%, margin 9.8%), maintaining high profitability. Margin was slightly down from 9.9% a year earlier but remained in the high-9% range. The Automotive Business posted Revenue of ¥1359.8B (YoY -0.1%) essentially flat, with Operating Income of ¥91.6B (YoY +13.0%, margin 6.7%) showing profit growth. Margin improved +0.7pt from 6.0% due to cost efficiency and product mix. The Non-Mobility Business expanded to Revenue of ¥1.7B (YoY +79.8%) but remains small and is at an investment stage, reporting an Operating Loss of ¥24.6B (prior year -¥28.6B, loss reduced by 13.9%). New business development in environmental and energy areas is underway; monetization is a medium-term challenge.
Profitability: Operating margin 7.3% (up +0.5pt from 6.8%), ROE 9.6% (up +1.0pt from 8.6%) indicating improved profitability. ROE decomposition: ROE = Net margin 7.2% × Total asset turnover 0.99 × Financial leverage 1.28 ≒ 9.1%, with Net margin improvement the primary driver. Total asset turnover declined from ~1.04 to 0.99, and financial leverage fell from 1.33 to 1.28. Net margin improvement was supported by SG&A efficiency (SG&A ratio 11.4%, down -0.9pt from 12.3%) and lower tax rate (effective tax rate 12.8%, down -7.9pt from 20.7%). Gross margin of 18.5% (down -0.7pt) signals cost headwinds, but SG&A reductions absorbed part of the impact.
Cash quality: Operating Cash Flow (OCF) of ¥227.8B was 1.21× Net Income (¥188.1B), indicating high quality. OCF/EBITDA (Operating Cash Flow ÷ (Operating Income + Depreciation)) was ¥227.8B ÷ (¥189.3B + ¥113.0B) ≒ 0.75×, below the benchmark (0.9×), implying remaining working capital burden. Inventory change -¥15.5B and accounts payable -¥28.7B pressured OCF.
Investment efficiency: CapEx of ¥157.7B was 1.39× Depreciation (¥113.0B), indicating an expansion phase. Total asset turnover at 0.99x (prior ~1.04x) is declining. DSO 65 days (Accounts receivable ¥461.8B ÷ Revenue ¥2608.4B × 365), DIO 62 days (Inventory ¥363.3B ÷ Cost of Sales ¥2126.0B × 365), DPO 42 days (Accounts payable ¥245.9B ÷ Cost of Sales ¥2126.0B × 365), giving CCC (DSO + DIO - DPO) of 85 days with room for improvement.
Financial soundness: Equity Ratio 77.6% (up +2.8pt from 74.8%), Debt/Capital 1.8% (short-term borrowings ¥38.5B ÷ Total capital ¥2062.9B), Debt/EBITDA 0.13× (borrowings ¥38.5B ÷ EBITDA ¥302.3B), indicating a very conservative balance sheet. Current ratio 348% (Current assets ¥1683.4B ÷ Current liabilities ¥483.0B) shows strong short-term liquidity. Net cash position was ¥675.1B (Cash ¥713.6B - Borrowings ¥38.5B), with minimal interest-bearing debt.
Operating Cash Flow was ¥227.8B (down -18.4% from ¥279.3B), 1.21× Net Income (¥188.1B), indicating high quality though reduced YoY. Pre-working-capital OCF subtotal was ¥265.4B (prior year ¥322.5B). Working capital pressures included Inventory -¥15.5B (prior year -¥12.3B), Trade receivables ¥0.2B (prior year -¥46.8B), and Trade payables -¥28.7B (prior year -¥1.3B). Provisions +¥18.5B (prior year -¥10.2B) reflected increases in product warranties, etc. Income taxes paid were -¥66.6B (prior year -¥75.5B), a decrease. Investing Cash Flow was -¥164.9B (prior year -¥257.8B) with reduced outflows. Capital expenditure was -¥157.7B (prior year -¥147.2B) increasing, and intangible asset acquisitions -¥10.6B (prior year -¥4.5B) also rose. Net change in time deposits was +¥24.2B (time deposits placed -¥142.9B + withdrawn +¥167.1B) acting as a cash inflow. Purchases of investment securities were -¥22.2B (prior year -¥4.3B), increased accumulation. Financing Cash Flow was -¥78.4B (prior year -¥146.3B), a reduction in outflows. Dividends paid -¥81.3B (prior year -¥71.5B) increased due to a commemorative dividend; share buybacks were -¥0.0B (prior year -¥38.0B) negligible. Net short-term borrowings were +¥8.4B (prior year -¥31.0B) for funding. Free Cash Flow was ¥62.9B (Operating Cash Flow ¥227.8B + Investing Cash Flow -¥164.9B), which covered dividends of ¥81.3B at 0.77×. Cash and cash equivalents increased to ¥713.6B (prior year ¥684.9B, +¥28.7B, including foreign exchange effect +¥44.1B). OCF/EBITDA 0.75× (¥227.8B ÷ ¥302.3B) is below the 0.9× standard, and improving working capital efficiency remains a priority.
The difference between Ordinary Income ¥164.5B and Net Income ¥188.1B (+¥23.6B) was largely driven by tax burden reduction from a low effective tax rate (12.8%). At the Ordinary Income stage, net financial income was ¥26.5B (financial income ¥29.3B less financial expenses ¥2.8B), and other income of ¥13.5B less other expenses ¥10.2B produced +¥3.3B in non-operating items; the reduction from Operating Income ¥189.3B to Ordinary Income ¥164.5B was influenced by equity-method loss -¥0.1B. The conversion from Profit Before Tax ¥215.7B to Net Income ¥188.1B yields a retention ratio of 87.2%, with income taxes ¥27.6B (effective tax rate 12.8%) suggesting a temporary reduction possibly due to prior-period items or recognition of deferred tax assets. Other Comprehensive Income of ¥102.1B (prior year -¥62.8B) was led by foreign currency translation differences of ¥92.7B (prior year -¥32.2B), reflecting yen depreciation raising asset valuations. Remeasurement of defined benefit plans was ¥1.3B (prior year -¥9.0B), and FVOCI financial assets +¥8.5B (prior year -¥21.7B) also increased OCI. Non-operating income was mainly financial income of ¥29.3B, though the breakdown of interest and dividends received is undisclosed and may be transient. The accrual ratio ((Net Income - Operating Cash Flow) ÷ Total Assets) = (¥188.1B - ¥227.8B) ÷ ¥2643.5B ≒ -1.5% indicates Operating Cash Flow exceeded Net Income, supporting high earnings quality. Depreciation ¥113.0B was 59.7% of Operating Income ¥189.3B, indicating a moderate depreciation burden on PP&E. Impairment losses amounted to ¥4.1B (Motorcycle ¥0.3B; Automotive ¥3.8B; prior year ¥9.3B), reduced and indicating low asset revaluation risk.
Full-year guidance had been Revenue ¥2600.0B, Operating Income ¥200.0B, Net Income ¥151.0B. Actuals were Revenue ¥2608.4B (vs. guidance +0.3%), Operating Income ¥189.3B (vs. guidance -5.4%), and Net Income ¥188.1B (vs. guidance +24.6%). Revenue was in line, Operating Income slightly missed guidance, but favorable non-operating items and lower tax rate drove Net Income substantially above guidance. The shortfall in Operating Income is likely due to a -0.7pt decline in gross margin (higher raw material and energy costs), partially offset by SG&A efficiency. The Net Income outperformance was mainly due to a materially lower effective tax rate of 12.8% (guidance likely assumed a tax rate around ~30% implied by the gap between profit before tax and net income). While Operating Income missed initial assumptions, favorable non-operating and tax items boosted Net Income. Since next fiscal year guidance was not disclosed at the time of this report, a reasonable scenario would assume Operating Income above ¥200.0B and Net Income around ¥150.0B, contingent on recovery in gross margin, maintenance of SG&A efficiency, and normalization of tax rates.
Annual dividend was ¥194 per share (Q2 interim ¥67; year-end ¥127), including a commemorative dividend of ¥126 (Q2 interim ¥63; year-end ¥63). The ordinary dividend base is estimated at ¥68 (Q2 interim ¥4; year-end ¥64). Total dividends amounted to ¥81.3B (prior year ¥71.5B, +13.7%) marking an increase. Dividend payout ratio relative to EPS ¥387.36 is approximately 50.1% (¥194 ÷ EPS ¥387.36), but excluding the commemorative dividend the ordinary payout of ¥68 implies a payout ratio of 17.6%, a conservative level. A payout ratio figure of 62.4% is presented and, on a commemorative-dividend-included basis, total shareholder returns of ¥98.6B ÷ Net Income ¥188.1B ≒ 52.4% is consistent. Free Cash Flow of ¥62.9B covered dividends of ¥81.3B at 0.77×, resulting in a shortfall partly funded from cash reserves. Share buybacks were ¥0.0B (prior year ¥38.0B) and none were executed this fiscal year. Total Shareholder Return ratio was 52.4% (dividends only; unchanged if buybacks included given no buybacks). The dividend policy emphasized shareholder returns including the commemorative dividend, while ordinary dividend payout of 17.6% remains conservative to prioritize balancing growth investment (CapEx / Depreciation 1.39×) with returns.
Structural demand decline for clutches from xEV shift: Clutches, core products for Motorcycle and Automotive Businesses, rely on internal combustion vehicles and may face structural demand reductions as electrification advances. Investments into Non-Mobility and EV/CASE areas are underway, but monetization remains incomplete as evidenced by the Non-Mobility operating loss of ¥24.6B. With Automotive at 52.1% of sales and Motorcycle 47.8%, transition risk for core businesses warrants close monitoring.
Gross margin pressure and raw material price volatility: The decline in gross margin to 18.5% (down -0.7pt from 19.2%) shows that rising raw material and energy costs are compressing profitability. While SG&A reductions have offset some impact, continued gross margin deterioration would threaten sustainable operating margins. Rising inventory levels (¥363.3B, up +10.8% from ¥327.8B) introduce valuation risk. Currency fluctuations that affect raw material procurement costs further complicate gross margin stabilization.
Declining working capital efficiency and reduced cash generation risk: With DSO 65 days, DIO 62 days, and CCC 85 days, working capital efficiency has room to improve and Operating Cash Flow fell -18.4% YoY. OCF/EBITDA 0.75× is below the 0.9× benchmark; inventory increase (-¥15.5B) and accounts payable decrease (-¥28.7B) were pressuring cash flow. If Free Cash Flow (¥62.9B) continues to be below dividends (¥81.3B), balancing growth investments and shareholder returns will be constrained. Strengthening working capital management is imperative.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 9.6% | 6.3% (3.2%–9.9%) | +3.3pt |
| Operating Margin | 7.3% | 7.8% (4.6%–12.3%) | -0.5pt |
| Net Margin | 7.2% | 5.2% (2.3%–8.2%) | +2.0pt |
ROE exceeds the industry median by +3.3pt placing the company in the upper group; Net margin is +2.0pt higher indicating efficient earnings structure. Operating margin is -0.5pt below the median and sits in the middle range, with Motorcycle segment profitability (margin 9.8%) supporting overall results.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.6% | 3.7% (-0.4%–9.3%) | -2.1pt |
Revenue growth lags the industry median by -2.1pt, placing the company in the lower cohort, influenced by flat Automotive and modest Motorcycle growth. Top-line expansion remains a challenge relative to manufacturing sector peers.
※Source: Company compilation
Sustainability of profit growth from SG&A efficiency and low tax rate: Improvements in Operating margin to 7.3% (+0.5pt) and ROE to 9.6% (+1.0pt) were supported by SG&A ratio improvement (-0.9pt) and a reduced effective tax rate of 12.8% (down -7.9pt). While SG&A efficiency can be seen as structural improvement, the low tax rate may include one-off factors; if tax rates normalize next year, Net Income momentum could moderate. Recovery in gross margin (18.5%, -0.7pt) is key for sustainability, so monitor progress on stabilizing raw material prices, FX, and price pass-through.
Three-pronged stance: high Motorcycle profitability, Automotive improvement, and narrowing Non-Mobility losses: Segmentally, Motorcycle margin at 9.8% remains a high stable contributor, Automotive improved to 6.7% (+0.7pt), and Non-Mobility losses narrowed to ¥24.6B (-13.9% YoY) with progress toward xEV-related new businesses. While clutch core businesses should remain stable near-term despite electrification headwinds, mid-term growth and margin maintenance hinge on Non-Mobility and EV/CASE segments reaching profitability. CapEx ¥157.7B (CapEx/Depreciation 1.39×) indicates expansion; evaluate investment returns in the next fiscal year.
Strong balance sheet, but need to improve working capital efficiency and cash generation: Equity Ratio 77.6% and Debt/EBITDA 0.13× show robust financial health, providing capacity for growth investment and shareholder returns. However, OCF/EBITDA 0.75× (<0.9×), DSO 65 days, DIO 62 days, and CCC 85 days indicate room to improve working capital efficiency as Operating Cash Flow fell -18.4% YoY. Free Cash Flow of ¥62.9B below dividends of ¥81.3B suggests that reverting to ordinary dividend levels (removal of commemorative dividend) will improve balance but that increasing OCF is a prerequisite for sustaining CapEx expansion and shareholder returns. Optimization of inventory management, receivables collection, and payable terms will be catalysts for enhanced cash generation.
This report is an analyst-style 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 company from public financial statements. Investment decisions are your responsibility; please consult professionals as needed before making investment decisions.