| Metric | Current | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1176.4B | ¥1135.4B | +3.6% |
| Operating Income / Operating Profit | ¥104.0B | ¥161.4B | -35.6% |
| Ordinary Income | ¥148.8B | ¥154.0B | -3.4% |
| Net Income / Net Profit | ¥128.6B | ¥97.8B | +31.4% |
| ROE | 1.5% | 1.1% | - |
FY2026 Q1 results maintained revenue of ¥1,176B (YoY +¥41B +3.6%) but showed a sharp decline in operating income to ¥104B (YoY -¥57B -35.6%). Gross margin decreased to 35.6% (from 39.7% in the prior year, -4.1pt), SG&A ratio rose to 26.7% (from 25.5% in the prior year, +1.2pt), and operating margin plunged to 8.8% (from 14.2% in the prior year, -5.4pt). Ordinary income narrowed the decline to ¥148B (YoY -¥5B -3.4%), and net income turned to an increase of ¥128B (YoY +¥31B +31.4%). Deterioration in operating profitability was offset by non-operating income of ¥49B (interest income ¥33B, foreign exchange gains ¥10B) and special gains of ¥31B (gains on sale of investment securities). By segment, the core Bicycle Components reported revenue of ¥874B (YoY -0.7%) and operating income of ¥78B (YoY -46.3%) and struggled, while Fishing Tackle remained strong with revenue of ¥302B (YoY +18.5%) and operating income of ¥26B (YoY +58.7%), but overall company profitability was dragged down by margin deterioration in the core business.
[Revenue] Revenue was ¥1,176B (YoY +3.6%). By segment, Bicycle Components recorded ¥874B (YoY -0.7%), a slight decline, and the core business, accounting for 74.3% of company sales, underperformed. Fishing Tackle continued high growth at ¥302B (YoY +18.5%), representing 25.7% of company sales. Strong performance in the Fishing business drove consolidated revenue growth, but prolonged demand adjustments and inventory corrections in the Bicycle business constrained overall revenue growth. Accounts receivable increased to ¥486B (prior year ¥385B, +26.3%), materially outpacing revenue growth (+3.6%), suggesting elongation of collection periods.
[Profitability] Operating income was ¥104B (YoY -35.6%). Cost of sales ratio worsened to 64.4% (from 60.3% in the prior year, +4.1pt), and gross margin fell sharply to 35.6% (from 39.7% in the prior year, -4.1pt). Increases in manufacturing costs (raw materials, logistics) and an adverse product mix pushed up cost ratios. SG&A increased to ¥315B (prior year ¥290B), an absolute increase of ¥25B, and SG&A ratio rose to 26.7% (from 25.5% in the prior year, +1.2pt). With SG&A behaving in a fixed-cost manner despite revenue growth, operating leverage turned negative. By segment, Bicycle Components operating income fell to ¥78B (prior year ¥145B, -46.3%), reducing its margin to 8.9% (prior year estimated 16.5%). Fishing Tackle operating income rose to ¥26B (prior year ¥16B, +58.7%), maintaining a healthy margin of 8.6%. Non-operating income of ¥49B (interest income ¥33B, FX gains ¥10B) narrowed the decline in ordinary income to ¥149B (YoY -3.4%). Recording special gains of ¥31B (gains on sale of investment securities) turned pretax income to ¥176B (YoY +14.6%), producing net income of ¥128B (YoY +31.4%). In sum, the company experienced revenue growth but operating income decline; however, non-operating and one-off items resulted in final-period growth.
Bicycle Components reported revenue of ¥874B (YoY -0.7%), operating income of ¥78B (YoY -46.3%), margin 8.9%. Margin deteriorated by 7.6pt from an estimated 16.5% in the prior year, and the decline in profitability of the core business — which accounts for 75% of consolidated operating income — pressured consolidated results. Prolonged demand adjustments and inventory corrections, adverse product mix, and cost inflation are estimated as primary drivers of the sharp margin decline. Fishing Tackle reported revenue of ¥302B (YoY +18.5%), operating income of ¥26B (YoY +58.7%), margin 8.6%, improving by 2.2pt from approximately 6.4% in the prior year, combining high growth with margin improvement. Sales composition is Bicycle 74.3%, Fishing 25.7%; high dependence on Bicycle means recovery in that segment is key to improving consolidated margins.
[Profitability] Operating margin was 8.8% (from 14.2% in the prior year, -5.4pt), net margin was 10.9% (from 8.6% in the prior year, +2.3pt). Operating profitability deteriorated sharply due to gross margin decline (35.6%, from 39.7% in the prior year, -4.1pt) and SG&A ratio increase (26.7%, from 25.5% in the prior year, +1.2pt), but contributions from non-operating income and special gains improved final profit margins. ROE was 1.5% (DuPont: net margin 10.9% × total asset turnover 0.126 × financial leverage 1.08), at a low level. [Cash Quality] Days sales outstanding worsened to 151 days (from 124 days in the prior year, +27 days), inventory days were 432 days (from 446 days, -14 days), accounts payable days were 90 days (from 89 days, +1 day), and cash conversion cycle extended to 726 days (from 685 days, +41 days). The increase in accounts receivable (+26.3%) significantly exceeded revenue growth (+3.6%), indicating deterioration in working capital efficiency. [Investment Efficiency] Total asset turnover remained low at 0.126x. ROA (net income / total assets) was 1.4%, and ROIC (NOPAT ¥76B / invested capital ¥6,795B) was 1.8%, indicating low capital efficiency. [Financial Soundness] Equity ratio was extremely high and stable at 92.6% (prior year 92.5%). Current ratio was 1,100%, quick ratio 949%, indicating very strong liquidity. Interest-bearing debt is negligible, D/E ratio 0.08x, interest coverage 452x, showing no solvency concerns. Cash and deposits were ample at ¥4,505B.
Although a dedicated operating cash flow statement was not disclosed, cash trends are analyzed from balance sheet movements. Accounts receivable increased to ¥486B (prior year ¥385B, +¥101B) and inventories increased to ¥896B (prior year ¥837B, +¥59B), expanding working capital. Cash conversion cycle extended to 726 days (from 685 days, +41 days), and expansion of receivables and inventories enlarged the time lag in cash generation. Cash and deposits decreased to ¥4,505B (prior year ¥4,773B, -¥268B), but recording gains on sale of investment securities ¥31B and repurchases of treasury stock ¥70B (treasury stock -¥82B, prior year -¥11B) likely impacted cash outflows. Construction in progress decreased to ¥241B (prior year ¥439B, -¥198B) while buildings and structures increased to ¥1,220B (prior year ¥976B, +¥244B), indicating capital projects are coming into operation. As capital expenditures ramp up, depreciation expense and fixed costs are expected to increase, but very strong financial position (cash ¥4,505B, low debt) suggests no liquidity concerns.
Against operating income of ¥104B, non-operating income ¥49B (interest income ¥33B, FX gains ¥10B) and special gains ¥31B (gains on sale of investment securities) lifted profit, meaning roughly 62% of net income ¥128B originated from non-operating or one-off factors. Interest income is recurring from ¥4,505B of cash and deposits, but the ¥31B gain on sale of investment securities is one-time and lacks sustainability. FX gains/losses included foreign exchange losses of ¥55B in non-operating expenses and FX gains of ¥10B in non-operating income, resulting in a net FX loss of ¥45B, which materially increased volatility (equivalent to -42.8% of operating income). Comprehensive income was ¥202B; the ¥73B gap versus net income ¥128B was mainly due to ¥89B in foreign currency translation adjustments, reflecting valuation gains on foreign-currency-denominated assets. Core earnings power should be evaluated at the operating income level; improving gross margin and SG&A ratio is essential to enhance earnings quality.
Full year plan: Revenue ¥4,670B (YoY +0.2%), Operating Income ¥470B (YoY -9.1%), Ordinary Income ¥533B (YoY +13.3%), Net Income ¥420B. Q1 progress rates: revenue 25.2% (in line), operating income 22.1% (vs standard 25%: -2.9pt, progress 88%), ordinary income 27.9%, net income 30.5% — the latter two are ahead. The shortfall in operating income progression and the outperformance at ordinary and net income reflect Q1 contributions from financial income and one-off gains. To achieve full-year operating income, improvements in gross margin (product mix correction, cost pass-through) and SG&A control from Q2 onward are required. Normalization of supply-demand and inventory optimization in Bicycle Components are preconditions for achieving the full-year plan.
Full-year dividend forecast is ¥181.50 per share, implying a payout ratio of approximately 37% against full-year EPS forecast of ¥488.19. Q1 DPS of ¥169.50 is estimated as the interim dividend, with a planned ¥12 increase at year-end. Treasury stock increased to -¥82B (prior year -¥11B), implying approximately ¥71B of repurchases. Against outstanding shares of 86.53 million (treasury stock 0.50 million), full-year dividend payout is approximately ¥15.7B. A payout ratio of 37% is sustainable, and with cash ¥4,505B and low debt, dividend payment capacity is ample. Total return ratio including buybacks is estimated at about 54% (full-year net income ¥420B vs dividends ¥157B + buybacks ¥71B), but continuity depends on buyback pace which is uncertain. Dividend stability is assessed as high.
Risk of further deterioration in core business profitability: Bicycle Components operating margin declined sharply to 8.9% (from estimated 16.5% in the prior year, -7.6pt). Prolonged demand adjustments, inventory corrections, adverse product mix, and cost inflation (raw materials, logistics) are pressuring gross margin. Since the core business accounts for 75% of consolidated operating income, delayed margin recovery would directly threaten full-year plan attainment.
Risk of delayed cash generation due to working capital inefficiency: Accounts receivable increased +26.3% YoY, DSO worsened to 151 days (from 124 days, +27 days). High inventory days of 432 and CCC of 726 days (from 685 days, +41 days) indicate working capital expansion that lengthens cash conversion and may impair operating cash flow generation.
Earnings volatility risk from FX: FX gains/losses impacted operating income by -42.8%, with non-operating FX losses of ¥55B and FX gains of ¥10B in non-operating income, resulting in a net FX loss of ¥45B. High share of foreign-currency-denominated sales and assets amplifies volatility in ordinary income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.8% | 6.8% (2.9%–9.0%) | +2.0pt |
| Net Margin | 10.9% | 5.9% (3.3%–7.7%) | +5.0pt |
Operating margin is +2.0pt above the industry median and net margin is +5.0pt above, but operating margin deteriorated YoY by -5.4pt, indicating shrinking relative advantage within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.6% | 13.2% (2.5%–28.5%) | -9.6pt |
Revenue growth lags the industry median by -9.6pt, placing the company in a low-growth position within the industry. Demand adjustments in the core business are restraining growth.
※ Source: Company aggregation of public financial statements
Margin recovery in the core Bicycle business is the top priority. Gross margin dropped to 35.6% (from 39.7% in the prior year, -4.1pt) and operating margin deteriorated to 8.8% (from 14.2% in the prior year, -5.4pt). Normalizing supply-demand and inventory levels, correcting product mix, and progressing cost pass-through are keys to margin recovery. Monitor gross margin and SG&A ratio trends from Q2 onward.
Improving working capital efficiency is a medium-term task. Accounts receivable +26.3% and CCC 726 days (+41 days) indicate weakening cash collection. Normalizing accounts receivable and optimizing inventory levels (finished goods ¥896B, work-in-progress ¥413B) are essential to stabilize operating cash generation.
Note high reliance on non-operating and one-off gains. Of net income ¥128B, gains on sale of investment securities ¥31B (~24%) and non-operating income ¥49B (interest income ¥33B, FX gains ¥10B) materially lifted profit. For sustainable earnings evaluation, focus on recovery at the operating income level.
This report was auto-generated by AI analyzing XBRL financial statement disclosures. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information aggregated by our firm based on public filings. Investment decisions are your responsibility; consult advisors as needed.