| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1098.6B | ¥1009.6B | +8.8% |
| Operating Income / Operating Profit | ¥40.8B | ¥34.3B | +19.2% |
| Equity-method Investment Gain/Loss | - | - | - |
| Ordinary Income | ¥44.5B | ¥37.6B | +18.4% |
| Net Income / Net Profit | ¥24.6B | ¥22.3B | +10.6% |
| ROE | 5.6% | 5.4% | - |
For the fiscal year ended March 2026, Revenue was ¥1,098.6B (YoY +¥89.0B +8.8%), Operating Income was ¥40.8B (YoY +¥6.6B +19.2%), Ordinary Income was ¥44.5B (YoY +¥6.9B +18.4%), and Net Income attributable to owners of the parent was ¥29.6B (YoY +¥3.0B +10.6%), delivering year-over-year increases across all profit lines. Operating margin improved to 3.7% (YoY +0.3pt) and gross profit margin was 14.3% (YoY +0.1pt), driven particularly by high growth in the Social & ICT Business (Revenue +18.4%, Operating Income +44.7%), which lifted company-wide profitability. Special gains included investment securities disposal gains of ¥5.9B, and profit before tax was ¥44.5B (YoY +¥1.8B +4.2%). EPS was ¥184.63 (YoY +11.1%), and annual dividend was ¥72 (interim ¥33 ・ year-end ¥39) with a payout ratio of 37.3%, achieving both earnings growth and shareholder returns.
[Revenue] Revenue was ¥1,098.6B (YoY +8.8%), with the FA & Devices Business at ¥776.3B (YoY +5.3%, composition 70.7%) and the Social & ICT Business at ¥322.3B (YoY +18.4%, composition 29.3%). The FA & Devices Business secured revenue growth supported by steady demand in industrial equipment systems and semiconductor/device-related sectors, while the Social & ICT Business achieved double-digit growth due to expansion in social infrastructure and information systems projects. By region, Japan was ¥868.3B (composition 79.0%), Singapore ¥176.7B (16.1%), and Other Asia ¥52.8B (4.8%), with the domestic market remaining the core of revenue. Segment-wise, high growth in Social & ICT accelerated company revenue expansion and diversified the business mix.
[Profitability] Gross profit was ¥157.2B (YoY +¥13.5B +9.4%), with gross margin slightly up at 14.3% (YoY +0.1pt). Selling, general & administrative expenses were ¥116.3B (YoY +¥7.0B +6.4%), rising but contained below revenue growth, resulting in SG&A ratio of 10.6% (YoY -0.2pt) and improved efficiency. Consequently, Operating Income was ¥40.8B (YoY +19.2%) and Operating margin improved to 3.7% (YoY +0.3pt). Non-operating income was ¥4.2B (including dividends received ¥1.7B and interest income ¥0.6B), and non-operating expenses were ¥0.5B, resulting in Ordinary Income of ¥44.5B (YoY +18.4%). Special gains included investment securities disposal gains of ¥5.9B, leaving profit before tax at ¥44.5B. Corporate taxes were ¥14.8B (effective tax rate 33.3%), and Net Income attributable to owners of the parent was ¥29.6B (YoY +10.6%). By segment, Operating Income for Social & ICT was ¥13.1B (YoY +44.7%, margin 4.1%), achieving high growth, and FA & Devices was ¥27.7B (YoY +10.0%, margin 3.6%), both contributing to company-wide profit growth. In summary, the fiscal year closed with revenue and profit increases.
The FA & Devices Business recorded Revenue of ¥776.3B (YoY +5.3%), Operating Income of ¥27.7B (YoY +10.0%), and Operating margin of 3.6% (YoY +0.2pt). Stable demand in industrial equipment systems and semiconductor/device-related areas underpinned revenue and supported margin improvement. Segment assets were ¥440.0B, and goodwill amortization was ¥2.9B (YoY -¥0.6B), decreasing. The Social & ICT Business achieved Revenue of ¥322.3B (YoY +18.4%), Operating Income of ¥13.1B (YoY +44.7%), and Operating margin of 4.1% (YoY +0.7pt), realizing high growth and high profitability. Expansion in social infrastructure (cooling/heating/residential equipment, building facilities, etc.) and information & communications (information systems, mobile phones, etc.) projects drove this, and the improved business mix contributed to company-wide profitability. Segment assets were ¥110.0B, and goodwill amortization was ¥1.0B (YoY +¥0.4B). With profit growth in both businesses, company Operating margin improved to 3.7% (YoY +0.3pt), and the higher margin in Social & ICT lifted the company’s profit structure.
[Profitability] Operating margin was 3.7% (YoY +0.3pt), Net margin was 2.7% (YoY +0.0pt), indicating profitability improvements driven by operating leverage. Gross margin was 14.3% (YoY +0.1pt) and SG&A ratio improved to 10.6% (YoY -0.2pt). EBITDA before goodwill amortization was ¥49.6B, showing solid cash-generating ability excluding amortization burden. ROE was 5.6% (based on Equity ¥442.4B), and DuPont decomposition is Net margin 2.7% × Total asset turnover 1.69 × Financial leverage 1.47, with high asset turnover supporting capital efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥29.8B, 1.01x relative to Net Income ¥29.6B, showing consistency, but OCF/EBITDA was 0.65x, relatively low, as collections of trade receivables were delayed (YoY +¥16.8B increase) and trade payables decreased (YoY -¥25.9B), pressuring working capital. Days sales outstanding (DSO) was about 84 days, indicating substantial room to improve cash conversion efficiency. [Investment Efficiency] Capital expenditures were ¥6.7B and intangible asset investment ¥3.4B, exceeding depreciation expense of ¥4.8B. Goodwill balance was ¥3.8B (YoY -¥3.9B, -50.5%), substantially reduced, easing M&A accounting burdens. [Financial Soundness] Equity Ratio was 68.2% (YoY +3.7pt), Current Ratio 266.7%, and Quick Ratio 217.7%, all at very high levels, demonstrating solid financial stability. Interest-bearing debt was ¥14.7B (short-term borrowings ¥13.7B + long-term borrowings ¥1.0B), resulting in net cash of ¥82.5B (cash & deposits ¥90.2B + short-term securities ¥7.0B - interest-bearing debt ¥14.7B). Debt/EBITDA was 0.32x, very low, indicating ample financial capacity.
OCF was ¥29.8B (YoY +¥11.6B +63.9%), and cash conversion from profit before tax ¥44.5B was generally good. Subtotal (before working capital changes) was ¥45.7B, supported by add-backs of non-cash expenses including depreciation ¥4.8B and goodwill amortization ¥3.9B. Working capital changes saw inventory decrease of ¥6.8B as a positive contribution, while increases in trade receivables ¥16.8B and decreases in trade payables ¥25.9B resulted in a combined cash outflow of ¥42.7B, and worsening working capital efficiency constrained OCF. After reflecting corporate tax payments of ¥18.0B, OCF was ¥29.8B. Investing Cash Flow was -¥18.0B, mainly including capital expenditures ¥6.7B, intangible asset investment ¥3.4B, and acquisition of short-term securities ¥7.0B, while disposal of investment securities ¥6.9B provided cash inflow. Free Cash Flow was ¥11.8B (OCF ¥29.8B + Investing CF -¥18.0B), sufficiently covering dividend payments of ¥10.6B. Financing Cash Flow was -¥11.6B, including dividend payments ¥10.6B, net decrease in short-term borrowings ¥0.3B, repayment of long-term borrowings ¥1.0B and new long-term borrowings ¥1.0B. Cash and cash equivalents at period-end were ¥88.5B (period-beginning ¥87.6B), and with foreign exchange translation adjustment ¥0.7B, net cash increase during the period was ¥0.9B. OCF/EBITDA ratio of 0.65x highlights room to improve working capital management; shortening receivables cycles and optimizing payables terms will be key to improving cash flow next fiscal year.
Quality of earnings is generally good, with Operating Income ¥40.8B and stable non-operating income ¥4.2B (dividends received ¥1.7B, interest received ¥0.6B, insurance income ¥0.6B, etc.) composing Ordinary Income ¥44.5B. A one-time factor was special gains of investment securities disposal gains ¥5.9B, which accounted for approximately 13.3% of profit before tax ¥44.5B. Adjusted profit before tax excluding this was about ¥38.6B, and applying the effective tax rate of 33.3% yields adjusted Net Income of about ¥25.7B. The difference of approximately ¥3.9B from reported Net Income ¥29.6B reflects the after-tax contribution of the one-time gain, so core earning power is somewhat lower than the reported figure. The accrual ratio is healthy, with OCF ¥29.8B and Net Income ¥29.6B nearly in line (~0%), but OCF/EBITDA 0.65x suggests working capital expansion, with DSO 84 days and a large reduction in payables suppressing cash conversion. Comprehensive income was ¥44.1B, driven above Net Income ¥29.6B by increases in Other securities valuation difference ¥13.4B, indicating valuation gains on investment securities boosted comprehensive income. The recurring earnings base is solid due to Operating Income growth and stable non-operating income, but reliance on one-time gains and the need for working capital efficiency improvement are points to watch regarding accrual quality.
Full-year forecast (FY ending March 2026) is Revenue ¥1,130.0B (YoY +2.9%), Operating Income ¥43.1B (YoY +5.5%), Ordinary Income ¥46.1B (YoY +3.5%), Net Income attributable to owners of the parent ¥31.0B, EPS ¥193.20, and dividend ¥35.00. Comparing to actuals, Revenue achieved 97.2% of forecast (¥1,098.6B/¥1,130.0B), Operating Income 94.8% (¥40.8B/¥43.1B), Ordinary Income 96.6% (¥44.5B/¥46.1B), and Net Income attributable to parent 95.5% (¥29.6B/¥31.0B). Actual dividends of ¥72 materially exceeded the forecasted ¥35, with an increase in the year-end dividend strengthening shareholder returns. The special gain (investment securities disposal gains ¥5.9B) temporarily inflated profits, but operating and ordinary levels were slightly below forecasts, suggesting Q4 revenue build-up may have been below plan. If high growth in Social & ICT and steady performance in FA & Devices continue, next year’s target is attainable, but improvement in working capital efficiency and cash generation is a prerequisite for sustainable growth.
Annual dividend was ¥72 (interim ¥33, year-end ¥39), with a payout ratio of 37.3% (total dividends ¥10.6B / Net Income attributable to owners of the parent ¥29.6B). This represents a significant increase from prior year dividend ¥29, with a dividend growth rate of +148.3%, strengthening shareholder returns. Since returns consist solely of dividends and no share buybacks were conducted, Total Return Ratio equals the payout ratio. Free Cash Flow was ¥11.8B, exceeding annual dividend payments ¥10.6B and yielding an FCF coverage of 1.11x, supporting dividend sustainability. With cash & deposits ¥90.2B and securities ¥7.0B providing ample liquidity and net cash ¥82.5B as financial capacity, the company has the ability to continue stable dividends. Equity Yield (DOE) is approximately 2.5%; relative to ROE 5.6%, there is room for shareholder returns, and further dividend increases may be possible depending on earnings growth and cash flow improvements. The payout ratio of 37.3% is at a sustainable level, and as long as an earnings-linked dividend policy is maintained, dividend stability is high.
Demand cycle fluctuation risk: The FA & Devices Business accounts for 70.7% of Revenue and 67.8% of Operating Income, so fluctuations in industrial equipment and semiconductor demand directly affect performance. A downside in the capital expenditure cycle could pressure both revenue and margins. With Social & ICT at 29.3% of the mix, diversification benefits are limited. Although Operating margin improved (prior year 3.4% → current year 3.7%), gross margin remains low at 14.3%, and margin downside risk is high if pricing competition intensifies.
Working capital efficiency deterioration risk: DSO of about 84 days and OCF/EBITDA of 0.65x indicate working capital management issues. Trade receivables increased YoY by ¥16.8B and trade payables decreased YoY by ¥25.9B, worsening working capital by about ¥42.7B YoY. If working capital expands alongside revenue growth, Free Cash Flow generation could fall, constraining funds for dividends and investments. Thick cash & deposits of ¥90.2B provide temporary relief, but persistent deterioration in working capital efficiency would impair financial flexibility.
Investment securities valuation volatility risk: The company holds investment securities of ¥77.5B (11.9% of total assets), and Other securities valuation difference ¥39.1B (8.8% of equity) is recorded in net assets. A stock market decline would reduce valuation differences and could lower the Equity Ratio. This period saw an increase in valuation differences YoY of +¥13.4B, boosting comprehensive income, but market movements could reverse, impacting ROE and dividend capacity.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.7% | 3.4% (1.4%–5.0%) | +0.4pt |
| Net Margin | 2.2% | 2.3% (1.0%–4.6%) | -0.1pt |
Profitability is slightly above the industry median, with Operating margin improving.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.8% | 5.9% (0.4%–10.7%) | +3.0pt |
Revenue growth exceeds the industry median by +3.0pt, led by high growth in Social & ICT.
※ Source: Company compilation
High growth and margin expansion in the Social & ICT Business boosted company-wide margins, with Revenue +18.4%, Operating Income +44.7%, and margin 4.1%, outperforming the core business in profitability. Business mix diversification is progressing, partially mitigating demand volatility risk in FA & Devices. If social infrastructure and information systems projects continue to expand, a company Operating margin in the 4% range is within reach.
Improving working capital efficiency is an urgent issue. OCF/EBITDA is 0.65x, DSO about 84 days, and a large decrease in payables (YoY -¥25.9B) are hindering cash conversion. Free Cash Flow of ¥11.8B barely covers dividends of ¥10.6B, and continued working capital expansion with revenue growth would increase the risk of constraints on dividend capacity and investment funds. Shortening receivables cycles and optimizing payables to raise OCF/EBITDA above 1.0x are prerequisites for sustainable growth and stronger shareholder returns.
The financial base is very solid—net cash ¥82.5B, Equity Ratio 68.2%, Current Ratio 266.7%—providing strong downside resilience. With a payout ratio of 37.3% and cash & deposits ¥90.2B, dividend continuity is secure, but valuation fluctuations of investment securities ¥77.5B (11.9% of assets) could materially affect net assets; Other securities valuation difference ¥39.1B is sensitive to market moves. Continuous improvement in core earnings and advanced working capital management are key to boosting ROE and ensuring stable shareholder returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed.