| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥3887.3B | ¥3516.3B | +10.6% |
| Operating Income | ¥110.0B | ¥108.6B | +1.3% |
| Pre-tax Income | ¥101.3B | ¥97.3B | +4.1% |
| Net Income | ¥59.5B | ¥61.2B | -2.8% |
| ROE | 7.6% | 7.6% | - |
For the fiscal year ended March 2026, Revenue was ¥3887.3B (YoY +¥371.1B, +10.6%), Operating Income was ¥110.0B (YoY +¥1.4B, +1.3%), Ordinary Income was ¥98.6B (YoY +¥3.0B, +3.1%), and Net Income attributable to owners of the parent was ¥48.98B (YoY -¥4.0B, -7.6%). Revenue achieved double-digit growth, but profitability deteriorated: Operating margin fell to 2.8% (down 0.3pt from 3.1% prior year) and Net margin to 1.3% (down 0.2pt from 1.5%), resulting in higher revenue but lower profits. Comprehensive income improved materially to ¥57.9B (prior year ¥21.9B, +164.6%), although the improvement in Other Comprehensive Income (foreign currency translation +¥18.7B) appears largely temporary.
[Revenue] Revenue expanded steadily to ¥3887.3B (YoY +10.6%). By segment, Car (Automotive Business — vehicle sales related) accounted for ¥3570.4B (+10.3%), representing 91.8% of revenue, with New Cars ¥1867.4B (+6.8%), Used Cars ¥893.7B (+15.3%), Services ¥590.1B (+14.0%), and Rental Cars ¥210.9B (+10.8%) — all categories grew. Growth in Used Cars and Services was notable, reflecting successful aftermarket strengthening. Housing (Housing Business) grew double digits to ¥314.9B (+14.1%), and despite an 8.1% segment mix, made a meaningful contribution. Regionally, Europe ¥1643.8B (+16.3%) and Japan ¥2027.1B (+7.8%) led growth, while Africa ¥148.5B (+4.5%), Oceania ¥46.4B (-4.4%), and Asia ¥16.3B (-29.3%) showed regional variability. Gross profit was ¥599.9B with a gross margin of 15.4%, a 0.2pt improvement from 15.2% prior year.
[Profitability] Operating Income was limited to ¥110.0B (YoY +1.3%), with an Operating margin of 2.8% (down 0.3pt from 3.1%). SG&A was ¥487.1B (SG&A ratio 12.5%, up 0.5pt from 12.0% prior year), increasing by +15.2% — outpacing revenue growth (+10.6%) and worsening operating leverage. By segment, Car Operating Income declined to ¥80.0B (-8.3%), with margin compressing to 2.2% (down 0.5pt from 2.7%). Housing Operating Income improved to ¥20.6B (+25.4%), margin 6.5% (up 0.6pt from 5.9%), supporting consolidated profitability. Non-operating items showed Financial income ¥9.8B versus Financial expenses ¥20.7B (interest expense ¥20.4B), a net burden of -¥10.9B, leaving Ordinary Income at ¥98.6B (+3.1%). Pre-tax Income was ¥101.3B (+4.1%), but high tax expense of ¥41.8B (effective tax rate 41.3%) persisted, resulting in Net Income attributable to owners of the parent of ¥48.98B (-7.6%). No major one-off items were disclosed in extraordinary profits/losses; the profit decline was mainly driven by higher SG&A, rising interest burden, and high tax expense — a triple squeeze. In summary, revenue rose but profits fell, with notable margin deterioration.
Car (Automotive Business) Revenue ¥3570.4B (YoY +10.3%), Operating Income ¥80.0B (-8.3%), margin 2.2% (down 0.5pt from 2.7%). While new car sales were steady, growth in used cars, services, and rental car revenue pressured gross margins, and increased SG&A (store expansion and higher personnel costs) compressed margins. Segment assets were ¥2447.0B (prior year ¥2260.7B), driven mainly by higher inventories. Housing (Housing Business) Revenue ¥314.9B (+14.1%), Operating Income ¥20.6B (+25.4%), margin 6.5% (up 0.6pt from 5.9%). Strong sales of condominiums and single-family homes improved gross margins and effective cost control. Segment assets increased to ¥339.1B (prior year ¥312.6B). Others (corporate management functions, etc.) had Revenue ¥2.0B and Operating Income ¥8.7B, providing group-level management functions. Contribution to consolidated operating income: Car 72.7%, Housing 18.7%, Others 7.9% — indicating high profit dependence on the Car business, while Housing’s growth helps lift consolidated profitability.
[Profitability] Operating margin 2.8% (down 0.3pt from 3.1%), Net margin 1.3% (down 0.2pt from 1.5%). ROE is 6.9% (down 0.5pt from 7.4%), primarily due to lower Net Income attributable to owners of the parent. DuPont decomposition shows the decline in Net margin as the largest negative contributor. Gross margin 15.4% improved slightly from 15.2%, but SG&A ratio 12.5% (up 0.5pt from 12.0%) depressed operating profitability.
[Cash Quality] Operating Cash Flow (OCF) was ¥187.9B, 3.16x Net Income ¥59.5B, indicating strong cash generation. However, OCF/EBITDA ratio stood at 0.68x (OCF ¥187.9B ÷ EBITDA ¥277.8B), below 1x, and working capital pressure (inventory increase -¥89.6B) reduced cash conversion efficiency. The accrual ratio was -4.6% (=(Net Income ¥59.5B - OCF ¥187.9B) ÷ Total Assets ¥3030.7B), negative, indicating cash generation in excess of accounting profits — a healthy pattern.
[Investment Efficiency] Total asset turnover was 1.28x (Revenue ¥3887.3B ÷ Total Assets ¥3030.7B), standard for distribution/dealer operations. Inventory days (DIO) were 97 days (Inventory ¥876.4B ÷ Cost of Sales ¥3287.4B × 365), extended by 9 days from 88 days prior year, showing weakened inventory efficiency. Days Sales Outstanding (DSO) were 41 days (Accounts receivable ¥367.7B ÷ Revenue ¥3887.3B × 365), Days Payable Outstanding (DPO) 76 days (Accounts payable ¥687.3B ÷ Cost of Sales ¥3287.4B × 365), yielding Cash Conversion Cycle (CCC) of 62 days (=DIO 97 + DSO 41 - DPO 76), extended from prior year.
[Financial Health] Equity Ratio was 23.3% (down 5.6pt from 28.9%), and D/E ratio 2.89x (Interest-bearing debt ¥869.2B ÷ Equity ¥779.4B), indicating sustained high leverage. Current ratio was 0.93x (Current assets ¥1475.4B ÷ Current liabilities ¥1580.5B), below 1x, warranting attention to short-term maturity mismatches. Interest Coverage was 5.3x (EBIT ¥110.0B ÷ Financial expenses ¥20.7B), indicating near-term interest payment capacity, though rising interest expense could reduce coverage. Cash and cash equivalents were ¥135.7B, equal to 0.42x monthly sales (¥324B), suggesting some constraint on liquidity combined with short-term borrowing reliance.
OCF was ¥187.9B (prior year ¥279.6B, -32.8%), but still 3.16x Net Income ¥59.5B, indicating solid cash generation. The decline was mainly due to working capital pressure: inventories rose by ¥89.6B and contract liabilities decreased by ¥2.7B. Accounts payable increased by ¥25.6B, partially offsetting working capital outflows by extending payment terms. Subtotal of OCF (before working capital changes) was ¥241.0B, and depreciation ¥166.8B plus impairment losses ¥10.8B contributed as non-cash additions. Investing Cash Flow was -¥108.1B (prior year -¥110.1B), similar to prior year, with capital expenditures of ¥136.0B as primary outflow; proceeds from sale of tangible fixed assets ¥39.4B contributed cash inflow. Free Cash Flow (FCF) was ¥79.8B (OCF ¥187.9B + Investing CF -¥108.1B), covering dividend payments ¥28.5B and share buybacks ¥23.0B (total ¥51.5B) by 1.5x, supporting the sustainability of shareholder returns. Financing Cash Flow was -¥94.7B, with net increase in short-term borrowings ¥113.2B, long-term borrowings raised ¥156.1B, long-term borrowings repayments -¥129.2B, and lease liability repayments -¥149.6B as main items. Cash and cash equivalents were ¥135.7B (prior year ¥146.4B, -¥10.8B), and after including foreign exchange translation effect of ¥4.2B, the cash balance decreased modestly. OCF/EBITDA ratio 0.68x is low for dealer operations; normalizing inventory levels is key to improvement.
Earnings for the period were primarily from recurring operating activities: Operating Income ¥110.0B versus Financial income ¥9.8B (including equity-method investment income ¥2.2B), with Financial income representing 0.3% of Revenue — limited impact. Financial expenses ¥20.7B (interest expense ¥20.4B) weighed on Ordinary Income, producing a net financial burden of -¥10.9B. Other income ¥15.9B and other expenses ¥18.7B included no large one-off disclosures; impairment losses ¥10.8B were recorded in operating expenses and are of recurring nature. Pre-tax Income ¥101.3B faced corporate income tax expense ¥41.8B, yielding an effective tax rate of 41.3%, compressing Net margin to 1.3%. The accrual ratio was -4.6% (=(Net Income ¥59.5B - OCF ¥187.9B) ÷ Total Assets ¥3030.7B), indicating cash generation exceeding accounting profit. Comprehensive income ¥57.9B was broadly in line with Net Income ¥59.5B; Other Comprehensive Income -¥1.6B comprised foreign operations translation +¥18.7B (temporary FX-related gain) and OCI financial assets fair value change -¥21.1B (valuation loss), which offset. The large increase in comprehensive income (prior year ¥21.9B, +164.6%) was driven by improved translation differences and does not indicate an improvement in recurring operating performance. While OCF materially exceeded Net Income, accumulated working capital (DIO 97 days) reduced cash conversion efficiency; normalizing inventory turns would improve earnings quality.
For FY ending March 2027, management projects Revenue ¥4000.0B (YoY +2.9%), Operating Income ¥135.0B (+22.7%), and Net Income attributable to owners of the parent ¥70.0B (+43.0%). Operating margin is assumed to improve to 3.4% (current 2.8%, +0.6pt), premised on controlling SG&A and margin recovery in the Car segment. Progress rate is high: with H1 Operating Income of ¥110.0B against full-year plan ¥135.0B, progress is 81.5%, but there remains potential for further profit in H2. EPS forecast is ¥60.21 (current-year actual ¥41.50, +45.1%), and dividend is expected to remain at ¥12.00 per year. To achieve guidance, key requirements are: (1) margin improvement in the Car segment (correcting discounts, increasing high-value services/aftermarket mix), (2) normalization of inventory efficiency (shortening DIO), (3) stabilization of interest burden and containment of SG&A growth, and (4) normalization of tax burden. Contract liabilities ¥135.2B (equivalent to customer deposits) are steady year-on-year, supporting stability in order intake. The outlook assumes continued weak yen, recovery of new car supply, and stabilization of used car market, given significant revenue exposure to Europe and Japan.
Annual dividend is ¥24 (interim ¥12, year-end ¥12), with Payout Ratio 54.8% (based on Net Income attributable to owners of the parent), within an acceptable range. Total dividends amounted to ¥28.5B (Shareholder equity payout ratio 4.0%), unchanged from prior year. Share buybacks totaled ¥23.0B, and combined with dividends the total shareholder return was ¥51.5B, yielding a Total Return Ratio of 105.2% (versus Net Income attributable to owners of the parent ¥48.98B), slightly exceeding profits. Against FCF ¥79.8B, total returns represent 64.6%, which is sustainable on a cash basis. Treasury shares increased to 6.33 million shares (5.2% of shares outstanding), expected to enhance per-share value; however, Equity Ratio has fallen to 23.3%, so balancing returns with financial soundness is necessary when leverage is high. Next fiscal year guidance plans to continue dividend of ¥12 and, with projected Net Income ¥70.0B, the Payout Ratio would fall to around 40%, enabling internal reserves and financial improvement. Continuation of buybacks depends on progress in inventory normalization and leverage reduction.
Inventory build-up and efficiency deterioration risk: Inventory ¥876.4B (YoY +22.0%), DIO 97 days (up 9 days from 88) indicate rising inventory levels. In the automotive dealer business, risks of inventory obsolescence, discounting pressure, and higher interest burden are acute; a used-car price downturn could trigger valuation losses. Working capital lock-up is the main cause of OCF/EBITDA falling to 0.68x, and normalizing inventory turnover is urgent.
High leverage and liquidity risk: D/E ratio 2.89x and Equity Ratio 23.3% indicate sustained high leverage. Current ratio 0.93x with high short-term debt dependence (short-term borrowings ¥581.3B) creates refinancing risk from maturity mismatches. In a rising-rate environment, financial expenses (already ¥20.7B, +¥3.1B YoY) could further depress profits; Interest Coverage 5.3x has limited buffer. Debt/EBITDA 3.1x (broad debt including leases 4.6x) raises some concern over debt repayment capacity.
Continued high tax burden pressuring Net Income: Effective tax rate 41.3% is elevated, pushing down Net margin to 1.3%. The tax burden coefficient (Net Income ÷ Pre-tax Income) of 0.484 means roughly half of pre-tax profits are lost to taxes; if this persists, shareholder value creation will be constrained. Deferred tax assets ¥18.2B and deferred tax liabilities ¥50.2B result in a net liability position, limiting scope for tax-position improvement.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 6.9% | 5.9% (2.6%–12.0%) | +1.0pt |
| Operating margin | 2.8% | 4.6% (1.7%–8.2%) | -1.8pt |
| Net margin | 1.5% | 3.3% (0.9%–5.8%) | -1.8pt |
ROE exceeds the industry median by +1.0pt, but Operating and Net margins lag the median, placing profitability in the mid-to-lower range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 10.6% | 4.3% (2.2%–13.0%) | +6.3pt |
Revenue growth outperforms the industry median by +6.3pt, placing topline expansion among the higher ranks in the sector.
※ Source: Company aggregation
Margin improvement and inventory normalization are critical to achieving next-year guidance: While Revenue achieved double-digit growth, Operating margin fell to 2.8% (from 3.1%) and Net margin to 1.3% (from 1.5%). Containing SG&A ratio at 12.5% (+0.5pt) and margin recovery in the Car segment (reducing discounting, increasing high-value services/aftermarket mix) are essential. Inventory reached record levels: Inventory ¥876.4B (+22.0%), DIO 97 days (up 9 days), causing working capital pressure and driving OCF/EBITDA down to 0.68x. Normalizing inventory turnover is a top priority to improve both cash generation and margins. The company’s guidance — Operating Income ¥135.0B (+22.7%) and Net Income attributable to owners of the parent ¥70.0B (+43.0%) — is ambitious and contingent on inventory efficiency improvement and margin recovery.
Leverage and liquidity improvement could be a catalyst for re-rating: With D/E ratio 2.89x and Equity Ratio 23.3%, leverage remains high and current ratio 0.93x indicates reliance on short-term debt. Debt/EBITDA 3.1x (broad debt including leases 4.6x) raises concerns over debt servicing capacity; rising interest rates could further increase Financial expenses beyond the current ¥20.7B. Interest Coverage 5.3x secures near-term interest payments but leeway is limited. Conversely, FCF ¥79.8B covers dividends and buybacks totaling ¥51.5B by 1.5x, showing sound cash generation. If inventory normalization expands FCF, accelerated debt repayment and balance sheet improvement become feasible. Improving leverage and liquidity metrics could catalyze upward revaluation within the industry. Housing segment’s margin improvement (6.5%, up 0.6pt) and Operating Income +25.4% contribute positively to portfolio-level margin enhancement.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference data compiled by the company based on public financial statements. Investment decisions should be made at your own discretion and, where appropriate, after consulting a professional advisor.