| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥740.4B | ¥725.8B | +2.0% |
| Operating Income | ¥26.9B | ¥28.4B | -5.4% |
| Equity-method Investment Gains (Losses) | - | - | - |
| Ordinary Income | ¥31.6B | ¥26.8B | +18.1% |
| Net Income | ¥22.4B | ¥18.6B | +20.5% |
| ROE | 2.1% | 1.8% | - |
Q1 FY2026 (Jan–Mar 2026) Revenue was ¥740B (YoY +¥14B +2.0%), Operating Income was ¥27B (YoY -¥2B -5.4%), Ordinary Income was ¥32B (YoY +¥5B +18.1%), and Net Income was ¥22B (YoY +¥4B +20.5%). Revenue marked a second consecutive period of growth. While Operating Income turned negative, Ordinary Income and Net Income increased due to improved non-operating income and reduced interest burden. Full Year progress rates were Revenue 24.7%, Operating Income 28.3%, Ordinary Income 35.1%, Net Income 37.4% — profit-line progress exceeded standard progress (25%) by more than 10 points. By region, the Americas (Revenue +16.1%) and Japan (Revenue +12.6%) led growth, while Greater China (Revenue -2.8%) and Europe (Revenue -14.7%) declined, clarifying regional mix divergence.
[Revenue] Revenue was ¥740B, an increase of ¥14B YoY (+2.0%). By region: Japan ¥253B (prior ¥224B, +12.6%) achieved double-digit growth on robust domestic demand; Americas ¥214B (prior ¥185B, +16.1%) posted the highest growth driven by local production shifts and demand expansion; Southeast Asia ¥279B (prior ¥283B, -1.2%) decreased slightly; Greater China ¥180B (prior ¥185B, -2.8%) declined due to geopolitical risks and softened demand; Europe ¥55B (prior ¥65B, -14.7%) fell significantly. Regional revenue composition: Southeast Asia 37.7%, Americas 29.0%, Japan 34.1%, Greater China 24.3%, Europe 7.4%; growth in the Americas and Japan supported consolidated revenue. Top-line remained resilient, but differing growth rates between high- and low-margin regions affected profitability.
[Profit & Loss] Cost of goods sold was ¥664B (prior ¥650B, +2.2%), rising faster than revenue growth. Gross profit was ¥76B (prior ¥76B, -0.3%), leaving gross margin at 10.3% (prior 10.5%, -16bp). SG&A was ¥49B (prior ¥47B, +4.0%), increasing faster than sales; SG&A ratio rose to 6.7% (prior 6.5%, +16bp). Operating Income was ¥27B (prior ¥28B, -¥1B -5.4%), and Operating Margin fell to 3.6% (prior 3.9%, -29bp), resulting in an operating loss on a YoY basis. Non-operating income increased to ¥8B (prior ¥3B), comprising interest income ¥1.3B, foreign exchange gains ¥0.6B, subsidies ¥0.4B, and other ¥2.6B, including one-off asset disposal gains ¥2.2B that contributed to the uplift. Non-operating expenses decreased to ¥3B (prior ¥5B); interest expense improved materially to ¥1.6B (prior ¥2.5B) due to reduced short-term borrowings, while foreign exchange losses of ¥1.8B remained. Ordinary Income increased to ¥32B (prior ¥27B, +¥5B +18.1%), improving Ordinary Margin to 4.3% (prior 3.7%, +57bp). Profit before tax was ¥32B; after income taxes of ¥9B (effective tax rate 29.2%), Net Income was ¥22B (prior ¥19B, +¥4B +20.5%), and Net Margin improved to 3.0% (prior 2.6%, +46bp). In summary, while revenue grew, operating-level profitability weakened due to lower gross margin and higher SG&A, but Ordinary and Net Income increased due to higher non-operating income and reduced interest burden — resulting in revenue up / operating down / final profit up.
Americas: Revenue ¥214B (prior ¥185B, +16.1%), Operating Income ¥11B (prior ¥13B, -13.5%), margin 5.3%. Revenue sustained high growth but profit declined; margin contracted from 7.1% last year. Southeast Asia: Revenue ¥279B (prior ¥283B, -1.2%), Operating Income ¥11B (prior ¥12B, -5.2%), margin 4.1%. Both revenue and profit slightly down; margin edged down from 4.3% last year. Japan: Revenue ¥253B (prior ¥224B, +12.6%), Operating Income ¥4B (prior ¥2B, +107.4%), margin 1.7%. Double-digit revenue growth and substantial profit improvement, margin up +0.8pt from 0.9% last year. Greater China: Revenue ¥180B (prior ¥185B, -2.8%), Operating Income ¥0.2B (prior ¥3B, -93.8%), margin 0.1%. Declining revenue and a sharp profit fall severely deteriorated profitability, down 1.5pt from 1.6% last year, effectively near breakeven. Europe: Revenue ¥55B (prior ¥65B, -14.7%), Operating Income ¥1B (prior ¥0.4B, +155.9%), margin 2.0%. Despite large revenue decline, cost optimization led to profit improvement and a swing to black, margin improved 2.6pt from -0.6% last year. The bulk of consolidated Operating Income came from the Americas and Southeast Asia (each >¥11B); Japan improved, Greater China collapsed, and Europe returned to profit, forming the regional profit structure.
[Profitability] Operating Margin 3.6% (prior 3.9%, -0.3pt), Gross Margin 10.3% (prior 10.5%, -0.2pt), SG&A Ratio 6.7% (prior 6.5%, +0.2pt). Operating-stage profitability was pressured by higher cost ratios and increased SG&A. Ordinary Margin 4.3% (prior 3.7%, +0.6pt) improved due to increased non-operating income and reduced interest burden. Net Margin 3.0% (prior 2.6%, +0.5pt). Tax burden coefficient 0.709 (income taxes ¥9B ÷ profit before tax ¥32B) is roughly normal, indicating limited erosion from Ordinary to Net Income. ROE was 2.1% versus a prior estimate 1.8% (Net Income ¥19B ÷ prior Net Assets ¥1,038B), slightly improved. DuPont decomposition: Net Margin 3.0% × Total Asset Turnover 0.354x (Revenue ¥740B ÷ Total Assets ¥2,094B) × Financial Leverage 1.97x (Total Assets ¥2,094B ÷ Net Assets ¥1,065B) — improvement mainly driven by Net Margin increase. EBIT margin as an operating efficiency indicator is 3.6% (prior 3.9%), diluted by below-average profitability in high-growth markets (Americas and Japan) and regional mix effects. Interest burden ratio 1.177 (Ordinary Income ¥32B ÷ Operating Income ¥27B) improved, and interest payable decreased to ¥1.6B (prior ¥2.5B), which contributed to non-operating uplift.
[Cash Quality] DSO (days sales outstanding) 298 days, DIO (days inventory outstanding) 311 days, CCC (cash conversion cycle) 374 days — all prolonged, suggesting receivables and inventory retention delay Operating Cash Flow generation. Interest coverage is 16.59x (Operating Income ¥27B ÷ interest payable ¥1.6B), a high level indicating strong interest-bearing capacity, but working capital constraints limit profit quality.
[Investment Efficiency] Total Asset Turnover 0.354x (prior 0.349x) slightly improved, attributable to Revenue growth +2.0% versus total assets growth +0.7%. Tangible Fixed Asset Turnover 1.77x (Revenue ¥740B ÷ tangible fixed assets ¥417B) indicates mid-level utilization of manufacturing and logistics bases, but deteriorated working capital efficiency depresses overall asset efficiency.
[Financial Soundness] Equity Ratio 50.9% (prior 49.7%, +1.2pt). Net Assets ¥1,065B (prior ¥1,038B, +¥27B +2.6%) increased from profit accumulation and foreign currency translation adjustments of ¥15B. Current Ratio 218% (Current Assets ¥1,554B ÷ Current Liabilities ¥713B), Quick Ratio 188% ((Current Assets – Inventory) ¥1,339B ÷ Current Liabilities ¥713B) — short-term liquidity is solid with minimal immediate funding concerns. Interest-bearing debt totals ¥366B (short-term borrowings ¥121B, long-term borrowings ¥94B, bonds ¥150B), exceeding cash and deposits ¥309B by net interest-bearing debt ¥57B, but scale is limited. Debt-to-equity multiple approx. 0.97x (interest-bearing debt ¥366B ÷ Net Assets ¥1,065B — roughly estimated), Debt/Capital ratio approx. 16.8% (interest-bearing debt ¥366B ÷ (Net Assets ¥1,065B + interest-bearing debt ¥366B) ×100) at conservative levels. Short-term debt ratio is 56.2% (short-term borrowings ¥121B ÷ interest-bearing debt ¥366B ×100) — relatively high; maturity management and sensitivity to rising rates require attention, although cash and deposits cover short-term borrowings 2.55x, limiting near-term refinancing risk. Payables ¥429B vs. Receivables ¥605B and Inventory ¥215B indicate large working capital; efficiency of credit and inventory management is key to maintain financial soundness.
Detailed cash flow statement not disclosed, but balance sheet movements analyzed for cash trends. Cash and deposits were ¥309B, up ¥8B from prior ¥301B (+2.8%). The cash increase is considerably below Net Income ¥22B, suggesting absorption by working capital expansion. Receivables were ¥605B, up ¥19B from prior ¥587B (+3.2%), rising faster than Revenue growth +2.0%, indicating delayed collections. Inventory was ¥215B, up ¥4B from prior ¥211B (+1.7%), reflecting continued inventory buildup with sales growth. Payables were ¥429B, up ¥22B from prior ¥407B (+5.4%), expanding with procurement activity, but the increase in receivables and inventory outpaced payables, tightening overall working capital. Short-term borrowings fell to ¥121B from ¥146B (down ¥25B, -17.0%), long-term borrowings ¥94B from ¥101B (down ¥7B, -6.9%); overall reduction in interest-bearing debt mitigated interest burden. Foreign currency translation adjustments were ¥345B, up ¥15B from prior ¥330B, with yen depreciation boosting Other Comprehensive Income and contributing to Net Assets growth. Working capital indicators DSO 298 days, DIO 311 days, CCC 374 days demonstrate prolonged receivable and inventory retention, indicating that cash generation from operations lags profits. Inventory turnover annualized 1.17x (COGS ¥664B ÷ Inventory ¥215B annualized from quarterly basis) corresponds to 118 days of inventory. Receivables turnover annualized 1.22x (Revenue ¥740B ÷ Receivables ¥605B quarterly-based) implies 298 days collection period. Shortening these metrics is central to improving Operating Cash Flow. In investing activities, asset disposal gains ¥2.2B were recorded in non-operating income, suggesting asset disposals temporarily boosted cash. Financing activities primarily included repayment of short-term borrowings ¥25B, contributing to reduced interest-bearing debt and improved financial quality. Overall, despite profit increases, working capital absorption and receivables/inventory retention delay cash conversion; shortening CCC and improving DSO/DIO are key to strengthening future cash generation.
Quality of earnings: starting from operating-stage recurring profit Operating Income ¥27B, net non-operating items (Non-operating income ¥8B – Non-operating expenses ¥3B = +¥5B) lifted Ordinary Income to ¥32B. Non-operating income breakdown: interest income ¥1.3B, foreign exchange gains ¥0.6B, subsidies ¥0.4B, other ¥2.6B; among these, asset disposal gains ¥2.2B are one-off and have limited repeatability. Non-operating income is 1.1% of Revenue — well below a 5% threshold — indicating low structural dependence on non-operating income. Interest payable decreased ¥0.9B to ¥1.6B (prior ¥2.5B), with reduced short-term borrowings contributing to Ordinary Income uplift. Foreign exchange losses ¥1.8B were recorded as non-operating expense, and FX volatility continues to pressure earnings. The divergence — Operating Income down -5.4% vs Ordinary Income up +18.1% and Net Income up +20.5% — shows that non-operating items and tax effects amplified final profit, implying insufficient operating-stage earning power. From accrual quality perspective, prolonged DSO 298 days, DIO 311 days, CCC 374 days indicate receivables and inventory retention hinder conversion of profits to Operating Cash Flow. Comprehensive Income was ¥39B (prior -¥38B), with foreign currency translation adjustment ¥15B being main contributor to Other Comprehensive Income, exceeding Net Income ¥22B by ¥17B. The gap between Comprehensive Income and Net Income includes non-cash FX valuation gains. Sustainability of recurring earnings depends on operating improvements; excluding one-offs (asset disposal gains ¥2.2B, interest burden reduction ¥0.9B), net non-operating uplift is ~¥2B, so part of Ordinary Income increase rests on non-recurring items. Overall, earnings quality is constrained by operating-stage margin deterioration and working capital absorption; final-stage uplift was driven by non-operating, FX, and one-off gains. Improving recurring earnings accompanied by cash generation will determine next valuation range.
Full year guidance unchanged: Revenue ¥3,000B (YoY +3.6%), Operating Income ¥95B (YoY +7.3%), Ordinary Income ¥90B (YoY -2.5%), Net Income ¥60B (estimated based on prior period results). Q1 progress vs full year: Revenue 24.7% (standard progress 25%: -0.3pt), Operating Income 28.3% (+3.3pt), Ordinary Income 35.1% (+10.1pt), Net Income 37.4% (+12.4pt) — indicating operating profit and below are ahead of schedule. Revenue progress is around standard and confirms sustained top-line growth, but operating-stage margin decline is reflected. The substantial outperformance in Ordinary and Net Income reflects increased non-operating income and reduced interest burden, including one-off items such as asset disposal gains ¥2.2B, so sustainability is uncertain. Against the full-year Operating Income plan ¥95B, Q1 Operating Income ¥27B assumes improvements from Q2 onward; recovery in gross margin and restraint of SG&A are key to achieving targets. For Ordinary Income plan ¥90B, Q1 ¥32B appears ahead, but risk remains from potential decay of non-recurring gains and FX volatility. Net Income is estimated around ¥60B based on FY EPS ¥127.29, and Q1 ¥22B is slightly more than one-third of that plan, increasing the likelihood of plan attainment assuming normalized tax burden. No forecast revisions were made after Q1; the company left guidance unchanged. Key points to watch: operating-stage profitability improvement (recovery in gross margin and SG&A control), regional mix effects (continued growth in Americas & Japan and profit recovery in Greater China), working capital efficiency (inventory reduction and stronger receivables collection to shorten CCC), and the trajectory of non-operating contributions (drop-off of one-offs).
Dividend policy maintained at annual dividend ¥25 per share. Payout Ratio relative to FY EPS ¥127.29 is approx. 19.6%, a conservative level. No dividend forecast revision at Q1; stable dividend policy remains. Cash and deposits ¥309B and strong liquidity (Current Ratio 218%, Quick Ratio 188%), alongside modest net interest-bearing debt ¥57B, provide sufficient capacity to continue dividends. Operating Cash Flow details undisclosed, but prolonged DSO/DIO/CCC imply profits are less readily converted to cash; however, total dividend payout estimated ¥12B (Annual DPS ¥25 × shares outstanding 50,400 thousand − treasury shares 3,262 thousand) is modest relative to quarterly Net Income ¥22B. Payout Ratio 19.6% leaves ample room for returns; if operating CF and working capital efficiency improve, dividend increases are possible. No share buybacks confirmed at this time; shareholder returns focus on dividends. Total Return Ratio (dividends + buybacks) equals the dividend-only payout ratio 19.6% at present. Given financial soundness and liquidity, dividend stability rates highly, though prolonged working capital constraints could pose future cash strain.
Working Capital Expansion Risk: Prolonged indicators DSO 298 days, DIO 311 days, CCC 374 days indicate receivables and inventory retention limiting Operating Cash Flow. Inventory ¥215B (YoY +¥4B) is rising faster than Revenue growth +2.0%, and 118 days of inventory raises risk of price adjustments and valuation losses during production cuts. Receivables ¥605B (YoY +¥19B) could lead to bad debt risk and deteriorating Operating Cash Flow if credit terms loosen and collections slow. Shortening CCC via inventory compression and receivables collection is essential; delays would cause persistent quality erosion of profits.
Regional Mix Risk: Greater China Revenue ¥180B (-2.8%) and Operating Income ¥0.2B (-93.8%, margin 0.1%) show a sharp deterioration, near breakeven. Prolonged geopolitical risks and demand softness could lead to losses and dilute consolidated margins. While Americas (Revenue ¥214B +16.1%, margin 5.3%) and Southeast Asia (Revenue ¥279B, margin 4.1%) drive profits, Americas saw Operating Income decline -13.5% and margin compression from 7.1% last year; maintaining profitability in growth markets is a focus. Delays in Greater China recovery combined with continued profit decline in Americas/Southeast Asia would materially compress consolidated Operating Income.
FX & Interest Rate Risk: FX losses ¥1.8B included in non-operating expenses, while foreign currency translation adjustments ¥15B lifted Comprehensive Income, indicating FX volatility impacts earnings and Net Assets. Yen depreciation boosts Revenue (overseas sales ratio 65.9% — Americas + Southeast Asia + Greater China + Europe total ¥493B ÷ Revenue ¥740B) but may raise procurement costs and widen FX losses, pressuring gross margin. Interest payable decreased to ¥1.6B, but short-term debt ratio 56.2% is relatively high; in a rising interest rate environment refinancing costs could surge, increasing financial expenses and pressuring Ordinary Income. Concurrent adverse FX and interest moves could eliminate non-operating gains and translate operating weakness into final profit declines.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.6% | – | – |
| Net Margin | 3.0% | 7.4% (6.8%–7.9%) | -4.3pt |
Net Margin is 4.3pt below the industry median 7.4%, indicating relatively low profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.0% | 3.8% (0.9%–6.4%) | -1.8pt |
Revenue growth lags the industry median 3.8% by 1.8pt.
※ Source: Company aggregation
Operating-stage profitability deterioration and working capital efficiency improvement are critical evaluation points: Operating Margin 3.6% (prior 3.9% -0.3pt), Gross Margin 10.3% (prior -0.2pt), SG&A Ratio 6.7% (prior +0.2pt) — operating profitability softened. Working capital indicators DSO 298 days, CCC 374 days imply delayed cash conversion of earnings. Full-year Operating Income progress +3.3pt exceeds standard, but if Q1 operating decline trends persist, achieving the plan will be difficult. Simultaneous improvement in gross margin (procurement optimization / price pass-through), SG&A control, inventory compression (DIO shortening), and receivables collection strengthening (DSO shortening) is required; quarterly monitoring of Operating Margin and CCC will be key investment-decision metrics.
Regional mix divergence is a mid-term watershed for growth and profitability: Americas (margin 5.3%) and Southeast Asia (4.1%) are core, Japan (1.7%) improving with double-digit growth, Greater China (0.1%) severely deteriorated, Europe (2.0%) returned to profit — clear regional profit divergence. Greater China’s revenue composition 24.3% being essentially breakeven weighs on consolidated Operating Income; whether Greater China can recover will determine mid-term upside. If Americas & Southeast Asia maintain high margins and Japan’s growth continues while Greater China returns to black, consolidated Operating Margin could recover to the 5% range. Conversely, Greater China turning into losses or continued Americas profit decline could push Operating Margin below 3%. Quarterly regional P&L trends and Greater China gross margin/order trends are leading indicators to watch.
This report was automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by our firm from public financial statements. Investment decisions are the responsibility of the reader; please consult a professional advisor as needed.