| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥347.6B | ¥326.7B | +6.4% |
| Operating Income | ¥15.9B | ¥8.2B | +94.0% |
| Ordinary Income | ¥19.8B | ¥11.6B | +70.5% |
| Net Income | ¥16.2B | ¥10.8B | +49.2% |
| ROE | 4.8% | 3.5% | - |
For the fiscal year ended March 2026, Revenue was ¥347.6B (YoY +¥20.9B +6.4%), Operating Income was ¥15.9B (YoY +¥7.7B +94.0%), Ordinary Income was ¥19.8B (YoY +¥8.2B +70.5%), and Net Income was ¥16.2B (YoY +¥5.3B +49.2%), delivering higher sales and substantially higher profits. Operating margin improved to 4.6% from 2.5% a year earlier (up 2.1pp), and net margin improved to 4.7% (up 1.4pp from 3.3%). The core Precision Products segment led performance with Revenue of ¥268.9B (+8.1%) and Operating Income of ¥25.4B (+22.5%), achieving double-digit operating profit growth and improving its operating margin to 9.4%. Daily Commodities recorded Revenue of ¥77.5B (+3.8%) but continued to post an operating loss of ¥0.8B; however, the loss narrowed by 89.8%. Gross margin improved to 23.0% (up 2.8pp from 20.2%), driven by successful price pass-through and mix improvement. Special gains of ¥7.8B (including ¥5.9B gain on disposal of fixed assets) lifted profit before tax, and a low effective tax rate of 7.0% further supported Net Income. Operating Cash Flow was ¥33.7B, 2.1x Net Income, and Free Cash Flow was positive at ¥15.1B, indicating strong cash backing for earnings. Equity Ratio stood at 69.3% and Current Ratio at 432.6%, reflecting very strong financial health. Dividends of ¥167.6 (payout ratio 79.4%) plus share buybacks of ¥15.7B resulted in a Total Return Ratio of about 94%, representing a high level of shareholder return.
[Revenue] Revenue of ¥347.6B (YoY +6.4%) was driven by the core Precision Products segment at ¥268.9B (+8.1%). That segment benefited from steady demand for precision components for Automotive, Industrial Equipment, and Optical Equipment, with contributions from overseas demand and FX effects. Daily Commodities recorded ¥77.5B (+3.8%), a small increase. Other segments (logistics etc.) were ¥11.0B (+5.9%). Segment composition was Precision Products 77.4%, Daily Commodities 22.3%, Other 3.2%, indicating high dependence on the core business.
[Profitability] Gross margin of 23.0% improved 2.8pp from 20.2%, aided by price pass-through, improved product mix, and higher utilization rates. SG&A was ¥64.0B (SG&A ratio 18.4%, prior year 17.7%), increasing more than sales and slightly reducing efficiency; however, improved gross margin resulted in Operating Income of ¥15.9B (Operating margin 4.6%, up 2.1pp from 2.5%), a 94.0% jump. Non-operating income was ¥7.0B (dividends received ¥1.8B, interest received ¥0.6B, etc.) and non-operating expenses were ¥3.1B (interest paid ¥0.8B, etc.), yielding net non-operating income of ¥3.9B and Ordinary Income of ¥19.8B (+70.5%). Special gains totaled ¥7.8B (gain on disposal of fixed assets ¥5.9B, gain on sale of investment securities ¥0.6B, etc.) and special losses were ¥2.7B (impairment losses ¥2.5B, etc.), producing net special gains of ¥5.1B and Profit Before Tax of ¥24.9B. Corporate taxes and similar amounted to ¥1.7B (effective tax rate 7.0%, low due to reversal of deferred tax assets, etc.), resulting in Net Income of ¥16.2B (+49.2%). Comprehensive income was ¥42.3B, with other comprehensive income items—unrealized gain on available-for-sale securities ¥11.0B, foreign currency translation adjustments ¥6.5B, and actuarial gains/losses ¥1.8B—boosting equity. Revenue and profit growth were supported by temporary factors that also bolstered Net Income.
Precision Products (Revenue ¥268.9B, Operating Income ¥25.4B, margin 9.4%) achieved double-digit growth: Revenue +8.1% and Operating Income +22.5%. Strong demand for precision components to Automotive and Industrial Equipment plus price and mix improvements contributed to margin expansion. Daily Commodities (Revenue ¥77.5B, Operating loss ¥0.8B, margin -1.0%) recorded Revenue +3.8% but remained in loss; however, loss narrowed from ¥7.6B to ¥0.8B (89.8% reduction), indicating structural improvements. Other (Revenue ¥11.0B, Operating Income ¥0.8B, margin 7.2%)—mainly logistics—delivered Operating Income +31.7%. There is a significant margin gap across segments, concentrating profitability in Precision Products.
[Profitability] Operating margin 4.6% (up 2.1pp from 2.5%), Net margin 4.7% (up 1.4pp from 3.3%), ROE 4.8% (up 2.4pp from 2.4%). Gross margin 23.0% (up 2.8pp from 20.2%) was the primary driver of margin improvement, thanks to price pass-through and product mix. EPS 287.91円 (prior year 91.93円, +213.2%), BPS 4,262.58円 (prior year 3,793.16円, +12.4%) also improved. [Cash Quality] Operating Cash Flow ¥33.7B is 2.1x Net Income ¥16.2B, and OCF/EBITDA is 1.11x, indicating good cash conversion. Accrual ratio -2.2% suggests small divergence between accounting profit and cash. Working capital was negatively impacted by inventory increase (-¥1.9B) and accounts payable decrease (-¥3.8B); Days Inventory Outstanding (DIO) 107 days and CCC 121 days show room for efficiency improvement. [Investment Efficiency] Total asset turnover 0.71x (flat from 0.72x prior year). Fixed asset turnover 1.77x. CapEx ¥13.3B equals 0.92x depreciation ¥14.5B, indicating maintenance/ selective investment level. [Financial Health] Equity Ratio 69.3% (prior year 69.4%), Current Ratio 432.6%, Quick Ratio 317.3% show ample liquidity. Interest-bearing debt ¥72.2B (long-term borrowings ¥27.5B, corporate bonds ¥40.0B, etc.) vs. cash and deposits ¥140.1B yields net cash ¥67.9B, Debt/EBITDA 2.37x, Interest Coverage 19.1x, indicating very healthy debt service capacity.
Operating Cash Flow ¥33.7B was generated by adding back non-cash expenses such as depreciation ¥14.5B to Profit Before Tax ¥24.9B and adjusting for working capital changes (inventory increase -¥1.9B, trade receivables decrease ¥0.8B, accounts payable decrease -¥3.8B, etc.) and corporate tax payments -¥3.8B. This level is 2.1x Net Income ¥16.2B, reflecting high quality. Investing Cash Flow was -¥18.6B, including capital expenditures -¥13.3B, intangible asset investments -¥2.2B, acquisition of investment securities -¥9.0B, partially offset by proceeds from sale of fixed assets ¥5.9B. Free Cash Flow was positive at ¥15.1B, covering CapEx and investments. Financing Cash Flow was -¥10.6B: long-term borrowings increased ¥20.7B and corporate bonds issued ¥15.0B were offset by long-term borrowings repayments -¥15.0B, dividend payments -¥6.0B, share buybacks -¥15.7B, lease liabilities repayments -¥4.1B, etc. Net change in cash (operating + investing + financing + FX effects) was +¥3.4B, resulting in year-end cash balance ¥140.1B (prior year ¥132.2B, +¥7.9B). Operating CF generation is solid, enabling both investment and shareholder returns.
Of Ordinary Income ¥19.8B, Special gains ¥7.8B (gain on disposal of fixed assets ¥5.9B, gain on sale of investment securities ¥0.6B, etc.) minus Special losses ¥2.7B (impairment losses ¥2.5B, etc.) produced net special gains ¥5.1B, which lifted Profit Before Tax to ¥24.9B. Approximately 20.5% of Profit Before Tax is attributable to one-off items. Moreover, an effective tax rate of 7.0% (due to reassessment of deferred tax assets, etc.) well below normal levels further supported Net Income of ¥16.2B. Operating Income ¥15.9B represents the operating earnings base; of non-operating income ¥7.0B, dividends received ¥1.8B and interest received ¥0.6B are relatively stable. Operating Cash Flow ¥33.7B is 2.1x Net Income and OCF/EBITDA 1.11x, indicating strong cash backing of earnings. Accrual ratio -2.2% shows high cash-based profitability. Given the sizable contribution from one-off items, normalization of tax rates and reduction of special gains in the coming year could lead to Net Income stabilization, making sustained operating-led profit growth the key to durability.
For the fiscal year ending March 2027, the company forecasts Revenue ¥370.0B (YoY +6.5%), Operating Income ¥20.0B (YoY +26.0%), Ordinary Income ¥23.0B (YoY +16.2%), EPS 211.72円, and year-end dividend ¥80.0. The plan assumes an Operating margin of 5.4% (up 0.8pp from current 4.6%), expecting higher sales and profits. Achieving this requires expanding high-value-added sales in Precision Products and maintaining operating margins, Daily Commodities returning to profitability (through price increases, SKU optimization, and fixed-cost reductions), inventory reduction to improve cost and working capital efficiency, and restraint in SG&A growth. Progress can be assessed at the two-thirds point of the fiscal year, with monitoring of Precision Products order trends, utilization rates, and inventory levels being important. Risks include prolonged high raw material/component prices, supply chain disruptions from geopolitical risks, and FX volatility, which could cause the plan to fall short.
Year-end dividend ¥167.6 with payout ratio 79.4% and share buybacks of ¥15.7B (equivalent to approximately 19.6% based on average shares outstanding of 0.8B during the period) were implemented. Combined with the dividend payment of ¥6.0B, total return of about ¥21.7B represents a Total Return Ratio of approximately 134% relative to Net Income ¥16.2B, a high level. However, because the dividend was calculated based on profit in a specific period, the effective payout ratio on a full-year basis is 79.4% given the year-end lump-sum nature. Free Cash Flow ¥15.1B covers dividends of ¥6.0B, but total return including share buybacks depends on special gains and thus sustainability is influenced by next year’s Operating Cash Flow trends. The company announced introduction of a semi-annual dividend from the fiscal year ending March 2027; with the planned year-end dividend ¥80.0 (payout ratio on EPS 211.72円 is 37.8%), this is expected to smooth and stabilize annual dividends. With an Equity Ratio of 69.3% and net cash ¥67.9B, the company has ample financial capacity to balance shareholder returns and growth investment, but if inventory reduction and CCC improvement do not progress and FCF stagnates, the scope for total returns could be limited.
Low working capital efficiency: DIO 107 days and CCC 121 days exceed industry norms, with inventory growth pressuring working capital. Inventory valuation loss risk exists from demand fluctuations and obsolescence; failure to shorten CCC could cause cash flow volatility and decline in capital efficiency.
Operating margin below industry: Operating margin 4.6% is 3.2pp below the industry median of 7.8%, indicating room to improve cost competitiveness. SG&A ratio 18.4% is relatively high; if operating leverage does not materialize, profit growth could slow and shareholder return capacity could diminish.
Segment profit polarization and reliance on one-off gains: Revenue and profits are concentrated in Precision Products (margin 9.4%), while Daily Commodities (margin -1.0%) continues to be loss-making, leaving portfolio imbalance. In addition, about 20.5% of this year’s Profit Before Tax derived from special items, indicating high dependence on one-off factors; normalization in coming years poses a risk of Net Income decline.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.6% | 7.8% (4.6%–12.3%) | -3.2pp |
| Net Margin | 4.7% | 5.2% (2.3%–8.2%) | -0.5pp |
Operating margin trails the industry median of 7.8% by 3.2pp, placing profitability at the lower end within the industry. Net margin is also 0.5pp below the median, highlighting the need to improve cost structure.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.4% | 3.7% (-0.4%–9.3%) | +2.7pp |
Revenue growth of 6.4% exceeds the industry median of 3.7% by 2.7pp, positioning the company in the upper-middle range for top-line growth.
※ Source: Company compilation
Continued profitability improvement and progress in structural reform: Operating margin improved to 4.6% (up 2.1pp from 2.5%), driven by Precision Products’ operating margin of 9.4%. Achieving next year’s target of 5.4% depends on Daily Commodities returning to profitability (price hikes, SKU optimization, fixed-cost reductions) and inventory compression; progress on structural reforms will determine medium-term assessment. Catching up to the industry median of 7.8% will likely require 2–3 years of continued improvement.
Room to improve working capital efficiency and cash generation: DIO 107 days and CCC 121 days exceed industry averages, making inventory compression and SCM optimization urgent. Although Operating Cash Flow ¥33.7B generated Free Cash Flow ¥15.1B and provided good cash backing for profits, inventory increases are pressuring working capital. Achieving DIO below 80 days and CCC below 90 days would likely enhance Operating CF and expand total return capacity.
Financial strength and sustainability of shareholder returns: Equity Ratio 69.3% and net cash ¥67.9B underpin high financial resilience and support dividend payout ratio 79.4% plus share buybacks ¥15.7B (Total Return Ratio approx. 94%). Introducing a semi-annual dividend from the fiscal year ending March 2027 should improve dividend stability, but given high reliance on one-off items (special items account for roughly 20% of Net Income) and expected normalization of tax rates next year, Net Income may stabilize downward. Sustainable shareholder returns will depend on operating-led profit growth and consistent FCF generation.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement disclosure 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 own responsibility; please consult a professional advisor as needed.