| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1256.0B | ¥1214.9B | +3.4% |
| Operating Income / Operating Profit | ¥102.4B | ¥100.1B | +2.2% |
| Ordinary Income | ¥110.2B | ¥95.7B | +15.2% |
| Net Income | ¥47.7B | ¥49.3B | -3.2% |
| ROE | 5.0% | 5.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1,256.05B (YoY +¥41.14B +3.4%), Operating Income was ¥102.36B (YoY +¥2.24B +2.2%), Ordinary Income was ¥110.21B (YoY +¥14.54B +15.2%), and Net Income attributable to owners of parent was ¥59.16B (YoY +¥3.19B +5.7%). The core Vision Care business expanded domestically and internationally with Revenue of ¥1,165.23B (+3.7%) and Operating Income of ¥174.68B (+2.9%, margin 15.0%), accounting for the bulk of earnings. Gross margin remained high at 53.8%, flat YoY, and SG&A ratio rose 0.2pt to 45.7% YoY, though improvements in price and mix limited the impact on margins. At the ordinary income level, foreign exchange gains of ¥9.69B (prior year ¥0.47B) contributed, and non-operating income totaled ¥17.50B vs. non-operating expenses ¥9.64B, netting +¥7.86B and significantly improving from last year’s ▲¥4.44B. Net Income included extraordinary losses of ¥21.81B, including impairments of ¥19.03B, but growth in Ordinary Income enabled final year-over-year profit increase. By region, Japan recorded Revenue of ¥868.76B (+2.5%), Europe ¥160.62B (+11.2%), North America ¥34.55B (+34.7%) with strong overseas growth, while Asia was ¥181.24B (▲3.2%) affected by softness to China.
[Revenue] Revenue totaled ¥1,256.05B (YoY +3.4%), with the Vision Care business representing 92.8% of the total and recording Revenue of ¥1,165.23B (+3.7%). By product, MELS Plan was ¥506.87B, manufacturing and sales of contact lenses and care products were ¥575.18B, both expanding, and Other (including Healthcare & Life Care businesses) was ¥173.98B. By region, Japan was ¥868.76B (+2.5%) with a solid domestic base, Europe ¥160.62B (+11.2%) and North America ¥34.55B (+34.7%) showing notable overseas growth. Asia was ¥181.24B (▲3.2%) with China-directed sales ¥138.66B (▲8.5%) softening. Cost of sales was ¥580.06B, giving a cost-of-sales ratio of 46.2% (prior 46.5%) and raising gross margin to 53.8% (prior 53.5%, +0.3pt). Revenue growth was driven by stable domestic growth, expansion of overseas channels, and price/mix improvements.
[Profitability] Gross profit was ¥675.99B (gross margin 53.8%), less SG&A ¥573.63B (SG&A ratio 45.7%, prior 45.3%) produced Operating Income of ¥102.36B (operating margin 8.1%, prior 8.2%). SG&A included goodwill amortization of ¥10.89B and increased +4.3% YoY, exceeding revenue growth of +3.4% and slightly reducing operating leverage. Corporate expenses were ¥63.69B (prior ¥58.10B), constraining operating margin improvement. Non-operating income comprised interest income ¥1.49B, foreign exchange gains ¥9.69B and other ¥5.30B totaling ¥17.50B; non-operating expenses comprised interest expense ¥8.10B and other ¥1.54B totaling ¥9.64B, giving net non-operating income +¥7.86B, a large improvement from last year’s ▲¥4.44B. As a result, Ordinary Income was ¥110.21B (YoY +15.2%), outpacing the +2.2% increase in Operating Income. Extraordinary income included ¥0.05B from sale of fixed assets and ¥16.32B from reversal of stock acquisition rights (note: total shown as ¥0.20B in source), and extraordinary losses included impairments ¥19.03B and loss on disposal of fixed assets ¥0.77B totaling ¥21.81B, resulting in profit before tax of ¥88.59B (prior ¥92.84B, ▲4.6%). After deducting total income taxes of ¥29.40B (effective tax rate 33.2%) and minority interests of ¥0.03B, Net Income attributable to owners of parent was ¥59.16B (YoY +5.7%). The ¥19.03B impairment reflected temporary measures for business structure realignment; improvement in ordinary operating profitability and favorable FX supported the final year-over-year increase. In summary: revenue growth, slight operating profit rise, substantial ordinary profit growth, and net income increase, with improved non-operating results boosting overall profit.
The Vision Care business posted Revenue ¥1,165.23B (YoY +3.7%), Operating Income ¥174.68B (YoY +2.9%), and operating margin 15.0% (prior 15.1%). Sales of contact lenses and care products expanded domestically and internationally; price/mix improvements maintained gross margin and absorbed fixed cost increases, keeping profitability high. Segment assets increased to ¥1,751.23B (prior ¥1,587.82B), mainly reflecting higher inventories and growth in construction in progress. Other segments (Healthcare & Life Care) recorded Revenue ¥90.82B (YoY ▲0.9%) and an operating loss ¥8.62B (prior loss ¥11.47B); the deficit narrowed but remained negative. Depreciation and amortization was ¥92.34B for Vision Care and ¥0.16B for Other, totaling ¥92.50B; capital expenditure was ¥149.86B for Vision Care and ¥0.11B for Other, totaling ¥149.97B, indicating continued aggressive investment in the core business. Consolidated Operating Income excluding corporate expenses of ¥63.69B was ¥102.36B, highlighting that high profitability of Vision Care supports group-level earnings.
[Profitability] Operating margin was 8.1% (prior 8.2%, ▲0.1pt), maintaining high levels; gross margin 53.8% (prior 53.5%, +0.3pt) rose due to price/mix improvements; SG&A ratio 45.7% (prior 45.3%, +0.4pt) edged up. ROE fell to 5.0% (prior 6.8%), with improvements in net margin offset by deterioration in total asset efficiency. ROA (on Ordinary Income basis) improved to 5.8% (prior 5.2%), indicating better returns on assets. [Cash Quality] Operating Cash Flow (OCF) was ¥118.39B, 2.00x Net Income ¥59.16B, indicating solid cash generation. OCF/EBITDA was 0.59x (with EBITDA = ¥199.64B), declining due to inventory increases and highlighting working capital management issues. DIO (days inventory outstanding) worsened to approximately 124 days (prior ~102 days), DSO ~43 days (prior ~41 days), DPO ~36 days (prior ~41 days), and CCC ~131 days (prior ~102 days), substantially extended. [Investment Efficiency] Capex was ¥152.10B, 1.56x depreciation ¥97.28B, prioritizing growth investment; Free Cash Flow was ▲¥46.49B. Total asset turnover was 0.645x (prior 0.647x), roughly flat, with inventory increases suppressing asset efficiency. [Financial Soundness] Equity ratio improved to 48.9% (prior 45.4%, +3.5pt). Interest-bearing debt totaled ¥191.56B and Debt/EBITDA was 0.96x, indicating ample financial capacity. Current ratio was 270.4% (prior 312.1%), quick ratio 202.8% (prior 252.7%), showing very strong liquidity, with Cash and deposits ¥326.08B exceeding current liabilities ¥292.06B. Interest coverage (EBIT / interest expense) was 12.6x, indicating strong interest-payability. D/E was 0.21x (prior 0.25x), indicating a conservative capital structure.
OCF was ¥118.39B (prior ¥139.44B, ▲15.1%). Profit before tax of ¥88.59B before tax adjustments added back non-cash items including depreciation ¥97.28B, goodwill amortization ¥10.89B, impairments ¥19.03B resulting in an OCF subtotal (before working capital changes) of ¥161.65B. Working capital movements included inventories up ¥45.40B, trade receivables up ¥4.80B, and trade payables down ¥11.40B, totaling approximately ¥61B of cash outflow. Corporate tax payments ¥37.00B, interest & dividend received ¥1.79B, and interest paid ¥8.10B resulted in final OCF of ¥118.39B. Inventory buildup and reduction in payables pressured working capital and reduced OCF/EBITDA to 0.59x, highlighting deterioration in cash conversion. Investing Cash Flow was ▲¥164.88B (prior ▲¥196.61B), primarily for capex ¥152.10B, intangible asset acquisitions ¥12.88B, and acquisition of subsidiary shares ¥20.66B. Free Cash Flow was ▲¥46.49B (prior ▲¥57.17B), remaining negative as growth investment was prioritized. Financing Cash Flow was ▲¥60.37B (prior ¥7.14B), reflecting dividends ¥21.46B, share buybacks ¥23.99B, redemption of corporate bonds ¥1.66B, repayment of long-term borrowings ¥12.70B, while long-term borrowings ¥161.40B and bond issuance ¥99.54B provided funding, and lease liability repayments ¥21.73B were included. Cash and cash equivalents decreased by ¥94.54B from ¥418.64B at the beginning of the period to ¥324.10B at the end, including FX impact +¥12.31B. Inventory increases are seen as reflecting capacity expansion and timing shifts in demand; prolonged capital tie-up raises the risk of higher funding costs depending on interest rate environment.
Ordinary Income ¥110.21B vs. Operating Income ¥102.36B shows non-operating income contribution of +¥7.86B, mainly driven by foreign exchange gains ¥9.69B. FX gains have a strong one-off characteristic and limited sustainability. Extraordinary items included extraordinary losses ¥21.81B including impairments ¥19.03B, making profit before tax ¥88.59B, a decline of ▲19.6% vs. Ordinary Income. Comprehensive income ¥131.94B comprises Net Income ¥47.73B (after tax and minority interests) plus other comprehensive income ¥72.74B including foreign currency translation adjustments ¥70.59B and valuation differences on available-for-sale securities ¥2.15B, with FX valuation gains contributing significantly. The gap between Net Income and OCI reflects the non-cash nature of FX valuation gains and are not realized gains. OCF/Net Income ratio of 2.00x is healthy, but inventory increases compress OCF and, from an accrual perspective, the buildup of working capital lowers earnings quality. Reliance on FX gains in non-operating income is high, so ordinary earnings could swing depending on FX assumptions in subsequent periods. Goodwill amortization ¥10.89B (specific to JGAAP) will continue to depress Net Income but has minimal impact on economic reality. Impairments are largely temporary structural adjustments and may reverse positively next year, but recurrence risk depends on the business environment.
Full year guidance is Revenue ¥1,330.00B (YoY +5.9%), Operating Income ¥110.00B (YoY +7.5%), Ordinary Income ¥105.00B (YoY ▲4.7%), and Net Income attributable to owners of parent ¥65.00B (EPS ¥87.58). Achievement ratios against first-half results are: Revenue 94.4%, Operating Income 93.1%, Ordinary Income 105.0%, Net Income 91.0%, indicating progress roughly in line with assumptions. The Ordinary Income forecast of ▲4.7% YoY likely incorporates the reversal of this year’s FX gains of ¥9.69B. The divergence between Operating Income forecast +7.5% and Ordinary Income forecast ▲4.7% assumes normalization of non-operating items. Net Income forecast ¥65.00B reflects the reversal of this year’s impairment ¥19.03B and a reduction in extraordinary losses. Dividend guidance is disclosed as ¥0 but actual dividend paid was ¥28 (payout ratio 36.3%); the guidance may reflect an undetermined interim and final dividend status. Revenue progress of 94.4% indicates that inventory normalization and continued overseas expansion are key for the second half; Operating Income progress of 93.1% emphasizes SG&A control and suppression of corporate expenses. Achieving full-year guidance assumes improvement in inventory efficiency and normalization of working capital, continuation of price/mix measures, and FX neutrality to absorb ordinary income pressure.
The year-end dividend was ¥28 per share, total dividends ¥21.46B, payout ratio 36.3% (based on Net Income attributable to owners of parent ¥59.16B), a sustainable level. The prior year disclosed dividend as ¥0 but actually paid ¥28, demonstrating consecutive dividends. Share buybacks totaled ¥23.99B; combined with dividends ¥21.46B total shareholder returns were ¥45.45B and total return ratio 76.8%. With Free Cash Flow negative at ▲¥46.49B, FCF coverage (total returns / FCF) is not computable, indicating shareholder returns were financed from cash on hand and borrowings. Net cash is ample at ¥326.08B and net cash after subtracting interest-bearing debt ¥191.56B is ¥134.52B, indicating very strong liquidity and high sustainability of dividends. Share buybacks aimed at improving capital efficiency, but when investment is prioritized, a balanced and flexible approach is required. Depending on next year’s investment plan and progress on inventory correction, dividends may be maintained or modestly increased, while share buybacks will be flexibly managed in trade-off with investments. Payout ratio 36.3% is a reasonable mid-term distribution benchmark, supported by financial capacity.
Cash tie-up and efficiency deterioration from inventory buildup: Inventories ¥197.44B (YoY +25.7%), DIO ~124 days (prior ~102 days) significantly worsened, and CCC extended to ~131 days (prior ~102 days). Prolonged inventory increases imply markdown pressure and obsolescence risk, expanding working capital and suppressing total asset turnover of 0.645x (prior 0.647x), and are a main reason for ROE decline to 5.0% (prior 6.8%). Delays in inventory normalization could crystallize higher funding costs depending on interest rate environment.
High concentration in a single business and market fluctuation risk: Vision Care accounts for 92.8% of Revenue and the majority of Operating Income; demand swings and price competition in the contact lens market directly affect performance. Other segments continue to incur an operating loss of ¥8.62B, limiting portfolio diversification effects. Regionally, China-bound sales softened by ▲8.5% YoY, and Asia market volatility can materially influence group growth.
Profit volatility from one-off items and FX dependence: Of Ordinary Income ¥110.21B, FX gains ¥9.69B (prior ¥0.47B) contributed +8.3% of profit; ordinary profitability could swing materially depending on FX assumptions next period. Recording of extraordinary losses ¥21.81B including impairments ¥19.03B led to profit before tax being ▲19.6% vs. Ordinary Income, creating high volatility at the bottom line. The sustainability of FX gains is limited, and the guidance for Ordinary Income YoY ▲4.7% reflects that reversal.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.1% | 7.8% (4.6%–12.3%) | +0.4pt |
| Net Margin | 3.8% | 5.2% (2.3%–8.2%) | -1.4pt |
Operating margin exceeds the industry median by 0.4pt and is at a high level, but net margin trails the median by 1.4pt due to extraordinary losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.4% | 3.7% (-0.4%–9.3%) | -0.3pt |
Revenue growth is slightly below the median 3.7% and represents a standard growth pace within the industry.
※ Source: Company compilation
Core business profitability is high: Vision Care operating margin 15.0% and gross margin 53.8% have been maintained via price/mix improvements, and stable domestic base plus overseas expansion (Europe +11.2%, North America +34.7%) are driving growth. Absorbing increases in SG&A ratio while keeping operating margin at 8.1% and ranking above industry peers demonstrates competitive strength.
Deterioration in working capital efficiency constrains returns on capital: DIO extended by about 22 days and CCC by about 29 days, highlighting inventory management issues. ROE decline to 5.0% (prior 6.8%) is mainly due to stagnation in total asset turnover; inventory normalization and working capital compression are key to improving capital efficiency. Aggressive capex ¥152.10B (1.56x depreciation) pushed FCF negative, but monetization of construction in progress ¥166.79B could provide significant future growth upside.
Financial position is very strong: current ratio 270.4%, cash ¥326.08B, Debt/EBITDA 0.96x indicate low liquidity and leverage risks. Shareholder returns are active with payout ratio 36.3% and total return ratio 76.8%, but with negative FCF returns were funded from cash and borrowings, so balancing with investment plans is a focal point. FX gains ¥9.69B and impairments ¥19.03B materially affected ordinary and net income, and normalization next year could cause profit volatility that warrants attention.
This report was generated by AI analyzing XBRL financial statement data to produce automated earnings analysis. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the firm from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.