| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥13482.5B | ¥12415.1B | +8.6% |
| Operating Income / Operating Profit | ¥1895.2B | ¥1802.3B | +5.2% |
| Ordinary Income | ¥2019.2B | ¥1864.7B | +8.3% |
| Net Income / Net Profit | ¥614.8B | ¥648.7B | -5.2% |
| ROE | 7.1% | 8.2% | - |
For the fiscal year ended March 2026, the company reported higher revenue and profit: Revenue ¥13,482B (YoY +¥1,067B +8.6%), Operating Income ¥1,895B (YoY +¥93B +5.2%), Ordinary Income ¥2,019B (YoY +¥155B +8.3%), and Net Income attributable to owners of the parent ¥1,407B (YoY +¥114B +8.8%). The core Toy & Hobby Business drove strong growth with Revenue +12.9% and Operating Income +24.2%, and the Amusement Business also improved with Operating Income +19.8%. The Digital Business grew Revenue +4.6% but saw Operating Income -17.3%, indicating margin pressure. Operating margin was 14.1% (down 0.4pt from 14.5% a year earlier), Net margin remained high at 10.4% (flat YoY). Operating Cash Flow was ¥1,647B, 1.2x Net Income, and Free Cash Flow was ¥1,236B, indicating ample cash generation. The full-year forecast is conservative: Revenue ¥13,500B (+0.1%), Operating Income ¥1,850B (-2.4%).
[Revenue] Revenue ¥13,482B (YoY +8.6%) grew across all segments. The Toy & Hobby Business recorded ¥6,740B ( +12.9%), representing 50.0% of total revenue, with success from multi-channel deployment of character toys, capsule toys, and cards. The Digital Business posted ¥4,766B (+4.6%), 35.3% of revenue, driven by packaged games and network content, but growth decelerated. The Film & Music Business was ¥956B (+5.3%), and the Amusement Business ¥1,528B (+8.0%) showed stable growth. By region, Japan contributed ¥7,799B (+11.8%), the Americas ¥2,292B (-1.7%), Europe ¥1,576B (-0.1%), and Asia ¥1,816B (+18.6%). Gross margin was 39.4% (down 0.5pt from 39.9%), with the rise in cost of sales attributed to product mix changes.
[Profitability] Cost of sales was ¥8,171B (cost of sales ratio 60.6%), gross profit ¥5,312B. SG&A was ¥3,417B (SG&A ratio 25.3%, improved 0.1pt from 25.4% last year), including goodwill amortization of ¥24B. Operating Income ¥1,895B (Operating margin 14.1%), up 5.2% YoY. By segment, Toy & Hobby Operating Income ¥1,269B (margin 18.8%) contributed roughly 67% of consolidated Operating Income; Digital Operating Income ¥567B (margin 11.9%, down 2.5pt from 14.4% prior year) showed deteriorating profitability. Non-operating income was ¥137B (interest income ¥33B, dividend income ¥17B, foreign exchange gains ¥23B, equity-method investment income ¥48B). Non-operating expenses were minor at ¥13B. Ordinary Income ¥2,019B (Ordinary margin 15.0%), up 8.3% YoY. Extraordinary gains ¥15B (gain on sales of investment securities ¥13B), extraordinary losses ¥57B (impairment losses ¥7B, valuation loss on investment securities ¥6B, etc.), net extraordinary items -¥42B. Income before income taxes ¥1,977B, income taxes ¥568B (effective tax rate 28.7%), and non-controlling interests ¥3B were deducted to arrive at Net Income attributable to owners of the parent ¥1,407B (Net margin 10.4%). In conclusion, revenue and profits increased, but margin decline in Digital constrained overall operating margin expansion.
The Toy & Hobby Business: Revenue ¥6,740B (YoY +12.9%), Operating Income ¥1,269B (YoY +24.2%), margin 18.8%, accounting for ~67% of consolidated Operating Income. High-margin card and toy lines drove profit growth. The Digital Business: Revenue ¥4,766B (+4.6%), Operating Income ¥567B (-17.3%), margin 11.9% (down 2.5pt from 14.4%). Upfront title development and promotion spending and a shift in revenue mix toward live-ops pressured profitability. Film & Music: Revenue ¥956B (+5.3%), Operating Income ¥122B (+3.4%), margin 12.8%—steady. Amusement Business: Revenue ¥1,528B (+8.0%), Operating Income ¥101B (+19.8%), margin 6.6%—improved. Other Businesses: Revenue ¥390B (+7.6%), Operating Income ¥28B (+68.7%). Consolidated Operating Income after corporate adjustments was ¥1,895B.
[Profitability] Operating margin 14.1% (down 0.4pt from 14.5%) remains well above manufacturing peers. Net margin 10.4% (flat YoY). ROE 7.1% (Net Income attributable to owners of the parent ¥614.8B ÷ Shareholders’ equity ¥8,614B, down from 8.2%) reflects solid equity base. EBIT (Operating Income) ¥1,895B. EBITDA (Operating Income + Depreciation ¥472B + Goodwill amortization ¥24B) ¥2,391B, implying an EBITDA margin of 17.7%. [Cash Quality] Operating Cash Flow ¥1,647B is 2.7x Net Income (consolidated basis ¥615B), indicating high quality. Accrual ratio (Net Income - Operating CF)/Total Assets = -8.7%—favorable. Operating CF / EBITDA ratio 0.69x, impacted by working capital absorption and higher tax payments. Days Sales Outstanding 39.6 days, Inventory turnover period 15.1 days. [Investment Efficiency] Total asset turnover 1.13x (Revenue ¥13,482B ÷ Ending total assets ¥11,905B). CapEx ¥358B / Depreciation ¥472B = 0.76x, reflecting maintenance/replacement investment levels. CapEx / Revenue ratio 2.7%. [Financial Soundness] Equity Ratio 72.4% (improved 0.5pt from 71.9%), Current Ratio 266%, Cash & Cash Equivalents ¥4,333B, effectively zero interest-bearing debt (no short-term or long-term borrowings; only lease liabilities). D/E ratio 0.38x (Debt ¥3,291B ÷ Net assets ¥8,614B) is very low. Interest Coverage (EBIT ¥1,895B ÷ Interest expense ¥5B) 386x, indicating extremely strong financial safety.
Operating CF was ¥1,647B (down 12.1% from ¥1,873B prior year). Starting from Income before income taxes ¥1,977B plus non-cash charges—Depreciation ¥472B, Goodwill amortization ¥24B, impairment losses ¥7B—Operating CF subtotal was ¥2,282B. Changes in working capital reduced cash by accounts receivable increase -¥193B, inventory increase -¥14B, accounts payable increase ¥23B, contract liabilities increase ¥19B, and corporate tax payments of ¥677B were deducted. Working capital absorption was larger than the prior year and was the main driver of Operating CF decline. Investing CF was -¥412B, mainly due to capital expenditures -¥358B (acquisition of tangible fixed assets), acquisition of intangible assets -¥100B, and purchases of investment securities -¥37B. Net change in time deposits contributed +¥8B. FCF (Operating CF + Investing CF) was ¥1,236B (slightly down from ¥1,253B prior year) and remains ample. Financing CF was -¥830B, driven by dividend payments -¥537B and share repurchases -¥248B. Lease liability repayments -¥24B were minor. Cash and cash equivalents increased by ¥514B; foreign exchange effects added +¥109B, resulting in ending balance ¥4,124B. Cash ratio 36.4% (Cash & Deposits ¥4,333B ÷ Total Assets ¥11,905B) indicates very strong liquidity.
Operating Income ¥1,895B is the core profit source. Non-operating income ¥137B (1.0% of sales) comprised interest income ¥33B, dividend income ¥17B, foreign exchange gains ¥23B, and equity-method investment income ¥48B—limited in scale but mostly recurring in nature. Non-operating expenses ¥13B (interest expense ¥5B, foreign exchange losses ¥8B) were minor. Ordinary Income ¥2,019B shows only a small uplift from operating results, indicating high quality of earnings. Net extraordinary items were -¥42B (Extraordinary gains ¥15B - Extraordinary losses ¥57B), representing 6.8% of Net Income—limited impact. Gain on sales of investment securities ¥13B was one-off but small. Effective tax rate 28.7% is standard, with minimal distortion from tax accounting. Operating CF ¥1,647B is 2.7x Net Income ¥615B, indicating good accrual quality. The difference between Comprehensive Income ¥1,466B and Net Income ¥615B (gap ¥851B) was driven by Other Comprehensive Income: foreign currency translation adjustments ¥157B, valuation differences on available-for-sale securities -¥127B, deferred hedge gains/losses ¥18B, retirement benefit adjustments ¥9B, etc.—mainly FX and securities valuation effects, presenting limited concern for earnings quality.
Full-year forecast for the fiscal year ending March 2027: Revenue ¥13,500B (YoY +0.1%), Operating Income ¥1,850B (YoY -2.4%), Ordinary Income ¥1,900B (YoY -5.9%), Net Income attributable to owners of the parent ¥1,300B (YoY -7.6%)—a conservative projection. Progress rates are: Revenue 99.9%, Operating Income 102.4%, Ordinary Income 106.3%, Net Income 108.3%—already exceeding FY guidance. The factors assumed for the year-end reduction include timing of title releases and development cost burdens in the Digital Business, inventory adjustments, and a tapering of favorable FX; these are plausible explanations. Forecast EPS ¥202.69 vs. realized ¥217.49 indicates targets already achieved. Dividend guidance: interim ¥23 (actual), year-end ¥25 for an annual ¥48, but the company notes “year-end dividend to be considered separately,” leaving room for an upward revision based on results.
Annual dividend was interim ¥23 and year-end ¥50 totaling ¥73 (a large increase from ¥11 in the prior year’s disclosed figure, noting the prior year only recorded interim). With Net Income attributable to owners of the parent ¥614.8B, weighted average shares outstanding during the period 6,467 million shares, and EPS ¥217.49, the dividend of ¥73 implies a Payout Ratio 33.6% (company disclosure cites 35.9%—minor discrepancy). Additionally, ¥248B of share buybacks were executed, bringing total shareholder returns to (Dividends ¥471B + Share buybacks ¥248B) ÷ Net Income attributable to owners of the parent ¥614.8B = 117% (company reports 51.0%, suggesting they used Net Income attributable to owners of the parent on a different basis ¥1,407B (consolidated comprehensive income basis) in the denominator). Total returns ¥719B vs. FCF ¥1,236B gives coverage 1.7x; dividend-only coverage by FCF is 2.6x—highly sustainable. A payout ratio in the 30% range balances room for profit growth and financial flexibility. Next fiscal year dividend guidance only discloses interim ¥25 with year-end undecided, leaving potential for an increase based on results.
Profitability deterioration in the Digital Business: Operating Income ¥567B (YoY -17.3%), margin 11.9% (down 2.5pt from 14.4%). Upfront title development and promotion spending and a shift in revenue mix toward live-ops are causes. Dependence on hit title cycles and delayed payback could press consolidated margins. Quantitative impact estimated at around -¥112B on Operating Income.
Inventory increase and turnover risk: Inventory ¥555B (up 28.0% from ¥434B prior year), including work-in-progress ¥646B and finished goods ¥555B. High WIP ratio suggests buildup ahead of title/product launches. Although inventory turnover period is short at 15.1 days, prolonged WIP stagnation could lead to valuation losses and discounting risk. Working capital absorption contributes to a low Operating CF/EBITDA ratio of 0.69x.
Conservatism and gap in guidance: The full-year Operating Income forecast ¥1,850B is below realized ¥1,895B. The rationale for projecting a year-end decline is unclear, raising questions about guidance credibility. Delays in Digital margin recovery or slower inventory normalization could exert downward pressure on future earnings estimates.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.1% | 7.8% (4.6%–12.3%) | +6.3pt |
| Net Margin | 4.6% | 5.2% (2.3%–8.2%) | -0.6pt |
Operating margin exceeds the manufacturing median by 6.3pt and is in the top tier. Net margin is 0.6pt below the median, attributable to tax burden and non-controlling interests; underlying earnings power remains superior.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 8.6% | 3.7% (-0.4%–9.3%) | +4.9pt |
Revenue growth outperforms the industry median by 4.9pt, placing the company in the high-growth cohort, driven by double-digit growth in the core Toy & Hobby business.
※ Source: Internal aggregation of public financial statements
High profitability and growth in the core Toy & Hobby Business: Revenue ¥6,740B (+12.9%), Operating Income ¥1,269B (+24.2%), margin 18.8%, accounting for ~67% of consolidated Operating Income. Multi-channel exploitation of character IP, cards, and toys drives profit and underpins the above-industry Operating margin of 14.1%. The business exhibits structural competitive advantages.
Margin recovery potential and risk in the Digital Business: Operating Income ¥567B (-17.3%), margin 11.9% (down 2.5pt from 14.4%). While the division is in a phase of upfront development spending and revenue-mix adjustment, improvements in title pipeline quality and investment payback would allow re-expansion of consolidated margins. Continued delays in payback represent downside risk. Given conservative full-year guidance, monitoring recovery in next fiscal year’s profitability is critical.
Financial strength and shareholder return capacity: Equity Ratio 72.4%, Cash & Deposits ¥4,333B, effectively zero interest-bearing debt—financial position is extremely robust. FCF ¥1,236B vs. total returns ¥719B gives 1.7x coverage; payout ratio 33.6%—ample capacity. If inventory normalizes and Digital profitability improves, the company has room to increase dividends and share repurchases.
This report was generated automatically by AI analyzing XBRL earnings announcement data and is a financial result analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmark data are reference information compiled internally from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.