| Indicator | Current Period | Prior-Year Q3 | YoY |
|---|---|---|---|
| Revenue | ¥118.9B | ¥117.3B | +1.3% |
| Operating Income | ¥0.2B | ¥1.9B | -87.0% |
| Ordinary Income | ¥0.2B | ¥2.0B | -87.7% |
| Net Income | ¥-0.3B | ¥1.8B | -62.2% |
| ROE | -0.5% | 2.9% | - |
In FY2026 Q3, Revenue was ¥118.9B (YoY +¥1.6B, +1.3%) and remained flat, while Operating Income fell sharply to ¥0.2B (YoY -¥1.7B, -87.0%) and Ordinary Income declined to ¥0.2B (YoY -¥1.8B, -87.7%). Net Income turned to a loss of ¥-0.3B (YoY -¥2.1B, -62.2%). Although top-line was largely maintained, the increase in SG&A pushed the Operating Margin down to 0.2%, indicating a severe deterioration in profitability.
[Profitability] ROE -0.5% (deteriorated from 4.9% a year ago), ROA -0.3% (deteriorated from 2.8% a year ago), Operating Margin 0.2% (down -1.4pt from 1.6% a year ago), Net Margin -0.3% (deteriorated from 1.5% a year ago), Gross Profit Margin 13.9%. DuPont analysis: Net Margin -0.3%, Total Asset Turnover 1.022x, Financial Leverage 1.88x; the decline in Net Margin is the primary driver of weaker profitability. [Cash Quality] Cash and Deposits ¥9.7B; Short-term Debt Coverage 0.27x (Cash and Deposits/Current Liabilities). Interest Coverage 2.5x (EBIT/Interest Expenses), a low level indicating interest burden is weighing on Operating Income. [Investment Efficiency] Total Asset Turnover 1.022x. Intangible Assets were ¥0.95B, up +58.3% from ¥0.60B a year ago, indicating a shift in invested capital mix. [Financial Soundness] Equity Ratio 53.3%, Current Ratio 192.2%, Quick Ratio 184.6%, Debt-to-Equity Ratio 0.88x, Interest-Bearing Debt ¥14.9B, Debt/Capital Ratio 19.4%, reflecting a conservative capital structure. Working Capital was ¥33.2B, indicating sound short-term liquidity; however, Accounts Receivable of ¥30.9B is elevated as a proportion of sales receivables.
Although Operating Cash Flow disclosure is unavailable, analysis of balance sheet trends shows Cash and Deposits increased by +¥0.2B YoY to ¥9.7B and remained broadly flat. Current Assets increased by +¥1.4B to ¥69.3B (from ¥67.9B a year ago), mainly due to Accounts Receivable rising to ¥30.9B (from ¥29.8B a year ago), up +¥1.1B. While Revenue rose a modest +1.3%, Accounts Receivable increased, suggesting the collection cycle may be lengthening. Inventory decreased slightly to ¥2.7B (from ¥2.8B a year ago), indicating stable inventory management. Cash coverage of Current Liabilities of ¥36.0B is 0.27x, but with a Current Ratio of 192.2%, short-term payment capacity is secured. Total Assets increased from ¥116.2B to ¥109.4B, with a notable rise in Intangible Assets of +¥0.35B (+58.3%). The company intends to maintain an annual dividend of ¥20 (¥10 at mid-year and ¥10 at year-end); however, given the net loss this period, dividend payments would rely on drawing down retained earnings or generating Operating Cash Flow.
Ordinary Income was ¥0.2B versus Operating Income of ¥0.2B, indicating non-operating items were largely neutral. Non-operating Income was ¥0.12B, mainly Dividend Income of ¥0.07B; Non-operating Expenses were ¥0.13B, largely Interest Expenses of ¥0.10B. The net Non-operating Profit/Loss was a small -¥0.01B, indicating non-operating items are not driving results. Operating Income of ¥0.2B (Operating Margin 0.2%) is extremely low; SG&A of ¥16.2B consumed nearly all Gross Profit of ¥16.5B. Income Taxes recorded were ¥0.28B; against Profit before tax of ¥0.01B, this implies a high effective tax rate, likely due to tax adjustments and deferred tax effects. Non-operating Income is limited at 0.1% of Revenue, and weak core business profitability significantly undermines earnings quality. With a net loss in the period, confirmation from the cash flow statement is needed regarding cash backing for earnings.
[Position within the Industry] (Reference information; our research) The company’s profitability is significantly inferior within its industry. Operating Margin of 0.2% is far below the industry median of 7.3% (IQR: 4.6%–12.0%), and Net Margin of -0.3% is also markedly lower than the industry median of 5.4% (IQR: 3.5%–8.9%). ROE -0.5% is below the industry median of 4.9% (IQR: 2.8%–8.2%), and ROA -0.3% is well below the industry median of 3.3% (IQR: 1.8%–5.1%). Revenue growth of +1.3% ranks in the lower tier compared with the industry median of 2.8% (IQR: -0.9%–7.9%), indicating underperformance even in top-line growth. Meanwhile, on financial soundness, the Equity Ratio of 53.3% is slightly below the industry median of 63.9% (IQR: 51.5%–72.3%) but roughly mid-level, while the Current Ratio of 192.2% is below the industry median of 267% (IQR: 200%–356%), indicating somewhat weaker liquidity. The Net Debt/EBITDA multiple is at a level that is not computable; compared with the industry median of -1.11 (IQR: -3.50–1.24), the company’s low EBIT suggests vulnerability in its capacity to service interest-bearing debt. Overall, within manufacturing, the company ranks in the lower tier for both profitability and growth, with financial soundness assessed as mid- to lower-tier. (Industry: Manufacturing (N=65 companies), comparison period: FY2025 Q3, source: our compilation)
Key points from the results are as follows. First, SG&A of ¥16.2B nearly consumes the entire Gross Profit of ¥16.5B, and an Operating Margin of 0.2% is far below the 7.3% industry median, exposing vulnerability in the profit structure. While the company maintains its full-year Operating Income forecast at ¥1.1B, achieving this would require generating +¥0.9B of profit in Q4 alone from a cumulative Q3 result of ¥0.2B, making the execution of concrete measures to curb SG&A and improve gross margin critical. Second, despite a net loss of ¥-0.3B this period, the company intends to maintain an annual dividend of ¥20; it is necessary to confirm whether total dividends can be funded by Operating Cash Flow. While Cash and Deposits of ¥9.7B suggest secured short-term liquidity, Interest Coverage is a low 2.5x, and the interest burden of ¥0.10B is pressuring Operating Income. Third, Intangible Assets rose sharply by +58.3% YoY (¥0.6B → ¥0.95B), necessitating monitoring of the change in the nature of invested capital and the potential impact of future amortization/impairment on performance. Accounts Receivable of ¥30.9B is high relative to sales receivables, and the lengthening of the collection cycle is a risk factor that could worsen working capital efficiency.
This report is an automatically generated earnings analysis produced by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by our firm from publicly available financial statements. Investment decisions are your own responsibility; please consult a professional as needed before making any decisions.