| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥456.7B | ¥451.1B | +1.2% |
| Operating Income | ¥67.2B | ¥69.0B | -2.5% |
| Ordinary Income | ¥69.0B | ¥70.7B | -2.4% |
| Net Income | ¥47.8B | ¥49.0B | -2.5% |
| ROE | 8.5% | 9.2% | - |
For the fiscal year ended March 2026, consolidated results were: Revenue ¥456.7B (year-on-year +¥5.6B +1.2%), Operating Income ¥67.2B (year-on-year -¥1.7B -2.5%), Ordinary Income ¥69.0B (year-on-year -¥1.7B -2.4%), Net Income attributable to owners of parent ¥47.0B (year-on-year -¥1.4B -2.8%). The company delivered higher revenue but lower profit. Operating margin was 14.7%, down 0.6pt from 15.3% a year earlier. The Wiring Devices segment led growth with Revenue +9.7% and Profit +24.9%, partially offsetting profit declines in the core Electrical Materials & Pipe Materials segment, but SG&A increases (¥109.4B, +¥0.8B YoY) pressured company-wide profitability. Cash and cash equivalents were ¥217.3B and net debt was effectively zero (interest-bearing debt ¥0.5B), maintaining a strong financial position. Dividend payout ratio was 50.1%, continuing shareholder returns. ROE declined slightly to 8.5% (prior 9.4%) but financial soundness remains very high supported by an Equity Ratio of 81.9%.
Revenue of ¥456.7B (+1.2%) was comprised of the core Electrical Materials & Pipe Materials segment at ¥349.9B (-0.1%), the Wiring Devices segment at ¥80.4B (+9.7%), and Other segments at ¥83.6B (+5.9%). Wiring Devices benefited from residential and capex demand capture and mix improvement, raising its revenue share to 17.6% (prior 16.2%). Geographic revenue remained over 90% domestic, with limited overseas exposure. Gross profit margin declined to 38.7% from 39.4% (down 0.7pt) as raw material and logistics cost increases pressured gross margins.
Operating Income of ¥67.2B (-2.5%) resulted from Gross Profit ¥176.6B less SG&A ¥109.4B. SG&A ratio was 23.9% versus 24.1% prior, effectively flat, but absolute increases in wages and allowances ¥38.6B (prior ¥37.5B) and freight ¥21.4B (prior ¥22.8B) weighed on profits. Ordinary Income of ¥69.0B exceeded Operating Income due to non-operating income ¥2.2B (dividends received ¥0.7B, interest income ¥0.3B), though growth in non-operating income was modest and core business profitability remained dominant. Extraordinary items net to neutral (gains ¥0.5B offset losses ¥0.5B). Profit before tax ¥69.0B less income taxes ¥21.2B (effective tax rate 30.7%) and non-controlling interest ¥0.8B produced Net Income ¥47.0B. In sum, despite revenue growth, increased SG&A and lower gross margin led to higher revenue but lower profit.
The core Electrical Materials & Pipe Materials segment reported Revenue ¥349.9B (-0.1%), Operating Income ¥59.9B (-6.4%), and a margin of 17.1%. Revenue was essentially flat but cost increases reduced margins year-on-year. The Wiring Devices segment delivered Revenue ¥80.4B (+9.7%), Operating Income ¥8.7B (+24.9%), and margin 10.8%, driven by capture of housing-related demand and a shift to higher value-added products; margin improved from prior Operating Income ¥7.0B and 9.5%. Other segments posted Revenue ¥83.6B (+5.9%), Operating Income ¥7.1B (+24.5%), margin 8.5%, with automation equipment, plastic injection molds, and telecom/Cable TV businesses performing steadily. Company-wide profit decline was mainly due to reduced profitability in the core Electrical Materials & Pipe Materials segment, partially offset by gains in Wiring Devices and Other segments.
Profitability: Operating margin 14.7% (prior 15.3%), Net margin 10.3% (prior 10.9%). Structure: Gross margin 38.7% less SG&A ratio 23.9%, where increases in SG&A absolute amount suppressed profitability. ROE was 8.5% (prior 9.4%), decomposed as Net margin 10.3% × Total asset turnover 0.665 × Financial leverage 1.22x. ROA on an Ordinary Income basis was 10.2% (prior 10.9%). Cash quality: Operating Cash Flow (OCF) ¥70.8B is 1.48x Net Income ¥47.8B, indicating good quality. EBITDA (Operating Income ¥67.2B + Depreciation ¥26.1B = ¥93.3B) to OCF ratio was 0.76x, with working capital increases (inventory -¥3.8B, accounts payable -¥3.6B) absorbing cash. Free Cash Flow was ¥29.3B, sufficient to cover dividends of ¥25.8B. Investment efficiency: CapEx ¥35.3B is 1.35x Depreciation ¥26.1B, indicating investment above maintenance; tangible fixed asset turnover 2.94x. Financial soundness: Equity Ratio 81.9% (prior 79.2%), Current Ratio 443%, Quick Ratio 391%—extremely robust. Interest-bearing debt ¥0.5B, Debt/EBITDA 0.01x implying effectively zero net debt. Long-term borrowings reduced to ¥0.1B (prior ¥0.8B), further enhancing financial flexibility. Interest coverage using OCF is ¥70.8B ÷ Interest Paid ¥0.1B ≈ 708x, indicating extremely high interest resilience.
OCF was ¥70.8B (year-on-year -6.0%). Starting from Profit before tax ¥69.0B plus non-cash charges such as Depreciation ¥26.1B, subtotal was ¥91.4B; after deducting working capital changes (inventory increase -¥3.8B, trade receivables increase +¥4.5B, trade payables decrease -¥3.6B) and corporate tax payments -¥22.1B, the result was OCF ¥70.8B. Net working capital increase of about ¥3B constrained cash generation. Investing Cash Flow was -¥41.5B, primarily CapEx -¥35.3B. Net changes in time deposits (placements -¥5.5B, withdrawals +¥1.6B) also had some impact. Financing Cash Flow was -¥27.0B, driven mainly by dividend payments -¥25.8B and long-term borrowings repayments -¥2.7B. Free Cash Flow ¥29.3B exceeded dividends ¥25.8B, enabling shareholder returns without eroding equity. Cash and cash equivalents rose slightly to ¥197.1B (prior ¥194.7B), maintaining ample liquidity.
Ordinary Income ¥69.0B was neutral to extraordinary items (gains ¥0.5B offset losses ¥0.5B). Non-operating income ¥2.2B—comprising dividends received ¥0.7B, interest income ¥0.3B, etc.—represents 0.5% of sales, indicating limited contribution from non-core sources. Recurring earnings make up the bulk of profit, with low dependence on one-off items. OCF ¥70.8B is 1.48x Net Income ¥47.8B, but OCF/EBITDA 0.76x reflects cash absorption from working capital increases (inventory +¥2.3B, accounts payable decrease -¥3.6B). The accrual ratio ((Net Income - OCF) ÷ Total Assets) is approximately -3.3%, within a healthy range. Tax burden is standard with an effective tax rate of 30.7%, and the divergence between Ordinary Income and Net Income is primarily tax-driven. Earnings sustainability and cash conversion are high, though inventory efficiency improvement is suggested.
Next fiscal year guidance: Revenue ¥118.2B (+1.2%), Operating Income ¥12.9B (-12.8%), Ordinary Income ¥13.2B (-13.0%), EPS ¥54.30 (¥), DPS ¥50.00 (¥). As the full-year is closed, progress rate evaluation is not applicable; next-year guidance is conservatively designed, expecting slight revenue growth but double-digit profit declines. The guidance factors in sustained high raw material and logistics costs and higher SG&A; dividend is leveled at ¥50. Price revision pass-through and mix improvement in the Wiring Devices segment are key to achieving targets.
Annual dividend ¥145 (interim ¥50 + year-end ¥95) returns a total of ¥25.8B to shareholders. Dividend payout ratio 50.1% is in line with historical levels, demonstrating a policy to smooth dividends despite profit fluctuations. Next-year forecasted dividend ¥50 reflects conservative profit assumptions and suggests maintenance of a floor dividend. Share buybacks were minimal at ¥0.01B, so Total Return Ratio is effectively equivalent to the payout ratio. Free Cash Flow ¥29.3B versus dividends ¥25.8B yields FCF coverage of dividends 1.14x, adequate. With cash and deposits ¥217.3B and effectively no net debt, dividend sustainability is high.
Inventory efficiency deterioration risk: Inventories ¥50.8B (prior ¥48.5B, +4.7%) have increased, raising concerns about extended inventory turnover periods. Composition includes Raw materials ¥18.4B and Finished goods ¥50.8B; demand volatility or product mix shifts could lead to inventory aging or impairment risks. Inventory increases have reduced OCF by -¥3.8B, and if efficiency is not improved, cash generation could slow.
Structural SG&A increase: Wages and allowances ¥38.6B (prior ¥37.5B) and freight ¥21.4B (prior ¥22.8B) indicate continued labor cost increases, and absolute SG&A ¥109.4B is a burden given sales growth of +1.2%. Upward pressure on wages and logistics costs may be irreversible in the short term, and delayed price pass-through would continue to compress margins. If the downtrend in Operating margin (14.7% vs prior 15.3%) becomes entrenched, achieving ROE targets could be difficult.
Concentration risk in core segment: The Electrical Materials & Pipe Materials segment accounts for 76.6% of Revenue and 89.2% of Operating Income; its profit decline (-6.4%) materially affects company-wide results. Heavy reliance on domestic housing and capex demand means that a slowdown in construction starts or variability in public investment would directly impact performance. Regional diversification is limited (domestic >90%), so global risk diversification has not progressed.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.7% | 7.8% (4.6%–12.3%) | +7.0pt |
| Net Margin | 10.5% | 5.2% (2.3%–8.2%) | +5.3pt |
Profitability significantly exceeds the manufacturing median and ranks high within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 1.2% | 3.7% (-0.4%–9.3%) | -2.5pt |
Growth lags the median, reflecting a mature business profile.
※ Source: Company compilation
High growth in the Wiring Devices segment has improved overall portfolio quality. With Revenue +9.7% and Profit +24.9%, double-digit growth continued and a shift to higher value-added products contributed to margin expansion. As the core Electrical Materials & Pipe Materials segment faces profit decline, expansion of Wiring Devices is key to medium-term revenue diversification.
The effectively debt-free position and Cash and cash equivalents ¥217.3B provide a strong financial base to withstand external shocks and support investment capacity. The company balances active investment (CapEx ¥35.3B, 1.35x Depreciation) with a dividend payout ratio in the 50% range, maintaining both shareholder returns and growth investment. Improving inventory efficiency would further enhance FCF generation and expand options for additional returns or growth investments.
Next-year guidance is conservative with Operating Income -12.8%, but price revision penetration and SG&A discipline could create upside. The Operating margin of 14.7% remains well above the industry median 7.8%, and with cost control and product mix improvement, sustaining double-digit margins is feasible. Inventory adjustment completion and accelerated growth in Wiring Devices are short-term catalysts.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions should be made at your own responsibility, and consult a professional advisor as needed.