| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2702.7B | ¥2083.1B | +29.7% |
| Operating Income | ¥607.6B | ¥445.1B | +36.5% |
| Ordinary Income | ¥587.8B | ¥433.8B | +35.5% |
| Net Income | ¥466.7B | ¥317.3B | +47.1% |
| ROE | 14.7% | 11.6% | - |
FY2026 Q1 results delivered substantial revenue and profit growth: Revenue ¥2702.7B (YoY +¥619.5B +29.7%), Operating Income ¥607.6B (YoY +¥162.5B +36.5%), Ordinary Income ¥587.8B (YoY +¥154.0B +35.5%), and quarterly Net Income attributable to owners of the parent ¥466.7B (YoY +¥149.4B +47.1%). All seven reportable segments posted revenue and profit growth, with particularly strong performance in Europe (Revenue +43.8%, Operating Income +53.5%), Greater China (Revenue +28.2%, Operating Income +62.9%), and Southeast & South Asia (Revenue +34.6%, Operating Income +45.2%). Operating margin improved to 22.5% (from 20.5% a year earlier, +2.0pt), and Net margin improved to 17.3% (from 15.2%, +2.1pt). EPS was ¥65.71 (prior ¥44.26, +48.5%). Total assets increased to ¥6,401.0B (up ¥536.2B from fiscal year-end), and total equity increased to ¥3,178.8B (up ¥445.2B), with the Equity Ratio improving to 49.7% (from 46.6%, +3.1pt), strengthening the financial base.
[Revenue] Revenue ¥2702.7B (YoY +29.7%) achieved high growth across all regions. Europe ¥845.7B (+43.8%) was the largest driver, while Greater China ¥372.0B (+28.2%) and Southeast & South Asia ¥168.7B (+34.6%) showed strong growth in emerging markets. North America ¥481.5B (+23.0%), Oceania ¥159.1B (+27.5%) also grew steadily, and Japan ¥592.7B (+17.2%) achieved double-digit revenue growth. Broad-based demand expansion and channel expansion were the main drivers of revenue growth; Accounts Receivable rose sharply to ¥1,293.5B (from ¥829.6B prior year, +55.9%), confirming transaction expansion. Inventories decreased to ¥1,660.5B from ¥1,743.7B a year earlier, suggesting healthy sell-through.
[Profitability] Cost of goods sold was ¥1,227.5B (prior ¥919.9B, +33.4%), rising with sales, and gross margin declined to 54.6% (from 55.8%, -1.2pt). SG&A was controlled at ¥867.5B (prior ¥718.1B, +20.8%), growing below revenue growth of +29.7%; notably Advertising ¥179.6B (6.6% of sales), Distribution expense ¥90.1B (3.3% of sales), and Fees ¥152.1B (5.6% of sales) were efficiently managed. As a result, Operating Income ¥607.6B (+36.5%) outpaced revenue growth, and Operating margin expanded to 22.5% (from 20.5%, +2.0pt). Non-operating items included Interest expense ¥13.5B and Foreign exchange losses ¥4.8B, partially offset by Interest income ¥7.2B, delivering Ordinary Income ¥587.8B (+35.5%). Special gains included Gain on disposal of fixed assets ¥31.1B, resulting in Profit before tax ¥618.7B (+42.7%) and Net Income ¥466.7B (+47.1%) after tax effects. Net margin improved to 17.3% (from 15.2%, +2.1pt).
Europe achieved Revenue ¥845.7B (prior ¥588.0B, +43.8%), Operating Income ¥182.1B (prior ¥118.7B, +53.5%), and margin 21.5%, recording largest scale and high growth. Greater China posted Revenue ¥372.0B (prior ¥290.1B, +28.2%), Operating Income ¥110.5B (prior ¥67.9B, +62.9%), and margin 29.7%, the highest profitability among segments. Japan reported Revenue ¥592.7B (prior ¥505.6B, +17.2%), Operating Income ¥145.0B (prior ¥106.8B, +35.8%), margin 24.5%, maintaining stable high profitability. North America delivered Revenue ¥481.5B (prior ¥391.3B, +23.0%), Operating Income ¥63.8B (prior ¥57.7B, +10.6%), margin 13.3%, showing growth albeit lower margin. Southeast & South Asia recorded Revenue ¥168.7B (prior ¥125.4B, +34.6%), Operating Income ¥44.5B (prior ¥30.6B, +45.2%), margin 26.3%, combining high growth and high profitability. Oceania had Revenue ¥159.1B (prior ¥124.8B, +27.5%), Operating Income ¥23.7B (prior ¥22.1B, +7.0%), margin 14.9%. Other regions: Revenue ¥159.2B (prior ¥129.0B, +23.4%), Operating Income ¥29.8B (prior ¥23.7B, +25.7%), margin 18.7%. All segments achieved revenue and profit growth; high-margin growth in Greater China, Europe, and Southeast Asia contributed to overall margin expansion.
[Profitability] Operating margin 22.5% (from 20.5%, +2.0pt) and Net margin 17.3% (from 15.2%, +2.1pt) show improved profitability. ROE 14.7% is composed of Total asset turnover 0.42x (from 0.43x, slight decline), improved Net margin, and Financial leverage 2.01x. Gross margin 54.6% (from 55.8%, -1.2pt) reflects cost pressures, but SG&A ratio 32.1% (from 34.5%, -2.4pt) efficiency drove Operating margin expansion. [Cash Quality] Operating Cash Flow (OCF) was -¥111.3B (from +¥34.5B prior year, deterioration of -422.8%), turning significantly negative. OCF before working capital changes was ¥129.5B, but increases in Accounts Receivable (-¥448.9B, DSO equivalent 175 days) and Corporate tax payments (-¥236.2B) absorbed cash. OCF/Net Income ratio is -0.24x, indicating delayed cash realization of profits. Free Cash Flow was -¥142.5B (OCF -¥111.3B, Investing CF -¥31.2B); capital expenditures ¥36.0B and Intangible asset acquisitions ¥35.0B were executed. [Investment Efficiency] Total asset turnover 0.42x (prior 0.43x) slightly declined. Inventory days (DIO) 508 days (Inventory ¥1,660.5B ÷ daily COGS), Receivables days (DSO) 175 days (Receivables ¥1,293.5B ÷ daily Sales), Payables days (DPO) 198 days (Payables ¥664.3B ÷ daily COGS) yield Cash Conversion Cycle (CCC) 485 days, extended. [Financial Soundness] Equity Ratio 49.7% (from 46.6%, +3.1pt), Current ratio 180.8% (Current assets ¥4,622.2B ÷ Current liabilities ¥2,556.2B), Interest-bearing debt ¥475.0B (Short-term borrowings ¥400.0B, Bonds maturing within 1 year ¥250.0B, Bonds ¥100.0B) against Cash and deposits ¥1,193.9B yields Net cash ¥718.9B, effectively debt-free. Debt/EBITDA ratio 0.58x (Interest-bearing debt ¥475B ÷ annualized EBITDA approx. ¥820B), Interest Coverage 45.1x (Operating Income ¥607.6B ÷ Interest expense ¥13.5B) indicate very strong financial resilience.
OCF was -¥111.3B (prior +¥34.5B, -422.8% deterioration), turning significantly negative. OCF before working capital changes totaled ¥129.5B, but the largest cash outflow factor was increase in trade receivables -¥448.9B (worsened from -¥304.1B prior year). Accounts Receivable rose to ¥1,293.5B (an increase of ¥463.9B or +55.9% from prior year), expanding at a pace far exceeding Revenue growth of +29.7%. Inventory decrease contributed +¥97.8B (prior +¥72.0B), reflecting inventory digestion due to strong sales. Decrease in Accounts Payable -¥68.4B (prior -¥38.2B) and Corporate tax payments -¥236.2B (prior -¥79.3B) also absorbed cash. Investing CF was -¥31.2B: CapEx -¥36.0B and Intangible asset acquisitions -¥35.0B were partially offset by proceeds from fixed asset disposals +¥58.5B and sale of subsidiary shares +¥4.2B. Financing CF was +¥218.8B, with net increase in short-term borrowings +¥375.0B (prior +¥80.0B) to supplement working capital, Dividend payments -¥113.5B (prior -¥71.6B), and Lease liabilities repayment -¥42.7B (prior -¥34.4B). Free Cash Flow was -¥142.5B (OCF -¥111.3B + Investing CF -¥31.2B). Cash and cash equivalents increased from ¥1,122.2B at the beginning of the period to ¥1,193.5B at period-end (+¥71.3B), largely reliant on increased short-term borrowings.
Ordinary Income ¥587.8B included Special gains ¥31.1B (Gain on disposal of fixed assets), representing about 5.0% of Profit before tax ¥618.7B, therefore limited impact on core earnings. Non-operating income ¥10.2B (Interest income ¥7.2B, Others ¥3.0B) versus Non-operating expenses ¥30.1B (Interest expense ¥13.5B, FX losses ¥4.8B, Others ¥5.1B) resulted in net -¥19.9B, indicating low reliance on non-operating items. Comprehensive income ¥548.4B exceeded Net Income ¥466.7B by +¥81.7B, composed of Foreign currency translation adjustments +¥19.8B, Deferred hedge gains +¥61.0B, Valuation difference on available-for-sale securities +¥0.7B, and Remeasurements of defined benefit plans +¥0.2B, with deferred hedge gains notably contributing. However, OCF -¥111.3B is substantially below Net Income ¥466.7B (OCF/Net Income -0.24x), and rapid Accounts Receivable growth plus concentrated tax payments are delaying cash realization of profits. The expansion of accruals is evident; working capital normalization in subsequent quarters (collections of receivables) will determine sustainability of earnings quality.
Full Year guidance remains unchanged: Revenue ¥9,500.0B (YoY +17.2%), Operating Income ¥1,710.0B (YoY +20.0%), Ordinary Income ¥1,650.0B (YoY +18.5%), Net Income attributable to owners of the parent ¥1,100.0B (YoY +21.3%), EPS forecast ¥153.91, Dividend forecast ¥18.00. Q1 progress against full-year guidance: Revenue 28.5% (seasonal norm 25% +3.5pt), Operating Income 35.5% (+10.5pt), Ordinary Income 35.6% (+10.6pt), Net Income 42.4% (+17.4pt), indicating front-loaded performance in the first half. Progress in profits is particularly notable, driven by high-margin growth in Europe and Greater China and SG&A efficiency. If the current pace continues, upside to full-year guidance is possible, but normalization of working capital (receivables collection, inventory compression) is a precondition. No revisions to earnings or dividend guidance were made this quarter; the company maintains confidence in its plan.
No dividend was paid in Q1; full-year dividend forecast is ¥18.00 per share (prior ¥12.00, +¥6.00 +50.0% increase). Against full-year Net Income forecast ¥1,100.0B and issued shares base 734 million shares, total dividend payment is approximately ¥132B (after treasury shares deduction approx. ¥128B), implying a Payout Ratio of about 11.6%, a conservative level. Dividend payment -¥113.5B in Q1 is assumed to be payment of prior-term dividend. Share buybacks in Q1 were -¥0.0B (Financing CF), very limited; shareholder return policy is dividend-centric. Cash and deposits ¥1,193.9B and Free Cash Flow full-year outlook (although at Q1 pace -¥142.5B the year would be negative, the assumption is working capital normalization in H2) suggest dividend funding is sufficiently secured and the sustainability of the dividend increase is high. Total Return Ratio remains roughly the same as Payout Ratio at about 11.6% due to minimal buybacks, indicating most profits will be retained for growth investment and financial stability.
Working capital management risk: Accounts Receivable ¥1,293.5B (prior ¥829.6B, +55.9%) has expanded at a pace far exceeding Revenue growth +29.7%, with DSO 175 days prolonged. OCF turned negative -¥111.3B and OCF/Net Income is -0.24x, indicating significant delay in cash realization. Inventory days DIO 508 days and CCC 485 days show deterioration in working capital efficiency; delayed receivable collections raise credit loss risk and inventory obsolescence risk. Short-term borrowings increased sharply from ¥25.0B to ¥400.0B (+1,500%), creating a structure of covering working capital shortfalls with short-term funding, which entails higher cost exposure in a rising interest rate environment and refinancing risk.
Regional concentration risk: Europe Revenue ¥845.7B (31.3% of total) and Greater China Revenue ¥372.0B (13.8%) indicate high dependence on particular regions; geopolitical risk, abrupt consumer trend changes, or regulatory changes could directly impact performance. Greater China, with Operating margin 29.7% and highest profitability, could see margin pressure if economic growth slows or competition intensifies. Foreign currency translation adjustment +¥19.8B supported comprehensive income this period, but future FX movements (notably EUR and CNY) could materially affect results.
Uncertainty in maintaining profitability: Gross margin fell to 54.6% (from 55.8%, -1.2pt) amid ongoing raw material and logistics cost pressures. While Operating margin improved to 22.5% due to SG&A efficiency, Advertising ¥179.6B (6.6% of sales), Distribution expense ¥90.1B (3.3%), and Fees ¥152.1B (5.6%) are likely to increase with sales expansion. Special gains ¥31.1B (Gain on disposal of fixed assets) are non-recurring and have low replicability over the full year. Growth slowdown or intensified price competition in high-margin regions (Greater China, Southeast Asia) poses downside risk to Operating margin.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 22.5% | 6.8% (2.9%–9.0%) | +15.6pt |
| Net margin | 17.3% | 5.9% (3.3%–7.7%) | +11.3pt |
The company substantially outperforms the manufacturing peer median on profitability, ranking in the upper quintile within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 29.7% | 13.2% (2.5%–28.5%) | +16.5pt |
Revenue growth exceeds sector median by +16.5pt, positioning the company as a high-growth firm within the industry.
※ Source: Company compilation
High-margin growth in Europe and Greater China and SG&A efficiency drove Operating margin to 22.5% (from 20.5%, +2.0pt) and Net margin to 17.3% (from 15.2%, +2.1pt). All seven reportable segments achieved revenue and profit growth; notably Greater China margin 29.7% and Southeast & South Asia margin 26.3% enhanced portfolio quality. Operating Income ¥607.6B (+36.5%) grew faster than Revenue +29.7%, showing operating leverage, and progress against full-year guidance is front-loaded (Operating Income 35.5%, Net Income 42.4%), exceeding seasonality.
Deterioration in working capital management is the main concern. Accounts Receivable expanded +55.9% (about twice Revenue growth +29.7%), driving OCF negative -¥111.3B. OCF/Net Income -0.24x, DSO175 days, DIO508 days, CCC485 days show substantial delay in cash realization. Short-term borrowings ¥400.0B (from ¥25.0B, +1,500%) are being used to cover working capital shortfalls. Normalization of receivables collections and inventory reduction in H2 are essential for FCF recovery and sustaining financial soundness.
Financial resilience is strong: Equity Ratio 49.7%, Cash and deposits ¥1,193.9B, Debt/EBITDA 0.58x, Interest Coverage 45.1x provide robust downside protection. The full-year dividend increase (¥12→¥18, +50.0%) is conservative with a payout ratio of 11.6%, and based on earnings and cash balances the increase appears sustainable. Continued profit progress versus guidance and improved regional portfolio quality could lead to upside to full-year guidance, conditional on the pace of working capital normalization.
This report was 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 from public financial statements. Investment decisions are your responsibility; consult a professional advisor if necessary.