| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥472.2B | ¥427.4B | +10.5% |
| Operating Income | ¥80.9B | ¥74.2B | +9.0% |
| Ordinary Income | ¥80.9B | ¥73.2B | +10.6% |
| Net Income | ¥55.4B | ¥49.1B | +12.8% |
| ROE | 9.4% | 8.6% | - |
For Q1 of the fiscal year ending March 2026, revenue was ¥472.2B (YoY +¥44.8B, +10.5%), Operating Income was ¥80.9B (YoY +¥6.7B, +9.0%), Ordinary Income was ¥80.9B (YoY +¥7.8B, +10.6%), and quarterly Net Income attributable to owners of the parent was ¥55.4B (YoY +¥6.3B, +12.8%), achieving revenue and profit growth. Operating margin remained high at 17.1% (down 0.3pt from 17.4% a year earlier). By segment, the core Workplace Business recorded revenue of ¥365.3B (+5.4%), accounting for 77.4% of the total, while the Equipment & Public Business grew strongly to ¥103.9B (+33.7%). Progress against the Full Year forecast was 28.2% for revenue and 50.6% for Operating Income, markedly ahead of the typical Q1 profit ratio (around 25%), indicating front-loaded profit performance.
[Revenue] Revenue was ¥472.2B (YoY +10.5%), reflecting solid growth. The Workplace Business continued steady growth at ¥365.3B (+5.4%), while the Equipment & Public Business expanded significantly to ¥103.9B (+33.7%). By region, Japan grew to ¥451.2B (+9.9%) as the primary market, and Asia showed high growth at ¥20.3B (+32.5%). Revenue mix was Workplace Business 77.4%, Equipment & Public Business 22.0%, Others 1.1%, and the rising share of the Equipment & Public Business contributed to a favorable mix. Notes and accounts receivable were ¥399.5B (¥344.7B prior year, +¥54.7B), and inventories were ¥76.0B (¥65.7B prior year, +¥10.3B), indicating buildup of receivables and inventory accompanying project growth.
[Profit and Loss] Gross profit was ¥209.7B (gross margin 44.4%, improved +0.4pt from 44.0% prior year) as price revisions and a rise in high-margin projects improved gross margin. Selling, General and Administrative Expenses (SG&A) were ¥128.8B (SG&A ratio 27.3%, up +0.8pt from 26.5% prior year), increasing by +13.7% which outpaced revenue growth (+10.5%), affected by upfront recognition of labor and logistics costs. Operating Income was ¥80.9B (+9.0%), Operating margin 17.1% (down 0.3pt from 17.4%), as gross margin improvements did not fully offset SG&A increases, leaving a slight decline in profitability. Non-operating items comprised non-operating income of ¥2.1B including dividend income ¥0.1B and foreign exchange gains ¥0.7B, and non-operating expenses of ¥2.1B including interest expense ¥1.3B, resulting in Ordinary Income of ¥80.9B (+10.6%). Extraordinary items netted to ▲¥0.3B, from extraordinary gains of ¥0.6B including gain on sale of investment securities ¥0.1B offset by extraordinary losses including loss on disposal of fixed assets ¥0.2B totaling ¥0.9B. After income taxes of ¥25.3B (effective tax rate 31.3%), Net Income was ¥55.4B (+12.8%), achieving both revenue and profit growth.
The Workplace Business posted revenue of ¥365.3B (YoY +5.4%), Operating Income ¥70.6B (+0.7%), and margin 19.3% (down 0.9pt from 20.2% prior year), maintaining stable growth though with a slight margin decline. The Equipment & Public Business achieved revenue ¥103.9B (+33.7%), Operating Income ¥10.0B (+168.9%), and margin 9.7% (improved +4.9pt from 4.8% prior year), delivering substantial revenue and profit growth and significantly improved profitability. Other Businesses recorded revenue ¥5.0B (▲3.3%), Operating Income ¥0.2B (▲24.2%), and margin 5.0%, small-scale but showing revenue and profit decline. Company-wide, high growth and margin improvement in the Equipment & Public Business led overall profit growth, advancing segment portfolio improvement.
[Profitability] Operating margin 17.1% (prior year 17.4%), Net margin 11.7% (improved +0.2pt from 11.5% prior year), and ROE 9.4% indicate high-level profitability. Gross margin 44.4% (improved +0.4pt from 44.0% prior year) benefited from price revisions and high-margin projects, but Operating margin slightly declined due to SG&A ratio rising to 27.3% (up +0.8pt from 26.5%). [Cash Quality] Days Sales Outstanding (DSO) 309 days, Days Inventory Outstanding (DIO) 106 days, Days Payable Outstanding (DPO) 146 days, and Cash Conversion Cycle (CCC) 269 days show elongation, reflecting the long collection cycle typical of project-based businesses. [Capital Efficiency] Total Asset Turnover 0.34x (prior year 0.33x) slightly improved, but Total Assets expanded to ¥1,372.2B (up +5.0%) due to increases in accounts receivable ¥399.5B (+15.9%) and inventories ¥76.0B (+15.7%). [Financial Soundness] Equity Ratio 43.1% (prior year 43.4%) and D/E ratio 1.32x remain at moderate levels. Current Ratio 161.9% and Quick Ratio 148.0% indicate healthy short-term liquidity, but short-term borrowings rose sharply to ¥218.8B (prior year ¥128.3B, +70.6%), raising short-term liabilities ratio to 69.8%.
While the cash flow statement is not disclosed, balance sheet trends indicate cash-flow dynamics: Cash and deposits decreased slightly to ¥208.2B (prior year ¥216.3B, ▲¥8.1B). Accounts receivable increased by ¥54.7B and inventories by ¥10.3B, absorbing roughly ¥65B of working capital, while accounts payable increased only ¥10.8B. Short-term borrowings increased significantly by ¥90.5B, suggesting short-term financing was used to meet working capital needs and business expansion. Short-term liabilities are ¥544.2B against cash and short-term securities totaling ¥211.3B, yielding a cash-to-short-term liabilities ratio of 0.39x, a low level where timing of cash conversion of working capital is key to liquidity. Interest coverage is very high at 60.8x (Operating Income ¥80.9B ÷ Interest Expense ¥1.3B), indicating strong ability to bear interest costs.
Earnings quality is generally sound. Operating Income of ¥80.9B was matched by net non-operating items of zero, resulting in Ordinary Income of ¥80.9B, indicating that core business profit largely constitutes ordinary income. Non-operating income ¥2.1B (0.4% of revenue) centered on recurring items such as dividend income ¥0.1B and foreign exchange gains ¥0.7B, while non-operating expenses ¥2.1B were largely interest expense ¥1.3B. Extraordinary items netted ▲¥0.3B (0.6% of Net Income), with small reliance on one-time items such as gain on sale of investment securities ¥0.1B and loss on disposal of fixed assets ¥0.2B. The reduction from Ordinary Income ¥80.9B to pre-tax profit ¥80.6B was due to extraordinary items, and the fall to Net Income ¥55.4B reflects income taxes ¥25.3B (effective tax rate 31.3%), with no accounting distortions evident. However, cash generation from operating activities is constrained by increases in accounts receivable and inventories, and accruals (gap between accounting profit and cash) are widening. If working capital buildup continues, attention must be paid to the risk of delayed cash conversion of profits.
The Full Year forecast is unchanged at Revenue ¥1,675.0B (YoY +9.0%), Operating Income ¥160.0B (+16.9%), Ordinary Income ¥160.0B (+16.5%), and Net Income ¥112.0B. Q1 progress rates are Revenue 28.2% (around standard 25%), Operating Income 50.6%, Ordinary Income 50.6%, and Net Income 49.4%, indicating substantial front-loading of profits. The +25.6pt lead in Operating Income progress may be explained by concentration of high-margin projects in Q1 and front-loaded expense smoothing. While expense increases and mix changes are expected in H2, at present there is upside potential in the Full Year plan. Continued high growth (+33.7%) in the Equipment & Public Business could further expand Full Year profit growth.
Concentration risk to the Workplace Business: The Workplace Business accounts for 77.4% of revenue and 87.3% of Operating Income, a high dependency structure where fluctuations in demand for office furniture and interiors or intensified competition would directly affect company performance. The rising share of the Equipment & Public Business (22.0%) improves diversification but dependency on the core business remains high.
Working capital stagnation and liquidity risk: Accounts receivable ¥399.5B (+15.9%) and inventories ¥76.0B (+15.7%) led to approximately ¥65B increase in working capital, and short-term borrowings expanded to ¥218.8B (+70.6%). With a cash-to-short-term liabilities ratio of 0.39x, delays in project acceptance or prolongation of collections could increase refinancing pressure. If long collection cycles persist (DSO 309 days, DIO 106 days, CCC 269 days), cash generation capability may deteriorate.
Margin pressure from rising SG&A ratio: SG&A grew to ¥128.8B (+13.7%), outpacing revenue growth (+10.5%), and SG&A ratio rose to 27.3% (up +0.8pt from 26.5%). As labor and logistics costs become more fixed, if revenue growth slows there is risk of negative operating leverage causing significant margin deterioration.
Profitability & Returns
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 17.1% | 6.8% (2.9%–9.0%) | +10.3pt |
| Net Margin | 11.7% | 5.9% (3.3%–7.7%) | +5.8pt |
Both Operating Margin 17.1% and Net Margin 11.7% substantially exceed industry medians, achieving top-class profitability within manufacturing.
Growth & Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.5% | 13.2% (2.5%–28.5%) | -2.7pt |
Revenue growth of 10.5% is slightly below the industry median 13.2% but maintains a steady growth pace.
※ Source: Company compilation
Q1 Operating Income progress rate is 50.6%, significantly front-loaded, suggesting concentration of high-margin projects and expense smoothing effects. Operating Income in the Equipment & Public Business grew +168.9% and margin improved to 9.7% (up +4.9pt from 4.8% prior year), indicating that segment portfolio improvement could be a structural driver of company-wide profitability.
Buildup of working capital and sharp rise in short-term borrowings (+¥90.5B, +70.6%) reflect increased funding needs accompanying business expansion. With long cycles of accounts receivable collection (DSO 309 days) and inventory turnover (DIO 106 days), progress in collection management and inventory optimization is essential to improve cash generation and dividend capacity. While Operating margin of 17.1% is top-class in the industry, improvements in capital efficiency and liquidity will determine sustainability of future growth.
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 securities. Industry benchmarks are reference information compiled by our company based on public financial statements. Investment decisions are your own responsibility; please consult a professional as appropriate.