| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥399.9B | ¥387.0B | +3.3% |
| Operating Income / Operating Profit | ¥52.3B | ¥53.9B | -3.1% |
| Ordinary Income | ¥58.6B | ¥55.2B | +6.1% |
| Net Income / Net Profit | ¥53.6B | ¥39.9B | +34.2% |
| ROE | 11.0% | 9.3% | - |
For the fiscal year ended March 2026, Revenue was ¥399.9B (YoY +¥12.9B, +3.3%), Operating Income was ¥52.3B (YoY -¥1.7B, -3.1%), Ordinary Income was ¥58.6B (YoY +¥3.4B, +6.1%), and Net Income attributable to owners of the parent was ¥48.9B (YoY +¥5.7B, +13.2%). From an operating-stage point of view there was higher revenue but lower operating profit; however, contributions from non-operating income (dividends received ¥1.7B, foreign exchange gains ¥1.4B, etc., total non-operating income ¥10.4B) led to an increase in ordinary income, and a special gain from sale of available-for-sale securities of ¥8.4B was recorded, resulting in double-digit net income growth. Operating margin declined 0.8pt to 13.1% from 13.9% a year earlier. Gross margin remained high at 59.4%, but selling, general and administrative expenses increased to ¥185.1B (SG&A ratio 46.3%, +0.8pt from 45.5%), which pressured operating-stage profitability. Net profit margin improved to 13.4% (up 2.3pt from 11.1%) supported by special gains. Pre-tax income reached ¥65.9B, from which corporate taxes and other amounted to ¥16.9B (effective tax rate 25.7%), producing the final result.
[Revenue] The Dental Business performed steadily at ¥376.7B (YoY +3.6%), accounting for 94.2% of consolidated revenue. By region, Japan ¥171.1B, Europe ¥86.6B, Asia ¥91.2B, and North & Latin America ¥51.0B all recorded positive growth. The Nail Business declined slightly to ¥22.2B (YoY -0.8%), representing 5.6% of sales. Revenue increased from ¥387.0B to ¥399.9B (+¥12.9B), but the +3.3% growth rate was below the growth rate of operating expenses, limiting operating leverage.
[Profitability] Cost of goods sold was ¥162.5B (COGS ratio 40.6%), yielding gross profit of ¥237.4B (gross margin 59.4%), unchanged from the prior year. SG&A was ¥185.1B (SG&A ratio 46.3%), up ¥9.1B (+5.2%) from ¥175.9B, and this cost increase exceeded the sales growth of +3.3%, compressing operating profit. As a result, Operating Income decreased ¥1.7B to ¥52.3B (Operating margin 13.1%). Non-operating income and expense produced net income of +¥6.4B (non-operating income ¥10.4B less non-operating expenses ¥4.0B), improving ¥5.1B from +¥1.3B a year earlier. Primary drivers were dividends received ¥1.7B, foreign exchange gains ¥1.4B (prior year foreign exchange loss ¥1.1B), and other non-operating income ¥3.0B. Ordinary Income rose ¥3.4B to ¥58.6B from ¥55.2B (+6.1%). Extraordinary items netted +¥7.3B (special gain ¥8.4B from sale of available-for-sale securities less special losses ¥1.1B comprising impairment losses ¥1.1B and loss on disposal of fixed assets ¥0.5B), lifting pre-tax income to ¥65.9B (prior year ¥61.5B). After deducting corporate taxes and others ¥16.9B and non-controlling interests ¥0.1B, Net Income attributable to owners of the parent was ¥48.9B, up ¥5.7B (+13.2%) from ¥43.2B. In summary: at the operating stage fixed cost increases led to lower profit, at the ordinary income stage non-operating improvements drove gains, and at the net income stage special gains produced double-digit growth.
The Dental Business posted Revenue ¥376.7B (YoY +3.6%), Operating Income ¥53.3B (YoY -1.9%), and Operating margin 14.2% (down 0.7pt from 14.9% a year earlier). Sales expanded across regions supported by solid demand, but rising SG&A reduced segment margins. Segment assets increased to ¥490.4B (up 17.4% from ¥417.7B), primarily driven by increased investment in tangible fixed assets. The Nail Business recorded Revenue ¥22.2B (YoY -0.8%), Operating loss ¥1.1B (widening from -¥0.7B), and Operating margin -5.1% (prior -2.9%), reflecting deteriorating profitability. Persistent operating losses led to an impairment loss ¥1.1B, and segment assets contracted sharply to ¥4.5B (down 73.5% from ¥17.0B). Other businesses are small with Revenue ¥1.0B and Operating Income ¥0.0B. While the Dental Business generates more than the entire group operating profit, continued losses in Nail drag on consolidated results.
[Profitability] Operating margin 13.1% (down 0.8pt from 13.9%), Net profit margin 13.4% (up 2.3pt from 11.1%), Gross margin 59.4% (flat year-on-year), SG&A ratio 46.3% (up 0.8pt from 45.5%). ROE was 11.0%, improving 0.7pt from 10.3%; DuPont decomposition is Net profit margin 13.4% × Total asset turnover 0.69x × Financial leverage 1.19x. Improvement in net profit margin was the main driver, but total asset turnover declined from 0.77x, indicating slower asset efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥33.7B, only 0.63x of Net Income ¥53.6B, indicating low cash conversion efficiency. The main causes were deterioration in working capital: inventory increase ¥15.4B, trade receivables increase ¥2.5B, trade payables decrease ¥1.7B. OCF/EBITDA (Operating Income ¥52.3B + Depreciation ¥12.1B = ¥64.4B) ratio was 0.52x, weak. Free Cash Flow (FCF) was ¥13.0B (OCF ¥33.7B - Investing CF ¥20.7B), but coverage of dividend cash outflow ¥18.5B was only 0.70x, leaving a shortfall. [Investment Efficiency] ROIC-related data are limited, but capital expenditures ¥34.3B were 2.84x depreciation ¥12.1B, indicating aggressive investment, and construction-in-progress ¥10.7B accumulation points to ongoing capacity expansion. Inventory days (DIO) = Inventory ¥101.3B ÷ (COGS ¥162.5B ÷ 365) = approximately 227 days, indicating lengthening. Days sales outstanding (DSO) = Trade receivables ¥45.9B ÷ (Revenue ¥399.9B ÷ 365) = 42 days. Days payables outstanding (DPO) = Trade payables ¥13.0B ÷ (COGS ¥162.5B ÷ 365) = 29 days. Cash conversion cycle (CCC) is about 240 days, indicating room to improve working capital efficiency. [Financial Soundness] Equity Ratio 84.4% (down 0.8pt from 85.2%), Current Ratio 473.6%, Quick Ratio 312.6% — extremely robust. Interest-bearing debt is zero, and interest coverage is 261.5x (Operating Income ¥52.3B vs interest expense ¥0.2B), showing no issue. Cash and deposits ¥101.2B, short-term investment securities ¥1.4B, and available-for-sale securities ¥101.1B provide ample liquidity.
OCF was ¥33.7B (down 2.2% from ¥34.5B), derived from pre-tax profit before income taxes ¥65.9B plus non-cash expenses such as depreciation ¥12.1B to subtotal ¥45.8B, less working capital deterioration — inventory increase ¥15.4B, trade receivables increase ¥2.5B, trade payables decrease ¥1.7B — and corporate tax payments ¥18.5B. The reason OCF is below Net Income ¥53.6B is primarily inventory build-up delaying cash realization of profits. Investing CF was -¥20.7B (increased outflow from -¥9.1B prior year), mainly due to capital expenditures ¥34.3B and acquisition of available-for-sale securities ¥3.2B; partial offsets included net changes in time deposits and proceeds from sale of available-for-sale securities ¥11.2B. FCF was positive ¥13.0B (OCF ¥33.7B + Investing CF -¥20.7B) but down 48.6% from ¥25.3B a year earlier. Financing CF was -¥19.7B (prior -¥17.8B), chiefly dividend payments ¥18.5B and long-term borrowings repayments ¥2.8B. Cash and cash equivalents decreased ¥2.9B from opening ¥100.6B to closing ¥97.7B; considering foreign currency translation adjustments ¥3.8B, the net change in funds was about -¥6.7B. OCF to Net Income ratio 0.63x and FCF dividend coverage 0.70x are both low; inventory rationalization and shortening collection cycles are key to restoring cash generation.
Of Ordinary Income ¥58.6B, Operating Income ¥52.3B is core business earnings, accounting for 89.2% of ordinary income. Non-operating income ¥10.4B (about 17.7% of ordinary income) comprises dividends received ¥1.7B, interest received ¥0.8B, foreign exchange gains ¥1.4B, and other ¥3.0B; non-operating income as a percentage of Revenue is 2.6%, under the 5% threshold and within acceptable range. A one-off special gain from sale of available-for-sale securities ¥8.4B was recorded, while special losses totaled ¥1.1B (impairment losses ¥1.1B and loss on disposal of fixed assets ¥0.5B), resulting in net special items +¥7.3B. The contribution of special items to pre-tax income ¥65.9B is about 11.1%, and after-tax effect is roughly ¥5.4B (about 10.1% of Net Income), indicating a material one-off component. Comprehensive income ¥77.4B exceeded Net Income ¥53.6B by ¥23.8B; other comprehensive income ¥28.5B comprised foreign currency translation adjustments ¥11.1B, valuation difference on available-for-sale securities ¥14.2B, and actuarial gains/losses related to retirement benefits ¥3.1B. The accrual ratio ((Net Income - OCF) ÷ Total Assets) = (¥53.6B - ¥33.7B) ÷ ¥577.1B = 3.4%, a healthy level, but OCF being below Net Income suggests delayed cash realization. The gap between ordinary income and net income is mainly due to net special items (+¥7.3B) and corporate taxes and others (¥16.9B); excluding special gains, an estimate of sustainable net income would be approximately ¥43B. Earnings quality is high at the operating level, but about 10% of this year’s Net Income is attributable to one-offs, so sustainability warrants attention.
The forecast for the fiscal year ending March 2027 is Revenue ¥429.6B (YoY +7.4%), Operating Income ¥60.0B (YoY +14.9%), Ordinary Income ¥58.9B (YoY +0.5%), and Net Income attributable to owners of the parent ¥47.6B (YoY -2.7%). Revenue is expected to benefit from ramp-up of production capacity investments made this year and product mix improvements. Operating Income is planned to increase double digits through strict SG&A control. The slower growth rate in Ordinary Income relative to Operating Income likely assumes the loss of this year’s non-operating positives (foreign exchange gains, one-off dividend income, etc.). Net Income is projected to decline due to the disappearance of the special gain (sale of available-for-sale securities ¥8.4B), though underlying operating gains are expected to provide support. Progress rates at Q2 were Revenue 93.1%, Operating Income 87.2%, Ordinary Income 99.5%, and Net Income 103.0% — generally on track — but attention to second-half volatility in non-operating and special items is required. Dividend guidance is ¥33 per share annually (including ¥6 special dividend), implying forecast payout ratio 24.7%, a conservative level. Achieving the full-year forecast assumes inventory rationalization to improve CCC, progress in structural reform of the Nail Business, and maintenance of high value-added product mix in the Dental Business.
Annual dividends were increased to total ¥60 per share: ¥21 at the end of Q2 and ¥39 at year-end (including a ¥5 special dividend), up ¥24 from ¥36 in the prior year. Note the company conducted a 2-for-1 stock split effective October 1, 2024; pre-split equivalent annual dividend is ¥98.00. Payout ratio is ¥60 ÷ EPS ¥137.38 = 43.7%, an appropriate level. Dividend cash outflow was ¥18.5B; coverage by FCF ¥13.0B was 0.70x, creating a shortfall that was funded from abundant opening cash ¥101.2B and proceeds from sale of available-for-sale securities ¥11.2B. Next year’s dividend forecast is ¥33 per share annually (including ¥6 special dividend, post-split basis), a decrease of ¥27 YoY, but this is a nominal effect that includes the stock split; on a split-adjusted basis the dividend policy can be viewed as continuing stable dividends. Forecast payout ratio 24.7% is conservative, leaving room for increases. No share buybacks are planned; total return ratio equals the payout ratio at 43.7%. Retained earnings stood at ¥269.4B (up ¥30.4B from ¥238.9B), leaving ample room to balance shareholder returns and growth investment.
Inventory excess risk: Inventory surged to ¥101.3B (up 23.6% from ¥81.9B) and DIO lengthened to approximately 227 days. Inventory composition is Finished goods ¥101.3B, Work-in-progress ¥20.3B, Raw materials ¥16.1B, with notable accumulation of finished goods. Demand fluctuations or product life-cycle changes could increase impairment and obsolescence risk, pressuring OCF. If inventory rationalization is delayed, deterioration in working capital efficiency and cash generation could persist.
Segment concentration risk: The Dental Business accounts for 94.2% of Revenue and more than 100% of Operating Income, creating very high single-segment dependency. If adverse external changes occur to this segment — market conditions, dental fee revisions, intensified competition, or technological shifts — consolidated results could be materially impacted. The Nail Business continues to post an operating loss of ¥1.1B and recorded an impairment loss ¥1.1B, failing to function as a complementary revenue source. The skewed business portfolio amplifies management risk.
Decline in OCF generation: OCF ¥33.7B is only 0.63x of Net Income ¥53.6B, down from 0.86x a year earlier. The main causes were inventory increase ¥15.4B and trade receivables increase ¥2.5B, with working capital expansion hampering profit-to-cash conversion. FCF ¥13.0B is below dividend outflow ¥18.5B, with FCF coverage 0.70x, creating a shortfall that was temporarily covered by sale of available-for-sale securities ¥11.2B. Reliance on one-off funding sources to pay dividends raises sustainability concerns. If inventory rationalization and collection cycle shortening do not progress, drawdown of internal reserves or reduced shareholder returns could be medium-term risks.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating margin | 13.1% | 7.8% (4.6%–12.3%) | +5.3pt |
| Net profit margin | 13.4% | 5.2% (2.3%–8.2%) | +8.2pt |
Both operating margin and net profit margin are substantially above industry medians, placing the company among the top performers in the sector.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 3.3% | 3.7% (-0.4%–9.3%) | -0.4pt |
Revenue growth is slightly below the industry median but within the IQR, indicating growth roughly in line with the sector.
※Source: Company compilation
The high profitability and financial soundness of the Dental Business underpin investment stability; however, inventory excess (DIO 227 days) and declining cash conversion efficiency (OCF/NI = 0.63x) are key focal points. Next year, progress in inventory rationalization and realization of CCC shortening will determine recovery of cash generation and sustainability of dividends. The ramp-up impact from aggressive capital expenditures (¥34.3B, 2.84x depreciation) and accumulation of construction-in-progress is key to achieving the double-digit operating income growth plan (+14.9%).
The disappearance of special gains (sale of available-for-sale securities ¥8.4B, about 10.1% of Net Income) leads to a forecasted Net Income decline of -2.7% next year, but underlying operating and ordinary income performance shows resilience. Continued losses and impairment in the Nail Business dilute earnings, and structural reforms (fixed cost cuts, product portfolio rebalancing) are catalysts for medium-term profitability improvement. Equity Ratio 84.4%, no debt, and Current Ratio 473.6% indicate very high financial safety, providing defensive balance against market volatility.
This report is an AI-generated earnings analysis document produced by analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.