| Metric | Current Period | Prior Year Comparable | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1269.6B | ¥1239.8B | +2.4% |
| Operating Income / Operating Profit | ¥65.0B | ¥65.1B | -0.1% |
| Ordinary Income | ¥71.8B | ¥64.9B | +10.7% |
| Net Income | ¥24.5B | ¥23.0B | +6.6% |
| ROE | 3.8% | 3.8% | - |
For the fiscal year ended March 2026, Revenue was ¥1,269.6B (YoY +¥29.7B, +2.4%), Operating Income was ¥65.0B (YoY -¥0.1B, -0.1%), Ordinary Income was ¥71.8B (YoY +¥6.9B, +10.7%), and Net Income attributable to owners of the parent was ¥54.1B (YoY +¥3.1B, +6.6%). Revenue returned to growth for the first time in three years, while operating performance was effectively flat. Ordinary Income and Net Income achieved double-digit increases, aided by ¥6.9B of foreign exchange gains and higher dividend and interest income. Gross margin improved to 38.1% (prior year 37.5%, +0.6pt), but SG&A rose +4.6%, outpacing Revenue growth (+2.4%), causing the Operating Margin to decline to 5.1% (prior year 5.2%, -0.1pt). Operating Cash Flow (OCF) improved substantially to ¥80.3B (YoY +293.4%), Free Cash Flow (FCF) was ¥50.4B, and shareholder returns comprised ¥19.5B in dividends and ¥27.7B in share buybacks. EPS was ¥240.06 (prior year ¥208.10, YoY +15.4%), and BPS was ¥2,966.82, indicating steady per‑share value improvement.
[Revenue] Revenue ¥1,269.6B was up ¥29.7B ( +2.4% YoY). By region, Japan was the core at ¥869.6B (+6.2%), accounting for 68.5% of total and supported by firm domestic demand. Asia & Oceania was ¥521.6B (+3.7%) and continued to grow. Europe was ¥170.4B (+4.6%), benefiting from FX tailwinds and strengthened local sales. The Americas was ¥137.2B (+2.9%) but turned loss-making on a profitability basis, revealing regional imbalance. Gross margin improved to 38.1% (prior year 37.5%, +0.6pt), driven by product mix optimization and FX effects.
[Profitability] Operating Income of ¥65.0B was essentially flat (YoY -¥0.1B, -0.1%). Gross profit in absolute terms expanded to ¥483.7B ( +¥21.9B), but SG&A rose to ¥418.7B ( +¥18.3B, +4.6%), outpacing Revenue growth (+2.4%) and compressing profits. SG&A ratio rose to 33.0% from 32.3% (+0.7pt), reflecting increases in logistics, advertising, and personnel-related fixed and semi-fixed costs. Operating Margin decreased to 5.1% (prior year 5.2%, -0.1pt). Ordinary Income of ¥71.8B (+10.7%) was mainly driven by non‑operating income expanding to ¥14.8B from ¥9.1B (+¥5.7B). The breakdown includes foreign exchange gains ¥6.9B (prior year foreign exchange loss ¥-1.3B), dividend income ¥1.8B, and interest income ¥1.1B; non‑operating expenses remained limited at ¥8.0B, primarily interest expense ¥5.5B. Extraordinary items mostly offset each other—gain on sale of investment securities ¥5.3B and impairment losses ¥5.2B—resulting in minimal net impact. Net Income attributable to owners of the parent was ¥54.1B (+6.6%), with an effective tax rate of 24.7% and a stable tax burden securing final profit growth. In conclusion, the company achieved revenue and profit growth overall, but operating performance was effectively flat and the improvements in Ordinary Income and Net Income relied on non‑operating factors.
The Japan segment recorded Revenue ¥869.6B (+6.2%) and Operating Income ¥56.3B (+24.8%), a significant profit increase. Margin improved to 6.5% from 5.5% (+1.0pt), reflecting successful domestic pricing strategy and efficiency gains. Asia & Oceania posted Revenue ¥521.6B (+3.7%) and Operating Income ¥48.5B (-5.6%), with margin down to 9.3% from 9.9% (-0.6pt); despite Revenue growth, higher SG&A and rising local currency costs pressured profits. Europe had Revenue ¥170.4B (+4.6%) and Operating Income ¥6.8B (+2.7%), margin 4.0% (prior year 4.1%), stable though slightly lower. The Americas reported Revenue ¥137.2B (+2.9%) but an Operating Loss of ¥1.7B (previously ¥0.4B profit), turning into a deficit due to sharp SG&A increases and intensified market competition; structural earnings improvement is urgently needed. The structure of earning ~95% of total profit from Japan and Asia is clear, highlighting regional concentration risk.
[Profitability] Operating Margin 5.1% (prior year 5.2%), Ordinary Income Margin 5.7% (prior year 5.2%), Net Margin 4.3% (prior year 3.9%). Gross Margin improved to 38.1% from 37.5% (+0.6pt), but the rise in SG&A ratio to 33.0% (prior year 32.3%) caused a slight decline in operating‑stage profitability. ROE 8.3% (prior year 8.6%), ROA (on Ordinary Income basis) 6.2% (prior year 5.8%). EPS ¥240.06 (prior year ¥208.10, YoY +15.4%), BPS ¥2,966.82 (prior year ¥2,654.34), both showing steady growth.
[Cash Quality] Operating Cash Flow ¥80.3B is 1.49× Net Income ¥54.1B, indicating good cash conversion. OCF/EBITDA is 0.73×, below the benchmark 0.9×, with inventory build (+¥10.0B) and accounts receivable increase (+¥17.0B) weighing on working capital. FCF ¥50.4B is Operating CF ¥80.3B less CapEx ¥23.6B, healthy but FCF/Net Income 0.93× indicates somewhat weak free cash conversion relative to profit.
[Investment Efficiency] CapEx ¥23.6B is only 52% of Depreciation ¥45.3B, suggesting underinvestment in renewals. Net tangible fixed assets ¥259.0B have a cumulative depreciation ratio of ~63%, indicating asset base maturity and progressing aging. Total asset turnover 1.06x (prior year 1.09x) slightly declined; inventory ¥348.7B (prior year ¥331.3B, +5.3%) accumulation is a bottleneck for asset efficiency.
[Financial Soundness] Equity Ratio 54.3% (prior year 53.5%), D/E 0.44x (Net D/E 0.24x), sound leverage. Current Ratio 243%, Quick Ratio 135% provide sufficient liquidity. Interest coverage (OCF / Interest Paid) 11.7x is comfortable, but of ¥285.3B interest‑bearing debt, short‑term borrowings ¥151.7B (53%) show a short‑term bias and relatively high refinancing sensitivity. Cash and cash equivalents ¥118.5B vs. short‑term borrowings ¥151.7B yields Cash/Short‑term Debt 0.78x.
Operating CF was ¥80.3B (prior year ¥20.4B, +293.4%), a large improvement. From Pre‑tax Income ¥71.9B plus Depreciation ¥45.3B subtotaling ¥94.5B, adjustments for working capital deterioration—inventory increase ¥10.0B, accounts receivable increase ¥17.0B, accounts payable decrease ¥2.8B—totaled ~¥29.8B, and corporate tax payments ¥15.7B were deducted, resulting in ¥80.3B generated. OCF/Net Income 1.49× reflects good profit quality, but OCF/EBITDA (OCF / EBITDA ≈ ¥110B) 0.73× misses the benchmark 0.9× due to inventory build and receivable increases. Investing CF was -¥29.9B, mainly CapEx -¥23.6B and intangible assets -¥4.9B. Purchase of investment securities -¥0.03B and proceeds from sales ¥6.3B resulted in net disposals, and net recovery of long‑term loans was ¥0.53B. FCF was ¥50.4B (Operating CF ¥80.3B - Investing CF ¥29.9B), solid. Financing CF was -¥46.2B: net increase in short‑term borrowings approx. ¥20.0B and long‑term borrowing proceeds ¥49.0B were offset by repayments -¥54.8B, dividends -¥19.5B, and share buybacks -¥27.7B. Cash and cash equivalents rose slightly from ¥114.7B at the start of the period to ¥118.5B at the end (+¥3.8B), with shareholder returns ¥47.2B (dividends + buybacks) absorbing most cash. On working capital, extended inventory days (DIO) and increased days sales outstanding (DSO) suggest lengthening Cash Conversion Cycle (CCC), which is a concern. Normalizing inventory efficiency and strengthening receivables management will be key to stabilizing OCF.
Ordinary Income of ¥71.8B exceeds Operating Income ¥65.0B by ¥6.8B, supported by non‑operating income ¥14.8B (foreign exchange gains ¥6.9B, dividend income ¥1.8B, interest income ¥1.1B, etc.). Given the prior year had a foreign exchange loss of ¥1.3B, FX effects show an ~¥8.2B swing, indicating relative dependence on FX factors. Dividend and interest income are recurring revenue sources, lending some recurrent quality. Extraordinary items—gain on sale of investment securities ¥5.3B and impairment losses ¥5.2B—almost offset, netting ¥0.1B and exerting minimal impact. Gains on sales are transitory while impairments reflect recurring reassessments of production efficiency or asset reviews; both should be treated as non‑recurring. Comprehensive Income was ¥83.7B, well above Net Income ¥54.1B; the ¥29.6B difference comprises ¥9.4B foreign currency translation adjustments, ¥18.8B valuation gains on available‑for‑sale securities, ¥0.7B deferred hedge gains, and ¥0.7B retirement benefit adjustments. Unrealized gains on investment securities have boosted equity but introduce market price volatility risk. While OCF ¥80.3B is 1.49× Net Income ¥54.1B indicating good cash conversion, OCF/EBITDA 0.73× reflects deteriorating working capital efficiency. Overall, the quality of Ordinary Income has reliance on non‑operating factors, making short‑term volatility from FX and securities possible.
Full Year guidance projects Revenue ¥1,340.0B (YoY +5.5%), Operating Income ¥70.0B (YoY +7.7%), Ordinary Income ¥64.0B (YoY -10.9%), and Net Income attributable to owners of the parent ¥55.0B (YoY +1.7%). Relative to current results, Revenue ¥1,269.6B (achievement rate 94.7%), Operating Income ¥65.0B (92.9%), Ordinary Income ¥71.8B (112.2%), Net Income ¥54.1B (98.4%); Ordinary Income exceeded the forecast while Operating Income fell short. The company assumes a second‑half build of +¥70B in Revenue and +¥5B in Operating Income; Ordinary Income is expected to decline ¥7.8B due to a reversal of non‑operating gains. The projected Operating Margin of 5.2% assumes modest improvement from the current 5.1%, predicated on containing SG&A growth and normalizing inventories. The expected decline in Ordinary Income is a conservative view accounting for FX gain reversal risk. Forecast EPS ¥252.31 implies a +5.1% increase from the current EPS ¥240.06. Dividend guidance is annual ¥50.0 (forecast payout ratio ~20%), conservative. Achieving the forecast depends on improving the Americas deficit and reducing inventories to enhance working capital efficiency.
Annual dividend of ¥90 (interim ¥45, year‑end ¥45) was distributed, with a payout ratio of 37.5% (total dividends approx. ¥20.3B vs. Net Income ¥54.1B), a reasonable level. FCF coverage is 2.48× (FCF ¥50.4B / dividends ¥20.3B), indicating high sustainability. Additionally, share buybacks of ¥27.7B were executed, making total returns ¥47.2B (dividends ¥19.5B + buybacks ¥27.7B), which is 93.7% of FCF ¥50.4B. Total Return Ratio is 87.3% (total returns ¥47.2B / Net Income ¥54.1B), tight but supported by stable OCF and low CapEx intensity (CapEx/Depreciation 0.52×). Treasury stock increased from ¥8.74B at the beginning of the period to ¥16.54B at the end (+89.2%), holding 4.4% of outstanding shares. While contributing to BPS improvement and capital efficiency, attention to liquidity balance is necessary. Next fiscal year dividend guidance is ¥50 (annual), which against forecast Net Income ¥55.0B implies about ¥11.3B in dividends (payout ratio 20.6%), a conservative posture suggesting sustainment of total returns.
Inventory stagnation and excess inventory risk: Inventory ¥348.7B (YoY +5.3%) outpaced Revenue growth +2.4%, implying declining inventory turnover. Inventory increase ¥10.0B was a drag on Operating CF subtotal ¥94.5B, contributing to OCF/EBITDA 0.73×, a low level. Inventory obsolescence or discount pressure could compress gross margin and prolong cash tie‑up.
Dependence on short‑term borrowings and liquidity risk: Short‑term borrowings ¥151.7B (53% of total interest‑bearing debt) exhibit a short‑term bias. Current Ratio 243% and cash ¥118.5B provide near‑term liquidity, but Cash/Short‑term Borrowings 0.78× indicates relative refinancing sensitivity. Rising interest rates or worsening credit conditions could increase refinancing costs.
Structural deficit risk in the Americas segment: The Americas reported Revenue ¥137.2B but an Operating Loss ¥1.7B. Rising SG&A and intensified competition underlie this; structural remediation is required to restore profitability. Heavy reliance on Japan and Asia for 95% of profits indicates insufficient regional diversification, and continued Americas losses would pressure consolidated profits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.1% | 7.8% (4.6%–12.3%) | -2.6pt |
| Net Margin | 1.9% | 5.2% (2.3%–8.2%) | -3.3pt |
Operating Margin 5.1% lags the industry median 7.8% by 2.6pt, reflecting relatively high SG&A and dependence on non‑operating income.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.4% | 3.7% (-0.4%–9.3%) | -1.3pt |
Revenue growth 2.4% trails the median 3.7% by 1.3pt, indicating comparatively weaker growth due to domestic market reliance and Americas underperformance.
※ Source: Company compilation using public financial statements
Improved gross margin and contributions from non‑operating items secured final profit growth, but operating performance was effectively flat and containing SG&A growth remains a challenge. Sustainable profit growth catalysts include inventory reduction to cut logistics and storage costs and remediation of the Americas deficit to lift Operating Margin.
OCF ¥80.3B and FCF ¥50.4B generation is solid, and total shareholder returns ¥47.2B (94% of FCF) demonstrate an active shareholder return stance. However, short‑term borrowings at 53% raise refinancing sensitivity and the risk of higher interest expenses in a rising rate environment. CapEx/Depreciation 0.52× indicates underinvestment in renewals, and mid‑term asset aging could affect quality and production efficiency.
Dependence on Japan and Asia for 95% of profits embeds regional concentration risk, and structural improvement in the Americas is essential to raise consolidated earnings power. Achieving company guidance (Revenue ¥1,340B, Operating Income ¥70B, Net Income ¥55B) presumes normalization of inventory efficiency and shortening of the CCC.
This report was automatically generated by AI analyzing XBRL financial filing data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial filings. Investment decisions are your own responsibility; consult professional advisors as needed before making investment decisions.