| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3290.3B | ¥3145.3B | +4.6% |
| Operating Income / Operating Profit | ¥241.4B | ¥239.3B | +0.9% |
| Ordinary Income | ¥258.4B | ¥264.6B | -2.3% |
| Net Income / Net Profit | ¥225.2B | ¥215.4B | +4.5% |
| ROE | 10.9% | 11.5% | - |
For the fiscal year ended March 2026, Revenue was ¥3290.3B (YoY +¥145.0B +4.6%), Operating Income was ¥241.4B (YoY +¥2.1B +0.9%), Ordinary Income was ¥258.4B (YoY -¥6.2B -2.3%), and Net Income was ¥225.2B (YoY +¥9.8B +4.5%). The company delivered revenue and net income growth, though Ordinary Income declined. Revenue increased for the second consecutive year, driven by the core Office Environment Business (+14.6%), while the Material Handling Systems business recorded a large revenue decline (-34.9%). Gross margin improved to 34.6% (prior year 33.6%) (+1.0pt), but SG&A rose by ¥82.3B YoY (+10.1%), outpacing revenue growth (+4.6%), causing Operating Margin to decline to 7.3% (prior year 7.6%) (-0.3pt). Ordinary Income fell due to a decrease in equity-method income within non-operating income (prior year ¥13.9B → ¥8.8B). Net Income was supported by extraordinary gains of ¥69.0B, principally investment securities sales gains of ¥66.5B (prior year ¥40.5B). Operating Cash Flow was robust at ¥272.2B (YoY +2668.9%), 1.21x Net Income, with FCF of ¥218.6B and ample dividend funding. Total assets were ¥3,018.8B (YoY +¥127.4B) and Total equity was ¥2,060.9B (YoY +¥192.9B), indicating a solid financial base.
Revenue of ¥3290.3B (YoY +4.6%) was driven by the Office Environment Business at ¥1,918.5B (+14.6%), which recorded double-digit growth and led the portfolio. This core segment accounted for a 58.3% share of sales; price revisions and improved product mix contributed. The Store Displays business was ¥1,161.7B (-1.8%) with a slight decline, while the Material Handling Systems business was ¥147.0B (-34.9%) with a large decline due to fewer large projects and deterioration in project profitability. Other businesses were ¥63.0B (+1.3%). Gross profit totaled ¥1,139.7B, up ¥101.4B (+9.8%), and gross margin improved to 34.6% (prior year 33.6%) (+1.0pt), helped by stabilization of raw material prices and pass-through. Regional revenue was over 90% domestic, with limited overseas exposure.
Operating Income of ¥241.4B (YoY +0.9%) increased only marginally. Gross margin improvement contributed +¥101.4B, but SG&A rose materially to ¥898.3B (YoY +¥82.3B +10.1%), increasing the SG&A ratio to 27.3% (prior year 25.9%) (+1.4pt). SG&A composition included Salaries and Allowances ¥329.4B (prior year ¥276.9B, +¥52.5B), Rent ¥98.2B (prior year ¥86.7B, +¥11.5B), Depreciation ¥26.5B (prior year ¥23.2B, +¥3.3B), and Goodwill Amortization ¥11.8B (prior year ¥20.4B, -¥8.6B). Labor cost inflation and strategic investments pushed SG&A higher, reducing Operating Margin to 7.3% (prior year 7.6%) (-0.3pt). Ordinary Income of ¥258.4B (YoY -2.3%) was affected by a decline in net non-operating items to ¥17.0B (prior year ¥25.2B), calculated as Non-Operating Income ¥29.3B (including Dividend Income ¥10.2B and Equity-Method Income ¥8.8B) less Non-Operating Expenses ¥12.3B (including Interest Expense ¥5.0B). The drop in equity-method income from ¥13.9B to ¥8.8B contributed to the decline. Profit before tax was ¥295.0B (YoY -3.2%), after net extraordinary items of +¥36.6B (prior year +¥40.2B), comprised of Extraordinary Gains ¥69.0B (primarily investment securities sales gains ¥66.5B) less Extraordinary Losses ¥32.4B (impairment losses ¥12.7B, loss on disposal of fixed assets ¥10.0B, valuation losses on investment securities ¥8.8B). After income taxes of ¥68.7B (effective tax rate 23.3%), Net Income was ¥225.2B (YoY +4.5%). There was a one-off net extraordinary contribution of +¥36.6B (approximately 16.3% of Net Income), so attention should be paid to potential reversals next fiscal year. By segment, the Office Environment Business maintained high profitability with Operating Income ¥226.3B (prior year ¥173.7B, +30.3%), while Store Displays fell to ¥28.0B (prior year ¥47.9B, -41.6%), and Material Handling Systems turned to an operating loss of ¥-14.7B (prior year Operating Income ¥16.2B), diluting company-wide margins. In conclusion, although revenue and net income increased, dependence on the core business is high, SG&A expansion and weaker profitability in non-core segments pressured margins.
Office Environment Business (OfficeFurniture) recorded Revenue ¥1,918.5B (YoY +14.6%), Operating Income ¥226.3B (YoY +30.3%), and Operating Margin 11.8% (prior year 10.4%), maintaining high profitability and accounting for 58.3% of sales. Price revisions, product mix improvement, and better utilization contributed, reflecting gross margin improvement and effective SG&A control. Store Displays Business (StoreDisplays) reported Revenue ¥1,161.7B (YoY -1.8%), Operating Income ¥28.0B (YoY -41.6%), and Operating Margin 2.4% (prior year 4.1%), suffering significant margin deterioration due to slowing demand from retail and food distribution customers, rising costs, and price competition. Material Handling Systems Business (MaterialHandlingSystems) had Revenue ¥147.0B (YoY -34.9%), Operating Loss ¥14.7B (prior year Operating Income ¥16.2B), and Operating Margin -10.0%, falling into loss territory due to fewer large projects and deterioration in project profitability; urgent measures on order selection and project management are required. Other Businesses had Revenue ¥63.0B (YoY +1.3%), Operating Income ¥1.8B (YoY +16.7%), and Operating Margin 2.9%, showing modest improvement. There is a wide disparity in segment margins: the double-digit margin in Office Environment supports company results, while Store Displays and Material Handling Systems dilute overall margins. High concentration in Office Environment (58.3% of sales) poses risk as its demand cycle significantly affects performance.
Profitability: Operating Margin 7.3% (prior year 7.6%) decreased by -0.3pt, Net Margin 6.8% (prior year 7.0%) decreased by -0.2pt. Gross Margin improved to 34.6% (prior year 33.6%) (+1.0pt), but SG&A ratio increased to 27.3% (prior year 25.9%) (+1.4pt), compressing margins. ROE 10.9% (prior year 12.3%) decreased -1.4pt, and ROA (on Ordinary Income basis) 8.7% (prior year 9.3%) also declined, indicating a slight deterioration in profitability year-on-year. SG&A growth (+10.1%) outpaced revenue growth (+4.6%), reducing operating leverage. By segment, margins are Office Environment 11.8%, Store Displays 2.4%, Material Handling Systems -10.0% — showing significant dispersion.
Cash Quality: Operating Cash Flow (OCF) ¥272.2B is 1.21x Net Income ¥225.2B, indicating strong cash generation. OCF/EBITDA was 0.85x (EBITDA ¥319.7B = Operating Income ¥241.4B + Depreciation ¥78.3B), somewhat low and suggesting room to improve working capital management. The accrual ratio -1.6% ((Net Income - OCF)/Total Assets) is within a healthy range, indicating stable cash conversion.
Investment Efficiency: Total Asset Turnover was 1.09x (Revenue ¥3,290.3B / Total Assets ¥3,018.8B), unchanged from prior year. Order backlog / sales ratio for manufacturing is not disclosed. Contract liabilities were ¥20.6B (prior year ¥17.9B, +¥2.7B) with a small increase, and contract assets were ¥98.9B (prior year ¥109.9B, -¥11.0B), indicating limited advance receipts. Days Sales Outstanding (DSO) was 96 days ((Accounts receivable ¥86,106 million + Contract assets ¥9,889 million) / (Revenue ¥329,031 million / 365 days)), indicating elongation and signs of collection delays. Inventory days were 15 days (Finished goods ¥9,176 million / (Revenue ¥329,031 million / 365 days)), showing short inventory turnover and good product turnover.
Financial Soundness: Equity Ratio improved to 68.3% (prior year 64.6%) (+3.7pt). Current Ratio 285.6% (prior year 260.0%) and Quick Ratio 267.7% (prior year 244.0%) indicate very high short-term liquidity. Debt/Equity was 0.083x (Interest-bearing liabilities ¥25,325 million / Net assets ¥206,089 million), and Debt/EBITDA was 0.79x (Interest-bearing liabilities ¥25,325 million / EBITDA ¥319.7B), reflecting low leverage and high financial safety. Interest Coverage was 48.0x (Operating Income ¥241.4B / Interest Expense ¥5.0B), indicating negligible interest burden. Goodwill increased to ¥90.2B (prior year ¥59.7B), but goodwill / Net assets 4.4% and goodwill / EBITDA 0.28x are at healthy levels, limiting impairment risk.
Operating Cash Flow ¥272.2B (prior year ¥9.8B, +2668.9%) started from Profit before tax ¥295.0B and, after a pre-working-capital subtotal of ¥338.0B, reflected working capital changes and tax payments to reach the final OCF. The large YoY increase was due to the prior year’s large working capital outflow (Accounts receivable -¥64.3B, Accounts payable -¥138.4B) which depressed OCF; in the current period working capital movements were modest with Accounts receivable +¥27.7B and Accounts payable -¥25.9B. Current OCF at 1.21x Net Income is healthy, while OCF/EBITDA 0.85x (EBITDA ¥319.7B) suggests room to improve cash conversion. Investing Cash Flow was -¥53.6B (prior year -¥142.7B), driven by Capital Expenditures -¥79.5B (prior year -¥164.6B), intangible asset acquisitions -¥28.3B (prior year -¥23.7B), and acquisitions of subsidiary shares -¥65.8B, offset by investment securities sales and others proceeds of +¥110.2B (prior year +¥45.5B). CapEx/Depreciation was 1.02x (CapEx ¥79.5B / Depreciation ¥78.3B), reflecting maintenance and growth investments. Free Cash Flow was ¥218.6B (OCF ¥272.2B + Investing CF -¥53.6B), a large improvement from prior year -¥132.9B, comfortably covering dividend payments of ¥95.7B. Financing Cash Flow was -¥161.6B (prior year -¥2.1B), consisting of long-term borrowings ¥152.0B obtained, net short-term borrowings -¥24.7B, borrowings repayments -¥33.6B, and dividends -¥95.7B. Cash increased from ¥254.1B at the beginning of the period to ¥318.6B at period-end (+¥64.5B), leaving ample liquidity. In working capital, decreases in Accounts receivable and Contract assets were a cash source of +¥27.7B and +¥? (note: overall wording in original), inventories were a cash source of -¥5.6B, and Accounts payable was a cash outflow of -¥258B, indicating shortened payment terms. DSO of 96 days and elongation of receivables collection is a concern; improving credit control and collections is required. FCF coverage was 2.29x (FCF ¥218.6B / Dividends ¥95.7B), indicating strong dividend payment ability and room to allocate surplus cash to share buybacks or growth investments.
Recurring earnings are centered on Operating Income ¥241.4B (Operating Margin 7.3%). Non-operating income ¥29.3B (0.9% of sales) comprises Dividend Income ¥10.2B, Equity-Method Income ¥8.8B, foreign exchange gains ¥1.2B, etc., and is small in scale, indicating low dependence on non-operating items. One-off items included Extraordinary Gains ¥69.0B (primarily investment securities sales gains ¥66.5B) and Extraordinary Losses ¥32.4B (impairment losses ¥12.7B, loss on disposal of fixed assets ¥10.0B, valuation losses on investment securities ¥8.8B), yielding a net extraordinary contribution of +¥36.6B (approx. 16.3% of Net Income) which boosted Net Income. The prior year also recorded net extraordinary items of +¥40.2B (Extraordinary Gains ¥40.5B from investment securities sales, Extraordinary Losses ¥0.3B), so investment securities sales gains show a recurring tendency. However, reproducibility of sales gains depends on market conditions and policy for selling strategic holdings, making sustainability uncertain for the next fiscal year. The gap between Ordinary Income ¥258.4B and Net Income ¥225.2B is due to the impact of extraordinary items and income taxes of ¥68.7B; therefore, assessment of core earnings should focus on Operating Income and EBITDA. The accrual ratio -1.6% ((Net Income ¥225.2B - OCF ¥272.2B) / Total Assets ¥3,018.8B) is within a healthy range, and OCF/Net Income 1.21x is favorable. Conversely, OCF/EBITDA 0.85x (OCF ¥272.2B / EBITDA ¥319.7B) is somewhat low, indicating room to improve working capital management and cash conversion. Comprehensive Income was ¥288.1B, substantially above Net Income ¥225.2B; the difference ¥62.9B comprised Foreign Currency Translation Adjustments ¥11.3B, Net Unrealized Gains on Securities ¥38.8B, and Adjustments related to Retirement Benefits ¥8.4B. Expansion in valuation gains on investment securities reflects improved equity market conditions and strengthens the financial position, but market value fluctuations will continue. Overall, Operating Income benefited from gross margin improvement partially offset by SG&A increases, limiting growth; Net Income rose due to extraordinary gains, but there is a risk of Net Income declining next fiscal year if extraordinary gains do not recur.
Full-year guidance: Revenue ¥3,470.0B (YoY +5.5%), Operating Income ¥260.0B (YoY +7.7%), Ordinary Income ¥275.0B (YoY +6.4%), EPS ¥222.87 (vs. current period ¥236.80, -5.9%). Revenue is expected to accelerate from +4.6% this year to +5.5% next year, with Operating Margin improving to 7.5% (this year 7.3%) (+0.2pt). Assumptions include continued growth in the Office Environment Business, margin recovery in Store Displays and Material Handling Systems (cost improvements, order selection, strengthened project management), and containment of SG&A growth. Current period extraordinary gains ¥69.0B (net +¥36.6B) are not reflected in next year’s guidance, so EPS ¥222.87 is projected to decline from ¥236.80. The full-year dividend guidance ¥52.50 (current period actual ¥104) may refer to an interim dividend and requires confirmation for annual policy. Assuming progress rates of 48% of Revenue and 47% of Operating Income at the end of H1, performance acceleration in H2 is necessary. Order backlog and book-to-bill ratios are undisclosed, so quarterly verification of project execution and price sustainability is needed. Improvement in Store Displays and Material Handling Systems profitability is critical to achieving the plan; black-to-black turnaround in loss-making segments and Store Displays margin recovery (target >4%) are prerequisites. Containment of SG&A ratio (target mid-20% range, 26% area) and maintaining double-digit margin in Office Environment are also important. Overall, next fiscal year aims for both top-line growth and margin improvement, but when excluding extraordinary gains, declines in Net Income and EPS are unavoidable; investor focus will center on improvements at the Operating and Ordinary Income levels.
Annual dividend was ¥104 (interim ¥52 + year-end ¥52, payout ratio 46.7%). Dividend payments totaling ¥95.8B against Net Income ¥225.2B (annual DPS ¥104 × weighted average shares 94,663 thousand) are sustainable. Share buybacks were negligible (Financing CF -¥0.0B), so total return is dividend-focused. FCF coverage was 2.29x (FCF ¥218.6B / Dividends ¥95.8B) and cash and deposits were ¥327.2B, with Net interest-bearing debt -¥2.0B (Interest-bearing debt ¥253.3B - cash ¥327.2B), effectively near debt-free and with very high payment capacity. Next fiscal year forecast dividend ¥52.50 may represent an interim dividend; on a full-year basis a similar level (around ¥105) could be maintained. Payout ratio against EPS forecast ¥222.87 would be around 47%, consistent with a stable dividend policy. Historically the payout ratio has remained in the 40% range; the current dividend of ¥104 represents a significant increase from prior year ¥45 (+131%) and suggests continuation of interim dividend in annualization. If cash generation continues, there is scope for further dividend increases, and total shareholder return is likely to remain under 50% and dividend-centric. Given financial soundness and earnings capacity, dividend sustainability is high and there is potential for additional share buybacks or dividend increases.
Segment Concentration Risk: The Office Environment Business accounts for 58.3% of revenue and the majority of Operating Income, and results are highly correlated with office demand cycles (new construction/refurbishment demand, telework trends, corporate capital expenditure). A slowdown in the core business would directly impact company results. With low contribution from Store Displays and Material Handling Systems, diversification benefits are limited. Quantitatively, Office Environment Operating Income ¥226.3B represents 93.7% of consolidated Operating Income ¥241.4B, and a 1pt decline in that segment’s margin would reduce consolidated Operating Income by roughly ¥19B.
Profitability Deterioration in Non-Core Segments: Store Displays’ Operating Margin dropped to 2.4% (prior year 4.1%) and Material Handling Systems is at -10.0%, diluting overall margins. Store Displays is affected by weaker retail/food distribution demand and price competition; Material Handling Systems is affected by large-project margin deterioration and fewer projects. Quantitatively, if Store Displays maintained prior-year margin of 4.1%, Operating Income would be +¥19B higher, and if Material Handling Systems returned to prior-year level (approx. 11.0% margin equivalent), Operating Income would be +¥37B higher—together potential upside of ¥56B (about 23% of current Operating Income). Delays in improvement at these segments could depress consolidated Operating Income by around ¥56B annually.
Elongation of Receivables and Liquidity Risk: DSO 96 days ((Accounts receivable ¥86,106 million + Contract assets ¥9,889 million) / (Revenue ¥329,031 million / 365 days)) is extended, exceeding the typical manufacturing benchmark of ~60 days by +36 days. Causes include changes in contract terms, delays in acceptance testing, and a shift toward larger projects. Quantitatively, normalizing DSO to 60 days could improve working capital by approximately ¥325B and increase Operating Cash Flow by the same amount. Conversely, prolonged DSO could reveal customer credit issues, leading to bad debt losses (potentially several times the current allowance for doubtful accounts of ¥1.99B) and weaker OCF. Contract liabilities (advance receipts) ¥20.6B are limited, with an advance-receipt ratio of 0.6% of revenue, suggesting project-based cash risk is somewhat elevated.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.3% | 7.8% (4.6%–12.3%) | -0.4pt |
| Net Margin | 6.8% | 5.2% (2.3%–8.2%) | +1.7pt |
Operating Margin is slightly below the industry median, while Net Margin exceeds the median, helped by extraordinary gains such as investment securities sales.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.6% | 3.7% (-0.4%–9.3%) | +0.9pt |
Revenue growth outperformed the industry median, driven by double-digit growth in the core Office Environment Business.
※ Source: Company compilation
Margin recovery hinges on sustaining gross margin improvement and strict SG&A control: Gross Margin improved to 34.6% (+1.0pt), but SG&A ratio rose to 27.3% (+1.4pt), reducing Operating Margin to 7.3%. To achieve the next fiscal year Operating Margin target of 7.5%, SG&A ratio must be contained in the mid-20% (26% area) while maintaining gross margin. Labor cost inflation (+¥52.5B this period) appears structural, but rent and depreciation increases are more manageable; execution to keep fixed-cost growth below revenue growth will be tested. Monitor quarterly SG&A ratios and Operating Margins.
Profitability improvement in non-core segments is a prerequisite for expanding company margins: Store Displays at 2.4% and Material Handling Systems at -10.0% dilute company margins. If both recover to prior-year levels (Store Displays 4.1%, Material Handling Systems ~11.0%), consolidated Operating Income could increase by ¥56B. Most of next year’s planned Operating Income increase of ¥18.6B depends on segment profitability recovery; verify cost control, order selection, and project-level profitability through quarterly disclosures. Delays in recovery would risk missing full-year guidance.
Loss of extraordinary gains and assessment of core earnings power: Current-period extraordinary gains ¥69.0B (net +¥36.6B) boosted Net Income by 16.3%, but next fiscal year EPS forecast ¥222.87 (vs. ¥236.80 this fiscal year, -5.9%) incorporates the likely drop in extraordinary gains. Investor focus will center on improvements at Operating and Ordinary Income levels; achievement of Operating Income +7.7% would warrant re-rating. Meanwhile, DSO 96 days and receivables elongation raise concerns about credit and liquidity risk; monitor progress on collection and credit control in earnings briefings. Disclosure of order backlog and book-to-bill ratios would be helpful.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; seek professional advice as necessary before making investment decisions.