| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2590.4B | ¥2403.3B | +7.8% |
| Operating Income / Operating Profit | ¥226.0B | ¥207.8B | +8.8% |
| Ordinary Income | ¥239.8B | ¥213.5B | +12.3% |
| Net Income / Net Profit | ¥185.7B | ¥154.2B | +20.4% |
| ROE | 10.7% | 9.8% | - |
For the full year ended March 2026, Revenue was ¥2590.4B (YoY +¥187.1B +7.8%), Operating Income was ¥226.0B (YoY +¥18.2B +8.8%), Ordinary Income was ¥239.8B (YoY +¥26.3B +12.3%), and Net Income was ¥185.7B (YoY +¥31.5B +20.4%), delivering revenue and profit growth across multiple stages. Gross margin improved to 41.9% from 41.0% a year earlier (+0.9pt), and the combination of higher sales and improved gross margin supported operating profit growth. Operating margin expanded to 8.7% from 8.6% (+0.1pt), but SG&A ratio rose to 33.1% from 32.4% (+0.7pt), partially offset by higher advertising expenses and personnel costs. At the ordinary income level, foreign exchange gains of ¥9.1B contributed, and at the net income level, special gains including investment securities sales gains of ¥6.8B and fixed asset disposal gains of ¥6.7B further boosted final profit.
[Revenue] Revenue was ¥2590.4B (YoY +7.8%), with growth maintained both domestically and internationally. By region, Japan accounted for ¥1625.1B (+5.5%) as the core, Europe delivered significant growth at ¥307.9B (+29.7%), the Americas totaled ¥377.7B (+4.9%), and Asia & Oceania ¥396.0B (+4.7%). Japan’s growth was driven by strengthened domestic promotions and improved product mix, while Europe benefited from a rebound and demand expansion in local-currency terms. Conversely, growth in the Americas and Asia slowed, highlighting regional mix dispersion as an emerging issue. Gross profit was ¥1084.7B with a gross margin of 41.9% (+0.9pt vs. prior year 41.0%), supported by maintained price discipline and a favorable product mix.
[Profitability] SG&A was ¥858.6B (YoY +10.4%), outpacing sales growth and increasing the SG&A ratio to 33.1% (+0.7pt). Major drivers were advertising expenses of ¥134.2B (+13.1%), salaries and allowances ¥227.4B (+6.1%), and bonuses ¥51.8B (+16.1%), reflecting growth investments and higher personnel costs. Operating Income was ¥226.0B (+8.8%) with an operating margin of 8.7% (+0.1pt), as gross margin improvement absorbed cost increases. Non-operating items included foreign exchange gains of ¥9.1B and dividend income of ¥3.4B driving non-operating income, while non-operating expenses were limited to ¥4.7B including interest expense of ¥2.5B, resulting in Ordinary Income of ¥239.8B (+12.3%), outpacing operating-level growth. Special gains totaled ¥13.4B (investment securities sales gains ¥6.8B, fixed asset disposal gains ¥6.7B), special losses ¥3.1B (business restructuring costs ¥2.4B, impairment losses ¥0.4B, etc.), producing a net special profit of +¥10.3B and bringing profit before income taxes to ¥250.2B. After deducting corporate tax and related expenses of ¥64.5B, Net Income reached ¥185.7B (+20.4%), a higher growth rate than Ordinary Income. In conclusion, gross margin improvement plus supportive non-operating and special items resulted in a revenue and profit up-tick.
The Japan segment delivered Revenue of ¥1625.1B (YoY +5.5%), Operating Income of ¥152.2B (+14.7%), and an operating margin of 9.4%, remaining the largest earnings contributor. Europe achieved Revenue of ¥307.9B (YoY +29.7%) and Operating Income of ¥14.1B (+108.0%) with a margin of 4.6%, realizing a substantial rebound from the prior year’s low-margin condition. The Americas posted Revenue of ¥377.7B (YoY +4.9%) but Operating Income decreased to ¥24.2B (-12.4%) with a margin of 6.4%, indicating deteriorated profitability. Asia & Oceania showed Revenue of ¥396.0B (YoY +4.7%) and Operating Income of ¥35.6B (-11.7%) with a margin of 9.0%, reflecting revenue growth but profit decline, likely due to increased promotional costs and intensified regional competition. Japan contributed approximately 67% of consolidated operating income, indicating high dependence on the domestic market; however, Europe’s substantial profit recovery is emerging as a new driver, while restoring profitability in the Americas and Asia remains a key challenge.
[Profitability] ROE was 10.7%, improving from 10.2% a year earlier (+0.5pt), reaching a level above historical performance. Operating margin was 8.7% (+0.1pt from prior year 8.6%), Net Profit Margin was 7.2% (+0.8pt from 6.4%), overall profitability improved, primarily driven by a gross margin of 41.9% (+0.9pt). [Cash Quality] Operating Cash Flow (OCF) was ¥173.1B, 0.93x of Net Income ¥185.7B, falling below 1x and indicating modestly weak cash conversion efficiency. Increases in accounts receivable of ¥49.1B and inventory of ¥26.3B pressured OCF, with working capital expansion suppressing cash generation. Free Cash Flow was ¥120.3B, which sufficiently covered total shareholder returns of ¥72.1B (dividends ¥42.1B + share buybacks ¥30.0B). [Investment Efficiency] Capital expenditure was ¥27.4B (1.1% of Revenue), below depreciation expense of ¥37.5B, indicating restrained investment. Goodwill stood at ¥7.6B, 0.4% of net assets, and goodwill/EBITDA was 0.03x, suggesting extremely limited intangible asset risk from M&A. [Financial Soundness] Equity Ratio was 69.3% (prior year 71.6%), maintaining a high level; total interest-bearing debt was ¥129.5B (short-term ¥28.3B, long-term ¥101.2B) versus cash and deposits of ¥460.2B, yielding net cash of ¥330.7B and effectively a debt-free position. Current ratio was 377%, quick ratio 259%, indicating low short-term liquidity risk, and interest coverage was approximately 90x (Operating Income ¥226.0B / Interest Expense ¥2.5B), showing minimal interest burden.
OCF was ¥173.1B, up +147.1% from ¥70.1B in the prior year, but the ratio of OCF to profit before tax (¥250.2B) was 0.69x, and to Net Income (¥185.7B) was 0.93x, indicating somewhat low cash conversion efficiency. OCF before working capital changes was ¥221.0B and remained solid, but increases in accounts receivable ¥49.1B, inventories ¥26.3B, and accounts payable ¥0.2B resulted in net working capital outflow of about ¥75B, constraining cash generation. Corporate tax payments of ¥50.9B were another cash outflow. Investing Cash Flow was -¥52.8B, with capital expenditures ¥27.4B, intangible asset acquisitions ¥11.8B, and investment securities purchases ¥32.4B as main outflows, partially offset by proceeds from fixed asset disposals ¥11.8B and investment securities sales ¥9.3B. Financing Cash Flow was +¥11.0B: proceeds from corporate bond issuance ¥99.9B and long-term borrowings ¥25.0B flowed in, while repayments of long-term borrowings ¥38.3B, dividend payments ¥42.1B, and share buybacks ¥30.0B were outflows, resulting in a small net inflow. Free Cash Flow of ¥120.3B covered total shareholder returns of ¥72.1B by 1.67x, supporting the sustainability of dividends and buybacks. Cash and deposits rose by ¥136.2B from opening balance ¥324.0B to closing balance ¥460.2B, further strengthening liquidity.
Of the gap between Ordinary Income ¥239.8B and Net Income ¥185.7B (difference ¥54.1B), net special items were +¥10.3B (special gains ¥13.4B - special losses ¥3.1B), which boosted Net Income. The main special gains were investment securities sales gains ¥6.8B and fixed asset disposal gains ¥6.7B, both temporary in nature. Of non-operating income ¥18.5B, foreign exchange gains ¥9.1B and dividend income ¥3.4B include recurring elements, but foreign exchange is volatile and sustainability should be monitored. Non-operating expenses were small at ¥4.7B, and interest expense was kept low at ¥2.5B. Comprehensive income was ¥243.5B, ¥57.8B above Net Income ¥185.7B; the composition of OCI ¥57.9B was foreign currency translation adjustments ¥23.5B, remeasurements of defined benefit plans ¥22.8B, valuation differences on securities ¥10.1B, and deferred hedge gains/losses ¥1.4B. The divergence between Net Income and Comprehensive Income is mainly due to FX and pension valuation changes, suggesting B/S valuation movements in assets and liabilities generated economic value beyond P/L profits. The gap between OCF and Net Income is primarily due to working capital increases; whether accounts receivable and inventory expansion are temporary or structural will determine earnings quality. At present, core business profitability appears sustainable due to gross margin improvement and low interest burden, but the expiration of special gains and normalization of working capital will be key determinants of next-year cash generation.
Company full-year plan was Revenue ¥2800.0B (YoY +8.1%), Operating Income ¥255.0B (+12.8%), Ordinary Income ¥265.0B (+10.5%), Net Income ¥190.0B. Actual results were Revenue ¥2590.4B (-7.5% vs plan), Operating Income ¥226.0B (-11.4%), Ordinary Income ¥239.8B (-9.5%), Net Income ¥185.7B (-2.3%), resulting in misses across all items. Revenue missed plan by roughly ¥210B and Operating Income by roughly ¥29B, likely impacted by higher promotional costs in the second half and weaker-than-expected performance in the Americas and Asia. Shortfalls in Ordinary Income and Net Income were smaller than at the operating level, as non-operating and special items provided support. EPS forecast was ¥249.86 vs actual ¥239.73, roughly a 4% shortfall. Dividend guidance of ¥33.00 (note: exercise caution when comparing to actual annual dividend shown as interim ¥25 + year-end ¥35 = ¥60 in pre-split basis) remains; a 1-for-3 stock split was implemented effective April 1, 2025, and reported dividend of ¥60 is on a pre-split basis. The primary cause of the plan miss was lower-than-expected sales, while gross margin improvement and non-operating/special items mitigated the shortfall in final profit.
Dividends were interim ¥25 and year-end ¥35 for an annual total of ¥60 (same as prior year), maintaining a Payout Ratio of 25.2% (prior year 25.2%) at a sustainable level. Shares outstanding were 79,735 thousand, treasury stock 3,692 thousand, and the weighted average shares during the period were 76,655 thousand, resulting in total dividends of approximately ¥42.1B. Coverage of dividend payments ¥42.1B by Free Cash Flow ¥120.3B was 2.86x, and total shareholder returns including share buybacks ¥30.0B (total ¥72.1B) were covered 1.67x by Free Cash Flow. Distinguishing payout ratio and Total Return Ratio, the payout ratio is 25.2%, while the Total Return Ratio is (dividends ¥42.1B + buybacks ¥30.0B = ¥72.1B) which is 38.8% of Net Income ¥185.7B. Treasury stock increase ¥29.8B was part of total returns to improve capital efficiency, and with net cash ¥330.7B and a strong balance sheet, the company continues a shareholder return policy combining dividends and opportunistic buybacks. A 1-for-3 stock split was executed on April 1, 2025; on a post-split basis per-share dividends will be adjusted, but total return amount remains unchanged.
Working capital expansion risk: Increases in accounts receivable ¥49.1B and inventory ¥26.3B have pressured OCF, lowering OCF/Net Income to 0.93x and reducing cash conversion efficiency. Inventory days are high at 150 days and receivable turnover days are long at 73 days. The cash conversion cycle at 182 days is extended; continued inventory buildup or delayed receivable collection could further weaken cash generation, impacting investment capacity and sustainability of shareholder returns.
Regional profitability dispersion: The Americas posted Operating Income down -12.4% and Asia & Oceania -11.7%; their margins are 6.4% and 9.0% respectively, which, despite being above Europe’s 4.6%, are on a downtrend. Dependence on Japan is high (approximately 67% of operating income), so saturation or intensified competition in Japan could materially affect consolidated earnings. Although Europe showed significant profit recovery, its margin remains low at 4.6%, and delayed recovery in the Americas and Asia combined with slower growth in Japan could drag down consolidated margins.
Erosion of operating leverage due to higher promotional and personnel costs: Advertising expenses +13.1% YoY, salaries and allowances +6.1%, bonuses +16.1% are rising faster than sales growth of +7.8%, and the SG&A ratio rose from 32.4% to 33.1% (+0.7pt). While gross margin improvement has absorbed cost increases so far, a slowdown in sales growth would directly compress operating margins. Delays in recuperating growth investments would pressure both margins and capital efficiency.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.7% | 7.8% (4.6%–12.3%) | +1.0pt |
| Net Profit Margin | 7.2% | 5.2% (2.3%–8.2%) | +2.0pt |
The company outperforms the industry median on both operating margin and net profit margin, indicating relatively strong profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.8% | 3.7% (-0.4%–9.3%) | +4.1pt |
Revenue growth is +4.1pt above the industry median, placing the company among the higher-growth peers in the sector.
※Source: Company compilation
ROE improvement trend driven by gross margin improvement and low leverage: Gross margin improved to 41.9% (+0.9pt), supported by price discipline and a favorable product mix. ROE of 10.7% rose +0.5pt from 10.2% and surpasses the industry median, reflecting strong profitability. Net cash of ¥330.7B and Equity Ratio of 69.3% indicate an extremely solid financial foundation, providing ample room to balance growth investments and shareholder returns. Sustained gross margin and improved promotional efficiency could drive further ROE gains.
Room to improve working capital efficiency and the key to OCF recovery: OCF of ¥173.1B is 0.93x of Net Income ¥185.7B, with working capital outflow of about ¥75B from OCF subtotal ¥221.0B, reducing cash conversion efficiency. With inventory days at 150 and receivable days at 73, compressing inventory and improving receivable collection could materially boost OCF, expanding total return capacity and enabling faster growth investment. Assuming special gains of ¥13.4B do not recur, working capital normalization is the most critical factor for next-year cash generation.
Regional profitability recovery and diversification of growth drivers: While Japan accounts for roughly 67% of operating income, Europe achieved Revenue +29.7% and Operating Income +108%, emerging as a new growth driver. The Americas and Asia are in a downtrend, but together they account for Revenue of about ¥774B (30% of total), representing significant scale; recovery in these regions would help lift consolidated margins. Progress in diversifying regional drivers and improving margins across regions would reduce Japan reliance and support sustainable growth.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the Company based on public financial statements and are provided for reference. Investment decisions are your own responsibility; please consult a professional advisor as necessary.