| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3356.9B | ¥3047.4B | +10.2% |
| Operating Income / Operating Profit | ¥308.7B | ¥212.4B | +45.4% |
| Ordinary Income | ¥331.2B | ¥207.7B | +59.5% |
| Net Income / Net Profit | ¥67.7B | ¥45.0B | +50.3% |
| ROE | 3.8% | 2.8% | - |
For the fiscal year ended March 2026, Revenue was ¥3356.9B (YoY +¥309.4B +10.2%), Operating Income was ¥308.7B (YoY +¥96.4B +45.4%), Ordinary Income was ¥331.2B (YoY +¥123.5B +59.5%), and Net Income attributable to owners of the parent was ¥67.7B (YoY +¥22.7B +50.3%) — all four key metrics recorded double-digit increases. Operating margin improved to 9.2% (up +2.2pt from 7.0% prior year), and Gross Profit Margin improved to 46.2% (up +1.2pt from 45.0%), indicating a significant enhancement in profitability. The core Emotional Value Solution Business drove performance with Revenue +10.7% and Operating Income +28.7%, while the Device Solution Business posted a substantial Operating Income improvement of +37.4%. In addition to top-line and bottom-line growth, SG&A ratio improved to 37.0% (from 38.0% prior year, -1.0pt), reflecting efficiency gains and effective operating leverage.
[Revenue] Revenue was ¥3356.9B (YoY +10.2%), marking a third consecutive year of revenue growth. By segment, Emotional Value Solution Business recorded ¥2204.5B (+10.7%), accounting for 65.7% of sales, driven by expanded sales of high value-added watches and luxury jewelry. Device Solution Business recorded ¥649.5B (+8.2%, 19.3% share) with solid performance in batteries & materials and precision components. System Solution Business recorded ¥571.6B (+8.3%, 17.0% share), supported by DX platforms and cashless-related services. Other segments totaled ¥42.9B (+26.0%) led by growth in shared services. Non-operating income added to core operations, including equity-method investment income of ¥14.8B, foreign exchange gains of ¥11.9B, dividend income of ¥8.4B, and interest income of ¥5.9B.
[Profitability] Gross profit was ¥1552.0B (gross margin 46.2%, up +1.2pt from 45.0%) supported by an improved mix toward high value-added products and cost control. SG&A was ¥1243.3B (SG&A ratio 37.0%, improved -1.0pt from 38.0%), with SG&A growth of +7.3% versus revenue growth of +10.2%, demonstrating operating leverage. As a result, Operating Income came in at ¥308.7B (Operating margin 9.2%, up +2.2pt from 7.0%, +45.4% YoY). Ordinary Income was ¥331.2B (+59.5%), with net non-operating income contributing ¥22.5B on top of Operating Income (non-operating income ¥48.6B less non-operating expenses ¥26.1B). Extraordinary income totaled ¥5.6B (note: overlap in recording of securities sale gains ¥18.6B and fixed asset sale gains ¥5.6B) while extraordinary losses totaled ¥18.7B (impairment losses ¥9.4B, business restructuring costs ¥8.0B, disaster losses ¥2.8B, etc.) which temporarily weighed on results. Income before income taxes was ¥318.1B, from which income taxes amounted to ¥97.3B (effective tax rate 30.6%). After deducting non-controlling interests of ¥1.0B, Net Income attributable to owners of the parent was ¥67.7B (+50.3%). In conclusion, revenue +10.2% and Operating Income +45.4% reflect a strong combination of profitability improvement and efficiency gains.
The Emotional Value Solution Business is the largest profit source, with Operating Income of ¥285.9B (margin 13.0%), representing 92.6% of consolidated Operating Income. The YoY +28.7% increase was primarily due to an improved high-price product mix and demand recovery in watches and luxury jewelry. Device Solution Business posted Operating Income of ¥38.2B (margin 5.9%), a significant YoY improvement of +37.4%, supported by demand recovery and improved utilization in batteries, materials, and precision components. System Solution Business recorded Operating Income of ¥55.0B (margin 9.6%), up +6.0% YoY, showing stable growth across IoT/AI solutions, DX platforms, and cashless services. Other segments recorded Operating Income of ¥2.5B (margin 5.8%), up +6.0% YoY. The high profitability of the Emotional Value Solution Business most significantly lifted consolidated margins, complemented by Device margin improvements.
[Profitability] Operating margin of 9.2% improved +2.2pt from 7.0%, indicating a third consecutive period of margin improvement. Gross Profit Margin 46.2% (up +1.2pt from 45.0%) and SG&A ratio 37.0% (improved -1.0pt from 38.0%) both contributed. ROE was 3.8% (prior year 2.9%), improving +0.9pt YoY, aided by reduced extraordinary losses and profit growth. Net Profit Margin was 2.0% (up +0.5pt from 1.5%), with Operating Income improvements propagating to pre-tax results. [Cash Quality] Operating Cash Flow (OCF) / Net Income stood at 5.43x, with OCF of ¥367.7B against Net Income of ¥67.7B, indicating very strong cash realization of profits. EBITDA was ¥449.6B (Operating Income ¥308.7B + Depreciation ¥140.8B) and EBITDA margin was 13.4% (improved +1.7pt from ~11.7% prior year), confirming improved cash generation. [Investment Efficiency] Total Asset Turnover was 0.87x (improved from 0.83x), and Return on Assets from operations (Operating Income / Total Assets) was 8.0% (up +2.2pt from 5.8%), indicating improved capital efficiency. Free Cash Flow was ¥219.8B (OCF ¥367.7B - Investing CF ¥147.9B), providing ample liquidity. [Solvency] Equity Ratio was 46.2% (improved +3.4pt from 42.8%), strengthening the financial base. Interest-bearing debt totaled ¥425.8B (short-term borrowings ¥425.7B + long-term borrowings ¥243.1B - duplication deduction ¥243.0B) and decreased YoY. Debt/EBITDA was 0.95x (¥425.8B ÷ ¥449.6B), a low level, and interest coverage was 22.2x (Operating Income ¥308.7B ÷ Interest Expense ¥13.9B), which is healthy. Cash and deposits of ¥434.9B exceed short-term borrowings of ¥425.7B, ensuring liquidity.
Operating Cash Flow (OCF) was ¥367.7B (YoY +12.8%), demonstrating strong conversion from profit before tax of ¥318.1B. OCF subtotal (before working capital changes) was ¥450.8B, with adjustments including Depreciation ¥140.8B, Impairment losses ¥9.4B, equity-method investment results -¥14.8B, and corporate tax payments -¥86.5B. Working capital changes included increases in trade receivables -¥35.1B and inventories -¥9.3B as negative contributions, offset in part by an increase in trade payables +¥6.5B. Subtracting Investing CF of -¥147.9B (including capital expenditures -¥96.8B and intangible asset acquisitions -¥42.7B) from OCF produced Free Cash Flow of ¥219.8B, ample to cover dividend payments of -¥47.5B at a coverage ratio of 4.6x. Financing CF was -¥204.6B, primarily reflecting net repayment of short-term borrowings (increases ¥1096.4B - decreases ¥1104.5B), long-term borrowing repayments -¥255.5B, long-term borrowings raised +¥214.0B, dividend payments -¥47.5B, and share buybacks -¥0.0B. Cash and deposits at period end were ¥434.9B (up ¥40.6B from ¥394.3B prior year), strengthening liquidity.
Core earnings center on Operating Income of ¥308.7B, driven by improvements in core business profitability. Non-operating recurring contributors included equity-method investment income ¥14.8B, dividend income ¥8.4B, interest income ¥5.9B, and foreign exchange gains ¥11.9B, making up a significant, stable portion of total non-operating income of ¥48.6B. After deducting non-operating expenses ¥26.1B (interest expense ¥13.9B, foreign exchange losses ¥6.2B, etc.), the net non-operating contribution added ¥22.5B to Operating Income. Extraordinary income of ¥5.6B (fixed asset sale gains ¥5.6B, and an overlapping recording with securities sale gains ¥18.6B) is considered temporary. Extraordinary losses of ¥18.7B (impairment losses ¥9.4B, business restructuring costs ¥8.0B, disaster losses ¥2.8B, etc.) are also one-off items; the net extraordinary impact was -¥13.1B, compressing Net Income by about 19%. OCF of ¥367.7B is 5.43x Net Income ¥67.7B, and the accrual ratio ((Net Income - OCF) ÷ Total Assets) = -7.8%, indicating high earnings quality. The gap between Ordinary Income ¥331.2B and Net Income ¥67.7B is attributable to tax expense ¥97.3B (effective tax rate 30.6%), net extraordinary losses -¥13.1B, and non-controlling interests ¥1.0B.
Full-year forecast is Revenue ¥3580.0B (YoY +6.6%), Operating Income ¥335.0B (YoY +8.5%), and Ordinary Income ¥340.0B (YoY +2.7%). Actuals were Revenue ¥3356.9B, Operating Income ¥308.7B, and Ordinary Income ¥331.2B, representing progress rates of 93.8% for Revenue, 92.1% for Operating Income, and 97.4% for Ordinary Income. Revenue and Operating Income fell short of plan by about 6–8%, while Ordinary Income reached 97.4%, with non-operating income cushioning the variance. The shortfall was mainly due to year-end working capital build and delayed recovery in certain Device markets and FX fluctuations. For the next fiscal year, maintaining a high value-added mix in the core Emotional Value Solution Business and inventory normalization are key to meeting guidance.
Annual dividend was Interim ¥60 and Year-end ¥105, total ¥165 (same as prior year, pre-stock-split basis). Payout Ratio was 30.7% (dividend ¥165 vs EPS ¥268.93; note a 1-for-2 stock split was implemented effective April 1, 2026). Total dividends amounted to ¥47.5B, with Free Cash Flow ¥219.8B yielding a coverage ratio of 4.6x, indicating high dividend sustainability. Share buybacks were effectively -¥0.0B, so returns were dividend-centric. Next-period dividend forecast is ¥45 (post-split basis; equivalent to ¥90 pre-split), implying an increase (note indicates a pre-split annual dividend forecast of ¥180). Debt/EBITDA 0.95x and Interest Coverage 22.2x reflect significant capacity to support dividends.
Concentration risk in core segment: The Emotional Value Solution Business accounts for 65.7% of Revenue and 92.6% of Operating Income, so brand cycles and demand fluctuations in watches and luxury jewelry have outsized impact. Since Operating Income of ¥285.9B from this segment comprises the majority of consolidated Operating Income ¥308.7B, a reversal in demand cycles could materially erode consolidated margins.
FX risk: While foreign exchange gains of ¥11.9B contributed to non-operating income, foreign exchange losses of ¥6.2B were also recorded, producing a net FX impact of +¥5.7B, equivalent to 1.8% of Operating Income. In a yen-strengthening scenario, FX gains could shrink and margin resilience would be tested. Part of the ¥14.8B equity-method investment income may include translation effects of overseas associates, so FX volatility could propagate to Ordinary Income.
Working capital efficiency and short-term funding risk: Working capital buildup—trade receivables -¥35.1B and inventories -¥9.3B—dampened OCF growth. Contract liabilities (advance receipts) of ¥99.9B function as a short-term funding source, but cash and deposits ¥434.9B only marginally cover short-term borrowings ¥425.7B (the bulk of interest-bearing debt), implying relatively high refinancing dependency. Delays in improving working capital efficiency could constrain OCF/EBITDA growth going forward.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.2% | 7.8% (4.6%–12.3%) | +1.4pt |
| Net Profit Margin | 2.0% | 5.2% (2.3%–8.2%) | -3.2pt |
Operating margin exceeds industry median by +1.4pt, indicating strong profitability, while Net Profit Margin lags median by -3.2pt due to extraordinary loss impact.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 10.2% | 3.7% (-0.4%–9.3%) | +6.5pt |
Revenue growth outpaces industry median by +6.5pt, maintaining a top-tier growth pace within manufacturing.
※ Source: Company aggregation
High profitability in the core business and realization of operating leverage: Emotional Value Solution Business margin of 13.0% significantly lifted consolidated margins, with Operating Income +45.4% versus Revenue +10.2%, showing effective operating leverage. Concurrent improvements in SG&A ratio (-1.0pt) and gross margin (+1.2pt) indicate improved earnings quality. If high value-added mix and efficiency gains continue, the trend of improving ROE and Operating margin is likely to persist.
Ample Free Cash Flow and dividend coverage: OCF ¥367.7B generated Free Cash Flow ¥219.8B, covering dividend payments ¥47.5B at 4.6x. Debt/EBITDA 0.95x and Interest Coverage 22.2x indicate substantial financial headroom, supporting dividend sustainability. Next-period dividend guidance (¥90 pre-split equivalent) suggests increases; further profit growth and working capital efficiency improvements would strengthen dividend safety.
Room to improve working capital efficiency and short-term liquidity: Increases in trade receivables and inventories constrained OCF growth; improving inventory turns and receivables collection cycles are priorities. Cash ¥434.9B marginally covers short-term borrowings ¥425.7B, suggesting relatively high refinancing reliance. Improving working capital efficiency will boost OCF/EBITDA and expand short-term liquidity, reinforcing financial stability.
This report was auto-generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as appropriate.