| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2191.4B | ¥2217.6B | -1.2% |
| Operating Income / Operating Profit | ¥137.0B | ¥131.0B | +4.5% |
| Equity-method Investment Income | ¥1.8B | ¥0.1B | +1900.0% |
| Ordinary Income | ¥143.5B | ¥136.0B | +5.6% |
| Net Income / Net Profit | ¥84.6B | ¥78.7B | +7.5% |
| ROE | 9.3% | 9.9% | - |
The fiscal year ended March 2026 recorded Revenue of ¥2191.4B (YoY -¥26.2B -1.2%), Operating Income of ¥137.0B (YoY +¥5.9B +4.5%), Ordinary Income of ¥143.5B (YoY +¥7.5B +5.6%), and Net Income attributable to owners of the parent of ¥99.5B (YoY +¥11.1B +12.6%), achieving earnings growth despite a slight revenue decline. The revenue decline with profit increase reflects an improved segment mix and profitability-focused operations. Gross margin was 17.8% (YoY +0.8pt) and operating margin was 6.2% (YoY +0.3pt), with margin expansion driven by high-margin Healthcare (revenue +51.4%) and Aviation & Infrastructure (revenue +57.0%). Operating Cash Flow (OCF) was ¥161.4B (YoY +39.2%), 1.6x of Net Income, and Free Cash Flow was ¥159.5B, supported by working capital release from reductions in inventory and advance payments. ROE remained above 10% at 11.7% (prior 11.6%), Equity Ratio improved to 51.6% (prior 46.5%), and the Current Ratio rose to 188.3%, indicating stronger financial soundness.
Revenue: Revenue was ¥2191.4B (YoY -1.2%). By segment, Healthcare ¥238.3B (+51.4%), Aviation & Infrastructure ¥119.9B (+57.0%), Electronics ¥529.5B (+3.2%), Construction/Automotive ¥425.8B (+2.6%) expanded, while Energy Solutions ¥400.5B (-26.3%), Industrial Machinery ¥274.0B (-11.5%), and Plant & Energy ¥227.2B (-5.6%) declined. High growth in Healthcare and Aviation & Infrastructure was driven by demand for pharmaceuticals/medical-related equipment and disaster-prevention/aviation equipment, respectively. The Energy Solutions decline was mainly due to market adjustments in equipment related to lithium-ion battery manufacturing, while Electronics was supported by firm demand for semiconductor/electronic components-related machinery.
Profitability: Cost of sales was ¥1800.3B (82.2% of sales), Gross Profit was ¥391.1B (Gross Margin 17.8%), improving +0.8pt YoY. SG&A was contained at ¥254.1B (SG&A ratio 11.6%), enabling Operating Income of ¥137.0B (Operating Margin 6.2%, YoY +0.3pt). Segment profitability: Healthcare 10.1% (prior 6.6%), Aviation & Infrastructure 8.7% (prior 5.1%), Plant & Energy 7.2% (prior 7.7%), Energy Solutions 6.6% (prior 6.7%), Construction/Automotive 6.1% (prior 5.3%), Electronics 5.2% (prior 5.1%), Industrial Machinery 2.7% (prior 3.3%) — high-margin areas are expanding. Non-operating income was ¥12.9B (dividends received ¥4.2B, forex gains ¥1.5B, equity-method income ¥1.8B, etc.), non-operating expenses were ¥6.4B (forex losses ¥1.4B, interest expense ¥0.4B, etc.), netting to a positive contribution of ¥6.5B. Extraordinary gains included ¥4.6B from sale of investment securities, extraordinary losses included ¥1.4B valuation loss on the same, netting to +¥3.1B. Pre-tax profit was ¥146.7B; after income taxes of ¥46.6B (effective tax rate 31.8%), Net Income was ¥84.6B, and Net Income attributable to owners of the parent after non-controlling interests was ¥99.5B (+12.6%). In conclusion, the revenue decline with profit increase is confirmed, driven by a shift to high-margin segments and stable forex/financial income supporting profit growth.
Electronics (Operating Income ¥27.5B, margin 5.2%) is the largest profit contributor. Revenue ¥529.5B (+3.2%) maintained growth, supported by demand for semiconductor/electronic component machinery. Construction/Automotive (Operating Income ¥25.8B, margin 6.1%) posted revenue ¥425.8B (+2.6%) with profits up +18.1%, showing improved profitability. Energy Solutions (Operating Income ¥26.4B, margin 6.6%) saw revenue decline to ¥400.5B (-26.3%) but maintained margin near prior-year level (6.7%) through cost controls. Healthcare (Operating Income ¥24.0B, margin 10.1%) achieved revenue ¥238.3B (+51.4%) and profit +44.9%, recording the highest margin among segments at 10.1%. Plant & Energy (Operating Income ¥16.2B, margin 7.2%) had revenue ¥227.2B (-5.6%) and profit -11.8%, maintaining a reasonable margin. Aviation & Infrastructure (Operating Income ¥10.5B, margin 8.7%) rapidly expanded with revenue ¥119.9B (+57.0%) and profit +105.3%, achieving a high industry-level margin. Industrial Machinery (Operating Income ¥7.4B, margin 2.7%) experienced revenue ¥274.0B (-11.5%) and profit -16.9%, with the lowest margin across segments indicating room for improvement. Other (Operating Income ¥0.6B, margin 42.1%) is small in scale with revenue ¥1.3B but shows an extreme margin of 42.1%, likely due to special factors such as machinery leasing. Overall, expansion and higher profitability in Healthcare and Aviation & Infrastructure are key to portfolio improvement, while recovery in Industrial Machinery and Energy Solutions remains a near-term challenge.
Profitability: Operating Margin improved to 6.2% (prior 5.9%, +0.3pt), Gross Margin rose to 17.8% (prior 17.0%, +0.8pt). SG&A ratio remained 11.6%, with no material change in composition (advertising ¥2.6B, rents ¥18.4B, depreciation ¥9.5B, retirement benefit expenses ¥3.9B), reflecting effective cost control. ROE was 11.7% (prior 11.6%), above 10%; DuPont decomposition shows Net Profit Margin 4.5% × Total Asset Turnover 1.25x × Financial Leverage 1.94x. ROA (on Ordinary Income basis) improved to 8.3% (prior 7.4%).
Cash Quality: OCF was ¥161.4B, 1.9x Net Income ¥84.6B and 1.6x Net Income attributable to owners of the parent ¥99.5B, indicating strong cash backing. OCF/EBITDA (Operating Income + Depreciation = ¥137.0 + ¥11.6 = ¥148.6B) was 1.09x, a healthy level. CapEx was ¥4.3B versus Depreciation ¥11.6B, giving CapEx/Depreciation of 0.37x, indicating continued investment restraint.
Investment Efficiency: Total Asset Turnover was 1.25x (prior 1.29x), slightly down but still high. Days Sales Outstanding (DSO) = (Bills Receivable ¥1,310 + Accounts Receivable ¥39,030 + Contract Assets ¥288) ÷ (Revenue ¥2191.4 ÷ 365) = 67.6 days, flat versus prior 67.7 days, indicating stable collection efficiency. Days Inventory Outstanding (DIO) = ¥179.4B ÷ (Revenue ¥2191.4 ÷ 365) = 29.9 days, short, indicating good inventory efficiency.
Financial Soundness: Equity Ratio rose to 51.6% (prior 46.5%, +5.1pt), Debt-to-Equity improved to 0.94x (prior 1.15x). Current Ratio was 188.3% (prior 170.9%), Quick Ratio 165.7% (prior 145.4%), enhancing liquidity. Interest-bearing debt (short-term borrowings ¥64.0B + long-term borrowings ¥4.8B + present-valued lease liabilities, etc.) totaled ¥68.8B. Debt/EBITDA (Operating Income + Depreciation ¥148.6B) was 0.46x, very low. Interest Coverage (Operating Income ¥137.0B ÷ Interest Expense ¥0.4B) was approximately 343x, ample.
OCF was ¥161.4B (YoY +39.2%), a substantial increase and 1.9x Net Income ¥84.6B, indicating strong cash generation. OCF subtotal (before working capital changes) was ¥200.1B versus prior ¥147.3B, up ¥52.8B, reflecting core profit growth. Working capital changes contributed via inventory decrease +¥48.1B (prior +¥11.7B), receivables decrease +¥42.6B (prior +¥103.7B), and advance payments decrease +¥38.9B (prior +¥234.4B), while payables decrease -¥60.2B (prior -¥79.0B) and advance receipts decrease -¥15.5B (prior -¥242.7B) offset some of that. Income taxes paid were -¥44.0B (prior -¥38.8B), increasing, but overall OCF rose by +¥49.4B YoY. Investing Cash Flow was -¥1.9B, small, with capital expenditures -¥4.3B (prior -¥4.1B) nearly offset by proceeds from sale of investment securities ¥5.4B and sale of tangible fixed assets ¥0.04B. Investment in intangible assets -¥4.8B likely mainly software. Financing Cash Flow was +¥12.2B, driven by net increase in short-term borrowings +¥43.0B (prior -¥45.9B), which exceeded dividend payments -¥32.5B (prior -¥27.2B) and lease liability repayments -¥3.1B (prior -¥2.6B). Free Cash Flow (OCF + Investing CF) was ¥159.5B, approximately 4.9x dividends of ¥32.5B, indicating very strong dividend capacity. Cash and cash equivalents rose by ¥179.5B from opening balance ¥338.8B to closing ¥518.3B; forex effects +¥7.8B and cash received from newly consolidated subsidiaries +¥1.9B also contributed. In conclusion, working capital release from inventory and advance payments was the main driver of OCF increase this period; while a normalization of working capital may cause a reversal next period, core profit growth is expected to continue supporting solid cash generation.
Most of Ordinary Income ¥143.5B derived from Operating Income ¥137.0B; non-operating income ¥12.9B (0.6% of sales) consisting of dividends received ¥4.2B, forex gains ¥1.5B, equity-method income ¥1.8B, etc., provided limited contribution. After deducting non-operating expenses ¥6.4B (forex losses ¥1.4B, fees ¥1.0B, etc.), the ordinary stage contributed +¥6.5B. Extraordinary gains ¥4.6B (sale of investment securities) and extraordinary losses ¥1.5B (valuation loss ¥1.4B) netted +¥3.1B, but this represents 2.1% of Pre-tax Profit ¥146.7B and is minor. Income taxes ¥46.6B (effective tax rate 31.8%) are at a normal level, with no material swings in deferred tax asset reversals or valuation allowances. OCF ¥161.4B relative to Net Income ¥84.6B (OCF/Net Income = 1.9x) indicates high quality, and Accrual (Net Income - OCF) is -¥76.8B, showing strong cash backing. Comprehensive Income was ¥140.4B, well above Net Income ¥84.6B, supported by Other Comprehensive Income +¥55.8B (foreign currency translation adjustment ¥10.4B, valuation difference on available-for-sale securities ¥24.6B, deferred hedge gains/losses ¥3.3B, retirement benefit adjustments ¥2.1B), boosting equity. Valuation difference on available-for-sale securities ¥24.6B reflects unrealized gains on investment securities ¥175.3B, linked to equity market movements. In conclusion, most Ordinary Income is generated from core operations, one-off items and financial gains/losses are limited, and earnings quality is robust.
The company's plan for FY2026 (full year) is conservative: Revenue ¥2100.0B (YoY -4.2%), Operating Income ¥120.0B (YoY -12.4%), Ordinary Income ¥124.0B (YoY -13.6%), Net Income attributable to owners of the parent ¥94.0B (YoY -5.5%). Given actual results this period of Revenue ¥2191.4B, Operating Income ¥137.0B, Ordinary Income ¥143.5B, and Net Income attributable to owners of the parent ¥99.5B, progress toward the full-year plan is 104.4% for Revenue, 114.2% for Operating Income, 115.7% for Ordinary Income, and 105.9% for Net Income attributable to owners of the parent, i.e., already exceeding targets. Therefore, the company’s plan appears to adopt conservative assumptions, likely including a downbeat outlook for the second half (Q4) or a prudential buffer. EPS forecast is ¥294.4 (actual ¥311.8), and dividend guidance is Annual ¥62 (actual this period ¥125), a large decrease, but this period included a special dividend of ¥8 within a year-end payout of ¥74, so next year is assumed to be ordinary dividend ¥54 excluding commemorative/special dividends. Segment-wise, the plan appears to factor in delayed recovery in Energy Solutions and Industrial Machinery, conservative forex assumptions, and a normalization of working capital leading to a rebound decline in OCF. Continued growth in high-margin areas (Healthcare, Aviation & Infrastructure) could result in upside relative to the company’s plan.
Annual dividend was ¥125 (Interim ¥51, Year-end ¥74), where the Year-end included ordinary dividend ¥43 and special dividend ¥8 (and other commemorative items). Total dividends approximately ¥32.5B (based on weighted average shares outstanding 31,920 thousand shares), giving a Payout Ratio of 32.7% against Net Income attributable to owners of the parent ¥99.5B, a sustainable level. Prior year annual dividend was ¥41 (interim ¥41, year-end assumed unresolved), so this period represents a substantial increase. Dividend capacity is about 20.4% of Free Cash Flow ¥159.5B, and FCF coverage is about 4.9x, indicating generous coverage. Share buybacks were ¥0 this period (¥0 prior), so Total Return Ratio equals the Payout Ratio at 32.7%. Next fiscal year dividend guidance is Annual ¥62 (ordinary dividend assumed), reflecting the lapse of this period’s special dividend and expected to be a cut, but implied Payout Ratio of 33.0% (based on forecast EPS ¥294.4) remains within a healthy range. With Shareholders’ Equity ¥907.0B and Equity Ratio 51.6%, the balance sheet is strong, supporting continuation of stable dividends.
Segment market fluctuation risk: Energy Solutions revenue fell sharply by -26.3% YoY, and Operating Income declined -1.5%, indicating slow recovery. The deceleration in capex cycles for lithium-ion battery manufacturing equipment underlies this; prolonged adjustment in EV demand or battery markets could sustain revenue and profit declines into future periods. Industrial Machinery also faces pressure (Revenue -11.5%, Profit -16.9%), affected by capex restraint in plastics, rubber, and steel-related equipment. Combined, Energy Solutions and Industrial Machinery account for about 30.8% of total revenue, so continued sluggishness in these segments could weigh materially on consolidated results.
Foreign exchange risk: Forex gains ¥1.5B were recorded in non-operating income and forex losses ¥1.4B in non-operating expenses, netting +¥0.1B; however, Other Comprehensive Income included foreign currency translation adjustment +¥10.4B, reflecting yen depreciation boosting overseas asset valuations. A reversal toward yen appreciation could turn translation adjustments negative, reducing equity and comprehensive income. Although details on overseas sales ratio and foreign-currency-denominated assets are not disclosed, as a global machinery trading company it likely has multi-currency exposure, and forex sensitivity cannot be ignored.
Working capital normalization risk: OCF rose to ¥161.4B (YoY +39.2%) mainly due to working capital release—inventory -¥48.1B, receivables -¥42.6B, advance payments -¥38.9B—which include temporary factors. Inventory turnover 29.9 days and DSO 67.6 days are short-term efficient, but next period the rebuilding of advance payments or inventories could normalize working capital and reduce OCF. The company’s conservative outlook likely incorporates this potential reversal, and investors should monitor OCF trends closely next fiscal year.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.2% | 3.4% (1.4%–5.0%) | +2.9pt |
| Net Profit Margin | 3.9% | 2.3% (1.0%–4.6%) | +1.6pt |
The company’s profitability ranks in the upper half of the industry, materially exceeding medians on Operating Margin and Net Profit Margin, supported by expansion of high-margin segments (Healthcare, Aviation & Infrastructure).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.2% | 5.9% (0.4%–10.7%) | -7.1pt |
Revenue growth lags the industry median, affected by market adjustments in Energy Solutions and Industrial Machinery. Growth underperforms within the industry, but improvements in margins offset this.
※ Source: Company aggregation
Achieved profit growth and margin improvement despite revenue decline: Revenue -1.2% while Gross Margin +0.8pt and Operating Margin +0.3pt, delivering Operating Income +4.5% and Net Income attributable to owners of the parent +12.6%. High-growth, high-margin Healthcare (Operating Margin 10.1%) and Aviation & Infrastructure (8.7%) improved portfolio quality, supporting ROE of 11.7%. Conversely, delayed recovery in Energy Solutions (-26.3% revenue) and Industrial Machinery (-11.5% revenue) are constraints; improvements in these segments are key to re-accelerating growth.
Strong cash generation and improved financial soundness: OCF ¥161.4B (1.9x Net Income), Free Cash Flow ¥159.5B, with working capital release contributing. Equity Ratio 51.6% (+5.1pt), Current Ratio 188.3%, Debt/EBITDA 0.46x, and dividend capacity approximately 4.9x FCF — all indicate a robust financial position allowing both stable dividends and potential resumption of growth investments. While OCF may decline on working capital normalization next year, core profit growth should continue supporting solid cash generation, enabling both stable dividends and the restart of growth investment.
Conservative company outlook with upside potential: Next-year guidance is cautious (Revenue -4.2%, Operating Income -12.4%), but this period’s actuals already exceeded full-year plan (progress 104–116%). The plan likely embeds a second-half downturn assumption or prudential buffer; continued expansion in high-margin segments or market recovery could provide upside. Low CapEx/Depreciation ratio (0.37x) suggests room to reinstate mid-term growth investments, and M&A or capacity expansion trends will be important to watch.
This report was auto-generated by AI analyzing XBRL financial statement data to produce an earnings analysis. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.