| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥1723.7B | ¥1573.4B | +9.5% |
| Operating Income | ¥69.1B | ¥57.9B | +19.4% |
| Equity-method Investment Income/Loss | - | - | - |
| Ordinary Income | ¥60.8B | ¥49.3B | +23.2% |
| Net Income | ¥44.9B | ¥31.4B | +42.7% |
| ROE | 9.8% | 7.8% | - |
For the fiscal year ended March 2026, revenue was ¥1723.7B (YoY +¥150.3B, +9.5%), Operating Income was ¥69.1B (YoY +¥11.2B, +19.4%), Ordinary Income was ¥60.8B (YoY +¥11.4B, +23.2%), and Net Income was ¥44.9B (YoY +¥13.4B, +42.7%), resulting in higher revenue and a substantial profit increase. Operating margin improved to 4.0% (up +0.3pt from 3.7% prior year), and net margin improved to 2.6% (up +0.7pt from 1.9% prior year), indicating improved profitability. Special gains of ¥10.8B (gain on sale of fixed assets) boosted Net Income, causing a notable jump from Ordinary Income to Net Income; temporary items account for a large portion (21.8%) of Net Income. Solution Business profit increased sharply by +56.6%, shifting the profit structure toward higher-margin businesses.
[Revenue] Revenue totaled ¥1723.7B (YoY +9.5%), with Device Business ¥1502.2B (+7.9%) and Solution Business ¥221.5B (+22.6%) both growing. Composition was Devices 87.2% and Solutions 12.9% — Devices remain the core, but high growth in Solutions drove consolidated top-line. By region, Japan ¥765.2B (from ¥604.0B, +26.7%) and Other Asia ¥315.9B (from ¥247.9B, +27.4%) posted large increases, while China slowed to ¥451.1B (from ¥531.1B, -15.1%). Sales to major customer Nintendo were ¥297.5B (from ¥181.9B, +63.5%), a primary driver of revenue growth. Gross profit was ¥184.3B (from ¥165.5B, +11.4%), and gross margin improved to 10.7% (from 10.5%, +0.2pt), aided by a higher Solutions mix.
[Profitability] Operating Income was ¥69.1B (YoY +19.4%) and operating margin was 4.0% (up +0.3pt from 3.7%), supported by gross profit expansion and SG&A efficiency. SG&A was ¥115.2B (YoY +7.1%), SG&A ratio 6.7% (from 6.8%, -0.1pt), with revenue growth absorbing SG&A increases and delivering operating leverage. Non-operating income included interest income ¥1.3B and dividend income ¥0.5B; non-operating expenses included interest expense ¥4.8B and foreign exchange losses ¥5.8B, forming total non-operating expenses of ¥11.3B, resulting in Ordinary Income of ¥60.8B (YoY +23.2%). Extraordinary income comprised gain on sale of fixed assets ¥10.8B and gain on sale of investment securities ¥0.7B (total ¥10.8B), less extraordinary losses ¥2.7B, giving Profit Before Tax ¥68.9B. Income taxes were ¥19.4B (effective tax rate 28.1%), resulting in Net Income ¥44.9B (YoY +42.7%). The large increase in Net Income is materially driven by one-off asset sale gains; the underlying growth in Ordinary Income was +23.2%, indicating core earning power. In conclusion, the company achieved higher revenue and substantially higher profits, with expanded contribution from Solutions and operating leverage improving profitability.
Device Business posted revenue ¥1502.2B (YoY +7.9%) but segment profit ¥26.9B (YoY -2.8%), ending with higher revenue and lower profit. Margin fell to 1.8% (from 2.0%), likely pressured by intensifying competition and rising procurement costs. Solution Business achieved revenue ¥221.5B (YoY +22.6%) and segment profit ¥33.8B (YoY +56.6%), a substantial increase in both revenue and profit. Margin improved considerably to 15.3% (from 12.0%, +3.3pt), likely due to growth in high-value-added projects such as cloud services and security products. Against consolidated Ordinary Income of ¥60.8B, Solutions contributed roughly 56% of profit, representing more than half of profit while only 12.9% of revenue. Continued expansion of Solutions is key to future growth and profitability, facilitating a transition away from the low-margin Device structure.
[Profitability] Operating margin 4.0% (from 3.7%, +0.3pt) and net margin 2.6% (from 1.9%, +0.7pt) indicate improved profitability. ROE was 9.8% (from 8.9%, +0.9pt), reflecting higher return on equity. ROA (on an Ordinary Income basis) was 6.9% (from 6.1%, +0.8pt), showing improved asset efficiency. [Cash Quality] Operating Cash Flow was ¥57.0B, exceeding Net Income ¥44.9B (OCF/NI = 1.27x), indicating good cash backing of earnings. Free Cash Flow was ¥63.8B (Operating CF ¥57.0B + Investing CF ¥6.8B), securing dividend funding. [Investment Efficiency] Total asset turnover was 1.89x (from 1.87x), maintaining asset efficiency. CapEx was ¥1.3B versus depreciation ¥3.1B (CapEx/Depreciation = 0.41x), indicating restrained investment. [Financial Soundness] Equity Ratio was 50.5% (from 48.2%, +2.3pt), strengthening the financial base. Current ratio 183.8% and quick ratio 136.0% show sufficient short-term liquidity. However, short-term borrowings of ¥197.5B (from ¥241.2B) are entirely short-term liabilities, and the cash to short-term borrowings ratio of Cash & Deposits ¥96.8B / short-term borrowings = 0.49x warrants attention for refinancing risk. Estimated Debt/EBITDA is 2.7x, within acceptable range but indicating material leverage.
Operating Cash Flow was ¥57.0B (from ¥39.8B, +43.3%). Subtotal was ¥73.9B from Profit Before Tax ¥68.9B, with working capital increases absorbing cash. Accounts receivable increased ¥20.8B and inventories increased ¥5.8B, while accounts payable increased ¥32.9B, resulting in partial offset in working capital. After corporate tax payments of ¥13.9B, Operating CF was ¥57.0B. Investing Cash Flow was an inflow of ¥6.8B, driven by proceeds from sale of fixed assets ¥11.5B (corresponding to extraordinary income), which exceeded capital expenditure ¥1.3B — asset disposals provided a temporary funding source. Financing Cash Flow was -¥65.9B, primarily due to a net reduction in short-term borrowings of ¥46.9B and dividend payments ¥17.8B. Free Cash Flow ¥63.8B was well above Net Income ¥44.9B, indicating strong cash generation. Cash & Deposits increased slightly to ¥96.8B (from ¥93.6B, +¥3.2B), with most surplus cash used to repay short-term borrowings. Cash/short-term borrowings ratio of 0.49x is low, and securing short-term liquidity remains a challenge.
Core recurring earnings center on Operating Income ¥69.1B, largely supported by Solution Business profit growth (+56.6%), confirming structural earning strength. Non-operating income totaled approximately ¥3.0B (interest income ¥1.3B, dividend income ¥0.5B, etc.; 0.17% of revenue), indicating minimal dependence on non-core income. Conversely, non-operating expenses of ¥11.3B were mainly foreign exchange losses ¥5.8B and interest expense ¥4.8B, reducing Ordinary Income by ¥8.3B from Operating Income. One-off items — extraordinary income of ¥10.8B (gain on sale of fixed assets, etc.) — significantly boosted Net Income; 21.8% of Net Income is non-recurring. Operating Cash Flow ¥57.0B exceeded Net Income ¥44.9B by 27.0% (OCF/NI = 1.27x), indicating healthy accruals and strong cash backing. The gap between Ordinary Income ¥60.8B and Net Income ¥44.9B (the ¥7.3B difference to Profit Before Tax ¥68.9B is explained by the 28.1% tax rate) falls within acceptable accounting practices, with no signs of earnings management. Overall, earnings quality is solid on an operating/ordinary basis, but the reproducibility of Net Income is subject to risk from the drop-off of one-time gains.
Full Year guidance calls for Revenue ¥1860.0B (YoY +7.9%), Operating Income ¥55.5B (YoY -19.7%), Ordinary Income ¥50.0B (YoY -17.7%), and Net Income ¥36.0B (estimate, back-calculated from EPS forecast ¥294.05), implying higher revenue but lower profits. Operating margin is forecast at 3.0% (down -1.0pt from actual 4.0%), reflecting conservative assumptions that exclude special gains and incorporate uncertainty in FX, interest rates, and raw material costs. Revenue progress rate stands at 92.6% (actual ¥1723.7B / forecast ¥1860.0B), implying the remaining 7.4% is assumed to be realized mainly in H2. Operating income progress rate is 124.5% (actual ¥69.1B / forecast ¥55.5B), already exceeding forecast and suggesting upside revision potential. Ordinary income progress rate of 121.6% similarly indicates outperformance. Dividend guidance is ¥40 per annum, a significant cut from actual dividend of ¥190, suggesting a cautious stance prioritizing liquidity buffer after one-off gains. If results continue at current pace, both operating and ordinary income could exceed guidance, making upward revisions and dividend adjustments focal points toward fiscal year-end.
Annual dividend was ¥190 (¥40 at Q2-end, ¥150 at year-end), payout ratio 47.4% (total dividends ¥16.7B / Net Income ¥49.6B, after subtracting non-controlling interests), representing a moderate return level. Against Free Cash Flow ¥63.8B, total dividends ¥16.7B yield an FCF dividend coverage of 3.8x, indicating high sustainability from a cash generation perspective. No share buybacks were executed (treasury shares nearly unchanged year-on-year); returns are dividend-centric. Next fiscal year dividend guidance is ¥40 per annum, a substantial cut implying payout ratio of 13.6% (based on forecast EPS ¥294.05). The reduction is attributable to (1) assumed normalization of Net Income after one-off gains, and (2) a financial policy prioritizing liquidity buffers given high short-term borrowings (Cash/short-term borrowings = 0.49x). In practice, if Operating and Ordinary Income continue to exceed guidance, a dividend revision (increase) toward year-end is possible. Policy remains focused on stable dividends while preserving financial flexibility.
Low-margin structure: Gross margin 10.7% and operating margin 4.0% are low, making earnings highly sensitive to price competition and procurement cost increases. Device Business margin of 1.8% drags down the company average; delayed structural shift to Solutions would hinder margin recovery. Cost of sales ratio 89.3% reflects trading company-style business model; transition to value-added offerings is essential.
Short-term funding dependence: Interest-bearing debt ¥197.5B is entirely short-term borrowings (short-term liabilities 100%), and Cash & Deposits ¥96.8B yields a Cash/short-term borrowings ratio of 0.49x, a low level. Refinancing and rising interest rate risks coexist, and skillful liquidity management will determine financial stability. High working capital of ¥367.6B (Accounts receivable ¥423.9B + Inventory ¥209.7B - Accounts payable ¥183.9B) could increase funding needs when sales fluctuate, pressuring short-term borrowings.
Business concentration: 87.2% of revenue is concentrated in Device Business, making the company vulnerable to semiconductor cycles and demand swings from major customers (Nintendo sales ¥297.5B). Regionally, China decelerated to ¥451.1B (YoY -15.1%), exposing geopolitical and supply-chain reorganization risks. Continued investment restraint (CapEx/Depreciation = 0.41x) could forfeit medium-term competitiveness and diversification opportunities.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.0% | 3.4% (1.4%–5.0%) | +0.7pt |
| Net Margin | 2.6% | 2.3% (1.0%–4.6%) | +0.3pt |
Profitability slightly exceeds the industry median, placing the company near the upper quartile. Higher Solutions ratio contributes.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 9.5% | 5.9% (0.4%–10.7%) | +3.6pt |
Growth outperforms the industry median and ranks among the top group, supported by major customer demand expansion and overseas development.
※Source: Company compilation
The Solutions Business has shifted to account for more than half of profit (about 56%), and margin improvement from high-margin activities is progressing. Continued growth in Solutions revenue and maintaining a segment margin of 15.3% are critical to consolidated earnings. The contrast with Device Business margin of 1.8% means changes in business mix will support trends of improving gross and operating margins.
Operating Cash Flow exceeds Net Income (OCF/NI = 1.27x), providing good cash backing of earnings, but short-term borrowings of ¥197.5B versus cash ¥96.8B (ratio 0.49x) limit short-term liquidity cushion. Improving working capital efficiency (shortening DSO, increasing inventory turns) and converting some short-term borrowings to long-term debt are prerequisites for expanding financial flexibility and sustaining growth.
Next fiscal year guidance is conservative, with Operating Income forecast down -19.7% versus actual, although progress rate is 124.5% and actuals already exceed the forecast. Even after removing one-off gains, sustained Solutions momentum and operating leverage could lead to upward revisions. The ¥40 annual dividend guidance is a steep cut from ¥190, but there remains potential for revision (dividend increase) as underlying earnings recover. For investment decisions, monitor H2 revenue accumulation and maintenance of operating margins; timing of guidance revisions will be an important signal.
This report is an AI-generated financial analysis document produced by 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 publicly available financial statements. Investment decisions are your responsibility; consult professional advisors as needed.