| Indicator | This Period | Prior Year | YoY |
|---|
| Revenue / Net Sales | ¥3438.6B | ¥3100.7B | +10.9% |
| Operating Income / Operating Profit | ¥555.4B | ¥471.8B | +17.7% |
| Profit Before Tax / Pre-Tax Income | ¥899.8B | ¥927.9B | -3.0% |
| Net Income / Net Profit | ¥625.7B | ¥673.5B | -7.1% |
| ROE | 8.1% | 9.4% | - |
For the fiscal year ended March 2026, Revenue was ¥3438.6B (YoY +¥337.9B +10.9%), Operating Income was ¥555.4B (YoY +¥83.6B +17.7%), Ordinary Income (JGAAP) was ¥620.6B (YoY +¥72.8B +13.3%), and Net Income attributable to owners of the parent was ¥617.3B (YoY -¥46.7B -7.1%). Revenue increased for the third consecutive year, and on a business-profit basis business profit was ¥1,020.0B (prior ¥936.2B), continuing solid revenue expansion. Operating margin improved to 16.2% from 15.2% a year earlier (+1.0pt), with positive operating leverage contributed by SG&A control. Final profit declined due to a sharp increase in financial expenses (¥510.9B, YoY +28.5%) and enlarged impairment losses on financial assets (¥624.2B). Profit before tax was ¥899.8B, slightly down from ¥927.9B the prior year; temporary factors such as an impairment on assets held for sale of ¥63.3B also had an impact.
-
Revenue: Revenue was ¥3438.6B (YoY +10.9%), maintaining double-digit growth. By segment, the Payments Business was largest at ¥2772.3B (about 81% of total), followed by the Finance Business at ¥844.9B and Real Estate‑related Business at ¥712.7B. The Finance Business grew strongly at +14.7% YoY, driven by expansion in outstanding credit guarantees. The Payments Business increased +9.5%, supported by higher card transaction volumes and broader cashless payment adoption. The Global Business grew to ¥624.4B (YoY +21.2%) but is undergoing internal revenue-structure review. The Entertainment Business recovered to ¥386.2B (YoY +8.9%). Geographic composition is undisclosed.
-
Profitability: Operating Income was ¥555.4B (YoY +17.7%), outpacing revenue growth; Operating margin improved to 16.2% (prior 15.2%, +1.0pt). SG&A was restrained at ¥2742.6B (YoY +4.8%), growing below revenue and reflecting efficiency gains. Impairments on financial assets rose to ¥624.2B (prior ¥432.8B), +44.2%, reflecting expansion of credit exposure and changes in credit conditions. Ordinary Income was ¥620.6B (YoY +13.3%); Financial income was ¥70.8B against Financial expenses of ¥510.9B (prior ¥397.7B, +28.5%), showing clear financing cost increases. Other expenses expanded to ¥138.1B (prior ¥42.8B), 3.2x, including temporary items such as impairment on assets held for sale ¥63.3B, equity-method investment impairments ¥16.8B, and loss on sale of equity investments in associates ¥26.6B. Extraordinary gains included ¥145.2B (including gain on sale of available-for-sale securities ¥105.7B); extraordinary losses were ¥27.2B. Profit before tax was ¥899.8B (YoY -3.0%). After deducting income taxes of ¥274.1B, Net Income attributable to owners of the parent was ¥617.3B (YoY -7.1%), and Net Income margin declined to 18.0% from 21.7% a year earlier (-3.7pt). In summary, while top-line and operating improvements were recorded, final profit declined due to the triple burden of financial expenses, credit costs, and one-off expenses.
- Payments Business: Operating Income ¥306.3B (prior ¥300.7B, +1.9%), slight increase; margin stable at 11.0%.
- Leasing Business: ¥46.7B (YoY +13.6%), steady, with equipment lease demand firm.
- Finance Business: ¥473.1B (YoY +21.5%), the largest growth driver, accounting for about 46% of business profit, driven by expansion of credit guarantee balances.
- Real Estate‑related Business: ¥192.4B (YoY +18.2%), high growth, supported by increased investment properties (¥1935.9B, YoY +15.1%) and both rental income and sale gains.
- Global Business: Loss of -¥14.3B, turned negative (prior year +¥33.8B), impacted by reassessment of overseas credit and investment projects and valuation losses.
- Entertainment Business: ¥25.9B (YoY +82.4%), significant improvement owing to closure of unprofitable stores and profitability improvement measures.
- Profitability: ROE 8.4% declined 1.0pt from 9.4% a year ago, mainly due to shrinking net margin and higher financial expenses. Operating margin improved to 16.2% (prior 15.2%), aided by a decline in SG&A ratio to 79.8% (prior 84.4%). Business-profit‑based margin is approximately 29.7% (business profit ¥1,020.0B / Revenue ¥3438.6B), indicating high underlying earning power excluding non-recurring items.
- Cash Quality: Operating Cash Flow (OCF) was -¥1356.7B; OCF / Net Income is -2.20x relative to Net Income ¥617.3B, indicating weakness in cash quality. Increase in trade receivables of -¥2588.1B was the largest cash outflow driver, reflecting higher working capital needs from expanded credit exposure.
- Investment Efficiency: Total asset turnover is 0.069x, reasonable for a financial firm. Tangible fixed assets ¥250.6B; capital expenditures ¥181.3B / depreciation ¥346.1B, controlled. Intangible assets ¥1146.6B, mainly software ¥964.6B. Investment properties expanding to ¥1935.9B.
- Financial Soundness: Equity Ratio 15.4% (prior 15.1%) slight improvement but low for financial industry. D/E ratio 5.39x, indicating high leverage. Interest-bearing liabilities ¥3.58兆円 (bonds ¥6072B, long-term borrowings ¥1.40兆円, short-term borrowings ¥2753B, CP ¥3150B). EBIT / interest expense approximately 1.1x (Operating Income ¥555.4B / interest paid ¥490.5B), indicating low interest‑coverage and vulnerability to rising rates. Current ratio looks healthy at 296.2% but cash ¥1123.2B / short-term liabilities ¥1.28兆円 gives cash coverage of 8.8%, implying limited effective liquidity.
- Operating Cash Flow: OCF was -¥1356.7B, an improvement from -¥2491.7B the prior year but still negative. Starting from pretax profit ¥899.8B plus depreciation and similar ¥346.1B, subtotal was -¥563.6B; increase in trade receivables -¥2588.1B was the largest cash outflow. Expansion of credit balances and additional operating investments in securities -¥48.2B pressured working capital. Interest paid was -¥471.3B and corporate tax paid -¥432.1B, heavy burdens, resulting in OCF / Net Income -2.20x and weak cash conversion.
- Investing Cash Flow: Investing CF was -¥269.2B, led by investment property acquisitions -¥331.1B, partially offset by proceeds from sale of investment securities ¥147.6B and sale of equity investments in associates ¥68.1B. Capital expenditures were subdued at -¥181.3B. Free Cash Flow (FCF) was -¥1626.0B.
- Financing Cash Flow: Financing CF was +¥1390.6B, with long-term borrowings +¥4277.7B and bond issuance +¥1120.4B expanding funding, while CP reduction -¥1053.1B, bond redemptions -¥650.0B, and long-term loan repayments -¥3107.5B adjusted cash structure. Dividends -¥180.6B and share buybacks -¥215.1B indicate shareholder returns funded via financing activity and dependent on capital-market access. Cash declined to ¥1123.2B (prior ¥1394.0B); liquidity is maintained through receivable securitization and diversified funding.
- Recurring earnings: Operating Income ¥555.4B is solid, but one-off items substantially affect Pretax Income volatility. Of Other expenses ¥138.1B, impairment on assets held for sale ¥63.3B, equity-method investment impairments ¥16.8B, and loss on sale of equity investments in associates ¥26.6B are non-recurring; excluding these, Pretax Income would be roughly equivalent to ¥1,027B. Conversely, of Other income ¥52.1B, gains such as gain on sale of equity investments in associates ¥1.7B, gain on sale of fixed assets ¥7.2B, and gains on valuation of investment securities ¥8.8B are one-off. Extraordinary net items contributed +¥118.0B (extraordinary gains ¥145.2B - extraordinary losses ¥27.2B), mainly from gain on sale of investment securities ¥105.7B and therefore non-recurring. On a recurring vs. non-recurring basis, the operating + ordinary income stages reflect recurring earning power, and business profit of ¥1,020.0B including financial expenses and impairments demonstrates core business strength. Comprehensive income was ¥960.0B (Net Income ¥625.7B + Other Comprehensive Income ¥334.3B), driven by cash flow hedges +¥182.9B, translation adjustments of overseas operations +¥56.5B, and FVTOCI financial asset fair value changes +¥64.9B, which exceeded net income. Accrual analysis shows a large negative accrual (about -¥1,982B equivalent) with negative OCF and positive Net Income, indicating delays in converting earnings to cash and timing mismatches in accounting profit recognition.
- Full-year guidance: Revenue ¥3645.0B, Operating Income ¥595.0B (YoY +7.1%), Ordinary Income ¥660.0B (YoY +6.3%), Net Income attributable to owners of the parent ¥755.0B (YoY +22.3%).
- Progress: With first-half results Revenue ¥3438.6B, progress rate is 94.3% and Operating Income ¥555.4B with progress rate 93.4%, broadly on plan. The second half requires an additional ¥39.6B in Operating Income to meet the full-year target, feasible depending on seasonality. Net Income shows first‑half ¥617.3B (progress 81.8% toward ¥755.0B forecast), needing ¥137.7B in the second half. If first-half one-off losses (e.g., impairment on assets held for sale) reverse in the second half, the plan for Net Income +22.3% is plausible. Dividend guidance is stated as ¥0, but an interim dividend of ¥130 per share has been paid, implying an expected annual dividend of ¥130 per share in a year‑end payment form. Forecast EPS ¥525.68 vs. actual H1 EPS ¥425.13 implies over ¥100 of profit addition required in H2. Achievement depends on normalization of credit costs and stable financial expenses; interest rate environment and credit trends are key.
- Annual dividend ¥130 per share (single year-end payment implied), with payout ratio 28.4% (Total dividends ¥180.6B / consolidated payout basis), a sustainable level relative to profits. Share buybacks of ¥215.1B were executed, with total return ¥395.7B and Total Return Ratio 63.2% (total return / Net Income attributable to owners of the parent ¥625.7B). The shareholder return stance is clear, but FCF is -¥1626.0B and returns are financed from Financing CF, so continued access to capital markets is a prerequisite. Cash and deposits ¥1123.2B cover only 8.8% of short-term liabilities ¥1.28兆円, indicating limited on‑hand liquidity. Dividend sustainability depends on improvement in OCF and ongoing capital market access; under rising rates or deteriorating credit conditions, a review is possible. Share buybacks aim to improve capital efficiency and per‑share value, but with ROIC at 1.6% and low capital efficiency, prioritization between growth investment and debt reduction will be a focus going forward.
-
Credit cost upside risk: Impairments on financial assets are trending up at ¥624.2B (prior ¥432.8B, +44.2%). Outstanding credit exposure is trade receivables ¥3.87兆円, up from ¥3.62兆円 (+6.9%). If delinquency rates rise or a recession forces higher provisioning rates, earnings would be directly hit. Allowance for doubtful accounts is recorded at ¥443.1B in current assets and ¥0.9B in non-current assets, but more provisioning may be required under future stress.
-
Interest rate rise risk: Financial expenses surged to ¥510.9B (prior ¥397.7B, +28.5%), with interest paid ¥490.5B. Interest-bearing liabilities ¥3.58兆円 have an average funding rate around 1.37%, but policy rate or market rate increases could raise funding costs further. EBIT / interest expense is about 1.1x, indicating weak interest coverage. While CP has been reduced to ¥3150B (prior ¥4280B) to lengthen funding, rising average interest on bonds and long-term borrowings remains a challenge.
-
Liquidity risk: Cash ¥1123.2B vs. short-term liabilities ¥1.28兆円 yields cash coverage of 8.8%, indicating limited on‑hand liquidity. The company depends on ~¥5903B of short-term funding via CP and short-term borrowings; if rollovers become difficult, funding could be impacted. The current ratio of 296.2% is driven by large current assets such as trade receivables, but immediate convertibility is low and refinancing risk remains under adverse market conditions.
- Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|------|------|-------------|-------|
| ROE | 8.4% | 3.8% (1.1%–16.8%) | +4.6pt |
| Operating Margin | 16.2% | 8.8% (4.0%–20.0%) | +7.3pt |
| Net Margin | 18.2% | 4.3% (0.6%–11.3%) | +13.9pt |
Profitability significantly exceeds industry medians, with operating and net margins at high levels. ROE is +4.6pt above the median.
- Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|------|------|-------------|-------|
| Revenue Growth (YoY) | 10.9% | 2.1% (-4.5%–6.9%) | +8.8pt |
Revenue growth outpaces the median by +8.8pt, placing the company in the higher-growth cohort, driven by expanding credit balances and cashless payment adoption.
※ Source: Company compilation
-
Polarization of earnings structure: Despite high operating profitability (Operating margin 16.2%) relative to the industry, rapid increases in financial expenses and credit costs have depressed final profit. Interest rate environment and credit-cost trends will be key drivers of share price volatility. The recovery plan assumes credit-cost normalization and stable interest rates to deliver a +22.3% recovery in Net Income. High-growth segments such as Finance (business profit +21.5%) and Real Estate‑related (+18.2%) support sustainability of earnings.
-
Rebuilding cash flows and capital policy: OCF -¥1356.7B and FCF -¥1626.0B represent significant negatives, and shareholder returns of ¥395.7B are financed from Financing CF. The company is shifting CP to longer-term funding, but cash coverage of 8.8% leaves thin on‑hand liquidity and refinancing risk under rising rates. With ROIC at 1.6% and low capital efficiency, improving yield on credit assets and pruning unprofitable businesses are medium‑to‑long term priorities.
This report is an AI-generated earnings analysis based on XBRL financial statement 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 should be made at your own responsibility; consult a professional advisor as needed.
