| Indicator | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥22153.8B | ¥20908.1B | +6.0% |
| Operating Income / Operating Profit | ¥2404.3B | ¥1871.3B | +28.5% |
| Ordinary Income | ¥2360.9B | ¥1935.9B | +22.0% |
| Net Income / Net Profit | ¥724.5B | ¥474.9B | +52.6% |
| ROE | 3.6% | 2.6% | - |
For the fiscal year ended March 2026, Revenue was ¥22,153.8B (YoY +1,245.7B, +6.0%), Operating Income was ¥2,404.3B (YoY +533.0B, +28.5%), Ordinary Income was ¥2,360.9B (YoY +425.0B, +22.0%), and Net Income attributable to owners of the parent was ¥1,622.1B (YoY +270.4B, +20.0%), reflecting increases in both revenue and profit. Operating margin improved by 2.0pt to 10.9%, with expansion of gross margin to 22.6% and SG&A containment realizing operating leverage. EPS rose to ¥112.98 (prior year ¥94.19, +19.9%). Results reached 101% of the full year guidance (parent company net income ¥1,600B). Total assets expanded to ¥13,8895.6B (YoY +11.3%), and total equity to ¥2,087.8B (YoY +11.3%). Operating Cash Flow (OCF) was ▲¥3,675.4B as cash outflows continued due to accumulation of operating assets, supplemented by financing cash flow of +¥4,693.7B via external funding. Comprehensive income was ¥2,614.6B, boosted by an increase in foreign currency translation adjustments (+¥922.0B). Equity Ratio was 15.3% and ROE was 8.6%, with capital efficiency stable, while a high leverage structure persists with D/E ratio 5.52x and Debt/Capital ratio 69.3%.
[Revenue] Revenue was ¥22,153.8B (YoY +6.0%), maintaining a growth trend. By segment, Customer Solutions was ¥1,022.0B (share 46.1%, +5.3%), with the core business expanding steadily. Overseas Customer was ¥511.2B (23.1%, +3.4%), and Aviation was ¥339.7B (15.3%, +5.5%) showing stable growth. Logistics, which showed the highest growth, was ¥178.9B (8.1%, +31.4%), supported by rising demand for marine containers and railcar leases. Conversely, Real Estate was ¥110.6B (5.0%, ▲5.2%) and contracted year-on-year. Environmental Energy was ¥46.0B (2.1%, +0.2%) and Mobility was ¥6.8B (0.3%, +20.9%), niche but growing. Gross Profit was ¥5,001.6B (gross margin 22.6%), up ¥374.9B YoY. Effects from consolidated subsidiaries' fiscal period changes (Aviation +¥89.92B, Logistics +¥62.49B, Adjustments +¥75.78B, total +¥228.2B) added to both revenue and profit, suggesting the underlying growth rate may be somewhat modest.
[Profit and Loss] Cost of sales was ¥17,152.2B and included impairment losses of ¥14.67B in Aviation, ¥0.69B in Logistics, ¥0.12B in Overseas Customer, and ¥0.59B in Environmental Energy (total ¥160.8B). SG&A was ¥2,597.3B (11.7% of sales, YoY ▲¥178.1B), with synergy and integration effects from the Hitachi Capital merger contributing to cost containment. Operating Income was ¥2,404.3B (operating margin 10.9%), a substantial increase of ¥533.0B YoY. Non-operating income totaled ¥130.7B, including interest income of ¥8.3B and equity-method investment income of ¥29.2B, while non-operating expenses were ¥174.1B including interest expense of ¥93.7B, yielding net non-operating loss of ▲¥43.4B, roughly neutral. Ordinary Income settled at ¥2,360.9B (YoY +22.0%). Extraordinary items included extraordinary gains of ¥107.8B, such as gains on sale of investment securities ¥51.6B and gain on negative goodwill ¥5.7B, against extraordinary losses of ¥140.6B including valuation losses on investment securities ¥2.3B and loss on sale of subsidiary shares ¥207.0B, resulting in net extraordinary loss of ▲¥32.8B which pressured Net Income temporarily. Income before income taxes was ¥2,328.1B, income taxes amounted to ¥699.9B (effective tax rate 30.1%). Net Income attributable to owners of the parent was ¥1,622.1B (YoY +20.0%), maintaining a pattern of revenue and profit growth.
Customer Solutions posted segment profit of ¥411.2B (YoY +11.5%), driven by corporate and government finance solutions and energy-saving solutions. Overseas Customer recorded segment profit of ¥83.8B (YoY +213.9%), a significant increase contributed by expansion of sales finance and finance solutions in Europe, the US, China, and ASEAN. Environmental Energy recorded a segment loss of ▲¥48.5B, turning from profit to loss due to impairments in renewable energy and deteriorating project profitability. Aviation posted segment profit of ¥545.4B (YoY +15.5%), including +¥89.92B from fiscal period change, supported by stable utilization of aircraft and engine leases and gains on disposals. Logistics achieved segment profit of ¥293.1B (YoY +26.3%), high growth driven by expansion in marine container and railcar leases and +¥62.49B from fiscal period change. Real Estate delivered segment profit of ¥261.8B (YoY +114.3%), with gains from real estate investment and asset management sales. Mobility logged segment profit of ¥33.8B (YoY +9.1%), small but on a growth trend. Corporate adjustments were +¥41.4B (prior year +¥51.0B), including consolidation adjustments and internal transaction differences.
[Profitability] Operating margin was 10.9% (prior year 8.9%, +2.0pt), with operating leverage from expansion of gross margin to 22.6% and decline in SG&A ratio to 11.7%. Net income margin was 7.3% (vs. revenue), indicating room for improvement in capital efficiency. ROE was 8.6% (based on parent company net income / equity), decomposed as net income margin 7.3% × total asset turnover 0.169 × financial leverage 6.52x. Equity-method investment income was ¥29.2B (prior year ¥72.0B), reduced and limiting contribution to consolidated profit. [Cash Quality] OCF / Net Income was ▲2.27x, as cash outflows associated with increasing lease and finance operating assets persist. Accrual ratio is approximately 4.0%, indicating good earnings quality on an accrual basis. OCF / Revenue was ▲16.6%, showing operating asset expansion outpacing revenue. [Investment Efficiency] Total asset turnover was 0.169x, a low level typical of financial/lease models. Interest coverage was 25.66x (Operating Income / Interest Expense), providing resilience even under rising interest rates. Approximate ROIC was around 2.7% (NOPAT / Invested Capital), near the lower bound of capital cost. [Financial Soundness] Equity Ratio was 15.3% (prior year 15.3%), flat. D/E ratio was 5.52x and Debt/Capital ratio 69.3%, indicating continued high leverage. Current ratio was 165.3% and quick ratio 163.0%, showing good short-term liquidity. Cash and deposits were ¥3,660.3B against short-term interest-bearing debt of ¥4,586.6B (Cash / Short-term Debt 0.80x), making management of CP, corporate bonds, and short-term borrowings rollovers important.
Operating Cash Flow was ▲¥3,675.4B (prior year ▲¥2,968.8B, deterioration 23.8%), primarily due to cash outflows from accumulation of operating assets (lease investment assets, rental assets, etc.). OCF subtotal (before working capital changes) was ▲¥677.9B and included interest and dividends received ¥104.6B, interest paid ▲¥2,827.6B, and income taxes paid ▲¥274.5B. Changes in accounts payable contributed modestly at +¥119.1B but were absorbed by net increases in operating assets. Investing Cash Flow was ▲¥339.4B (prior year ▲¥969.8B), improved by proceeds from sale/redemption of securities ¥149.5B. Free Cash Flow was ▲¥4,014.8B (OCF + Investing CF), showing a structure where growth investment and operating asset expansion are complemented by debt funding. Financing Cash Flow was +¥4,693.7B, raised by long-term borrowings proceeds ¥13,976.2B and bond issuance ¥4,663.4B, while repaying long-term borrowings ▲¥11,169.4B, redeeming bonds ▲¥4,934.2B, and paying dividends ▲¥604.0B. Net increase in CP was ¥2,171.5B, also contributing to funding. Cash and deposits were ¥3,660.3B, up ¥552.4B YoY. Given the lease and finance model, negative OCF is a structural outcome of growth and requires active management of funding via external sources. The increase in foreign currency translation adjustments of +¥922.0B boosted comprehensive income and strengthened the equity buffer.
Operating profit growth was the main driver of earnings expansion, with gross profit increases and SG&A containment improving operating-level profitability. Non-operating items were net ▲¥43.4B, roughly neutral, with interest income and equity-method gains partially offsetting interest expense. Extraordinary items were net ▲¥32.8B, with loss on sale of subsidiary shares ¥207.0B temporarily depressing Net Income, partially offset by gains on sale of investment securities ¥51.6B. The divergence between Ordinary Income and Parent Net Income is attributable to tax burden (effective tax rate 30.1%) and extraordinary items, and is within acceptable bounds for recurring profitability. Accrual ratio is about 4.0%, indicating no major concerns over accrual-based earnings quality. However, OCF / Net Income at ▲2.27x is low, highlighting a structural challenge in cash conversion where operating asset buildup outpaces profit generation. Comprehensive income was ¥2,614.6B, with foreign currency translation adjustments +¥922.0B making a significant contribution and strengthening equity.
Full year guidance for Net Income attributable to owners of the parent was ¥1,600B, EPS ¥111.43, while actuals were ¥1,622.1B and EPS ¥112.98, achieving 101% progress and meeting guidance. The upside was mainly at the operating level, aided by SG&A containment and segment-level earnings improvements. Dividend guidance was annual ¥25 while actuals were annual ¥46 (interim ¥22, year-end ¥24), equating to an achieved payout ratio of approximately 42.5%. The dividend significantly exceeding the full year guidance could indicate either a board-approved interim increase or conservatism in next fiscal year's guidance; confirmation of the board resolution in May is necessary.
Annual dividend was ¥46 (interim ¥22, year-end ¥24), up ¥6 from prior year ¥40 (interim ¥20, year-end ¥20). The payout ratio relative to Net Income attributable to owners of the parent ¥1,622.1B is approximately 42.5%, indicating a shareholder return policy linked to profit growth. Total dividends were approximately ¥66.0B (based on weighted average shares outstanding 1,435.8 million), and retained earnings of ¥956.07B provide sufficient capacity for dividends. Free Cash Flow was ▲¥4,014.8B, well below dividend levels, but the company’s cash cycle—typical of a lease/finance model—is supplemented by debt funding; dividend sustainability should be assessed based on profit levels and capital adequacy. Maintaining Equity Ratio 15.3% and ROE 8.6% while sustaining payout ratios in the 40% range appears feasible. No share buybacks were disclosed; dividends are the sole return mechanism. For next year, dividend guidance of ¥25 is conservatively set, but there is scope for increase if profit growth continues.
Refinancing risk due to high leverage: With D/E ratio 5.52x and Debt/Capital ratio 69.3%, high leverage persists and refinancing cost risk rises under interest rate increases or tightened market liquidity. Cash and deposits ¥3,660.3B vs. short-term interest-bearing debt ¥4,586.6B (coverage 0.80x) is somewhat tight, making rollovers of CP, bonds, and short-term borrowings critical. Interest coverage is 25.66x, indicating strong resilience to interest burden, but widening new-issue spreads would raise the cost of capital.
Impairment risk in Aviation and Logistics: Impairments totaling ¥160.8B were recorded (Aviation ¥14.67B, Logistics ¥0.69B, Overseas Customer ¥0.12B, Environmental Energy ¥0.59B). Deterioration in markets or utilization for aircraft & engines, marine containers, and railcars could trigger additional impairments and increase operating profit volatility. Goodwill of ¥916.4B (4.6% of equity) is relatively modest, but JGAAP goodwill amortization ¥104.3B persistently pressures Operating Income.
Combined FX and interest rate risk: Foreign currency-denominated operating assets are large (Overseas Customer, Aviation, Logistics combined account for 46.5% of consolidated revenue), and the increase in foreign currency translation adjustments +¥922.0B reflects yen depreciation. Conversely, currency reversals could depress comprehensive income and increase equity volatility. In rising rate environments, lagged repricing of operating assets can compress spreads; maintaining interest coverage requires appropriate pricing of deals. Environmental Energy recorded a segment loss of ▲¥48.5B; prolonged weakness in renewable markets or project margin deterioration would be a structural risk.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.9% | 8.8% (4.0%–20.0%) | +2.0pt |
| Net Income Margin | 3.3% | 4.3% (0.6%–11.3%) | -1.0pt |
Operating margin exceeds the industry median by 2.0pt, placing the company among the higher profitability cohort. Net income margin is 1.0pt below the median, but one-off extraordinary items affected this and competitiveness is maintained on an ordinary income basis.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.0% | 2.1% (-4.5%–6.9%) | +3.9pt |
Revenue growth outperforms the industry median by 3.9pt, driven by Logistics, Overseas Customer, and Aviation, indicating above-median growth in the sector.
※ Source: Company compilation
Improvement to 10.9% Operating Margin and realization of operating leverage: Expansion of gross margin to 22.6% and SG&A ratio decline to 11.7% improved operating margin by +2.0pt YoY to a level above the industry median. Synergy from the Hitachi Capital merger contributed to SG&A containment and economies of scale. If interest rate and FX environments stabilize, maintaining double-digit operating margins is attainable. Conversely, Environmental Energy’s shift to a loss and impairments in Aviation and Logistics highlight market-linked risks; segment-level earnings stability will be key to medium-term profitability.
Structural issues of high leverage and cash conversion: D/E ratio 5.52x and OCF ▲¥3,675.4B (OCF / Net Income ▲2.27x) reflect high leverage and weak cash conversion. Cash outflows from operating asset accumulation are inherent to the lease/finance model, but refinancing costs and rollover risk under rising rates or reduced market liquidity warrant monitoring. Interest coverage of 25.66x supports short-term servicing ability, but ROIC of 2.7% is close to capital cost, so improving investment efficiency is important to ease valuation and capital policy constraints.
Dividend sustainability and shareholder return policy: Payout ratio ~42.5% and an increase to annual ¥46 links returns to profit growth, with retained earnings ¥956.07B providing ample capacity. Despite negative FCF, dividend sustainability is likely if profit levels and capital adequacy are maintained. Next fiscal year guidance of ¥25 dividend is conservative; continued profit growth could allow further increases. No share buyback program was announced; dividends remain the sole return method. ROE and ROIC improvement will influence future return capacity.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on publicly disclosed financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.