| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥977.2B | ¥863.3B | +13.2% |
| Operating Income | ¥148.2B | ¥117.4B | +26.2% |
| Ordinary Income | ¥204.9B | ¥151.2B | +35.5% |
| Net Income | ¥28.6B | ¥96.8B | -70.4% |
| ROE | 1.4% | 5.0% | - |
For the fiscal year ended March 2026, full-year results were Revenue ¥977.2B (YoY +¥113.9B +13.2%), Operating Income ¥148.2B (YoY +¥30.8B +26.2%), Ordinary Income ¥204.9B (YoY +¥53.7B +35.5%), and Net Income attributable to owners of the parent ¥165.7B (YoY +¥54.7B +49.5%). As a single segment (Investment & Financial Services Business), expansion of fee income and cost containment improved the operating margin to 15.2% (prior year 13.6%), up 1.6pt. Non-operating income increased 63.7% YoY to ¥59.8B, with dividend income ¥12.0B, equity-method investment income ¥12.6B, and investment limited partnership gains ¥12.5B supporting Ordinary Income. Extraordinary items resulted in net special gains of ¥45.7B driven by gains on sales of available-for-sale securities of ¥30.1B, offset by special losses of ¥23.4B including impairment losses of ¥20.7B, yielding a net +¥22.3B that boosted pre-tax profit. On a comprehensive income basis, total comprehensive income was ¥228.5B, with other comprehensive income of ¥46.6B added to Net Income attributable to owners of the parent of ¥165.7B.
[Revenue] Revenue of ¥977.2B was an increase of ¥113.9B YoY (+13.2%). As a single segment (Investment & Financial Services Business), detailed breakdown by sub-business is not disclosed, but overall revenue growth is presumed driven by expansion in fee income and improved market conditions. SG&A was ¥771.0B (SG&A ratio 78.9%) up ¥69.6B YoY; however, SG&A growth of +9.7% lagged Revenue growth of +13.2%, realizing positive operating leverage. Depreciation ¥37.6B increased slightly by ¥0.9B YoY, indicating restrained fixed costs.
[Profitability] Operating Income ¥148.2B rose ¥30.8B YoY (+26.2%), outpacing revenue growth. Operating margin improved to 15.2% from 13.6% a year ago (up 1.6pt). Non-operating income expanded significantly to ¥59.8B (prior year ¥36.5B, +63.7%), primarily due to dividend income ¥12.0B (prior year ¥10.3B), investment LP gains ¥12.5B (prior year ¥13.1B), and equity-method investment income ¥12.6B (prior year ¥1.8B). Non-operating expenses were ¥3.0B (prior year ¥2.7B). This resulted in Ordinary Income ¥204.9B (prior year ¥151.2B, +35.5%). Extraordinary items comprised special gains ¥45.7B (including gains on sales of available-for-sale securities ¥30.1B, gains on sale of subsidiary shares ¥14.3B) versus special losses ¥23.4B (including impairment losses ¥20.7B), yielding net special items +¥22.3B and pre-tax profit ¥227.2B (prior year ¥170.5B, +33.3%). Income taxes ¥45.3B (effective tax rate 19.9%) and non-controlling interests ¥16.2B deducted, producing Net Income attributable to owners of the parent ¥165.7B (prior year ¥110.5B, +49.5%). In conclusion, double-digit revenue growth combined with cost control and contributions from non-operating and special items resulted in increased revenue and profit.
[Profitability] Operating margin 15.2% improved 1.6pt from 13.6% last year; Net Income margin 17.0% improved 4.2pt from 12.8%, indicating significant improvement in profitability. ROE is 1.4% (calculation basis: Net Income ¥28.6B ÷ average shareholders' equity during the period ¥2,017.5B) which is low; on a consolidated basis using Net Income attributable to owners of the parent ¥165.7B, ROE is approximately 8.2%, improved from 6.1% in the prior year. [Cash Quality] Operating Cash Flow (OCF) ¥47.4B relative to Operating Income ¥148.2B gives OCF/Operating Income of 0.32x; on an EBITDA basis (Operating Income + Depreciation ¥37.6B = ¥185.8B), OCF/EBITDA is 0.26x, indicating weak cash conversion of profits. Free Cash Flow ¥-160.0B is negative, reflecting large effects from working capital fluctuations and timing of investment/financing activities. [Investment Efficiency] Capital expenditures ¥14.8B / Depreciation ¥37.6B = 0.39x, indicating restrained capex. Goodwill ¥0.5B and intangible fixed assets ¥46.1B indicate limited risk of asset intangibilization. [Financial Soundness] Equity Ratio 13.7% (prior year 13.8%), D/E 6.31x, Cash and Deposits ¥935.4B versus current liabilities ¥1,1287.7B gives current ratio 127.1% and quick ratio 127.1%, indicating short-term liquidity is secured, but cash/short-term liabilities of approximately 0.46x (Cash ¥935.4B vs. short-term borrowings & short-term debt total ~¥2,015.8B) implies high rollover dependence. Long-term borrowings ¥1,597.0B and bonds ¥205.0B bring total interest-bearing debt to ~¥3,580.4B, Debt/EBITDA 19.3x, reflecting high leverage.
OCF was ¥47.4B, a large decline of -77.2% from ¥208.0B in the prior year; the ratio to pre-tax profit before income taxes and non-controlling interests (¥227.2B) was only 0.21x. Operating cash flow subtotal (before working capital changes) turned negative to ¥-0.7B from ¥208.3B year ago. After adjustments for non-cash items such as equity-method investment income ¥12.6B, impairment losses ¥20.7B, and gains on sales of available-for-sale securities -¥30.1B, changes in other assets resulted in -¥367.7B, adjustments for interest and dividends received -¥126.5B, adjustments for interest paid ¥57.0B, etc., causing large working capital swings. Cash outflow from deposit acceptance of ¥468.8B was also recorded in OCF, and after corporate tax payments -¥33.4B, OCF settled at ¥47.4B. Investing Cash Flow was -¥207.3B, driven primarily by short-term loans disbursed -¥556.4B, short-term loans collected ¥312.2B, purchase of investment securities -¥57.8B, sales of investment securities ¥122.8B, and sale of subsidiary shares ¥16.8B. Capital expenditure was -¥14.8B and intangible asset acquisitions -¥21.6B, indicating restrained capital spending. Financing Cash Flow was -¥27.4B, with long-term borrowings inflow ¥308.0B, long-term borrowings repayments -¥105.0B, bond issuance ¥135.0B, bond redemptions -¥63.9B, and dividend payments -¥95.4B. Unable to cover dividend payments of ¥95.4B with Free Cash Flow -¥160.0B, funding was raised via borrowings and bond issuance. Weakness in OCF was mainly driven by large working capital swings and investment turnover timing; normalization going forward is a focal point.
Of Ordinary Income ¥204.9B, Operating Income ¥148.2B forms the recurring earnings base, while non-operating income ¥59.8B (6.1% of Revenue) made a large contribution. Non-operating income breakdown: dividend income ¥12.0B, investment LP gains ¥12.5B, equity-method investment income ¥12.6B, etc., showing investment returns benefited from favorable market conditions and lifted Ordinary Income. Extraordinary items included gains on sales of available-for-sale securities ¥30.1B and gains on sale of subsidiary shares ¥14.3B (special gains ¥45.7B), offset by impairment losses ¥20.7B and other special losses ¥23.4B, yielding net +¥22.3B added to pre-tax profit—indicating significant one-off contributions. Comprehensive income ¥228.5B greatly exceeded Net Income ¥28.6B, with Other Comprehensive Income ¥46.6B (¥44.7B attributable to owners of the parent) comprised of valuation differences on securities ¥29.6B and remeasurements related to retirement benefit plans ¥16.6B, reflecting increased unrealized gains on held securities and improved pension asset valuations. OCF ¥47.4B versus Net Income ¥28.6B yields an accrual ratio of (28.6-47.4)/28.6 = -0.66x, indicating cash generation exceeded accounting profit; however, on a consolidated basis using Net Income attributable to owners of the parent ¥165.7B, OCF/Net Income is 0.29x, showing weak cash conversion and a large timing gap between accounting profit and cash.
Full-year dividend was ¥50 per share (interim ¥22, year-end ¥28), of which ordinary dividends are interim ¥14 and year-end ¥20 totaling ¥34, and commemorative dividends are interim and year-end ¥8 each totaling ¥16. Based on average shares outstanding during the period of 251,738 thousand shares, total dividends amount to approximately ¥12,590M (¥125.9B), and the payout ratio relative to Net Income attributable to owners of the parent ¥165.7B is about 76%, a high level. Prior year dividend was ¥12 per share; dividends were substantially increased year-over-year, and excluding the commemorative dividend of ¥16, ordinary dividend is ¥34 showing an increase versus prior year. Free Cash Flow -¥160.0B is negative and dividends are not covered by cash flows; sustainability of dividend funding depends on improvement in OCF and financing via borrowings and bond issuance. Treasury stock is ¥68.9B, increased from ¥41.5B at the beginning of the period, and there is a note of treasury stock disposal ¥8.9B, suggesting partial disposal to improve capital efficiency. Payout ratio of 76% is high, and with the likely lapse of commemorative dividends next fiscal year, adjustments depending on earnings levels are possible.
Market environment volatility risk: Of non-operating income ¥59.8B, market-related income such as investment LP gains ¥12.5B, equity-method investment income ¥12.6B, and dividend income ¥12.0B account for approximately 29% of Ordinary Income. Earnings may fluctuate significantly with equity markets, interest rates, and credit spreads. Extraordinary items also include non-recurring factors such as gains on sales of available-for-sale securities ¥30.1B, raising the risk that earnings levels may decline due to reversals in the next fiscal year.
High leverage and short-term debt dependence risk: D/E 6.31x and Debt/EBITDA 19.3x indicate high debt dependence. Cash/short-term liabilities of 0.46x (Cash ¥935.4B vs. short-term borrowings & short-term debt ~¥2,015.8B) implies high rollover dependence. In periods of rising interest rates or deteriorating credit conditions, refinancing costs could increase and financial stress could intensify. Interest expense ¥56.1B is about 38% of Operating Income ¥148.2B, indicating high interest-rate sensitivity.
Cash conversion risk of earnings: OCF ¥47.4B is only 0.29x of Net Income attributable to owners of the parent ¥165.7B, and large working capital swings (other assets -¥367.7B, etc.) and timing effects such as deposit acceptance ¥468.8B make profit difficult to convert into cash. Free Cash Flow -¥160.0B means dividends ¥95.4B cannot be covered, and unstable cash generation threatens dividend sustainability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 15.2% | 19.9% (6.5%–38.3%) | -4.8pt |
| Net Income Margin | 2.9% | 5.6% (3.8%–22.2%) | -2.7pt |
Operating margin is 4.8pt below the industry median 19.9%, and Net Income margin is 2.7pt below the median 5.6%. Profitability ranks from median to slightly below within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 13.2% | -0.5% (-0.9%–13.1%) | +13.7pt |
Revenue growth rate 13.2% significantly exceeds the industry median -0.5%, placing the company among the higher-growth peers.
※ Source: Company aggregation
Cost containment and realization of operating leverage: SG&A growth +9.7% versus Revenue growth +13.2% resulted in Operating Margin improving to 15.2% (up 1.6pt). Positive operating leverage is in effect, confirming a trend of improving profitability. Continued control of SG&A ratio will be key to sustaining margin improvement.
Dependence on non-operating income and special items and risk of next-year reversal: Non-operating income ¥59.8B and net special items +¥22.3B materially boosted profits. Gains on sales of available-for-sale securities ¥30.1B and rapid increase in equity-method investment income captured favorable market conditions; however, there is risk of reversal next year. In the composition of Ordinary Income, Operating Income ¥148.2B (72%) and non-operating income ¥59.8B (29%) indicate significant non-operating contribution; earnings stability depends on expanding stock-like recurring revenue bases.
Room to improve cash generation and sustainability of dividends: OCF ¥47.4B is low relative to profit and Free Cash Flow -¥160.0B cannot cover dividends ¥95.4B. Payout ratio 76% is high; excluding commemorative dividends ¥16, ordinary dividend ¥34 is still a large increase year-over-year, but cash backing relies on borrowings and bond issuance. Normalization of OCF and improved working capital management will determine dividend sustainability; investors should monitor cash flow trends in subsequent periods.
This report is an earnings analysis document automatically generated by AI analyzing 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 based on public financial disclosure data. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.