| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥3061.6B | ¥2548.8B | +20.1% |
| Operating Income | ¥106.2B | ¥77.8B | +36.4% |
| Ordinary Income | ¥114.3B | ¥94.4B | +21.1% |
| Net Income | ¥74.2B | ¥61.7B | +20.3% |
| ROE | 4.8% | 4.3% | - |
For the fiscal year ended March 2026, the company achieved revenue of ¥3,061.6B (vs prior year +¥512.8B, +20.1%), Operating Income of ¥106.2B (vs prior year +¥28.4B, +36.4%), Ordinary Income of ¥114.3B (vs prior year +¥19.9B, +21.1%), and Net Income attributable to owners of the parent of ¥91.8B (vs prior year +¥25.7B, +38.9%), recording both top-line and bottom-line growth. Operating margin improved to 3.5% (prior year 3.1%, +0.4pt). Gross margin rose to 12.0% (approximately prior year 11.6%, +0.4pt), while SG&A ratio was roughly flat at 8.5%. Revenue growth of +20.1% was driven by steady expansion in the Leasing Business (+5.4%), rapid expansion in the Investment Business (+76.4%), and significant increases in Other Businesses. Operating Income grew faster than revenue (+36.4%), indicating operating leverage. Growth rates for Ordinary Income and Net Income lagged Operating Income due to increased non-operating expenses and normalization of tax expense (the prior-year one-off reversal of deferred tax assets ran its course). EPS was ¥426.15 (prior year ¥306.98, +38.8%), reflecting higher Net Income, and ROE improved to 4.8% from the prior-year level.
[Revenue] Revenue was ¥3,061.6B (YoY +20.1%), a substantial increase. By segment, the Leasing Business grew steadily to ¥2,416.2B (+5.4%), accounting for 78.9% of total revenue and functioning as the core business. The Finance Business rose to ¥87.0B (+14.4%), and the Investment Business expanded rapidly to ¥243.7B (+76.4%), aided by the expansion of asset, real estate, and advisory businesses through the consolidation of Risa Partners Co., Ltd. Other Businesses surged to ¥315.3B (approx. 6.2x from prior year ¥43.8B), reflecting monetization in rental residences, renewable energy power generation, and PFI/PPP projects. Domestic revenue accounted for over 90%, and global segment disclosure is omitted. Top-line growth was supported by three pillars: expansion of the leasing base, progress on exits in investment businesses, and the launch of new businesses (Other segment).
[Profitability] Operating Income was ¥106.2B (YoY +36.4%), outpacing revenue growth, with operating margin improving to 3.5% (prior year 3.1%, +0.4pt). By segment, the Leasing Business recorded Operating Income of ¥62.3B (YoY +42.7%, margin 2.6%), a significant profit increase. Other Businesses posted ¥24.0B (approx. 4.6x from prior year ¥5.2B, margin 7.6%), contributing materially to profit growth. The Investment Business delivered ¥23.7B (YoY +7.9%, margin 9.7%), showing steady growth, while the Finance Business fell to ¥19.1B (YoY -33.9%, margin 21.9%), turning into a profit decline and leaving issues in the revenue mix. SG&A increased to ¥259.7B (prior year ¥218.8B, +18.7%) but rose less than revenue (+20.1%), reflecting effective cost control. Net non-operating items were +¥8.1B (prior year +¥16.6B), driven by foreign exchange gains of ¥4.9B and other non-operating income of ¥4.2B, offset by interest expense of ¥1.5B and foreign exchange losses of ¥1.6B. Equity-method investment income declined sharply to ¥0.8B (prior year ¥6.9B), reflecting slower associate earnings. Ordinary Income was ¥114.3B (YoY +21.1%), showing slower growth than at the operating level due to weaker non-operating income year-on-year. Extraordinary items were net +¥2.2B: extraordinary gains ¥8.8B (including negative goodwill ¥2.6B, gain on sale of subsidiary shares ¥3.6B, etc.) exceeded extraordinary losses ¥6.6B (including loss on sale of subsidiary shares ¥0.7B, asset write-downs ¥2.7B, etc.), temporarily boosting profits. Profit before tax was ¥116.5B (prior year ¥88.6B, +31.4%), income taxes were ¥42.2B (prior year ¥26.9B), resulting in an effective tax rate of 36.2% (prior year 30.4%) as the prior-year deferred tax asset reversal effect subsided. Non-controlling interests were -¥17.6B, increasing with the addition of consolidated subsidiaries. In conclusion, the company achieved revenue and profit increases driven by the Leasing and Other Businesses and cost control, but profit improvement was restrained by the Finance Business decline and weaker non-operating income.
The Leasing Business improved profitability, with Operating Income of ¥62.3B (prior year ¥43.7B, +42.7%) and margin 2.6% (prior year 1.9%). Against stable revenue growth of ¥2,416.2B (+5.4%), profit expanded significantly, likely aided by gains on asset sales from lease maturities/early terminations and maintenance service income for leased equipment. The Finance Business reported Operating Income of ¥19.1B (prior year ¥28.8B, -33.9%) with margin 21.9% (prior year 37.9%); despite maintaining high margins, profit declined markedly. Lending, factoring and other financial income fell below prior-year levels, and lower equity-method income also weighed. The Investment Business recorded Operating Income of ¥23.7B (prior year ¥21.9B, +7.9%) with margin 9.7% (prior year 15.9%); despite revenue rising by +76.4%, profit growth was limited and margin compressed. Consolidation of Risa Partners (acquisition of Risa RT receivables recovery and 8 other entities) drove the revenue surge but integration costs and new business startup expenses may have pressured profits. Other Businesses saw Operating Income of ¥24.0B (prior year ¥5.2B, approx. 4.6x), as monetization in rental residences, renewables, PFI/PPP, and tourism advanced. Segment adjustment was -¥22.9B (prior year -¥21.9B), mainly corporate overhead, explaining the gap from total segment profit of ¥129.1B to consolidated Operating Income of ¥106.2B.
[Profitability] Operating margin was 3.5% (prior year 3.1%, +0.4pt). Gross margin rose to 12.0% (approx. prior year 11.6%, +0.4pt). ROE was 4.8%, consistent with net profit margin 3.0%, total asset turnover 0.23x, and financial leverage 8.74x. ROA was 0.9% (prior year 0.8%), a slight increase supported by margin improvement. ROIC was 1.1% (invested capital = equity + interest-bearing debt total; NOPAT = Operating Income × 0.64), remaining low and below capital cost, indicating challenges in investment returns. Segment margins were diverse: Finance 21.9%, Investment 9.7%, Leasing 2.6%, Other 7.6%, reflecting coexistence of high-margin Finance and low-margin, high-volume Leasing. [Cash Quality] Operating Cash Flow was -¥660.7B (Net Income multiple -7.20x), and OCF/EBITDA was -1.98x, indicating extremely weak cash conversion, primarily due to absorption of working capital from growth in lease receivables and investment assets. Free Cash Flow was -¥955.7B, and shareholder returns are funded by external financing. [Investment Efficiency] Total asset turnover improved to 0.23x (prior year 0.21x) as revenue growth (+20.1%) outpaced total asset growth (+9.5%). Capital expenditures were ¥306.9B (prior year ¥445.9B), a YoY decline suggesting M&A investment may have subsided. Capex is roughly in line with depreciation of ¥227.5B, indicating a balance between asset renewal and growth investment. [Financial Soundness] Equity ratio was 11.4% (prior year 11.6%), roughly flat. D/E ratio was 7.74x, indicating high leverage but within a tolerable range for leasing/finance business models. Interest coverage was strong at 72.7x (Operating Income ÷ interest expense ¥1.5B), indicating solid capacity to service interest. Current ratio and quick ratio were 184%, indicating ample short-term liquidity, but significant short-term liabilities such as CP ¥270.0B and bonds maturing within one year ¥306.0B require continual rollover.
Operating Cash Flow was -¥660.7B (prior year -¥340.1B), a large negative and -7.20x relative to Net Income of ¥91.8B. At the subtotal stage (before working capital changes) it was -¥513.5B; adding non-cash charges such as depreciation ¥227.5B and goodwill amortization ¥2.6B still left a substantial shortfall relative to profit. Principal drivers included expansion of lease receivables and investment assets (change in real estate for sale - increase ¥71.6B, change in trade receivables - increase ¥51.4B), interest paid of -¥130.7B, and corporate tax paid of -¥26.2B. The increase in real estate for sale of ¥71.6B reversed the prior-year decrease of ¥176.3B, with accumulation of investment properties absorbing cash. Trade payables increased by ¥89.6B, partially easing working capital, but overall asset growth drove the negative operating cash flow. Investing Cash Flow was -¥295.0B (prior year -¥150.1B), including acquisition of subsidiary shares -¥154.8B (consolidation of Risa RT receivables recovery and 8 other companies), acquisition of investment securities -¥320.7B, and proceeds from sales +¥61.3B. Financing Cash Flow was +¥555.1B (prior year +¥1,056.4B), with long-term borrowings executed +¥2,239.5B, bond issuance +¥395.0B, long-term borrowings repayments -¥1,591.1B, bond redemptions -¥200.0B, and net increase in CP +¥40.0B, resulting in net funding. Included were dividend payments -¥30.3B, dividends to non-controlling interests -¥22.0B, and capital contributions from non-controlling interests +¥59.1B. Cash and cash equivalents at period-end were ¥688.9B (prior year ¥1,100.9B), a decrease of ¥412.1B. Foreign exchange impact was -¥11.5B (prior year -¥2.5B). The negative Operating Cash Flow reflects a typical cash absorption pattern during asset growth phases, making funding capacity and market access prerequisites for ongoing cash flow management.
Of Ordinary Income ¥114.3B, Operating Income accounted for ¥106.2B, and net non-operating items added +¥8.1B (non-operating income ¥16.7B less non-operating expenses ¥8.6B). Major non-operating income items were foreign exchange gains ¥4.9B, other non-operating income ¥4.2B, and dividend income ¥0.5B, with FX gains containing one-off elements. Non-operating expenses included interest expense ¥1.5B, foreign exchange losses ¥1.6B, and other ¥0.4B, with FX affecting both income and expenses and increasing volatility. Extraordinary items were net +¥2.2B, with extraordinary gains ¥8.8B (negative goodwill ¥2.6B from acquisition allocations for Risa RT receivables recovery consolidation, gain on sale of subsidiary shares ¥3.6B, etc.) exceeding extraordinary losses ¥6.6B (loss on sale of subsidiary shares ¥0.7B, fixed asset compression losses ¥2.7B, etc.). Negative goodwill is a non-recurring accounting gain with low sustainability. The gap between Ordinary Income and Net Income primarily reflects income taxes ¥42.2B and non-controlling interests -¥17.6B; the tax burden rose to 36.2% from 30.4% as the deferred tax asset reversal effect subsided. The accrual ratio ((Net Income − Operating CF) ÷ Total Assets) was 5.6%, within a neutral range, but the large shortfall of Operating CF relative to Net Income indicates a significant divergence between accounting profit and cash. Equity-method investment income fell to ¥0.8B (prior year ¥6.9B), showing associate performance was a headwind. Overall, recurring operating income is the principal earnings source, with limited contribution from non-operating/extraordinary items, although volatility from FX and equity-method earnings affects earnings quality.
Progress against full-year forecasts: Revenue ¥3,061.6B / ¥3,100.0B = 98.8%; Operating Income ¥106.2B / ¥165.0B = 64.3%; Ordinary Income ¥114.3B / ¥170.0B = 67.2%; Net Income attributable to owners of the parent ¥91.8B / ¥100.0B = 91.8%. Revenue nearly reached the initial forecast, while Operating and Ordinary Income reached only the 60% range, representing substantial shortfalls. The forecast Operating Margin was 5.3% (¥165.0B ÷ ¥3,100.0B) vs. actual 3.5%, a 1.8pt gap. Causes likely include the unexpected profit decline in the Finance Business (-33.9%), margin compression in the Investment Business amid rapid revenue growth, and SG&A increases beyond assumptions. Net Income progressed to 91.8%, higher than operating-stage metrics, supported by lower effective tax rate and contribution from extraordinary items. Initial forecast EPS ¥464.15 vs. actual EPS ¥426.15, about an 8% shortfall. Dividend forecast of annual ¥150 matched actual (interim ¥75 + year-end ¥75). No revision to the full-year forecast was disclosed, suggesting the initial forecast may have been left unchanged into the results. Margin improvement and recovery in the Finance Business are key near-term focuses.
Annual dividend was ¥150 (interim ¥75 + year-end ¥75), total dividends ¥3.231B, with payout ratio vs. Net Income attributable to owners of the parent ¥91.8B at 35.2%. Prior-year dividend was ¥75 (payout ratio 24.4%); this year dividend amount doubled and payout ratio rose. Dividends are sufficiently covered by profits, indicating capacity, but Free Cash Flow of -¥955.7B means shareholder returns are funded via external financing (bond issuance, borrowings). The dividend policy appears to maintain stable dividends, but adjustments may be required depending on asset growth and funding conditions. No share buybacks were confirmed; the concept of Total Return Ratio is not applicable. Dividend yield vs. BPS ¥6,048.65 is 2.5%, indicating a moderate level of shareholder return. With cash balance ¥688.9B, Operating CF -¥660.7B, and interest-bearing debt ¥6,933.7B (short-term borrowings + long-term borrowings + bonds + CP), dividend funding depends largely on externally raised funds, posing risks in a rising interest rate or tightening funding environment.
Interest rate rise / funding cost risk: With interest-bearing debt of ¥6,933.7B (D/E 7.74x), rising market rates would increase interest expense and compress operating margins. Although interest coverage is high at 72.7x, the thin-margin Leasing Business (margin 2.6%) is vulnerable to delayed pass-through of higher rates. Significant short-term liabilities such as CP ¥270.0B and bonds maturing within one year ¥306.0B heighten rollover risk and potential widening of funding spreads.
Business concentration / revenue-mix risk: The Leasing Business accounts for 78.9% of revenue, indicating high dependence on a single business. The Finance Business, despite high margin (21.9%), saw Operating Income decline -33.9%, while the Investment Business experienced margin compression amid rapid revenue growth. Large inter-segment profitability differentials mean that a slow recovery in Finance would hinder improvement in the overall revenue mix.
Cash flow quality / liquidity risk: Operating Cash Flow is -¥660.7B (-7.20x Net Income), and OCF/EBITDA is -1.98x, showing extremely weak cash conversion and persistent working capital absorption from asset growth. Relying on external funding to cover Free Cash Flow -¥955.7B increases dependence on capital market access. Cash balance decreased 37.5% YoY to ¥688.9B; while short-term liquidity is ample, continued issuance of CP and bonds and rollover of long-term borrowings are prerequisites, and adverse market conditions could crystallize funding risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.5% | 8.8% (4.0%–20.0%) | -5.4pt |
| Net Profit Margin | 2.4% | 4.3% (0.6%–11.3%) | -1.9pt |
Both operating and net profit margins lag industry medians, indicating inferior profitability versus peers. The low-margin structure of the Leasing Business and the Finance Business profit decline are primary causes.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 20.1% | 2.1% (-4.5%–6.9%) | +18.1pt |
Revenue growth substantially exceeds the industry median, demonstrating strong top-line expansion. Rapid growth in the Investment and Other Businesses contributed and enabled top-line outperformance of peers.
※ Source: Company compilation
Trend of revenue and profit growth with margin improvement potential: Achieved revenue +20.1% and Operating Income +36.4%, with Operating Margin improving to 3.5% (+0.4pt). However, Operating and Ordinary Income reached only the 60% range of full-year forecasts, indicating incomplete comprehensive margin improvement. The Finance Business profit decline (-33.9%) is a drag; recovery in this segment and stabilization of Investment Business margins are focal points. Operating Margin remains well below the industry median of 8.8%, indicating substantial room for margin improvement.
Dual nature of high growth and weak cash conversion: Revenue growth +20.1% far outpaces the industry median of 2.1%, but Operating CF -¥660.7B and OCF/EBITDA -1.98x show extremely weak cash conversion and persistent working capital absorption with asset growth. Filling Free Cash Flow -¥955.7B via external financing embeds risks in rising-rate or strained funding environments. Continued capital market access and spread management are prerequisites for shareholder value preservation.
Balance of leverage and interest-paying capacity: D/E 7.74x and Debt/EBITDA 16.1x indicate high leverage, but interest coverage 72.7x and current ratio 184% show solid interest-paying capacity and short-term liquidity. Goodwill increase (+255%) signals M&A activity, but goodwill-to-equity of 3.0% suggests limited burden and constrained impairment risk. Payout ratio 35.2% is sustainable on a profit basis, but dividend funding relies on external financing; improving ROIC (currently 1.1%) and asset turnover is necessary for medium- to long-term stability of shareholder returns.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional as needed before making investment decisions.