| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥6315.7B | ¥6067.9B | +4.1% |
| Operating Income / Operating Profit | ¥432.4B | ¥439.4B | -1.6% |
| Ordinary Income | ¥433.9B | ¥446.8B | -2.9% |
| Net Income / Net Profit | ¥294.0B | ¥248.1B | +18.5% |
| ROE | 9.6% | 8.4% | - |
For the fiscal year ended March 2026, Revenue was ¥6,315.7B (YoY +¥247.8B +4.1%), Operating Income was ¥432.4B (YoY -¥7.0B -1.6%), Ordinary Income was ¥433.9B (YoY -¥12.9B -2.9%), and Net Income was ¥294.0B (YoY +¥45.9B +18.5%). Results showed higher revenue but lower operating profit. Revenue increased for the third consecutive year driven by progress in large Plant & Machinery (Machine Tools) projects; Operating Income declined slightly due to SG&A growth (+¥111.5B +11.5%); Net Income rose double-digits due to recognition of ¥24.0B gain on sale of investment securities. Operating margin was 6.8% (down 0.4pt from 7.2% prior year), Net margin was 4.7% (up 0.6pt from 4.1%).
[Revenue] Revenue rose to ¥6,315.7B (+4.1%) showing solid growth. By segment, the Machinery & Engineering Business (機工事業) expanded significantly to ¥3,115.2B (+8.5%), supported by progress on plant construction projects. The Logistics Business recorded ¥2,990.7B (-0.1%), essentially flat; port and domestic logistics demand remained firm but was slightly offset by shipping market conditions. Other Businesses amounted to ¥307.3B (+0.8%). By region, Japan was ¥5,212.1B (+4.3%) led by domestic projects, Asia was ¥875.1B (-1.7%), and Americas & Others were ¥228.5B (+26.2%), with overseas ratio at 14.5%. Gross profit was ¥763.7B (¥+11.0B) and gross margin held at 12.1% (prior year 12.1%), with improved project mix in Machinery & Engineering and price pass-through in Logistics contributing.
[Profitability] Operating Income was ¥432.4B (-1.6%), a slight decline. SG&A rose to ¥331.3B (+11.5%), outpacing sales growth and compressing operating margin to 6.8% (-0.4pt). SG&A ratio increased to 5.2% (prior year 4.9% +0.3pt), primarily due to higher personnel and digitalization-related investments. By segment, Machinery & Engineering operating profit was ¥309.6B (-3.3%), down due to sustained high project costs and increased subcontracting expenses, with margin declining to 9.9% (prior 10.5% -0.6pt). Logistics operating profit was ¥98.3B (+1.5%), a slight increase, maintaining margin at 3.3% (prior 3.2%) as labor cost increases were offset via price revisions. Ordinary Income was ¥433.9B (-2.9%); non-operating income included ¥13.8B dividend income and ¥1.3B equity-method income, while interest expense increased to ¥13.7B (prior ¥12.6B), pressuring results. Extraordinary gains of ¥27.4B (mainly ¥24.0B gain on sale of investment securities) were recorded; extraordinary losses were minor at ¥2.2B (impairment). Profit before tax at ¥459.1B less income taxes ¥142.7B (effective tax rate 31.1%) resulted in Net Income ¥294.0B (+18.5%). In summary, while operating-stage results were revenue-up, profit-down, extraordinary gains drove final net income higher.
The Logistics Business: Revenue ¥2,990.7B (-0.1%) essentially flat; Operating Income ¥98.3B (+1.5%), slight increase. Margin improved to 3.3% (prior 3.2% +0.1pt). Labor and fuel cost increases in port hauling and general cargo transport were absorbed via price revisions, demonstrating execution on cost pass-through despite structurally low margins. The Machinery & Engineering Business: Revenue ¥3,115.2B (+8.5%) substantial growth, Operating Income ¥309.6B (-3.3%) decline. Margin fell to 9.9% from 10.5% prior (-0.6pt). Large factory equipment construction and heavy machinery installation projects drove revenue, but higher material prices and increased subcontracting pressured profitability, with some project mix effects. Other Businesses: Revenue ¥307.3B (+0.8%), Operating Income ¥24.7B (+11.5%), margin improved to 8.0% (prior 7.3% +0.7pt), supported by stable information systems and staffing services.
[Profitability] Operating margin 6.8% (prior 7.2% -0.4pt), gross margin 12.1% (flat), while SG&A ratio rose to 5.2% (prior 4.9% +0.3pt), squeezing margins. Net margin 4.7% (prior 4.1% +0.6pt) improved due to extraordinary gains. ROE 9.6% (prior 10.7% -1.1pt); DuPont decomposition shows slight decline in net margin and small reduction in leverage (1.82→1.80x) offset partly by improved total asset turnover (1.13x, prior 1.11x). [Cash Quality] Operating Cash Flow / Net Income was 1.77x (prior 1.75x), remaining at a high level, with accrual ratio -3.8% indicating good earnings quality. Operating Cash Flow (OCF) / EBITDA improved to 0.79x (prior 0.68x), aided by progress in receivables collection. DSO was 121 days (prior 132 days), improving 11 days but still long; contract assets accumulated to ¥502.7B, reflecting project progress but underscoring the importance of collection management. [Investment Efficiency] Total asset turnover improved to 1.13x (prior 1.11x), propelled by Machinery & Engineering sales growth. Capital expenditures were ¥166.0B, depreciation ¥205.0B, maintaining a depreciation-to-CapEx ratio of 0.81x indicating maintenance-level investment; growth capex was restrained. Goodwill rose to ¥76.4B from ¥15.9B prior (+379.6%), driven by small-scale M&A; goodwill / net assets 2.5%, goodwill / EBITDA 0.12x, indicating limited impairment risk. [Financial Soundness] Equity ratio remained solid at 54.8% (prior 54.5%), current ratio 178.6%, quick ratio 171.4% indicating high liquidity. Interest-bearing debt totaled ¥470.2B, Debt/EBITDA 0.74x, interest coverage 31.5x, showing very low leverage. However, short-term debt ratio rose to 50.2% (including short-term borrowings ¥235.9B, CP ¥300.0B, current portion of bonds ¥100.0B), increasing short-term funding reliance; long-term borrowings declined to ¥234.2B (-37.4%) altering funding mix. Cash & deposits ¥461.4B cover 0.73x of short-term interest-bearing debt ¥636.0B, indicating a certain buffer.
Operating Cash Flow was ¥519.9B (prior ¥435.3B, +19.4%), a large increase and high quality at 1.77x of Net Income ¥294.0B. Starting from income before income taxes and minority interests ¥459.1B, non-cash additions included depreciation ¥205.0B and goodwill amortization ¥1.8B. Working capital changes: decrease in trade receivables of ¥115.2B offset a decrease in contract liabilities of -¥5.0B, accounts payable decreased -¥31.5B (cash outflow), and inventories increased -¥3.2B (minor). After tax payments -¥171.7B, subtotal OCF was ¥688.7B leading to final OCF ¥519.9B. Investing CF was -¥191.9B: CapEx -¥166.0B (primarily building and machinery renewals), intangible asset acquisitions -¥24.4B (software investments), and acquisition of subsidiary shares -¥47.3B (small M&A) were main outflows; proceeds from sale of tangible fixed assets ¥7.0B and gain on sale of investment securities ¥24.0B partially offset. FCF was ¥328.1B (prior ¥170.6B +¥157.5B, +92.3%), significantly improved due to receivables collection and higher OCF. Financing CF was -¥323.8B: dividends paid -¥128.9B (payout ratio 40.6%), share buybacks -¥200.2B totaling shareholder returns ¥329.1B, exceeding Net Income ¥294.0B; long-term borrowings repayment -¥194.6B and short-term borrowings increased ¥1,536.1B with short-term borrowings repayments -¥1,460.7B reflecting refinancing, and bond redemption -¥100.0B executed. Cash & deposits declined ¥14.0B from ¥475.4B to ¥461.4B (including FX effect +¥7.2B). The cash decline was due to aggressive buybacks and dividends.
Of Ordinary Income ¥433.9B, Operating Income ¥432.4B constituted 99.7% from core operations. Non-operating income ¥32.6B comprised dividend income ¥13.8B, interest income ¥6.4B, equity-method income ¥1.3B, and other ¥11.1B, reflecting stable income from held investment securities and affiliates. Non-operating expenses ¥31.2B included interest expense ¥13.7B (up 8.7% from ¥12.6B prior, reflecting higher interest-bearing debt and rising rates) and other expenses ¥17.4B. Ordinary-stage profitability largely reflected operating performance. Extraordinary gains ¥27.4B were mainly ¥24.0B gain on sale of investment securities and are one-off; extraordinary losses ¥2.2B (impairment) were minor. From pre-tax income ¥459.1B, income taxes ¥142.7B (effective tax rate 31.1%) resulted in Net Income ¥294.0B. Comprehensive income ¥427.9B exceeded Net Income by ¥133.9B, mainly due to valuation differences on other securities ¥64.7B, foreign currency translation adjustments ¥29.1B, and retirement benefit adjustments ¥17.8B, benefiting from positive equity market and FX movements. OCF ¥519.9B is 1.77x Net Income, indicating good cash conversion; accrual ratio -3.8% (the gap between operating profit and net income is small, and excluding extraordinary gains performance is solid on an underlying basis).
For the fiscal year ending March 2027, full-year guidance is Revenue ¥6,385.0B (+1.1%), Operating Income ¥470.0B (+8.7%), Ordinary Income ¥455.0B (+4.9%), Net Income ¥285.0B (-3.1%). Operating margin is expected to improve to 7.4% (from 6.8% current +0.6pt). While Revenue is projected to rise modestly, management plans for double-digit operating profit growth driven by normalization of project profitability in Machinery & Engineering and restraint on SG&A growth. Net Income decline reflects the absence of this year’s extraordinary gain (¥24.0B gain on sale of investment securities). As of period-end, progress toward full-year forecast is: Revenue 98.9%, Operating Income 92.0%, Ordinary Income 95.4%, Net Income 103.2%, broadly on track. Assumptions include project margin recovery in Machinery & Engineering and continued price revision effects in Logistics. The company plans a stock split (1 share → 5 shares effective October 1, 2026) and plans total dividend of ¥129 per share (post-split: year-end ¥27; pre-split equivalent ¥135), maintaining payout ratio at 40.6%.
Dividends were ¥118 at Q2-end and ¥128 at year-end, annual total ¥246 (prior year ¥102 +141.2%). Payout ratio maintained at 40.6% (prior 40.6%), providing stable returns relative to EPS ¥614.05. Total dividends amounted to ¥12.89B, representing 43.8% of Net Income ¥294.0B; coverage relative to FCF ¥328.1B is 2.52x, indicating high sustainability. The company executed share buybacks totaling ¥200.2B, acquiring 2.774M shares, raising treasury stock ratio to 5.2% post-acquisition. Total shareholder returns (dividends + buybacks) were ¥329.1B, exceeding Net Income ¥294.0B, yielding a Total Return Ratio of 111.9%, indicating an aggressive stance. FCF nearly covers total returns (FCF ¥328.1B vs Total Return ¥329.1B), but sustaining similar-scale buybacks will pose allocation trade-offs with growth investment. For FY2027 the company plans dividend ¥129 (post-split), with payout ratio vs forecast EPS ¥131.66 at 98.0% (high); no buybacks disclosed. The stock split aims to lower trading unit and improve liquidity.
Profitability volatility in Machinery & Engineering projects: Operating margin declined from 10.5% to 9.9% (-0.6pt). Rising material and subcontracting costs in large projects pressured profits. Contract liabilities ¥27.9B (down from ¥31.7B) indicate lower advance-receipt levels; securing project margins and cost control remain challenges. While backlog data is limited, accumulation of contract assets ¥502.7B (up from ¥336.9B +49.2%) is a leading indicator of future revenue but carries risks of acceptance delays or additional cost occurrences.
Working capital funding risk: DSO at 121 days improved from 132 days but remains long; combined receivables and contract assets ¥2,597.0B account for 41.1% of Revenue, a high level. Increase in contract assets (+¥165.8B) signals project-related funding needs; delays in collection timing could impact liquidity. While OCF ¥519.9B is solid, structural improvement in working capital management is necessary.
Short-term debt refinancing risk: Short-term debt ratio 50.2% with short-term borrowings ¥235.9B, CP ¥300.0B, and bonds maturing within one year ¥100.0B indicates rising reliance on short-term funding. Long-term borrowings decreased to ¥234.2B (-37.4%), altering refinancing composition. Cash & deposits ¥461.4B are 0.73x of short-term interest-bearing debt ¥636.0B, providing a buffer, but rising interest rates could increase refinancing costs and strain liquidity during stress. Interest coverage of 31.5x shows ample interest-paying capacity, but maturity mismatch management is critical.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.8% | 6.3% (3.7%–8.5%) | +0.5pt |
| Net Margin | 4.7% | 2.7% (1.6%–4.7%) | +1.9pt |
Profitability exceeds industry median, aided by high-value Machinery & Engineering projects, but the contraction in operating margin warrants attention.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.1% | 5.0% (-0.4%–9.4%) | -0.9pt |
Revenue growth is slightly below industry median, weighed down by flat Logistics performance, though Machinery & Engineering growth is favorable.
※ Source: Company compilation
Margin improvement in operating income is the next-term focus. Management targets 7.4% operating margin via normalization of project profitability in Machinery & Engineering and containment of SG&A, but sustained high material and subcontracting costs could hinder achievement. Project-level margin control and progress on price revisions are key.
Cash generation is strong and supports dividend sustainability, but Total Return Ratio at 111.9% and shareholder returns exceeding Net Income require scrutiny on continuation. Next fiscal year shows no explicit buybacks; allocation between FCF and growth investment will be watched. Stock split effect on liquidity improvement is also a positive element of shareholder returns.
Structural improvement potential in working capital efficiency. DSO 121 days improved but remains below top industry levels; collection management of contract assets and streamlining billing/acceptance processes are critical to improve capital efficiency. Short-term debt ratio 50.2% and changing funding mix introduce refinancing cost risk in a rising rate environment, making a shift toward long-term stable funding a medium-term priority.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your responsibility; consult a professional advisor as appropriate.