| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4248.5B | ¥4067.0B | +4.5% |
| Operating Income / Operating Profit | ¥247.5B | ¥194.7B | +27.1% |
| Ordinary Income | ¥373.7B | ¥316.0B | +18.3% |
| Net Income / Net Profit | ¥410.9B | ¥196.4B | +109.2% |
| ROE | 3.6% | 2.1% | - |
For the fiscal year ended March 2026, Revenue was 4,248.5B (YoY +181.5B, +4.5%), Operating Income was 247.5B (YoY +52.8B, +27.1%), Ordinary Income was 373.7B (YoY +57.7B, +18.3%), and Net Income attributable to owners of the parent was 410.9B (YoY +214.5B, +109.2%). Improved profitability in the Media & Content business and gain on sale of investment securities (Special Income 488.8B) materially boosted the bottom line. Operating margin improved to 5.8% (from 4.8%, +1.0pt) and net margin improved to 9.7% (from 4.8%, +4.8pt), indicating improved profitability, but the large increase in net income is driven by temporary factors. Operating Cash Flow (OCF) was weak at 101.2B (YoY -56.5%), highlighting cash conversion challenges. On the balance sheet, Equity Ratio was 69.7%; long-term borrowings increased materially by 591.3B YoY, while cash and deposits were also healthy at 1,242.3B (+496.3B), securing strong liquidity.
[Revenue] Revenue was 4,248.5B (+4.5%), a solid increase. By segment, Media & Content was 3,128.7B (+5.4%, representing 73.6% of total), driving the top-line with program schedule changes and progress in content monetization. Lifestyle was 957.4B (+2.3%, 22.5% of total) with modest growth, and Real Estate & Others was 208.1B (+0.8%, 4.9% of total) with slight growth. Cost of sales was 2,835.5B, yielding a gross margin of 33.3% (improved +1.6pt from 31.7%), indicating improved profitability.
[Profitability] Operating Income was 247.5B (+27.1%). SG&A was 1,165.5B (SG&A ratio 27.4%), where cost control was effective and the SG&A ratio rose only slightly by +0.5pt from 26.9% the prior year. Operating margin improved to 5.8% (+1.0pt). Non-operating income totaled 151.8B, led by dividend income received of 139.5B (up +8.9B from 130.6B the prior year). Equity-method investment income contributed 2.6B (vs 0.8B prior year). Non-operating expenses were minor at 25.6B (interest expense 3.3B, fees paid 6.2B, etc.). Ordinary Income was 373.7B (+18.3%). Special income included gain on sale of investment securities of 488.8B, while special losses were 47.4B (impairment loss 4.8B, business restructuring costs 2.7B, etc.). Profit before tax was 815.1B (+16.9%); after corporate taxes of 286.7B (effective tax rate 35.2%) and non-controlling interests of 6.1B, Net Income attributable to owners of the parent was 410.9B (+109.2%). In conclusion, revenue and operating profit increased, but the significant rise in net income is due to the one-time gain on sale of investment securities.
Media & Content recorded Operating Income of 146.1B (+72.1%, margin 4.7%), a substantial increase. Operating profit improved from 84.9B the prior year, with margin up +2.8pt, driven by program schedule changes and content monetization. Lifestyle recorded Operating Income of 28.7B (-18.2%, margin 3.0%), a decline from 35.1B the prior year and deteriorating profitability. Real Estate & Others had Operating Income of 72.7B (-2.6%, margin 34.9%), maintaining high profitability with slight decline from 74.7B the prior year; margin of 34.9% continues to function as a stabilizer for company-wide profits. Segment operating income composition: Media & Content 59.0%, Lifestyle 11.6%, Real Estate & Others 29.4%.
[Profitability] Operating margin 5.8% (prior 4.8%), gross margin 33.3% (prior 31.7%), net margin 9.7% (prior 4.8%) — profitability improved. ROE was 3.6%, down from 4.2% prior year, due to a large increase in equity (Comprehensive Income 2,349.5B, of which valuation difference on available-for-sale securities 1,813.0B) increasing the denominator. ROA (on Ordinary Income basis) improved to 2.6% (prior 2.2%). [Cash Quality] OCF/Net Income ratio fell sharply to 0.25x (prior 1.19x). Working capital increases (inventory +86.4B, trade receivables +25.3B) and corporate tax payments of 328.2B pressured OCF. Days Sales Outstanding (DSO) about 72 days, inventory turnover days about 15 days. Free Cash Flow (FCF) 402.3B comprised OCF 101.2B and Investing CF +301.0B (sale of securities), indicating large contribution from asset sales. [Investment Efficiency] Total asset turnover was low at 0.26x/year, reflecting asset structure where investment securities account for 62.4% of total assets (10,162.9B). ROIC calculation is constrained, but goodwill/EBITDA ratio is low at 0.53x, limiting M&A risk. [Financial Soundness] Equity Ratio 69.7% (prior 72.2%), current ratio 242.9%, Debt/EBITDA 1.81x, interest coverage 75.6x — very healthy. Long-term borrowings increased materially to 718.5B (prior 127.3B, +591.3B), but cash and deposits of 1,242.3B and investment securities provide ample coverage.
OCF was 101.2B (prior 232.8B, -56.5%), a significant decrease. OCF subtotal (before working capital changes) was 261.1B, with negative contributions from inventory increase -86.4B, trade receivables increase -25.3B, and accounts payable decrease -23.9B. Corporate tax payments -328.2B were the main cash outflow driver. OCF amounted to 0.25x of Net Income 410.9B, with the non-cash nature of special income and financial income and working capital burden weakening cash conversion. Investing CF was a net inflow of +301.0B, with proceeds from sale of investment securities 538.1B far exceeding capex -130.4B and M&A-related expenditures -40.0B. FCF was 402.3B and appears ample but largely due to one-off asset sales. Financing CF was +90.9B, with long-term borrowing proceeds 607.7B exceeding dividends -123.3B and share buybacks -257.5B. Cash and cash equivalents at period-end were 1,238.97B (up +493.2B). OCF/EBITDA was low at 0.25x; even relative to EBITDA (depreciation 150.5B, EBITDA approx. 398.0B), cash generation capacity is limited.
Earnings quality is heavily influenced by one-time factors. Operating Income 247.5B reflects recurring improvement in core profitability, but dividend income received 139.5B (3.3% of revenue) within non-operating income depends on asset holdings and has limited persistence. Special income 488.8B was gain on sale of investment securities and is clearly one-time. The difference between Ordinary Income 373.7B and Net Income 410.9B (+10.0%) is mainly driven by net special items (+441.4B), indicating profit levels will decline after one-off gains. OCF at 0.25x of Net Income highlights a large accrual (gap between accrual accounting and cash flows). Comprehensive Income 2,349.5B far exceeds Net Income (+5.7x), with most of Other Comprehensive Income 1,821.1B being valuation difference on available-for-sale securities 1,813.0B — valuation gains from market movements. Sustainable earning power depends on continued improvement at the operating level, but weak cash conversion warrants monitoring.
Against full-year guidance (Revenue 4,400.0B, Operating Income 260.0B, Ordinary Income 390.0B, Net Income 485.0B), Revenue achieved 96.6%, Operating Income 95.2%, Ordinary Income 95.8% — slightly short but close; Net Income was 410.9B, 84.7% of forecast (forecast EPS basis 308.86 yen × shares ≈ 485B). However, actual EPS of 331.42 yen exceeds forecast EPS 308.86 yen by +7.3%. Dividend forecast of 50 yen vs actual 84 yen (interim 35 yen + year-end 49 yen) represents a +68.0% upside. Progress toward full-year guidance is around 95% in revenue and operating metrics, reasonable, while the net income deviation is attributable to one-time gains. For next fiscal year, with the absence of gain on sale of investment securities, bottom-line is expected to normalize.
Annual dividend was 84 yen (interim 35 yen + year-end 49 yen), total dividend payout 111.8B. Payout ratio was 24.9% (based on basic EPS 331.42 yen), within a conservative range. DOE (Dividends / Equity) about 1.0%, low. FCF coverage (FCF 402.3B / dividends 111.8B) is 3.6x, adequate, but note FCF includes proceeds from asset sales. Share buybacks amounted to 257.5B, making total shareholder returns 369.3B. Total Return Ratio approximately 89.9% (total return / Net Income) is high, but because Net Income includes one-off gains, evaluation should be based on sustainable OCF. Ample capacity for returns is supported by cash and deposits 1,242.3B and investment securities 10,162.9B. Actual dividend 84 yen exceeded forecast 50 yen, indicating a proactive shareholder return stance.
Working Capital Management Risk: Inventory increased +28.1B YoY (+31.4%), DSO about 72 days and receivables collection lengthened. OCF at 0.25x of Net Income indicates inventory buildup and delayed receivables are pressuring cash generation. Normalization of working capital is key to OCF recovery.
One-time Income Dependence Risk: Of Net Income 410.9B, gain on sale of investment securities 488.8B (Special Income) materially boosted the bottom line; non-operating income also depends on dividend income 139.5B and financial asset income. After the removal of one-time gains, profit levels will fall significantly from Ordinary Income 373.7B, and sustainable earning power relies on operating income (247.5B).
Asset Valuation Volatility Risk: Investment securities 10,162.9B (62.4% of total assets), valuation difference on available-for-sale securities 1,813.0B, and deferred tax liabilities 2,721.7B indicate very high balance-sheet sensitivity to equity market fluctuations. In a market downturn, unrealized gains could shrink and equity and ROE could decline.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.8% | 8.1% (3.6%–16.0%) | -2.3pt |
| Net Margin | 9.7% | 5.8% (1.2%–11.6%) | +3.8pt |
Operating margin trails the industry median by -2.3pt, while net margin is +3.8pt above due to one-time gains.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.5% | 10.1% (1.7%–20.2%) | -5.6pt |
Revenue growth lags the industry median by -5.6pt.
※ Source: Company compilation
Core profitability is improving, but the large increase in Net Income is due to a one-time gain on sale of investment securities (Special Income 488.8B), limiting sustainability. The continuation of the improvement trend in Operating Margin 5.8% (+1.0pt) and Gross Margin 33.3% (+1.6pt) is critical. The extent to which Media & Content’s large operating income increase (+72.1%) driven by program schedule changes and content monetization is sustainable, and the recovery of Lifestyle business after a decline (-18.2%), are key points.
OCF is weak at 0.25x of Net Income, and cash conversion is fragile; improving working capital (inventory +86.4B, trade receivables +25.3B) is the catalyst for OCF recovery. Excluding asset sale proceeds, underlying FCF generation is limited, so sustainability of dividends and buybacks depends on normalization of OCF. Financial capacity (Equity Ratio 69.7%, cash and deposits 1,242.3B, investment securities 10,162.9B) is very strong, allowing flexibility in returns, but strengthening operating cash generation is necessary to improve capital efficiency.
Investment securities represent 62.4% of total assets, and valuation difference on available-for-sale securities 1,813.0B significantly boosts equity, but increases balance-sheet sensitivity to market moves. In a market downturn, unrealized gains and equity could contract, so ongoing monitoring of the asset portfolio is necessary. Real Estate & Others (Operating Margin 34.9%) provides stable high profitability, and mid-term evaluation points include the growth trajectory from strengthened distribution and digital initiatives.
This report is an earnings analysis automatically generated by AI analyzing XBRL financial statement disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statement data. Investment decisions are your responsibility; consult a professional advisor as appropriate before making investment decisions.