| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥7347.9B | ¥6865.5B | +7.0% |
| Operating Income / Operating Profit | ¥1166.6B | ¥1050.4B | +11.1% |
| Profit Before Tax (Tax-Pre Profit) | ¥1990.8B | ¥1507.2B | +32.1% |
| Net Income / Net Profit | ¥1562.3B | ¥1212.9B | +28.8% |
| ROE | 12.8% | 12.9% | - |
For the fiscal year ended March 2026, Revenue was ¥7,347.9B (YoY +¥482.4B, +7.0%), Operating Income was ¥1,166.6B (YoY +¥116.3B, +11.1%), Ordinary Income was ¥155.9B (YoY -¥244.8B, -61.1%), and Net Income attributable to owners of the parent was ¥1,510.1B (YoY +¥334.9B, +28.5%). While the company achieved both revenue and profit growth, the decrease in Ordinary Income resulted from the net amount of Financial Income of ¥776.2B (prior year ¥416.0B) and Financial Expenses of ¥224.0B (prior year ¥158.6B) being recognized at the operating stage due to an allocation change to Cost of Sales and SG&A. Profit Before Tax was ¥1,990.8B (+32.1%), and Comprehensive Income expanded significantly to ¥3,119.0B (+87.6%), with Accumulated Other Comprehensive Income (AOCI) increasing to ¥271.5B (prior year ¥66.7B). Fair value gains on financial assets of ¥1,318.0B accelerated capital accumulation.
[Revenue] Revenue was ¥7,347.9B (+7.0%), maintaining a revenue-growth trend. By segment, Electricity & Gas led at ¥3,195.7B (+10.8%) and drove the top line; this includes government subsidies of ¥127.8B (prior year ¥127.9B), indicating substantive growth contribution beyond subsidy levels. Financials showed high growth at ¥455.3B (+37.4%), primarily due to expanded interest income centered on microfinance. Telecommunications was ¥1,275.4B (+4.0%) with stable growth, Insurance was ¥314.8B (+16.9%) with IFRS 17 insurance revenue of ¥252.4B (prior year ¥209.2B) contributing to sales. Beverages were ¥853.1B (+7.6%), supported by steady demand for home-delivery services. Conversely, Agency Sales declined to ¥984.9B (-8.8%) affected by changes in telecom carrier product sales structure. Solutions were ¥268.7B (-4.1%) with a modest decline. Overall, double-digit growth in Electricity & Gas and Financials drove the top line, demonstrating benefits from portfolio diversification.
[Profitability] Gross profit was ¥3,639.6B (gross margin 49.5%), up from ¥3,433.0B (50.0%) a year earlier. SG&A was ¥2,508.8B (SG&A ratio 34.1%) versus prior year ¥2,385.7B (34.7%), increasing in absolute terms but with an approximate 0.6pp improvement in expense ratio, producing operating leverage. Operating margin improved to 15.9% (prior year 15.3%), an increase of ~0.6pp. By segment Operating Income, Financials stood out at ¥220.9B (margin 48.5%), Telecommunications at ¥293.8B (margin 23.0%), and Electricity & Gas at ¥358.5B (margin 11.2%) forming the core. Insurance was ¥93.7B (margin 29.8%) and Beverages ¥97.0B (margin 11.4%), both increasing YoY; Solutions improved to ¥37.9B (margin 14.1%). Agency Sales, despite revenue decline, achieved Operating Income of ¥128.0B (+3.4%, margin 13.0%) through efficiency gains. Financial Income of ¥776.2B and Equity-method investment income of ¥268.5B contributed outside operating income, expanding Profit Before Tax to ¥1,990.8B (+32.1%). Income taxes were ¥428.5B (effective tax rate 21.5%) versus prior year ¥294.3B (19.5%), increasing but maintaining a reasonable tax rate. Net Income was ¥1,562.3B (+28.8%), of which Net Income attributable to owners of the parent was ¥1,510.1B (+28.5%); net margin improved to 21.3% (prior year 17.1%), a roughly 4.2pp improvement. Other Comprehensive Income after tax was ¥1,556.7B, including fair value gains on financial assets of ¥1,318.0B, foreign currency translation differences of ¥206.4B, and OCI attributable to equity-method investees of ¥44.9B, bringing total Comprehensive Income to ¥3,119.0B. In summary, the company achieved revenue and profit growth and large increases in Net Income and Comprehensive Income driven by an expansion in non-operating income.
Electricity & Gas: Operating Income ¥358.5B (+1.1%), margin 11.2%. Profit growth lagged revenue growth, suggesting possible impact from higher raw material costs amid stable subsidies. Telecommunications: Operating Income ¥293.8B (+14.4%), margin improved to 23.0% due to efficiency in recurring revenue models and net subscriber additions. Beverages: Operating Income ¥97.0B (+19.1%), margin 11.4%, driven by improved operations of the delivery model and cost control. Insurance: Operating Income ¥93.7B (+14.0%), margin 29.8%; under IFRS 17, insurance revenue of ¥252.4B less insurance service expenses of ¥193.6B and reinsurance losses of ¥1.2B produced net insurance profit that supports operating income and maintained high margin. Financials: Operating Income ¥220.9B (+23.6%), margin 48.5%, at very high levels due to stable growth in interest income under the effective interest method and scale benefits from microfinance. Solutions: Operating Income ¥37.9B (+47.6%), margin 14.1%, with efficiency gains from customer management and payment platforms. Agency Sales: Operating Income ¥128.0B (+3.4%), margin 13.0%; cost efficiencies in SG&A secured profit despite revenue decline. Corporate costs were -¥63.1B (prior year -¥52.7B), reflecting increased holding-company level administrative costs.
[Profitability] ROE was 14.4% (calculated as Net Income attributable to owners of the parent ¥1,510.1B ÷ average equity during the period ¥10,502.2B), up 0.6pp from 13.8% prior year. Operating margin was 15.9% (prior year 15.3%), and Net margin was 21.3% (prior year 17.1%), both improved. Return on Assets (ROA) on an Ordinary Income basis was approximately 7.6% (Ordinary Income ¥155.9B ÷ average total assets during the period ¥2,612.4B estimate), up from 6.8% prior year. [Cash Quality] Operating Cash Flow / Net Income was 0.37x (¥570.7B ÷ ¥1,562.3B), low, as working capital expansion (Accounts Receivable increase ¥791.7B, Operating Payables decrease ¥209.5B) significantly pressured cash generation. Operating Cash Flow / EBITDA was about 0.43x (EBITDA = Operating Income ¥1,166.6B + Depreciation ¥164.8B = ¥1,331.4B), weak and raising concern over cash conversion efficiency. [Investment Efficiency] Total asset turnover was 0.26x (Revenue ¥7,347.9B ÷ year-end total assets ¥28,538.7B), down from 0.29x prior year, slowed by accumulation of investment securities and equity-method investments. Debt / EBITDA ratio was approximately 8.2x (interest-bearing debt ¥10,884.7B ÷ EBITDA ¥1,331.4B), improved from 9.3x prior year. Interest coverage (EBIT / interest expense) was about 9.8x (EBIT is very small at Ordinary Income ¥155.9B; using operating profit + financial income - financial expense before tax = 1,166.6 + 776.2 - 224.0 = ¥1,718.8B yields 1,718.8 / 159.4 ≒ 10.8x), indicating healthy credit metrics. [Financial Soundness] Equity Ratio was 41.5% (prior year 38.6%), improved. Current ratio was 211.3% (current assets ¥10,196.4B / current liabilities ¥4,826.0B), indicating no short-term liquidity issues. Cash and deposits ¥5,398.5B cover short-term interest-bearing debt ¥1,613.1B by 3.3x, limiting liquidity risk.
Operating Cash Flow was ¥570.7B (YoY -32.7%), with a generation rate vs. Profit Before Tax of 28.7%, low. Subtotal fell sharply to ¥394.0B (prior year ¥1,075.3B), mainly due to working capital deterioration from increases in Accounts Receivable of ¥669.8B (prior year increase ¥551.1B) and decreases in Operating Payables of ¥178.1B (prior year increase ¥498.6B). Interest and dividend receipts of ¥179.3B and dividend receipts of ¥372.8B were added, while interest paid ¥159.4B and income taxes paid ¥215.9B were deducted. Investing Cash Flow was -¥1,041.0B, with acquisition of investment securities ¥4,242.3B offset by sales/redemptions ¥3,422.0B for net acquisitions ¥820.3B, capital expenditures ¥194.0B, loss of control of subsidiaries payments ¥7.0B, etc. Financing Cash Flow was a positive ¥1,046.8B, with proceeds from long-term interest-bearing debt ¥2,716.3B and repayments ¥1,201.4B for net increase ¥1,514.9B, net decrease in short-term interest-bearing debt ¥18.7B, dividend payments ¥321.4B, and share buybacks ¥61.4B. As a result, FCF was -¥470.3B (Operating CF ¥570.7B - CapEx ¥194.0B - main investing CF items), and Cash and Cash Equivalents increased by ¥695.8B to ¥5,398.5B due to net borrowing in Financing CF. Foreign exchange translation effects contributed ¥119.2B positively. The deterioration in cash generation from working capital growth is pronounced, and the active acquisition of investment securities funded via increased financing CF is evident.
Of Net Income attributable to owners of the parent ¥1,510.1B, Operating Income ¥1,166.6B represents results from recurring business activities, while Financial Income ¥776.2B (including dividends, interest, and valuation gains on investment securities) and Equity-method investment income ¥268.5B materially contributed as non-operating income. Financial Income increased substantially by ¥360.2B from prior year ¥416.0B, and Financial Expenses rose to ¥224.0B (prior year ¥158.6B). The net positive amount was ¥552.2B (prior year ¥257.4B), reflecting market improvement and portfolio expansion. Equity-method investment income rose by ¥87.1B from prior year ¥181.4B, aided by an increase in equity-method investment balances (prior year ¥2,054.9B → this period ¥3,197.2B) and improved performance of investees. These non-operating revenues are sensitive to market and FX conditions, so sustainability is limited. Meanwhile, the expansion in Comprehensive Income was mainly due to OCI of ¥1,556.7B, chiefly fair value gains on financial assets of ¥1,318.0B, reflecting equity and bond market rises and yen depreciation. OCI contains the risk of future earnings volatility and, considering potential reclassification, the quality of earnings is assessed as "moderately including temporary elements." The low Operating CF / Net Income of 0.37x and the large divergence between profit recognition and cash generation are additional concerns regarding earnings quality.
Full year guidance projects Revenue ¥7,750.0B, Operating Income ¥1,300.0B (+11.4%), Net Income attributable to owners of the parent ¥1,200.0B (-20.5%), and EPS ¥2,738.32. The expectation of higher Operating Income with a decline in Net Income is assumed to reflect normalization of Financial Income and Equity-method investment income from the current period's elevated levels. Against current Operating Income of ¥1,166.6B, the full-year guidance of ¥1,300.0B implies a progress rate of 89.8%, requiring an additional ¥133.4B in the remaining four months. Dividend guidance is an annual ¥195 (DPS ¥195), consistent with the period dividends of ¥751 (quarterly totals 181 + 185 + 190 + 195 yen), and the payout ratio based on forecast EPS is about 7.1%, very low, which may indicate a policy of quarterly dividend adjustments based on results. Overall guidance is conservative, embedding continued operating trends and cautious estimates for Financial Income and Equity-method income.
This period's dividends were paid quarterly at ¥181, ¥185, ¥190, and ¥195, totaling ¥751 (period actual), with total dividends amounting to ¥329.5B (DPS ¥751 × shares outstanding 43,822 thousand). Dividend payments on the cash flow statement were ¥321.4B, and the payout ratio versus Net Income attributable to owners of the parent ¥1,510.1B is approximately 21.3%. Share buybacks amounted to ¥61.4B, making total returns ¥382.8B and a Total Return Ratio of about 25.3%. FCF was -¥470.3B and did not cover the sum of dividends and buybacks, so the period funded returns via net borrowing in Financing CF. However, Cash and Deposits ¥5,398.5B are ample and Retained Earnings ¥11,087.6B are substantial, so dividend sustainability is not in question. Next fiscal year dividend guidance of ¥195 (annual) slightly exceeds the period quarterly average of ¥187.75, suggesting a stable dividend policy. The payout ratio in the low 20% range indicates significant room for dividend increases, contingent on improvements in FCF and normalization of working capital.
Working capital expansion and weak cash conversion efficiency: Accounts Receivable increased ¥791.7B and Operating Payables decreased ¥209.5B, substantially worsening working capital and driving Operating CF / Net Income to 0.37x, extremely low. DSO (Days Sales Outstanding) is about 204 days (Accounts Receivable ¥4,115.0B ÷ daily revenue ¥20.1B), prolonged, raising concerns about changes in collection terms or loosened credit control. If this persists, investment capacity and sustainability of shareholder returns could be constrained. The quantitative impact is visible in FCF of -¥470.3B, which did not cover dividends and buybacks totaling ¥382.8B and was supplemented by Financing CF.
Dependence on Financial Income and Equity-method investment income and their volatility: Financial Income ¥776.2B (YoY +¥360.2B) and Equity-method investment income ¥268.5B (YoY +¥87.1B) drove Net Income growth but include non-recurring elements sensitive to markets, FX, and investee performance. Investment securities balance is ¥13,661.7B and equity-method investments ¥3,197.2B, totaling ¥16,858.9B, about 1.4x net assets ¥12,176.5B. Market reversals could trigger valuation losses and equity-method losses, materially reducing Net Income; next fiscal year's projected Net Income decline (-20.5%) incorporates such normalization.
Subsidy dependence and raw material cost risk in the Electricity & Gas segment: Electricity & Gas is largest at Revenue ¥3,195.7B (composition 43.5%) but includes government subsidies of ¥127.8B. Although subsidy levels have remained similar to prior year, policy changes could reduce or terminate subsidies, and rising raw material prices directly increase costs, explaining the muted Operating Income growth of ¥358.5B (+1.1%). Regulatory environment and resource price volatility in power and gas markets materially affect segment profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 14.4% | 10.1% (2.2%–17.8%) | +4.3pt |
| Operating Margin | 15.9% | 8.1% (3.6%–16.0%) | +7.8pt |
| Net Margin | 21.3% | 5.8% (1.2%–11.6%) | +15.4pt |
ROE, Operating Margin, and Net Margin all significantly exceed industry medians, reflecting a portfolio weighted toward high-margin segments (Financials, Insurance, Telecommunications).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.0% | 10.1% (1.7%–20.2%) | -3.1pt |
Revenue growth is slightly below the industry median, showing a more moderate pace relative to high-growth IT & Telecom peers.
※ Source: Company compilation
Expansion of high-margin segments and improvement at operating level: High-margin businesses — Financials (Operating margin 48.5%), Insurance (29.8%), and Telecommunications (23.0%) — accounted for 61.6% of Operating Income, improving Operating Margin to 15.9% (prior year 15.3%). Solutions also improved markedly to a 14.1% margin (prior year 9.2%), indicating a trend of rising profitability. Electricity & Gas, while largest, has relatively low profitability at 11.2%, indicating structural room for margin improvement.
Normalization of working capital management is the short-term key: Operating CF / Net Income 0.37x and DSO 204 days show working capital deterioration severely constraining cash generation. FCF was -¥470.3B, and dividends and buybacks were funded by net borrowing in Financing CF. While Cash and Deposits ¥5,398.5B are ample, reopening investment capacity and expanding shareholder returns requires normalization of receivables and improved Operating CF quality. Effectiveness of measures such as revised collection terms or factoring will be closely watched.
Normalization of financial & investment income and outlook for next fiscal year: Next fiscal year guidance anticipates Operating Income up but Net Income down (-20.5%), assuming normalization of Financial Income and Equity-method income. Current period Financial Income ¥776.2B (YoY +¥360.2B) and Equity-method income ¥268.5B (YoY +¥87.1B) boosted Net Income but have limited persistence. The buildup of investment securities and equity-method investments (total ¥16,858.9B, 1.4x net assets) carries risk of future valuation losses on market reversals. While the payout ratio at 21.3% indicates capacity, sustainable dividend growth depends on expanding recurring contributions from Telecommunications, Insurance, and Solutions.
This report is an earnings analysis document automatically generated by AI from 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 publicly available financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary before making investment decisions.