| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3938.7B | ¥3758.5B | +4.8% |
| Operating Income / Operating Profit | ¥165.6B | ¥144.8B | +14.4% |
| Ordinary Income | ¥189.7B | ¥156.8B | +21.0% |
| Net Income | ¥62.4B | ¥70.3B | -11.2% |
| ROE | 4.5% | 5.4% | - |
For the fiscal year ended March 2026, Revenue was ¥3,938.7B (YoY +¥180.2B +4.8%), Operating Income was ¥165.6B (YoY +¥20.8B +14.4%), Ordinary Income was ¥189.7B (YoY +¥32.9B +21.0%), and Net Income attributable to owners of the parent was ¥130.8B (YoY +¥17.5B +15.5%), achieving revenue and profit increases across all stages. Operating margin improved to 4.2% (up +0.3pt from 3.9% prior year), and ordinary income margin improved to 4.8% (up +0.6pt from 4.2% prior year), reflecting improved profitability and realization of operating leverage exceeding sales growth. The core StandAloneService segment drove a substantial operating profit increase of +22.1%, and domestic affiliates performed strongly at +16.4%, while overseas affiliates, despite revenue growth, recorded nearly flat operating profit at -0.3%, indicating headwinds from FX and cost environment. Non-operating income expanded to ¥27.5B (¥19.9B prior year), with foreign exchange gains of ¥11.6B (¥1.8B prior year) making a significant contribution. Extraordinary items were limited to a net -¥3.6B, and improvement in recurring earning power was the primary driver of the final profit increase.
[Revenue] Revenue expanded steadily to ¥3,938.7B (YoY +4.8%). By segment, StandAloneService generated ¥2,554.8B (+4.7%), maintaining stable growth as the core business and accounting for 64.9% of consolidated revenue. Domestic affiliates recorded ¥470.9B (+8.8%), representing 12.0% of consolidated revenue and showing strong growth. Overseas affiliates totaled ¥1,054.4B (+3.1%), showing a slowdown and accounting for 26.8% of consolidated revenue. Gross profit expanded to ¥766.4B (+6.1%), and gross margin improved to 19.5% (up +0.3pt from 19.2% prior year). Cost control was effective, enabling gross profit expansion outpacing revenue growth.
[Profitability] SG&A was ¥600.8B (+4.0%), an increase below revenue growth (+4.8%), resulting in an SG&A ratio of 15.3% (improved -0.1pt from 15.4% prior year). As a result, Operating Income rose to ¥165.6B (+14.4%), achieving double-digit growth, and Operating Margin improved to 4.2% (up +0.3pt from 3.9% prior year). In non-operating items, foreign exchange gains of ¥11.6B (¥1.8B prior year) and equity-method investment income of ¥5.5B (¥9.9B prior year) contributed, with total non-operating income of ¥27.5B (¥19.9B prior year) while non-operating expenses were restrained at ¥3.4B (¥7.9B prior year), resulting in Ordinary Income of ¥189.7B (+21.0%). Extraordinary items consisted mainly of securities valuation losses of ¥4.0B and impairment losses of ¥1.6B, leaving a net extraordinary loss of -¥3.6B, and Pre-tax Income was ¥186.1B (¥156.2B prior year). After corporate taxes of ¥46.2B (effective tax rate 24.8%) and non-controlling interests of ¥9.1B, Net Income attributable to owners of the parent settled at ¥130.8B (+15.5%). In conclusion, revenue growth, realization of operating leverage, and expanded FX gains drove the revenue and profit increases.
StandAloneService posted Revenue of ¥2,554.8B (YoY +4.7%), Operating Income of ¥86.9B (YoY +22.1%), and Operating Margin of 3.4% (improved +0.5pt from 2.9% prior year), reflecting substantial profitability improvement. As the core segment contributing 52.5% of consolidated operating income, SG&A efficiency and expansion of higher-value projects contributed. Domestic affiliates recorded Revenue ¥470.9B (+8.8%), Operating Income ¥33.4B (+16.4%), and Operating Margin 7.1% (improved +0.1pt from 7.0% prior year), achieving both high growth and high profitability. They contributed 20.2% of consolidated operating income, with domestic group expansion proceeding smoothly. Overseas affiliates reported Revenue ¥1,054.4B (+3.1%), Operating Income ¥46.3B (-0.3%), and Operating Margin 4.4% (down -0.2pt from 4.6% prior year); despite revenue growth, operating profit remained nearly flat. Profitability deterioration due to FX environment and cost increases is evident, and recovery is a challenge for this segment, which accounts for 28.0% of consolidated operating income. Intersegment eliminations/adjustments were -¥1.0B (previous -¥1.5B), narrowing and resulting in consolidated Operating Income of ¥165.6B.
[Profitability] Operating Margin improved to 4.2% (prior year 3.9%) and Net Margin to 3.3% (prior year 3.0%), but remained low versus the industry median. ROE was 4.5% (calculated as Net Income attributable to owners of the parent ¥130.8B ÷ average shareholders’ equity), maintaining prior-year levels. Gross profit margin of 19.5% improved +0.3pt from 19.2%, confirming improved earning power at the gross profit stage. [Cash Quality] Operating Cash Flow (OCF) was ¥207.6B, 3.3x Net Income ¥62.4B and 1.6x Net Income attributable to owners of the parent ¥130.8B, indicating strong cash generation. Accrual ratio was -3.4% (= (Net Income ¥62.4B - OCF ¥207.6B) ÷ Total Assets ¥2,238.7B), in negative territory, showing good cash backing of earnings. Free Cash Flow was ¥117.3B (= OCF ¥207.6B - Investing CF ¥90.3B), about 3.0x total dividends ¥39.7B, supporting dividend sustainability. [Investment Efficiency] Total Asset Turnover was 1.76x (Revenue ¥3,938.7B ÷ average total assets), down from 1.81x prior year, as asset growth slightly outpaced revenue growth. Capital expenditures of ¥32.9B were 0.84x depreciation expense ¥39.2B, indicating restrained investment; including intangible asset acquisitions of ¥11.6B, investment levels remain conservative. [Financial Soundness] Equity Ratio was 62.2% (prior year 62.1%), Current Ratio was 211.2% (prior year 249.4%), maintaining high levels. Interest-bearing debt was ¥21.6B versus cash & deposits of ¥804.7B, effectively net-debt-free. Debt/EBITDA ratio was 0.11x (interest-bearing debt ¥21.6B ÷ EBITDA approx. ¥205B), and net cash was ¥783.1B, indicating very high financial resilience.
OCF expanded to ¥207.6B (¥173.1B prior year, +19.9%), and after adding non-cash expenses including depreciation ¥39.2B and goodwill amortization ¥2.3B to Pre-tax Income before adjustments ¥186.1B, changes in working capital impacted cash flow: increase in trade receivables -¥53.1B, increase in trade payables +¥29.6B, and decrease in inventories +¥6.8B. After corporate tax payments of -¥31.9B, OCF of ¥207.6B was generated. Investing CF was -¥90.3B, centered on capital expenditures -¥32.9B and intangible asset acquisitions -¥11.6B, with limited large M&A investments. Other investing outflows totaled -¥13.1B and included changes in time deposits, resulting in total investing outflows of -¥90.3B. Free Cash Flow was ¥117.3B (OCF ¥207.6B - Investing CF ¥90.3B), up +9.2% from ¥107.4B prior year. Financing CF was -¥69.5B, mainly dividend payments -¥39.7B (dividends to owners of the parent -¥39.7B, dividends to non-controlling interests -¥4.0B) and repayments of long-term borrowings -¥21.4B. Cash and cash equivalents increased from ¥731.3B at the beginning of the period, plus FX impact +¥9.4B, to ¥789.0B at year-end (YoY +7.9%). OCF/Net Income ratio was 3.3x, indicating excellent cash conversion of earnings. In working capital, the increase in trade receivables is notable, and DSO of approximately 70 days (trade receivables ¥753.9B ÷ daily revenue) raises concern about somewhat extended collection periods, although increases in trade payables partially offset this.
Core recurring earnings are Operating Income ¥165.6B, with non-operating income of ¥27.5B including notably increased foreign exchange gains ¥11.6B (¥1.8B prior year). FX gains are highly dependent on external environment and have a strong transitory element, posing a normalization risk next fiscal year. Equity-method investment income ¥5.5B (¥9.9B prior year) reflects performance variation of affiliates, and interest income received ¥3.5B (¥3.0B prior year) from cash holdings is stable. One-off items included special gains ¥3.7B (including subsidiary share sale gains ¥0.2B) and special losses ¥7.3B (securities valuation loss ¥4.0B, impairment loss ¥1.6B, fixed asset retirement loss ¥1.3B), resulting in a net extraordinary loss of -¥3.6B. Non-operating income ¥27.5B is 0.7% of revenue, indicating limited dependence on non-core income. The gap between Ordinary Income ¥189.7B and Net Income ¥130.8B is explainable by tax burden (effective tax rate 24.8%) and non-controlling interests ¥9.1B, with no abnormal divergence observed. OCF ¥207.6B is 3.3x Net Income ¥62.4B and 1.6x Net Income attributable to owners of the parent ¥130.8B, indicating very strong cash backing of profits. Accrual ratio -3.4% indicates cash-driven profit generation, and even accounting for working capital movements such as increased trade receivables and decreased inventories, the quality of earnings is high.
Against the full-year forecast (Revenue ¥4,100.0B, Operating Income ¥168.0B, Ordinary Income ¥178.0B, Net Income attributable to owners of the parent ¥135.0B), actuals were Revenue ¥3,938.7B (progress 96.1%), Operating Income ¥165.6B (progress 98.6%), Ordinary Income ¥189.7B (progress 106.6%), and Net Income attributable to owners of the parent ¥130.8B (progress 96.9%). Revenue missed the forecast by -3.9%, likely affected by slowed growth at overseas affiliates and timing shifts in certain projects. Operating Income was slightly below forecast by -1.4%, but Ordinary Income exceeded forecast by +6.6%, driven by FX gains ¥11.6B and expanded non-operating income, capturing improved financial results. Net Income attributable to owners of the parent missed forecast by -3.1%, but extraordinary items had limited impact and the substantive deviation was small. Shortfalls at the operating level suggest external and cost environment headwinds, but Ordinary Income upside offset these and overall results can be viewed as broadly in line with guidance.
A year-end dividend of ¥140 per share is planned, with total dividends of approximately ¥39.7B. The payout ratio relative to Net Income attributable to owners of the parent ¥130.8B is approximately 30.4%, consistent with the reported payout ratio of 35.1% (differences arise from number of shares outstanding vs. average shares during the period). Free Cash Flow ¥117.3B covers total dividends ¥39.7B by about 3.0x, leaving ample cash after dividend payments. Based on the effective number of shares after treasury stock deduction of approx. 37.47 million shares (average shares during the period), ¥140 per share would correspond to total dividends of approx. ¥52.5B, but the actual total dividend ¥39.7B difference is due to calculation on year-end shares outstanding. Dividend policy sustainability is high, supported by net cash ¥783.1B, stable OCF ¥207.6B, and FCF coverage approx. 3.0x. There were no share buybacks during the period; shareholder returns are concentrated on dividends.
Low-margin structure risk: Operating Margin 4.2% and Gross Margin 19.5% are significantly below industry medians (Operating Margin 8.1%, Net Margin 5.8%), increasing the risk of margin pressure from intensified price competition or rising labor costs. StandAloneService’s Operating Margin of 3.4% is low versus industry benchmarks, and without a shift to higher-value projects, margin improvement will be difficult. Revenue growth of 4.8% also trails the industry median of 10.1%, posing challenges for relative competitiveness.
Working capital efficiency deterioration risk: Trade receivables increased to ¥753.9B (¥695.1B prior year, +8.5%), outpacing revenue growth of +4.8%, and DSO approx. 70 days indicates lengthening collection periods. Revenue expansion tends to inflate working capital needs, which could pressure cash generation efficiency as growth continues. Inventories are modest at ¥27.8B, but the rise in trade receivables drove a -¥53.1B cash outflow in OCF, making strengthened receivables management necessary.
Overseas business profitability stagnation risk: Overseas affiliates’ Operating Income was ¥46.3B (¥46.4B prior year, -0.3%) and Operating Margin declined to 4.4% (down -0.2pt from 4.6% prior year). Although FX gains supported Ordinary Income, operating-level profitability is being squeezed by FX costs and inflation. Given overseas revenue constitutes 26.8% of consolidated sales, delayed recovery in overseas profitability could materially affect consolidated results.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.2% | 8.1% (3.6%–16.0%) | -3.9pt |
| Net Margin | 1.6% | 5.8% (1.2%–11.6%) | -4.3pt |
Both operating and net margins are well below industry medians, placing profitability in the lower tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.8% | 10.1% (1.7%–20.2%) | -5.3pt |
Revenue growth rate is also below the industry median, indicating growth pace below industry average.
※Source: Company compilation of public financial statements
Realization of operating leverage and margin improvement: StandAloneService’s Operating Margin improved to 3.4% (up +0.5pt from 2.9% prior year), and consolidated Operating Margin improved to 4.2% (up +0.3pt from 3.9% prior year), reflecting simultaneous progress in SG&A efficiency and gross margin improvement. With revenue growth +4.8% and Operating Income +14.4%, operating leverage is pronounced; if expansion of higher-value projects and cost control continue, trend improvement in margins is expected. However, relative to industry medians the company remains low, and structural improvement in earning power is a mid-to-long-term evaluation point.
Strong cash generation and financial soundness: OCF ¥207.6B and FCF ¥117.3B demonstrate abundant cash generation, with net cash ¥783.1B and Equity Ratio 62.2% indicating an extremely healthy financial base. Payout ratio around 30–35% is sustainable, and with FCF coverage approx. 3.0x, continuity of stable dividends is highly likely. Investment level is somewhat restrained with CapEx/Depreciation 0.84x, but net-debt-free status and ample liquidity provide room to expand growth investments or shareholder returns.
Challenges in overseas business and working capital management: Overseas affiliates’ Operating Margin deteriorated by -0.2pt YoY and operating profit was flat. FX gains aided ordinary results but operating-level recovery lags, and structural improvements in overseas operations will be critical for future assessments. Additionally, trade receivables growth outpaced revenue growth, with DSO approx. 70 days indicating lengthening collection periods. Improving working capital efficiency during growth phases is an important theme to sustain cash generation.
This report was 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 statements. Investment decisions are your responsibility; consult a professional advisor as necessary before making investment choices.
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