Key Positives From The Results
FX-adjusted operating income, the company's headline KPI, reached JPY 4,813M (+13.7% YoY), marking the fourth consecutive year of profit growth. The garment business drove earnings through production expansion centered on Bangladesh and improved utilization rates, demonstrating steadily strengthening core profitability.
- Garment Business FX-Adjusted Operating Income:JPY 5,469M (+57.2% YoY). Unit sales of 63.5M pieces (+22.1% YoY), with rising utilization rates from increased order intake directly translating into gross margin improvement
- Gross Profit Margin:Improved to 11.8% (+2.5pt YoY). COGS grew just +2.4% versus revenue growth of +5.2%, demonstrating a structure where top-line growth outpaces cost increases
- Operating Cash Flow:JPY 6,071M (+122.8% YoY), expanding to 2.2x the prior year. Interest-bearing debt declined 7.9% to JPY 14,947M, with D/E ratio improving to 0.48x, strengthening financial soundness
- ASEAN And Other Markets Revenue Mix:Reached 67.5% (+3.9pt YoY). The garment business alone achieved 72.6%, meeting the mid-term plan target and demonstrating progress in geopolitical risk diversification
- High-Growth Production Hubs:Bangladesh revenue JPY 23,167M (+24.8% YoY) and Indonesia revenue JPY 3,755M (+27.3% YoY) continued robust expansion
Key Concerns From The Results
The lamination film business saw FX-adjusted operating income plunge to JPY 586M (▲66.0% YoY), exposing portfolio concentration risk. Additionally, reported operating income of JPY 2,174M fell short of the full-year guidance of JPY 2,500M (achievement rate 87.0%), reaffirming the significant volatility that FX movements impose on operating income.
- Lamination Film Business:Revenue JPY 8,221M (▲30.9% YoY), sales volume 13.64M yards (▲25.2% YoY). A customer hit product lapping effect compounded by weak Chinese consumer spending resulted in a segment loss in Q3 standalone
- Inventories:Rose to JPY 15,613M (+JPY 1,424M, +10.0% YoY), outpacing revenue growth of +5.2%, warranting attention to obsolescence risk
- Extraordinary Losses:JPY 266M booked (impairment losses JPY 204M, loss on sale of investment securities JPY 62M). Details of consolidated subsidiary impaired assets remain undisclosed
- Comprehensive Income:Declined to JPY 3,686M (▲26.2% YoY). Foreign currency translation adjustments increased by only JPY 170M (versus JPY 2,514M in the prior year), slowing the pace of equity accumulation
Focus Areas / Items To Monitor Going Forward
- Mid-Term Plan "BEYOND2028" First-Year Capex:Over JPY 8B (including JPY 3B for the new Indonesia factory)—the payback schedule and ramp-up trajectory for utilization rates. This is the single most critical factor determining the achievability of FY2028 targets of JPY 90B in revenue and JPY 6B in recurring profit
- Lamination Film Business Recovery:Timing and progress of new customer acquisition. Next year's guidance assumes sales volume of 15M yards (+9.9%), but downside risk persists depending on the Chinese market environment and customer inventory adjustments
- Timing of production start at the new Indonesia factory (capex ~JPY 3B), maximum production capacity, and breakeven timeline
- Quantitative revenue and profit targets for the lamination film business over the mid-term plan period
- New customer pipeline for the lamination film business following the opening of sales offices in Shanghai and Ho Chi Minh City
- Quantified productivity gains expected from MES/ERP implementation (e.g., yield improvement rates, lead time reductions)
- Quantitative assessment of the impact of U.S. trade policy (tariffs) on production hubs in Bangladesh, Vietnam, etc.
- Medium- to long-term positioning of the Myanmar operations and evaluation of downsizing/withdrawal risk
- Drivers behind the ▲2.7% decline in casualwear revenue, and details on the new "Others" category created by shifting production items at Chinese factories
- Policy on additional shareholder returns such as share buybacks, in addition to raising the payout ratio target to 35%
- Conversion outlook for the convertible bonds (outstanding balance JPY 750M) and dilution impact
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 74,251M | +5.2% |
| Cost of Goods Sold | JPY 65,495M | +2.4% |
| Gross Profit | JPY 8,756M | +32.9% |
| Gross Profit Margin | 11.8% | +2.5pt |
| SG&A | JPY 6,581M | +6.9% |
| Operating Income | JPY 2,174M | +401.3% |
| FX-Adjusted Operating Income | JPY 4,813M | +13.7% |
| └ FX Gains from Operating Transactions | JPY 2,638M | ▲30.6% |
| └ FX Gains from Financial Transactions | JPY 516M | - |
| Recurring Profit | JPY 5,391M | +28.4% |
| Net Income Attributable to Owners of Parent Company | JPY 3,117M | +19.9% |
| EPS | JPY 298.12 | +14.9% |
| Diluted EPS | JPY 275.91 | +23.3% |
| BPS | JPY 3,804.30 | +5.7% |
| ROE | 8.0% | +0.7pt |
| ROA (Recurring Profit Basis) | 7.3% | +1.2pt |
| OPM | 2.9% | +2.3pt |
Operating income surged +401.3% YoY, but note that the prior-year base of JPY 433M was depressed by FX-driven cost inflation. The company's KPI—FX-adjusted operating income at +13.7%—provides a more accurate read on core earnings power.
Performance By Business Segment
| Segment | Revenue | YoY | Segment Profit (Recurring Profit) | YoY | FX-Adjusted Operating Income | YoY |
|---|---|---|---|---|---|---|
| Garment Business | JPY 66,029M | +12.5% | JPY 5,959M | +67.6% | JPY 5,469M | +57.2% |
| Lamination Film Business | JPY 8,221M | ▲30.9% | JPY 554M | ▲67.9% | JPY 586M | ▲66.0% |
| Adjustments | - | - | ▲JPY 1,122M | - | - | - |
| Total | JPY 74,251M | +5.2% | JPY 5,391M | +28.4% | JPY 4,813M | +13.7% |
- Workwear: Revenue JPY 6,897M (+48.9% YoY). Surging demand for fan-equipped garments driven by extreme summer heat, with the Bangladesh IMBD Phase 2 factory adding production lines to meet demand. IMBD Phase 2 output doubled from 1.42M to 2.89M pieces/year
- Innerwear / Cut & Sewn: Revenue JPY 15,567M (+15.2% YoY). Robust demand even on a restated product category basis, with production capacity expanding primarily in Bangladesh
- Bangladesh (By Region): Revenue JPY 23,167M (+24.8% YoY). Achieved the group's largest production scale expansion. Revenue share rose to 31.2% (+4.9pt YoY)
- Indonesia (By Region): Revenue JPY 3,755M (+27.3% YoY). Productivity improved following a product mix review in the prior year
- Lamination Film Business: Revenue JPY 8,221M (▲30.9% YoY), sales volume 13.64M yards (▲25.2% YoY). In addition to the lapping of a customer hit product, weak Chinese consumer spending dampened replacement demand. Q3 standalone posted a segment loss of ▲JPY 57M
- Casualwear: Revenue JPY 39,459M (▲2.7% YoY). Impacted by the shift of production items at certain Chinese factories (bedding/sleepwear transferred to the new "Others" category)
- Myanmar (By Region): Revenue JPY 2,933M (▲8.7% YoY). Despite the ongoing unstable domestic situation, factories independently pursued new customer acquisition to secure orders, maintaining stable utilization rates
Progress Versus Full-Year Guidance
Full-year results met guidance for revenue, recurring profit, and net income. FX-adjusted operating income of JPY 4,813M (plan JPY 5,000M, 96.3% achievement) fell slightly short due to the larger-than-expected earnings decline in the lamination film business. Operating income of JPY 2,174M (plan JPY 2,500M, 87.0% achievement) missed guidance, but this was driven by yen depreciation inflating overseas factory costs on a JPY-translated basis—performance should be evaluated on the KPI basis of FX-adjusted operating income.
| Item | Actual (Full-Year) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 74,251M | JPY 74,000M | 100.3% |
| Operating Income | JPY 2,174M | JPY 2,500M | 87.0% |
| FX-Adjusted Operating Income | JPY 4,813M | JPY 5,000M | 96.3% |
| Recurring Profit | JPY 5,391M | JPY 4,700M | 114.7% |
| Net Income Attributable to Owners of Parent Company | JPY 3,117M | JPY 3,000M | 103.9% |
- Overseas subsidiaries (excluding Myanmar) have a Jan–Dec fiscal year, so consolidated Q1 corresponds to Jan–Mar for overseas subsidiaries. Revenue and profit tend to be skewed toward Q3/Q4 (Jul–Dec for overseas subsidiaries)
- Workwear (fan-equipped garments, etc.) sees production and shipments concentrated in spring ahead of summer demand
Next Fiscal Year Guidance
FY2027/3 marks the first year of mid-term plan "BEYOND2028." The company projects revenue and profit growth driven by expanded production capacity in the garment business. The FX assumption is USD/JPY 151.3 (period average) and 152 at period-end, which is more conservative (stronger yen) than current levels. Recurring profit is guided lower as FX losses are factored in. FX-adjusted operating income of JPY 5,300M (+10.1%) represents the underlying growth trajectory of core operations.
- Revenue: JPY 80,000M (+7.7%)
- Operating Income: JPY 3,400M (+56.3%)
- FX-Adjusted Operating Income: JPY 5,300M (+10.1%)
- Recurring Profit: JPY 4,900M (▲9.1%)
- Net Income Attributable to Owners of Parent Company: JPY 3,400M (+9.1%)
- EPS: JPY 323.85 (+8.6%)
- Unit Sales (Garment Business): 70M pieces (+10.2%)
- Sales Volume (Lamination Film Business): 15M yards (+9.9%)
Commentary On Shareholder Returns
The FY2026/3 annual dividend is JPY 100 (ordinary dividend JPY 90 + JPY 10 commemorative dividend for the 70th anniversary), for a payout ratio of 33.5%. For FY2027/3, the target payout ratio has been raised from 30% to 35%, with an annual dividend of JPY 115 (+JPY 15) planned. During the mid-term plan period, the company aims to grow dividends in line with earnings growth. Management indicated it will flexibly consider enhanced shareholder returns based on the financial position and share price conditions.
Financial Position
Equity ratio improved to 53.1% (+1.3pt) and D/E ratio declined to 0.48x (▲0.08pt), strengthening financial soundness. Short-term borrowings were reduced by JPY 3.7B and shifted to long-term debt, extending the maturity profile. Cash and cash equivalents remained ample at JPY 19,506M.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Total Assets | JPY 75,174M | +3.8% YoY |
| └ Total Current Assets | JPY 50,118M | +5.0% YoY |
| └ Total Non-Current Assets | JPY 25,056M | +1.3% YoY |
| Cash and Cash Equivalents | JPY 19,506M | +0.6% YoY |
| Cash and Deposits (B/S) | JPY 21,600M | +7.2% YoY |
| Inventories | JPY 15,613M | +10.0% YoY |
| Shareholders' Equity | JPY 39,939M | +6.3% YoY |
| Interest-Bearing Debt | JPY 14,947M | ▲7.9% YoY |
| └ Short-Term Borrowings | JPY 4,700M | ▲44.5% YoY |
| └ Long-Term Borrowings (Incl. Current Portion) | JPY 9,065M | +38.8% YoY |
| └ Convertible Bonds with Share Acquisition Rights | JPY 750M | ±0% YoY |
| EBITDA | JPY 4,237M | Operating Income 2,174 + D&A 2,063 |
News Released Alongside The Earnings Announcement
None
Major Announcements During The Quarter
Large-Shareholding Filings / Material Proposals Over The Past Year
None
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