Thin Net ProfitabilityNet margins near 2.9% and ROE around 5.4% leave limited buffer for shocks and reduce internal capital generation. Thin bottom-line profitability constrains ability to fund growth, rewards shareholders, or absorb prolonged cost inflation without margin recovery or product-mix improvement.
Volatile Free Cash FlowFree cash flow has been uneven—TTM roughly ¥3.3B but very low in FY2025 and negative in FY2023—making capital allocation and dividend consistency less predictable. Cash conversion volatility raises risk that working-capital needs or reinvestment pressure will constrain flexibility.
Cyclical Demand ExposureSales are closely tied to automotive production and industrial equipment cycles, exposing revenue and margins to capital-spending swings. This structural cyclicality makes earnings and cash generation sensitive to macro and industry downcycles, limiting visibility over multi-quarter horizons.