Negative Operating & Free Cash FlowPersistent negative operating and free cash flow (-¥2.17bn OCF in 2025) means core operations do not generate sufficient cash, forcing reliance on financing. This raises liquidity and refinancing risk, constrains capital spending and debt reduction, and undermines the durability of margin gains.
Meaningful LeverageA debt-to-equity ratio of 1.67 reflects meaningful leverage that increases interest burden and refinancing exposure. Elevated indebtedness reduces financial flexibility, heightens downside risk in downturns, and may limit the company’s ability to invest or absorb shocks until deleveraging or cash generation improves.
Low Net Profit MarginA 2.61% net margin despite improving gross margins indicates significant costs below operating line (interest, taxes, or one-offs) or persistent inefficiencies. Low net profitability limits retained earnings, reduces reinvestment capacity, and weakens the company’s ability to convert operational improvements into shareholder value.