Sorting businesses by ROIC against WACC, and selling the cross-shareholdings (2024)

Dropping the average, showing the breakdown

What changed with the 2026 Medium-Term Management Plan was less the level of the targets than the granularity of the disclosure. A single company-wide ROIC of 6.1% does not tell anyone where to cut. Putting suspension springs at 1.1% and precision components at 0.6% in the same table as seats at 20.2% moved the internal argument onto invested capital by business. Carrying the decomposition tree down to yield rates and inventory levels — and writing that it would feed personnel evaluation where necessary — reads as an intent not to let the metric stop at a planning-department slide.

Finer disclosure does not, however, guarantee better capital efficiency. Company-wide ROIC for the year ended March 2026 was 6.8%, below a WACC that had risen to 8.6%. What ran ahead of plan was the capital in-and-out side: $110.3M (¥17bn) of cross-shareholdings sold and $437.7M (¥66bn) returned to shareholders. On the business side, suspension-spring ROIC fell from 1.1% in fiscal 2023 to 0.4% in the year ended March 2026 — the very business NHK Spring took over, plant and all, from Daido Steel in 1958, and which made it the largest spring maker in Japan.