6963 · Rohm

Will it survive?

• Can it pay its interest? 7.1×
  Comfortable
  Operating income ¥10.9B ÷ interest expense ¥1.5B
  What this means

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.

• How heavy is the debt, net of cash? +¥43.8B
  Net cash
  Cash ¥428.7B + ST investments ¥15.1B − debt ¥400.0B
  What this means

  Cash and short-term investments exceed every dollar of debt by ¥43.8B, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 80d
  Long (60+ days)
  DSO 63 + DIO 41 − DPO 24 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 5%
  Below average through the cycle
  10-yr median, range -3%–11%; 1% latest = NOPAT ¥8.6B ÷ invested capital ¥609.6B
  Industry peers: median 7%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 1% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 6%
  Solid through the cycle
  10-yr median margin, range 0%–11%; latest ¥32.4B = operating cash ¥89.4B − maintenance capex ¥57.0B
  Industry peers: median 7%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 7% of revenue this year, a 6% median across 10 years. It chose to put ¥53.9B more into growth, so free cash flow this year was (¥21.5B) — the gap is investment, not weakness.

• Are earnings backed by cash? ¥89.4B
  Loss, but cash-generative
  Net income (¥158.4B) · cash from operations ¥89.4B
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? 60%
  Returns about half
  Dividends + buybacks ¥19.3B ÷ Owner Earnings ¥32.4B
  What this means

  Of ¥32.4B Owner Earnings, ¥19.3B (60%) went back to shareholders, ¥19.3B dividends, ¥0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 1.95×
  Expanding
  Capex ¥111.0B ÷ depreciation ¥57.0B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 8 of 10
  What this means

  Lost money in 2 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 0 of 7 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 12% → 1% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 12% early to 1% lately, median 9% — competition or costs are biting in.

• Reinvestment, incremental ROIC −10%
  What this means

  Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.

• Owner earnings growth −5%/yr
  What this means

  Owner earnings shrank about 5% a year over the record.

• Worst year 2025 · −8.9% op. margin
  What this means

  Operations went underwater in 2025, understand why before trusting the good years.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.