The focus is whether FY2027-H1 can return from a first-quarter loss to the full-year profit forecast

First-quarter revenue was ¥974 million, down 20.1% from ¥1,219 million in the same quarter a year earlier. Operating results turned from a profit of ¥131 million in the year-earlier quarter to a loss of ¥54 million, while the company also posted an ordinary loss of ¥36 million and a quarterly net loss attributable to owners of the parent of ¥41 million. The operating margin on revenue fell from approximately 10.7% to approximately negative 5.6%, indicating that profit declined more sharply than revenue.

First-quarter revenue represented only approximately 20.6% of the full-year forecast. Assuming simply that the first and second halves are evenly balanced, first-half revenue of ¥2,361 million would be a mechanical benchmark, but the company is exposed to substantial fluctuations in demand for infection-related products and cell-processing projects, as well as seasonality and the timing of project recognition. Accordingly, in FY2027-H1, it will be necessary to assess not only the absolute level of revenue but also whether the company is assuming a second-half concentration or expects demand to return from the second quarter onward.

The first quarter recorded an operating loss of ¥54 million, while the full-year forecast calls for operating profit of ¥137 million. To achieve the full-year forecast, the company will need to generate ¥191 million in operating profit over the remaining 3 quarters, and if losses continue through the first half, substantial profit improvement will be required in the second half. The company did not revise its earnings forecast as of the first quarter, so at the next results announcement it will be important to see whether it can explain specifically the basis for maintaining the forecast, the projects and products expected in the second half, and the extent to which fixed costs are being absorbed.

The company attributed the decline in revenue to the failure to meet plans for OEM culture-medium sales following tighter cell-therapy-related regulations in China, and to a reactionary decline in demand for infection-related products after the previous surge. Cell-processing projects related to stem cells were reportedly strong, but not enough to offset the company-wide loss. As no statement of cash flows was prepared for the first quarter and operating cash flow was not disclosed, FY2027-H1 will also require confirmation of cash-generation capacity, including working capital and capital expenditures, alongside the recovery in earnings.