Q1 earnings are ahead of plan, but H1 will test the sustainability of the full-year earnings decline

In Q1, covering April to June 2026, revenue was ¥29,212 million and operating profit was ¥1,811 million, exceeding the previous year's revenue of ¥28,314 million and operating profit of ¥1,525 million. Revenue growth was limited to 3.2% year on year, while operating profit increased 18.7%, ordinary profit rose 36.3% to ¥2,045 million, and net income attributable to owners of the parent increased 41.4% to ¥1,432 million. The operating margin improved by approximately 0.8 percentage points, to approximately 6.2% from approximately 5.4% a year earlier.

The full-year forecasts are revenue of ¥126,600 million, operating profit of ¥5,800 million, ordinary profit of ¥6,000 million, and net income attributable to owners of the parent of ¥4,100 million. No revisions were made to the earnings forecasts as of Q1. Q1 progress was approximately 23.1% for revenue, calculated as ¥29,212 million ÷ ¥126,600 million, and approximately 31.2% for operating profit, calculated as ¥1,811 million ÷ ¥5,800 million. Using 50% of the full-year forecast as a simple H1 benchmark, ¥63,300 million in revenue and ¥2,900 million in operating profit would provide reference levels for H1. Based on Q1 results, operating profit of at least ¥1,089 million in Q2 alone will be required.

On a full-year basis, the FY2027 revenue forecast of ¥126,600 million represents a 5.2% increase from FY2026 revenue of ¥120,303 million. Operating profit, however, is expected to decline by ¥1,696 million, from FY2026 actual operating profit of ¥7,496 million to ¥5,800 million, a decrease of 22.6%. The planned operating margin is approximately 4.6%, calculated as ¥5,800 million ÷ ¥126,600 million, below the Q1 level of 6.2%. Accordingly, rather than judging the potential for full-year upside solely on Q1's strong earnings progress, it will be necessary to assess how much of the assumed increase in raw material, packaging material, and logistics costs in H2 is already reflected in H1 results.

In FY2027-H1, in addition to cumulative revenue and operating profit for April through September, we will examine Q2 standalone operating profit, the operating margin, the per-unit pricing effect from price revisions, and the contribution from productivity improvements and cost reductions. The Q1 financial results summary states that price revisions, productivity improvements, and cost reductions contributed to the increase in profit, but does not disclose the amount attributable to each factor or their contribution by volume. The next results announcement will provide important evidence on whether H1 operating profit reached ¥2,900 million, whether the margin has declined from around 6.2%, and whether the full-year forecasts of ¥126,600 million in revenue and ¥5,800 million in operating profit remain unchanged.