The sharp recovery in FY2027 1Q came with the external sales business returning to profitability, but confirmation that this has taken hold is needed in the first half.

FY2027 1Q revenue was ¥22.008 billion, up 3.7% year on year, operating profit was ¥751 million, up 148.1%, ordinary profit was ¥768 million, up 142.8%, and net income for the quarter was ¥404 million, up 142.9%. Operating profit increased much more than revenue, making this a quarter in which improvements in the business mix and cost structure flowed through to earnings, rather than a simple recovery in the top line.

The full-year forecasts are revenue of ¥92.0 billion, operating profit of ¥3.260 billion, ordinary profit of ¥3.3 billion and net income of ¥1.760 billion. As of 1Q, progress was 23.9% for revenue and 23.0% for operating profit. The simple half-year benchmarks, without taking quarterly seasonality into account, are revenue of ¥46.0 billion and operating profit of ¥1.630 billion, but these are not first-half targets published by the company. Accordingly, in FY2027-H1 it will be necessary to assess whether the business is weighted toward the second half and whether the external sales business remains profitable in 2Q, rather than mechanically applying a 50% progress benchmark.

By segment, the tenant business generated revenue of ¥11.913 billion and segment profit of ¥524 million in 1Q, up 4.1% and 10.3%, respectively, year on year. The external sales business generated revenue of ¥10.095 billion and segment profit of ¥226 million, returning to profitability from a ¥172 million loss in the same period last year. The simultaneous positive contribution from both segments suggests that the instability in company-wide earnings caused by the external sales business’s production-system revisions through the previous year may have run its course.

By contrast, FY2026 full-year revenue was ¥86.653 billion and operating profit was ¥2.757 billion, down 4.2% and 10.4%, respectively, from the previous year. Whether higher revenue and profit continue in FY2027-H1, and particularly whether earnings in the external sales business avoid reverting to a temporary rebound, will determine how the full-year operating profit forecast of ¥3.260 billion is assessed. Rather than judging achievement of the full-year plan from 1Q figures alone, the first-half segment profit, deliveries to PPIH and the normalization of factory operations should be monitored together.