First-quarter operating profit is tracking quickly, but sustainability must be assessed through the first half

FY2027-Q1 revenue was ¥17,581 million, up 2.3% year on year, operating profit was ¥1,039 million, up 33.0%, ordinary profit was ¥1,065 million, up 19.2%, and net profit attributable to owners of the parent was ¥729 million, up 14.8%. Revenue progress against the full-year forecast of ¥65,500 million was 26.8%, slightly above the 25% of the fiscal year that had elapsed. Operating profit progress, however, was 54.7%, ordinary profit progress was 53.3% and net profit progress was 48.6%, meaning profit progress was substantially ahead of revenue progress.

This progress cannot simply be extrapolated to the full year. After recording operating profit of ¥1,039 million in the first quarter, only ¥861 million is required over the remaining 3 quarters to meet the full-year forecast of ¥1,900 million. Accordingly, one benchmark for the first half will be whether at least ¥950 million can be secured. For revenue, ¥32,750 million, equivalent to 50% of the full-year forecast, will be the benchmark for FY2027-H1. It will also be necessary to check whether ordinary profit and net profit reach ¥1,000 million and ¥750 million, respectively.

The operating margin was approximately 1.9% in FY2025 and approximately 2.0% in FY2026, compared with approximately 5.9% in FY2027-Q1, calculated by dividing operating profit of ¥1,039 million by revenue of ¥17,581 million. The operating margin implied by the FY2027 full-year forecast is approximately 2.9%, so an important question is whether the high first-quarter margin will persist through the first half or return to normal levels from the second quarter onward. There were no extraordinary gains or losses and no changes in accounting policies, so the first-half results should clarify whether the increase in operating profit arose from product mix, pricing or manufacturing costs rather than from a temporary accounting factor.

At the next earnings announcement, the focus will be not only on cumulative revenue and operating profit, but also on whether the company can disclose, to the extent possible, year-on-year changes in sales volume, product prices, raw material and logistics costs, and selling, general and administrative expenses. In particular, if operating profit remains below ¥950 million or revenue falls below ¥32,750 million, the company will need to explain the basis for maintaining the full-year forecasts of ¥1,900 million and ¥65,500 million.