Operating profit is ahead of the full-year plan; H1 will test whether the improvement is sustainable

FY2027-Q1 revenue was ¥31,367 million, down 2.7% year on year, while operating profit rose 87.6% to ¥3,387 million, ordinary profit rose 86.0% to ¥3,419 million, and net income attributable to owners of the parent was ¥2,640 million. Progress against the full-year forecasts was 23.8% for revenue, 38.5% for operating profit, 40.7% for ordinary profit and 50.8% for net income, meaning profit progress significantly outpaced revenue.

The disclosed drivers of profit improvement were the boost from the time lag between changes in selling prices and raw-material prices for plastic films, improved profitability in overseas operations and progress in structural reform in the apparel business. However, the price/raw-material time lag may be a temporary contribution, while net income also benefited from the reversal of structural improvement costs for the apparel business recorded in the previous year. The Q1 operating margin was 10.8%, 4.1 percentage points above the full-year forecast of 6.7%, making the extent to which margins normalize in H1 important.

Full-year operating profit fell from ¥6,777 million in FY2024 and ¥7,921 million in FY2025 to ¥4,882 million in FY2026, before the company planned ¥8,800 million for FY2027. Accordingly, in FY2027-H1, the simple half-year benchmarks are revenue of ¥66,000 million and operating profit of ¥4,400 million, but it will also be necessary to determine whether Q1's high margin is turning into permanent improvement through price revisions, fixed-cost reductions and site consolidation, rather than relying solely on the simple progress rate.