Key focus: progress in the first half against the full-year plan after the upward revision

Consolidated revenue in FY2027-Q1 was ¥6,577 million, up 14.1% year on year. Operating profit was ¥395 million, up 35.9%, ordinary profit was ¥441 million, up 27.8%, and net profit attributable to owners of the parent was ¥263 million, up 26.5%. Higher revenue from the Chemicals and Industrial Machinery and Construction Machinery segments lifted company-wide revenue, but Q1 operating profit represented only 15.8% of the full-year forecast of ¥2,500 million, lagging the 23.1% progress rate for revenue. How much profit can be accumulated in the first half is more important than revenue growth alone.

The full-year FY2027 forecasts were subsequently raised to revenue of ¥29,500 million, operating profit of ¥2,650 million and net profit attributable to owners of the parent of ¥2,100 million. These represent upward revisions of ¥1,000 million, ¥150 million and ¥100 million, respectively, from the previous forecasts of revenue of ¥28,500 million, operating profit of ¥2,500 million and net profit of ¥2,000 million. The revised operating margin is approximately 9.0%. External reports state that the first-half operating profit forecast was also raised from ¥500 million to ¥805 million and the first-half ordinary profit forecast from ¥600 million to ¥920 million. FY2027-H1 will therefore be a reporting period in which these revised figures are tested against actual results.

The composition of earnings requires attention. In Q1, the Chemicals segment recorded revenue of ¥2,093 million, up 27.5% year on year, and segment profit of ¥58 million, up 87.0%. The Industrial Machinery and Construction Machinery segment, however, posted revenue of ¥2,050 million, up 16.9%, while segment profit fell 34.1% to ¥79 million. Profit may fail to grow even when revenue increases, depending on the project mix, margins on parts and servicing, and the gap between raw material and selling prices. In the first-half results, we therefore need to review not only revenue, but also segment margins and the factors behind changes in profit.

Seasonality in the first half shows that revenue was ¥11,838 million in FY2025-H1, or 44.6% of full-year revenue of ¥26,568 million, and ¥12,647 million in FY2026-H1, or 44.8% of full-year revenue of ¥28,201 million. Applying this ratio to the revised full-year revenue forecast of ¥29,500 million gives approximately ¥13,100 million as one benchmark for first-half revenue. For first-half operating profit, we will assess whether the company can exceed ¥805 million and which businesses, among Chemicals, Industrial Machinery and Construction Machinery, and Environmental Equipment, will drive profit growth, then judge the likelihood of achieving full-year operating profit of ¥2,650 million.