Strong first-quarter progress, but can the first half absorb the full-year earnings decline plan?

First-quarter revenue was ¥110.373 billion, operating profit was ¥7.132 billion, ordinary profit was ¥6.626 billion, and net income attributable to owners of the parent was ¥3.072 billion. In the same quarter of the previous year, revenue was ¥102.910 billion and operating profit was ¥5.566 billion. Revenue rose 7.3%, while operating profit increased 28.1% and net income increased 95.3%. The operating margin also improved by 1.05 percentage points, from approximately 5.41% in the same quarter of the previous year to approximately 6.46% in the current quarter, indicating that profitability improved at least in the first quarter.

The full-year forecasts are revenue of ¥435.0 billion, operating profit of ¥23.0 billion, ordinary profit of ¥18.5 billion, and net income attributable to owners of the parent of ¥7.0 billion. First-quarter progress was 25.4% for revenue, 31.0% for operating profit, 35.8% for ordinary profit, and 43.9% for net income. However, the company did not provide its own assessment of progress against the full-year plan in the earnings summary, so it is necessary to review developments in raw material and fuel prices, selling prices, depreciation, and other expenses from the second quarter onward before concluding that operating profit is progressing strongly.

Compared with the previous fiscal year, the forecast for the fiscal year ending March 2026 calls for revenue of ¥421.563 billion, while the current-year forecast is up 3.2%. Operating profit, however, is planned to decline by ¥4.906 billion, or 17.6%, from ¥27.906 billion in the previous fiscal year to ¥23.0 billion. The forecast operating margin is expected to fall from approximately 6.62% to approximately 5.29%. Therefore, even if revenue increases in the first half, progress should be interpreted as consistent with the full-year earnings decline plan if margins are lower.

The company did not prepare a quarterly consolidated statement of cash flows for the first quarter, so cash flow from operating, investing, and financing activities cannot be confirmed. In the previous full year, cash flow from operating activities was ¥45.032 billion, while cash flow from investing activities and financing activities represented outflows of ¥27.077 billion and ¥16.506 billion, respectively. In FY2027-H1, it will be necessary to confirm not only earnings progress but also whether investment spending and cash recovery are proceeding in tandem.