FY2027 full-year plan at standard progress in 1Q; first half will test sustainability

In FY2027-Q1, sales were ¥13,172 million, operating income was ¥2,481 million, ordinary income was ¥2,598 million, and profit attributable to owners of the parent was ¥1,744 million. Year on year, sales increased 17.0%, operating income 28.2%, ordinary income 26.6% and net income 17.7%, showing simultaneous growth in sales and profit. The operating margin was 18.8%, an improvement of approximately 1.6 percentage points from approximately 17.2% in the same quarter of the previous year.

The full-year forecasts are sales of ¥54,900 million, operating income of ¥9,900 million, ordinary income of ¥10,100 million and net income of ¥6,800 million. At 1Q, progress was 24.0% for sales and 25.1% for operating income, broadly in line with the 25% quarterly average. However, if the first-half midpoint is mechanically set at 50% of the full-year forecast, the September interim period requires sales of ¥27,450 million and operating income of ¥4,950 million. After deducting 1Q results, second-quarter sales of ¥14,278 million and operating income of ¥2,469 million represent one reference line.

The factors behind the earnings growth were semiconductor demand for advanced logic and memory applications accompanying the spread of generative AI, data center demand, expansion of the electronic materials market, price pass-through and the operation of the newly built fifth plant. However, the 1Q financial results did not disclose cash flow from operating activities, and the company did not hold a supplementary earnings briefing or earnings presentation. Accordingly, the 1Q materials alone cannot establish whether the earnings growth was accompanied by cash collection or by increases in inventories, accounts receivable and capital expenditure.

At the next FY2027-H1 results, we will check not only whether first-half results exceed the mechanical 50% line above, but also whether the strength of demand underlying the full-year forecast continues into the second quarter. In particular, key points are whether operating income growth slows again relative to sales growth, whether price pass-through and the operation of new facilities support margins, and whether operating cash flow and capital expenditure are disclosed. Because the pre-revision full-year forecast and the size of any revision cannot be compared based on the current disclosure, the reasons for maintaining, raising or lowering the forecast at H1 will also be checked.