Full-year forecast maintained, but first-half operating profit reached only 40.5% of the forecast

In the interim period from January through June of Reiwa 8, revenue was ¥8,672 million, operating profit was ¥324 million, ordinary profit was ¥372 million, and interim net profit attributable to owners of the parent was ¥437 million. Revenue fell 1.2% year on year, operating profit declined 21.3%, and ordinary profit decreased 26.3%, indicating that earnings power through the operating-profit level was below the previous year. Interim net profit alone, however, increased 73.9%, creating a divergence from operating performance when the headline profit figure is viewed in isolation.

The full-year forecasts were revenue of ¥18,500 million, operating profit of ¥800 million, ordinary profit of ¥720 million, and net profit attributable to owners of the parent of ¥520 million, with no revisions made in the interim results. Based on a simple calculation, interim progress was 46.9% for revenue, 40.5% for operating profit, 51.7% for ordinary profit, and 84.0% for net profit. Accordingly, the amounts required in the second half are revenue of ¥9,828 million, operating profit of ¥476 million, ordinary profit of ¥348 million, and net profit of ¥83 million, making the recovery hurdle higher for operating profit than for revenue.

The high progress rate for net profit was largely due to the impact of extraordinary income, including a ¥304 million gain on sales of investment securities. This was up from the ¥109 million gain recorded in the same period of the previous year and offset declines in operating profit and ordinary profit. Accordingly, at the next earnings release, it will be necessary to distinguish not only changes in net profit but also the operating margin, ordinary profit, profit after excluding extraordinary gains and losses, and whether there was a gain on sales of investment securities.

The full-year earnings forecasts were left unchanged, and the annual dividend forecast was set at ¥15. However, the earnings presentation did not provide numerical assumptions for full-year forecast progress, the revenue and profit levels required in the second half, or foreign exchange rates and raw-material prices. It also did not disclose KPIs for orders received, order backlog, volumes, or unit prices. At the next third-quarter earnings release, the points to confirm will be how close cumulative operating profit has come to the ¥476 million required in the second half, whether price pass-through and demand recovery have been reflected in actual profit, and whether additional support has been provided for maintaining the full-year forecasts.