Whether the sharp Q1 slowdown can be reversed to meet the full-year plan

Revenue in the first quarter of the fiscal year ending March 2027 was ¥14,250 million, down ¥2,628 million from ¥16,878 million in the same period of the previous year. Operating profit was ¥30 million, down ¥505 million from ¥535 million, a decline of 94.3%. Ordinary profit was ¥146 million and profit for the quarter attributable to owners of the parent was ¥98 million, both significantly below the previous year. The operating margin also fell from approximately 3.2% to approximately 0.2%.

The company has maintained its full-year forecasts at revenue of ¥84,000 million, operating profit of ¥4,070 million, ordinary profit of ¥4,380 million and profit attributable to owners of the parent of ¥3,060 million. Q1 revenue progress was approximately 17.0%, behind the simple 25% benchmark for one-quarter completion. Operating profit progress was only approximately 0.7%, meaning that revenue of ¥69,750 million and operating profit of ¥4,040 million must be accumulated from Q2 onward to maintain the full-year plan. These are remaining amounts calculated from the full-year forecasts and Q1 results, not company-disclosed interim forecasts.

The company explained that the main cause of the deterioration was weak demand after development and capital investment projects related to electrification in the automotive industry were reviewed. Higher personnel expenses resulting from a new personnel system, repair expenses for renovation work at the head office building, and increased packing and freight charges also weighed on operating profit. However, the disclosure did not provide the revenue decline by factor, the profit impact of project reviews, the increase by expense item, or order intake and order backlog.

In the next FY2027-H1 results, revenue of ¥36,745 million and operating profit of ¥1,645 million in the same period of the previous year will be important comparison benchmarks. It will be necessary to confirm how much operating profit recovers from ¥30 million in Q1 on a cumulative Q2 basis, whether delays to electrification-related projects are temporary or structural, and whether the delivery timing of projects supporting the full-year forecast is explained. As large equipment projects also tend to generate revenue toward the end of the fiscal year, the certainty of second-half projects and delivery management should be assessed alongside, rather than solely by, simple progress rates.