The plan after the downward revision will serve as the benchmark for the next H1 in FY2027.

Revenue in the first quarter of FY2027 was ¥15,451 million and operating profit was ¥566 million, representing a 2.0% year-on-year increase in revenue and a 39.9% decrease in operating profit. Progress against the full-year revenue forecast of ¥67,000 million was approximately 23.1%, while progress against the ¥2,400 million operating profit forecast was approximately 23.6%, broadly in line with the elapsed portion of the fiscal year at the time of the earnings release. However, this assessment was based on the initial plan as of 12 August.

On 14 October, the full-year revenue forecast was lowered from ¥67,000 million to ¥63,500 million, and the operating profit forecast from ¥2,400 million to ¥1,800 million. The reductions were approximately 5.2% for revenue and 25.0% for operating profit. The ordinary profit forecast was also revised down from ¥2,550 million to ¥1,850 million, and net income attributable to owners of the parent from ¥1,750 million to ¥1,300 million. The ordinary profit reduction was approximately 27.5% and the net profit reduction approximately 25.7%, meaning that profit forecasts were revised by more than the revenue forecast.

The H1 ordinary profit outlook was also lowered from ¥1,050 million to ¥600 million and is expected to fall below the ¥1,258 million recorded in the same period of the previous year. Accordingly, the next results should be assessed against the revised October H1 ordinary profit target of ¥600 million and full-year ordinary profit target of ¥1,850 million, rather than progress against the initial plan. If H1 ordinary profit falls below ¥600 million, a substantial profit recovery in the second half will be required to achieve the full-year plan.

The available earnings revision information confirms the old and new forecasts for revenue, operating profit, ordinary profit and net profit, but does not break down the profit reductions by factor, such as personnel, logistics, fuel, materials or Tokai Mother Center costs. At the next results, it will be necessary to determine not only the H1 results but also whether the reasons for the revision were one-off expenses or an ongoing change in the cost structure, including logistics and personnel costs.

The annual dividend forecast for FY2027 is ¥27, so a key shareholder-return issue is whether it remains consistent with the progressive dividend policy after the earnings forecast was lowered. At the H1 results, we will assess the treatment of any further revision to the full-year earnings forecast, maintenance of the ¥27 annual dividend and the policy targeting a payout ratio of approximately 30%.