Extent to which the disconnect between sales growth and profit generation has been corrected

Consolidated sales in FY2027-Q1 were ¥93,181 million, up ¥2,662 million, or 2.9%, from ¥90,519 million in the same period of the previous year. However, operating results turned from a ¥577 million profit in the same period of the previous year to a ¥245 million loss, showing that higher sales have not translated into operating-level profit. The operating margin fell by approximately 0.90 percentage points, from approximately 0.64% in the same period of the previous year to approximately negative 0.26%.\n\nAt the profit level, ordinary income was ¥62 million, down 92.9% year on year, while net income attributable to owners of the parent was ¥5 million, down 99.1%. In the previous full fiscal year, sales rose 3.1% to ¥360,358 million, while operating income fell 74.0% to ¥719 million and the operating margin declined from 0.8% to 0.2%. Accordingly, the FY2027-Q1 operating loss should be tracked as the manifestation of a decline in profitability that has continued since FY2026, rather than as a one-off quarterly fluctuation.\n\nThe factors cited by the company are slowing healthcare demand amid domestic inflation, a review of trading terms following consolidation among major retailers, continued increases in logistics costs, and the impact of the Act on Promotion of Subcontracting Small and Medium-sized Enterprises. Efforts to absorb higher center fees and product prices across the supply chain are also still under way. However, the company has not disclosed how many millions of yen each factor reduced operating income, what percentage of price increases was passed on to business partners, or whether higher logistics costs were reflected in cost of sales or selling, general and administrative expenses.\n\nFor FY2027-H1, the first point to confirm is whether sales exceed the ¥182,750 million reported in the same period of the previous year. We also need to confirm whether operating income returns to profitability, whether the operating margin exceeds 0%, and the extent of any decline or recovery from operating income of ¥1,197 million in the same period of the previous year. In addition, whether the company discloses the impact amount, improvement amount, absorption rate or at least the year-on-year direction of changes relating to center fees, logistics costs and the pass-through of product price increases will be a key point in assessing the effectiveness of the profit recovery.