Q1 delivered higher revenue and a return to operating profitability, but achieving full-year operating profit will require further earnings to be built up in H2.

Q1 revenue was ¥19,793 million, up 18.5% year on year, and operating profit turned positive at ¥310 million, compared with an operating loss of ¥94 million in the same quarter of the previous year. Ordinary profit also improved to ¥269 million from an ordinary loss of ¥62 million in the same quarter of the previous year, confirming a recovery in revenue scale and profitability at the operating level. However, profit attributable to owners of the parent was ¥60 million, down 73.9% from ¥232 million in the same quarter of the previous year.

The full-year forecasts are revenue of ¥73,000 million, operating profit of ¥1,500 million, ordinary profit of ¥1,300 million and profit attributable to owners of the parent of ¥1,000 million. Q1 progress was 27.1% for revenue, 20.7% for operating profit, 20.7% for ordinary profit and 6.0% for net profit. Revenue is ahead of the 25% of the fiscal year elapsed, but approximately ¥1,190 million of operating profit still needs to be generated over the remaining 3 quarters, requiring approximately ¥397 million per quarter on a simple average basis.

The fact that net profit is progressing substantially more slowly than operating profit is also important. In Q1, operating profit was ¥310 million, ordinary profit was ¥269 million and net profit was ¥60 million, meaning that the improvement at the operating level has not flowed through directly to final profit. The Q1 materials do not disclose consolidated results for the standalone 3-month quarter, limiting the information available to directly assess seasonality and the buildup of profit from Q2 onward.

In Q2, the focus will be not only on whether cumulative revenue approaches 50% of the full-year forecast, but also on whether cumulative operating profit builds to at least around ¥750 million. In addition, disclosure of the factors behind the improvement from ¥60 million in net profit toward the ¥1,000 million full-year forecast, the impact of non-operating and extraordinary gains and losses, and whether the full-year forecast has been revised will be key to assessing the reliability of the earnings forecast.