The first quarter returned to profit, but a departure from the full-year loss plan has not yet been confirmed.

In the fiscal year ended March 2026, sales were ¥55,816 million, operating profit was ¥920 million and the operating margin was 1.6%. In contrast, the company’s forecast for the fiscal year ending March 2027 is sales of ¥55,000 million, an operating loss of ¥150 million, an ordinary loss of ¥400 million and a net loss attributable to owners of the parent of ¥500 million. Sales are planned to decline only 1.5% year on year, but operating profit is expected to move from a profit to a loss. The focus at the next results announcement is therefore whether the company can convert sales into profit, rather than sales growth.

In the first quarter, sales were ¥13,530 million, up 9.3% year on year, operating profit was ¥60 million, up 175.0%, ordinary profit was ¥128 million and quarterly net income attributable to owners of the parent was ¥107 million. Progress against the full-year sales forecast was 24.6%, approximately 0.4 percentage points below the 25% of the fiscal year elapsed. On sales alone, the pace was broadly in line with the plan. However, because the full-year operating profit forecast is △¥150 million, a standard progress rate cannot be applied mechanically to operating profit, and it will be important to see whether the company can remain profitable in the second quarter alone. The earnings presentation materials did not disclose progress against the full-year forecast or the company’s own assessment of the plan.

The first-quarter operating margin was 0.5% in the materials, an improvement of 0.3 percentage points year on year, but the absolute profit level remains low. The year-on-year increase in operating profit was only ¥38 million, reflecting the fact that positive factors including the pass-through of material costs into selling prices, foreign exchange and cost improvements exceeded negative factors including higher fixed costs, the impact of the situation in the Middle East and earnings-related effects. It is therefore necessary to assess separately from simple sales progress whether cumulative first-half operating profit can remain at or above ¥0 million and whether the full-year forecast of an operating loss of ¥150 million will be maintained or revised upward or downward.

At the next results announcement, we will confirm not only whether first-half sales reach approximately ¥27,500 million, but also cumulative first-half operating profit, operating margin, ordinary profit and net income. The company did not change its full-year earnings forecast or annual dividend forecast in the first quarter. The most important point in the second quarter will be whether the assumptions of a full-year operating loss of ¥150 million, ordinary loss of ¥400 million and net loss of ¥500 million remain unchanged. We will also seek to verify through disclosure of the amounts by factor whether the operating-profit improvement resulted only from first-quarter price pass-through and foreign-exchange effects or can be reproduced during the remaining period.