Operating profit is planned to remain flat despite sales growth

In FY2026, sales were ¥171,765 million, operating profit was ¥20,832 million, ordinary profit was ¥22,005 million, and profit attributable to owners of the parent was ¥15,599 million, with the main profit measures reaching record highs. The company’s FY2027 forecasts are sales of ¥190,300 million, operating profit of ¥20,900 million, ordinary profit of ¥21,100 million, and profit attributable to owners of the parent of ¥15,000 million. Sales are expected to increase 10.8% year on year, but operating profit is planned to rise only 0.3%, ordinary profit to decline 4.1%, and net profit to decline 3.8%, indicating that sales growth is not expected to translate directly into profit growth.

Calculated as operating profit divided by sales, the operating margin was 12.1% on an actual basis in FY2026, versus approximately 11.0% in the FY2027 forecast. The company has not provided a value-based bridge by factor or forecast profit by segment to explain the decline, so the contribution of the sales growth breakdown, raw-material and energy costs, depreciation, and upfront investment costs needs to be confirmed at the next earnings announcement. In particular, sales are expected to increase by ¥18,535 million, while operating profit is expected to increase by only ¥68 million. It will be important to determine whether the premise is that most of the incremental sales will be absorbed by higher costs or changes in product mix.

In FY2027 1Q, sales were ¥49,145 million, operating profit was ¥6,667 million, and profit attributable to owners of the parent was ¥4,656 million. Progress against the full-year forecasts was 25.2%, 29.5%, and 29.7%, respectively, with profit progress exceeding sales progress. If 50% of the full-year forecast is used simply as a first-half benchmark, the benchmarks are sales of ¥97,650 million, operating profit of ¥11,300 million, and net profit of ¥7,850 million. Based on the 1Q results, 2Q alone would need to generate sales of ¥48,505 million, operating profit of ¥4,633 million, and net profit of ¥3,194 million.

However, the company has not disclosed a first-half forecast or quarterly seasonality, so these are mechanical benchmarks for measuring progress, not company guidance. At the next earnings announcement, it will be necessary to assess not only whether first-half results exceed simple 50% progress, but also whether the high 1Q margin was due to temporary factors such as product mix, foreign exchange, or the timing of expenses, or to quality improvements and expense reductions that can be sustained in the second half.