A return to profitability in Q1 is still too early to overturn the full-year loss forecast.

FY2027-Q1 revenue was ¥1,481 million, up ¥129 million, or 9.6%, from ¥1,352 million in the same quarter of the previous year. The operating loss also narrowed by ¥69 million, from ¥90 million to ¥21 million, improving the operating margin from approximately negative 6.7% to approximately negative 1.5%. In addition, ordinary income moved from a ¥56 million loss in the same quarter of the previous year to ¥31 million of income, while quarterly net income attributable to owners of the parent turned from a ¥42 million loss to ¥18 million of income.

In contrast, the company’s forecast for the fiscal year ending March 2027 remains revenue of ¥5,660 million, an operating loss of ¥187 million, an ordinary loss of ¥88 million and a net loss attributable to owners of the parent of ¥114 million, with no revision after the FY2027-Q1 results. First-quarter revenue represented approximately 26.2% of the full-year forecast, slightly above the 25% of the fiscal year elapsed. On a simple residual basis, however, revenue of ¥4,179 million will be required over the remaining 3 quarters to meet the full-year forecast. Operating results likewise show an operating loss of only ¥21 million at the first-quarter stage against the full-year forecast, but imply an operating loss of ¥166 million over the remaining period, leaving an assumption that the loss will widen again after the first half.

The factors behind the first-quarter revenue growth were domestic stockpiling demand for sewing thread, driven by concerns over supply shortages and price increases, and a recovery in orders for products shipped to the United States, where orders had stagnated in the same quarter of the previous year. Revenue growth and lower selling, general and administrative expenses contributed to earnings, but the weaker yen, higher raw material and supply costs, and lower utilization at domestic plants as sewing-thread production shifted overseas remain negative factors. The second-quarter cumulative revenue and operating results will need to show whether stockpiling demand and US orders were one-off developments or have become part of normal demand.

For FY2027-H1, revenue of ¥2,830 million and an operating loss of ¥93.5 million can be used as simple 50% benchmarks. However, the company has not disclosed seasonal patterns or the timing of demand in numerical terms, so these are not company forecasts. At the next results announcement, the key points will be the impact of a reversal in domestic stockpiling demand, the continuity of US orders, the amount of selling, general and administrative expense reductions, the impact of higher raw material and supply costs, and whether the full-year forecasts are revised.