The focus is on whether the company can maintain progress toward higher revenue and earnings while making up for the decline in gross margin in Q3 during Q4

For the three months ended Q1, revenue was ¥7,657 million and operating profit was ¥1,201 million. For the six months ended Q2, revenue was ¥15,391 million and operating profit was ¥2,236 million, while for the nine months ended Q3, revenue was ¥23,267 million and operating profit was ¥2,906 million. Operating profit growth versus the same periods of the previous year declined from 67.7% in Q1 to 41.0% for the six months ended Q2 and 18.4% for the nine months ended Q3. Earnings therefore continued to grow on a cumulative basis, but the pace of profit growth has slowed quarter by quarter.

The full-year forecasts are revenue of ¥30,000 million and operating profit of ¥3,650 million. The nine-month progress rates are 77.6% for revenue and 79.6% for operating profit, leaving required Q4 revenue of ¥6,733 million and operating profit of ¥744 million. With approximately 80% of full-year operating profit secured through the nine months ended Q3, the target remains achievable in monetary terms. However, profitability deteriorated in Q3 standalone, so the outlook cannot be assessed solely on the basis of cumulative progress.

Q3 standalone revenue rose 11.4% year on year to ¥7,876 million, while cost of sales increased 34.3% to ¥3,349 million and gross profit fell 1.1% to ¥4,527 million. The gross margin declined 7.2 percentage points year on year to 57.5%, and operating profit fell 22.8% to ¥670 million. The company attributed this mainly to the high proportion of products sold before the April price review and the use of raw materials purchased when precious metal prices remained elevated.

The Q3 earnings presentation assumes a Q4 gross margin of 60–62%. At the next earnings release, it will be necessary to assess whether the actual gross margin fell within this range, how the product price review affected average spend per customer and customer numbers, and the extent to which the increase in costs caused by higher precious metal prices was absorbed. At present, the monetary contributions from pricing, volume and raw material factors have not been disclosed separately, making it important to identify which factors generated the additional ¥744 million in operating profit.