1Q is on plan, but profit progress toward the full-year forecast is lagging sales

For the fiscal year ended March 2026, net sales were ¥4,348 million and operating profit was ¥1,364 million. For the fiscal year ending March 2027, the company expects net sales of ¥5,135 million and operating profit of ¥1,452 million. The company’s plan represents increases of 18.1% in net sales and 6.5% in operating profit from the previous year’s results, assuming that profit growth will be restrained while sales growth is maintained.

Net sales in 1Q of the fiscal year ending March 2027 were ¥907 million, and operating profit was ¥185 million. On a simple full-year progress basis, this equates to 17.7% for net sales and 12.7% for operating profit, with profit progress 4.9 percentage points below sales progress. The company states in its supplementary materials that both sales and profit are on plan, but it has not disclosed the numerical progress rates against the full-year forecasts or the pace of achievement after factoring in quarterly seasonality.

Year on year, 1Q net sales rose only 1.2%, while operating profit fell 30.0%, ordinary profit fell 33.5%, and net income attributable to owners of the parent fell 37.9%. Accordingly, at the 2Q results, it will be necessary to assess not only the accumulation of net sales but also how much operating profit has recovered toward the full-year plan. The fact that the company maintained its full-year forecasts as of 1Q is reassuring, but it has not provided sufficient numerical assumptions for the remaining period to verify its assessment that results are on plan.

Based solely on 1Q results, ¥4,228 million in net sales and ¥1,267 million in operating profit remain to be generated to meet the full-year forecasts. At 2Q, we will check cumulative first-half net sales and operating profit, progress rates against the full-year forecasts, and whether the full-year forecasts have been revised, while tracking whether the sales and profit levels required in the second half are becoming realistically smaller. In particular, unless operating profit progress approaches sales progress, achieving the full-year forecasts will require an improvement in the second-half profit margin.