Can the strong start in Q1 be carried through to the first-half plan, including the rebound effect from advance ordering?

In the first quarter of the fiscal year ending March 2027, revenue was ¥10,107 million, up 18.5% year on year, and operating profit was ¥875 million, up 136.8%. Operating profit had reached 54.7% of the full-year forecast of ¥1,600 million, well above the 26.2% revenue progress rate, making this a very strong start on the face of it.

However, the latest full-year outlook assumes revenue of ¥38,600 million and operating profit of ¥1,600 million, while the second half is conservatively estimated at revenue of ¥19,600 million and operating profit of ¥400 million. Back-calculating from the full-year figures gives first-half targets of ¥19,000 million in revenue and ¥1,200 million in operating profit. Based on first-quarter results, the amounts required in Q2 are ¥8,893 million in revenue and ¥325 million in operating profit.

The ¥325 million of operating profit required in Q2 is only 37.1% of the ¥875 million recorded in Q1, while the required revenue is equivalent to 88.0% of Q1 revenue of ¥10,107 million. Therefore, achieving the first-half plan does not require operating profit to remain at the Q1 level, but it assumes an operating margin of approximately 3.7% in Q2 alone, a significant decline from approximately 8.7% in Q1.

The company cites customers’ advance ordering as a factor behind the first-quarter revenue growth, and has factored in a subsequent decline and higher raw material and fuel prices in the second half. Orders received, order backlog and the contribution from advance ordering have not been disclosed, so at the next results announcement we will want to confirm not only whether Q2 revenue exceeded ¥8,893 million, but also how the company explains the subsequent decline in terms of orders and volumes.