Can H1 make up the shortfall in profit progress toward the full-year guidance?

Revenue in the first quarter of the fiscal year ending March 2027 was ¥3,049 million, up just 0.1% year on year. Operating profit was ¥52 million, down 0.4% year on year, indicating a slight decline in core profit despite virtually flat revenue. Based on the disclosed figures, the operating margin in the first quarter was approximately 1.7%.

Revenue progress toward the full-year forecast was approximately 22.8%, calculated as ¥3,049 million ÷ ¥13,400 million, while operating profit progress was just 10.4%, calculated as ¥52 million ÷ ¥500 million. Using 50% of the full-year forecast as a mechanical H1 benchmark, cumulative H1 revenue of ¥6,700 million and operating profit of ¥250 million would serve as reference points. Reaching these levels from the first-quarter results would require second-quarter revenue of ¥3,651 million and operating profit of ¥198 million. These are not the company's disclosed half-year forecasts, but simple benchmarks for monitoring progress.

The full-year forecasts as of the first quarter were revenue of ¥13,400 million, operating profit of ¥500 million, ordinary profit of ¥500 million and net income of ¥350 million. Revenue is planned to increase 10.7% year on year and operating profit 16.8%, while net income is planned to decline 36.0%. As of the first quarter, the company had not disclosed quarterly revenue and profit plans, H1 segment plans or the amount of profit contribution from price revisions.

The company had previously cited raw material and fuel prices, the situation in the Middle East and the outlook for price revisions as reasons why the full-year forecast had remained undecided. Accordingly, in H1 it will be important to assess not only whether revenue reaches 50% of the full-year forecast, but also whether operating profit catches up with revenue progress and whether the ¥500 million full-year operating profit forecast is maintained. If operating profit remains below ¥250 million, a substantial amount of profit would still be required in the second half, making the extent of price pass-through and absorption of raw material costs important.