How far Japan's orders, price revisions and production setup can reproduce revenue and profit growth

The Japan segment improved from revenue of ¥7,475 million and segment profit of ¥358 million in FY2025-H1 to revenue of ¥8,026 million and segment profit of ¥529 million in FY2026-H1. Revenue increased by ¥551 million and profit by ¥171 million, suggesting that price revisions and improved production efficiency, rather than a simple recovery in volumes, likely contributed to the improvement in profit as well. The margin rose from approximately 4.8% in FY2025-H1 to approximately 6.6% in FY2026-H1. The key issue next time will be whether this improvement was merely a temporary rebound.

The company said that, in Japan, orders increased amid supply and demand conditions, in addition to sales-price revisions reflecting higher raw-material and labor costs. The overhaul of the production system following capital investment during the previous fiscal year enabled the company to respond to higher orders, while the absence of one-time costs related to investment equipment that had been incurred in the previous year also supported the recovery in profit from FY2025-H1 onward. Accordingly, in FY2026-Q3 it will be necessary to distinguish between the effects of additional price revisions and productivity with the upgraded equipment operating under normal conditions.

Japan segment profit was ¥626 million for FY2025 as a whole, while it had already reached ¥529 million in FY2026-H1. Although the first-half profit level is high, if labor and raw-material costs accelerate again in the second half, the first-half margin cannot necessarily be carried over unchanged to the full year. In the next earnings release, the focus will be on whether the company discloses, in monetary or volume terms, the increase in revenue from sales-price revisions, cost changes in key raw materials such as base paper, the timing of price increases, and production-line utilization rates or any periods of idling.

At this stage, the company has explained the price revisions and increase in order volumes, but has not disclosed the revenue contribution from price and volume factors, the reduction in unit costs from capital investment, or plant-by-plant utilization rates. If Japan revenue remains above the prior-year level in FY2026-Q3, Japan segment profit exceeds ¥529 million, and the margin remains around 6.5%, this would provide stronger confirmation of the payback on the previous year's investment and the sustainability of price pass-through. Conversely, if revenue increases while the margin declines, rising labor and raw-material costs may have started to outweigh the effects of the price revisions.