Semiconductor materials led 1Q earnings growth; the focus for FY2027-H1 is whether the strong growth can continue

In 1Q of the fiscal year ending March 2027, consolidated revenue was ¥78,792 million, operating profit was ¥21,907 million, ordinary profit was ¥23,644 million, and profit attributable to owners of the parent was ¥16,844 million. Revenue increased 12.8% year on year and operating profit rose 21.1%, with the operating margin calculated at 27.8%, up approximately 1.9 percentage points from approximately 25.9% in the same period of the previous year. Profit growth outpaced revenue growth, with Functional Materials at the center of the company-wide earnings increase.

1Q revenue at Functional Materials was ¥32,597 million, up ¥6,739 million year on year, while operating profit was ¥10,688 million, up ¥2,487 million. The segment accounted for approximately 48.8% of 1Q operating profit, and the substantial revenue increase driven by strong customer utilization in semiconductor materials lifted company-wide results. In the same period of the previous year, Functional Materials recorded revenue of ¥25,858 million and operating profit of ¥8,201 million, indicating that the earnings increase was accompanied by expansion in segment revenue, rather than being attributable solely to changes in the allocation of company-wide expenses.

In the full fiscal year ended March 2026, Functional Materials recorded revenue of ¥113,377 million and operating profit of ¥35,331 million. 1Q alone generated approximately 30% of full-year revenue and approximately 30% of full-year operating profit. While the current pace is strong, attention is warranted because reliance on semiconductor materials is increasing. In the past, the company’s revenue from ARC and multilayer materials has fluctuated with customer-factory utilization rates and the ramp-up of new plants. In H1, we will therefore want to distinguish sustainable demand from a temporary recovery in utilization.

The full-year consolidated operating profit forecast is ¥66,800 million, putting 1Q progress at 32.8%. For Functional Materials, simply doubling 1Q operating profit gives ¥21,376 million as one benchmark for the pace, but this is a mechanical measure that ignores seasonality and is not company guidance. In the next earnings release, we will check whether disclosure is provided for semiconductor-materials revenue, volumes, price variances by product, customer operating conditions, and the operating status of capacity-expansion and analysis equipment. As of 1Q, quantitative breakdowns of unit prices and volumes, order intake, order backlog, and revenue by region had not been disclosed, leaving insufficient information to assess the sustainability of segment profit.