Will the strong first-quarter earnings progress be sustained in FY2027-H1?

FY2027-Q1 revenue was ¥11,137 million, up 13.6% year on year, operating profit was ¥395 million, up 125.9%, ordinary profit was ¥289 million, up 47.9%, and quarterly net profit attributable to owners of the parent was ¥177 million, up 57.9%. The full-year forecasts are revenue of ¥46,000 million, operating profit of ¥800 million, ordinary profit of ¥700 million and net profit of ¥500 million, implying progress rates of 24.2% for revenue and 49.4% for operating profit. Revenue was broadly in line with the 25% elapsed-quarter rate, while operating profit had reached nearly half of the full-year plan.

By segment, fertilizer revenue was ¥9,091 million and segment profit was ¥56 million, chemicals revenue was ¥2,326 million and segment profit was ¥261 million, and real estate revenue was ¥234 million and segment profit was ¥103 million. The improvement in operating profit was supported not only by fertilizer but also by higher profits in chemicals and real estate. However, the company explicitly cited advance demand ahead of higher fertilizer prices, and has not disclosed how much of the ¥395 million in operating profit was attributable to a recovery in underlying demand versus demand pulled forward ahead of price revisions.

Fertilizer demand is concentrated from February to April, and seasonality means that second-half revenue and operating expenses exceed those in the first half. It is therefore too early to assess full-year achievement based solely on the high Q1 profit progress rate. In FY2027-H1, it will be necessary to determine whether cumulative operating profit can remain around ¥395 million and whether a reversal of advance demand or higher raw material prices is weighing on profit. It will also be important to see whether the full-year forecasts of ¥46,000 million in revenue and ¥800 million in operating profit are revised, and whether additional volume and price information by factor, not disclosed as of Q1, is provided.