Q1 was front-loaded toward profit, but keeping the FY2027 full-year forecast unchanged is the focus for H1

First-quarter revenue was ¥34.248 billion, operating income was ¥3.734 billion, ordinary income was ¥5.581 billion, and profit attributable to owners of the parent was ¥3.278 billion. The full-year forecasts are revenue of ¥152.20 billion, operating income of ¥14.20 billion, ordinary income of ¥19.00 billion, and net income of ¥15.80 billion, giving simple progress rates of 22.5%, 26.3%, 29.4%, and 20.7%, respectively. Operating income and ordinary income are progressing faster than revenue, while progress in net income is comparatively low.

An improvement in margins is evident. The first-quarter operating margin was approximately 10.9%, calculated as ¥3.734 billion divided by ¥34.248 billion, up approximately 1.2 percentage points from approximately 9.7% in the same quarter of the previous year. However, year-on-year growth in net income was only 2.0%. Extraordinary losses of ¥694 million were recorded in the first quarter, including a ¥217 million loss on disposal of fixed assets, ¥55 million in impairment losses, and a ¥372 million loss on plant closure. Accordingly, the improvement at the operating-income level did not flow through directly to bottom-line profit.

The full-year forecast had not been changed as of the first-quarter results. FY2026 revenue was ¥152.091 billion and operating income was ¥14.970 billion, compared with FY2027 forecasts of ¥152.20 billion and ¥14.20 billion, respectively. The plan therefore calls for broadly flat revenue and a 5.1% decline in operating income. Accordingly, before judging the 26.3% first-quarter progress rate for operating income as an upside, it is necessary to assess the seasonality expected in agricultural chemicals in H2, raw-material and fuel prices, foreign exchange, and the remaining impact of closure-related costs.

The company has historically disclosed that the agricultural chemicals business tends to generate higher earnings in Q4 because of seasonality, making mechanical 50% progress in H1 no more than a checkpoint. In H1, we will assess where actual results stand relative to half of the full-year forecasts, namely revenue of ¥76.10 billion, operating income of ¥7.10 billion, ordinary income of ¥9.50 billion, and net income of ¥7.90 billion. It will also be important in assessing net income progress to determine whether extraordinary losses such as the Mizushima Plant closure loss were limited to Q1 or whether additional costs will arise.