The focus is whether Q1's sharp recovery can be sustained, rather than whether it is on track to be achieved

FY2027-Q1 revenue was ¥19,774 million, up 30.6% year on year, while operating profit was ¥3,979 million, up 410.7%. Operating profit increased by ¥3,200 million from ¥779 million in the year-earlier quarter, representing a substantial improvement that significantly outpaced revenue growth. The operating margin was approximately 20.1% in Q1, up by around 15 percentage points from approximately 5.1% a year earlier.

At the time of the Q1 results, the company indicated first-half revenue of ¥42,200 million, first-half operating profit of ¥6,600 million, full-year revenue of ¥95,000 million and full-year operating profit of ¥11,300 million. Q1 represented approximately 20.8% of the full-year revenue forecast and 35.2% of the operating profit forecast, indicating that profit is ramping up faster than revenue. Meanwhile, the latest forecast data dated 22 October show upward revisions to full-year revenue of ¥98,500 million, operating profit of ¥14,600 million and net income attributable to owners of the parent of ¥9,900 million.

Accordingly, in FY2027-H1 it will be necessary to assess not only whether the first-half plan is achieved, but also whether Q1's high margin was temporary. The first points to check will be whether cumulative operating profit for the second quarter exceeds ¥6,600 million and whether the operating margin on revenue avoids a substantial decline from Q1's approximately 20%. In particular, it will be important to see whether the company can re-disclose the contributions of higher sales volumes, price revisions, rising raw material and fuel prices, and higher depreciation expense by factor.

The latest full-year operating profit forecast has been raised substantially from ¥11,300 million at the time of Q1 to ¥14,600 million, so the H1 results should show how much of the assumptions underlying the upward revision has been realised. We will track whether earnings growth continued in Q2 alone, whether higher revenue was driven mainly by precision chemicals, whether temporary factors such as inventory movements were included, and whether the company provides specific explanations of the revenue and operating profit levels required from Q3 onward.