Q1 revenue and operating profit are on track, but net income is lagging

In Q1 of the fiscal year ending March 2027, revenue was ¥12,458 million, up 5.8% year on year, operating profit was ¥1,039 million, up 7.7%, and ordinary profit was ¥1,050 million, up 1.6%. Although revenue and operating profit exceeded the year-earlier levels, net income attributable to owners of the parent fell 3.1% to ¥518 million, indicating that the improvement at the operating level has not flowed through to bottom-line profit.

Calculated simply against the full-year forecasts, progress was 24.0% for revenue, based on ¥12,458 million divided by ¥52,000 million; 23.1% for operating profit, based on ¥1,039 million divided by ¥4,500 million; 22.3% for ordinary profit, based on ¥1,050 million divided by ¥4,700 million; and 16.7% for net income, based on ¥518 million divided by ¥3,100 million. Compared with the 25.0% share of the fiscal year elapsed in Q1, the gap for revenue and operating profit was around 1 percentage point, while net income was 8.3 points below that benchmark.

Revenue growth was driven by higher shipments and sales of products for the semiconductor and electronic components markets, motorcycle-related products, reflective sheets for Europe, and the EPC business. On the other hand, lower shipments of adhesives and certain agrochemical and pharmaceutical chemicals, lower sales of building materials for detached houses, higher costs on certain large projects, increases in R&D and other expenses, and a temporary decline in the sales mix of high-value-added products weighed on profit. The company has not disclosed a monetary breakdown by factor, so for H1 it will also be necessary to determine how much of the contribution from volume, pricing, foreign exchange and costs can be quantified.

For the next H1 results, the simple 50% benchmarks will be revenue of ¥26,000 million, operating profit of ¥2,250 million and net income of ¥1,550 million. However, the company has not disclosed quarterly seasonality or a second-half weighting, so these figures are no more than mechanical benchmarks. If H1 net income falls materially short of ¥1,550 million, the achievability of full-year net income of ¥3,100 million, the status of extraordinary gains and losses and the tax burden, and whether the full-year forecasts are revised will need to be assessed together.