First-quarter operating profit progress outpaced revenue, but can this lead be sustained through the first half?

Revenue in the first quarter of the fiscal year ending March 2027 was ¥26,321 million, up 8.3% year on year, while operating profit was ¥2,057 million, up 37.1%. Compared with revenue of ¥24,294 million and operating profit of ¥1,500 million in the same quarter of the previous year, the operating margin improved by 1.6 percentage points, from approximately 6.2% to approximately 7.8%. Ordinary profit was ¥2,409 million, and net profit attributable to owners of the parent was ¥1,647 million, with final profit also increasing 39.6% year on year.

The full-year forecasts are revenue of ¥101,000 million, operating profit of ¥5,900 million, ordinary profit of ¥7,000 million and net profit of ¥4,600 million. First-quarter progress rates were 26.1% for revenue, 34.9% for operating profit, 34.4% for ordinary profit and 35.8% for net profit, putting operating profit and net profit approximately 8 to 10 percentage points ahead of revenue. However, this is a comparison based only on the first quarter and does not directly demonstrate the validity of the company’s plan, which incorporates seasonality and demand and cost conditions in the second half.

If the first half is assumed to represent a simple 50% of the full-year forecast, the mechanical benchmarks would be revenue of ¥50,500 million, operating profit of ¥2,950 million and net profit of ¥2,300 million. First-half results in the previous year were revenue of ¥47,797 million, operating profit of ¥2,694 million and net profit of ¥2,109 million. At the next results announcement, we will want to confirm not only whether revenue and profit both increase year on year, but also whether results exceed the simple half-year benchmarks based on splitting the full-year forecasts in half.

There was no revision to the full-year forecasts as of the first quarter, and the essentially flat operating profit plan of ¥5,900 million remains unchanged. At the next results announcement, it will be important to see, in addition to cumulative first-half results, how much of the remaining second-half revenue of ¥50,500 million and operating profit of ¥2,950 million the company expects to generate, and whether quantitative explanations are added for the full-year plans by segment and the volume and pricing factors.