Will operating profit growth despite lower revenue continue in FY2027-H1?

Revenue in Q1 of the fiscal year ending March 2027 was ¥2,082 million, down 1.8% from ¥2,121 million in the year-earlier period. Operating profit, however, rose 11.5% to ¥109 million from ¥98 million, raising the calculated operating margin from 4.6% to 5.2%, an increase of approximately 0.6 percentage points. Operating profit increased despite the decline in revenue, making the margin improvement the key change in the quarter’s results.

The year-earlier cumulative figures used for the first-half comparison were revenue of ¥4,114 million and operating profit of ¥132 million. Accordingly, in the first half of the fiscal year ending March 2027, the key point will be whether cumulative operating profit, including Q2, exceeds ¥132 million, rather than merely whether Q1 profit increased. For revenue, it will also be important to see how much the delayed shipments of cosmetics-related products are resolved in Q2 compared with the year-earlier revenue of ¥4,114 million.

The company has not changed its full-year forecasts and expects revenue of ¥8,500 million, operating profit of ¥350 million, ordinary profit of ¥260 million, and net income attributable to owners of the parent of ¥210 million. As of Q1, progress against the full-year forecasts was 24.5% for revenue and 31.1% for operating profit. Operating profit is progressing faster than revenue, but seasonal patterns and shipment timing vary by quarter, so the Q1 progress rate alone is insufficient to determine whether the full-year forecast will be exceeded.

The Q1 explanation cited increased shipments of products for lithium-ion secondary batteries, delays in shipments of certain cosmetics-related products, and higher prices for key raw materials and fuels. However, no monetary breakdown of the contributions from volume, pricing, and costs was disclosed. In the first-half results, it will be necessary to assess, together with segment profit, how much of the ¥109 million in operating profit was recurring, whether the profit increase was accompanied by a recovery in revenue, and whether the operating margin can be maintained at around 5.2%.