First-quarter earnings are progressing ahead of the full-year forecast, but sustainability through the first half is the focus

First-quarter revenue for the fiscal year ending March 2027 was ¥7,347 million, up 0.7% year on year, while operating profit was ¥372 million, up 32.1%. The ¥57 million ordinary loss recorded in the year-earlier quarter turned into ordinary profit of ¥414 million, while the ¥112 million quarterly net loss attributable to owners of the parent turned into profit of ¥260 million. Improvement therefore extended beyond operating profit to non-operating income and expenses and net income.

The full-year forecasts are revenue of ¥29,000 million, operating profit of ¥1,000 million, ordinary profit of ¥1,100 million and net profit attributable to owners of the parent of ¥500 million. First-quarter progress rates are 25.3%, 37.2%, 37.6% and 52.0%, respectively. Revenue is close to a simple quarter of the full-year forecast, whereas profit is progressing ahead of revenue. Net profit in particular has already exceeded half of the full-year forecast in the first quarter alone, making it important to determine whether the first half will see a reversal of one-off factors or volatility in non-operating income and expenses.

The company cited increased data volumes accompanying the spread of AI, LTO demand against a backdrop of tight HDD supply, strong demand for magnetic and dielectric materials, product price correction initiatives and changes in sales mix as factors behind the earnings growth. However, it has not disclosed the monetary contribution of each factor or a volume-price breakdown. Through the cumulative second quarter, it will be necessary to assess not only whether revenue approaches ¥14,500 million, a simple half of the full-year plan, and operating profit approaches ¥500 million, but also whether margin improvement is dependent solely on passing through price increases.

The company also did not prepare a quarterly consolidated statement of cash flows for the first quarter, so support from operating cash flow cannot be confirmed. Special gains of ¥76 million and special losses of ¥66 million were nearly offset in scale, but details are also limited regarding why ordinary profit exceeded operating profit by ¥42 million. Accordingly, at the next results announcement, we will monitor not only cumulative operating-profit progress but also whether improvement in the core business continues after excluding equity-method investment gains and losses, foreign-exchange gains and losses, and extraordinary gains and losses.