Revenue growth has outpaced operating profit growth by a wide margin, with higher raw-material costs weighing on earnings.

FY2027-Q1 revenue was ¥9,754 million, up ¥959 million, or 10.9%, from ¥8,795 million in the year-earlier quarter. Operating profit, meanwhile, was ¥1,242 million, just ¥20 million, or 1.6%, above the year-earlier ¥1,222 million. The operating margin, calculated simply, declined by approximately 1.2 percentage points, from about 13.9% in the year-earlier quarter to about 12.7% in the current quarter, indicating that revenue growth has not translated directly into earnings growth.

By segment, high-purity chemicals revenue rose 10.2% year on year to ¥8,383 million, but operating profit fell 9.6% to ¥902 million. Transport revenue increased 16.5% to ¥1,350 million and operating profit rose 48.8% to ¥337 million, so the improvement in company-wide operating profit was largely supported by the transport business. In high-purity chemicals, price pass-through in the semiconductor business and higher shipments of electronic materials lifted revenue, while lower shipments in the energy and general-products businesses and soaring raw-material costs weighed on profit.

The operating profit bridge in the earnings presentation shows a ¥300 million positive contribution from sales volume, a ¥350 million negative contribution from prices, a ¥45 million negative contribution from other factors in the high-purity chemicals business, and a ¥115 million positive contribution from other businesses and eliminations. Higher volumes alone did not absorb the effects of prices and costs. The negative price contribution indicates that even where price pass-through was implemented, it did not fully offset higher raw-material costs. The company also disclosed an average Chinese import price of ¥384/kg for high-purity hydrofluoric acid, so the next results should be assessed with both progress in price pass-through and procurement prices in view.

In FY2027-H1, the focus will be on how far high-purity chemicals operating profit can recover toward the business's year-earlier profit level. It will be important to confirm whether the segment can at least maintain its FY2027-Q1 operating margin of approximately 10.8% and absorb higher raw-material costs through price pass-through. Whether the operating profit bridge in H1 is also disclosed by amount for sales volume, prices, raw materials and expenses will be an important check on earnings repeatability.