FY2027 Q1: Revenue and profit increased, but margin improvement includes temporary factors

First-quarter revenue was ¥34.584 billion, up 9.1% year on year, operating profit was ¥3.242 billion, up 30.1%, and ordinary profit was ¥3.675 billion, up 33.9%. Net profit attributable to owners of the parent was ¥2.898 billion, up 16.1%. The operating margin was approximately 9.37%, up approximately 1.51 percentage points from approximately 7.86% in the same quarter of the previous year, confirming that operating profit growth outpaced revenue growth.

Factors behind the profit increase included passing higher raw-material prices through to selling prices, strong sales of high-value-added products, and the consumption of inventory purchased before prices rose. In particular, the inventory factor temporarily suppresses the cost of sales when raw-material prices are rising, so it will be necessary to separately assess whether the operating margin can remain in the 9% range after inventory levels normalize. In the past, revisions to selling prices contributed to revenue growth, but there were also periods when the company was unable to immediately absorb increases in raw-material prices, putting pressure on profits.

The full-year operating profit forecast is ¥11.5 billion, of which approximately 28.2% was achieved in the first quarter alone. Rather than simply annualizing the first-quarter profit increase, it will be important to check whether price pass-through continues in the first half and whether the improved product mix of high-value-added products remains after the benefit from inventory consumption fades. In the earnings release, it will be important to see whether the effects of selling-price revisions, volume, high-value-added products, and inventory valuation and consumption can be disclosed separately, at least on a monetary basis.