Strong 1Q earnings growth is well ahead of the first-half and full-year plans, but 2Q will test whether it is repeatable

In 1Q of FY2027, revenue was ¥223,025 million, operating profit was ¥14,944 million, ordinary profit was ¥13,750 million, and net income attributable to owners of the parent was ¥8,941 million. Year on year, revenue rose 12.3%, operating profit 83.1%, ordinary profit 127.7%, and net income 109.8%, with profit growth substantially outpacing revenue growth. The earnings presentation materials stated that revenue and operating profit both reached record quarterly highs.

The full-year forecasts remain unchanged at ¥820,000 million in revenue, ¥36,000 million in operating profit, ¥32,000 million in ordinary profit, and ¥31,500 million in net income. At the 1Q stage, progress was approximately 27.2% for revenue and 41.5% for operating profit. Compared with a simple even six-month allocation, revenue had exceeded one-quarter of the full-year plan, while operating profit had already exceeded 40% of the plan. FY2026 results were revenue of ¥811,638 million and operating profit of ¥32,894 million, implying targets for FY2027 of 1.0% revenue growth and 9.4% operating profit growth.

However, the 1Q operating margin of 6.7% was above both the 4.1% full-year margin in FY2026 and the 4.4% FY2027 full-year forecast. Price revisions, stable supply, and a shift toward higher-value-added products were cited as drivers of profit growth, but the profit contribution from price revisions, the breakdown between sales volume and unit prices, and changes in raw material and SG&A expenses were not disclosed. The company also did not prepare a quarterly consolidated cash flow statement for 1Q, so the support provided by operating cash flow and investment spending cannot be confirmed.

In FY2027-H1, key points will be whether operating profit falls sharply in 2Q alone and whether cumulative first-half operating profit can secure half of the full-year plan, or ¥18,000 million. With risks remaining from higher raw material costs, Asian market conditions, US housing and construction demand, foreign exchange, and supply uncertainty related to the Middle East, the sustainability of the 1Q high margin needs to be assessed by segment to determine whether it reflects an initial benefit from price revisions or a lasting improvement in sales volumes and product mix.