Will the divergence between marginal sales growth and declining operating profit continue?

FY2026 H1 revenue was ¥2,414.901 million, up 1.2% year on year, while operating profit was ¥128.001 million, down 47.8%, ordinary profit was ¥135.213 million, down 46.0%, and interim net profit attributable to owners of the parent was ¥82.741 million, down 51.3%. With revenue growth nearly stalled, profit has been cut in half, and the operating margin has fallen by approximately 5 percentage points, from about 10.3% in the same period last year to about 5.3%.

The full-year forecasts remain unchanged at revenue of ¥4,700 million, operating profit of ¥200 million, ordinary profit of ¥210 million and net profit attributable to owners of the parent of ¥140 million. At the H1 stage, progress was approximately 51.4% for revenue, 64.0% for operating profit and 59.1% for net profit. On a simple remaining-balance basis, the company needs to add ¥2,285.099 million in revenue and ¥71.999 million in operating profit in H2 to meet the full-year forecasts, but quarterly revenue has historically been seasonal, so it would not be appropriate to judge whether the plan will be achieved based solely on H1 progress.

Cumulative Q3 revenue and operating profit in FY2025 were ¥3,328 million and ¥236 million, respectively, representing progress of approximately 69.3% and 59.0% against the full-year forecasts. Based on the difference from the prior-year H1 figures, standalone Q3 revenue was approximately ¥943 million and operating profit was an approximately ¥9 million loss. Accordingly, in this year's Q3 it will be necessary to assess not only nine-month cumulative progress but also whether standalone Q3 performance absorbed the prior-year seasonal factors and eliminated the operating loss.

It is particularly important to determine whether the assumptions underlying the company's decision to maintain its full-year forecasts have changed as of H1. In the Q3 results, we will look at how the company explains the nine-month cumulative revenue and operating profit, standalone Q3 results and progress against the full-year forecasts, as well as the revenue and operating profit levels required in Q4. As in H1, it will be necessary to distinguish between profit merely progressing faster than revenue and a substantive profit recovery resulting from the end of elevated cost burdens.