Can 1Q earnings momentum translate into headroom against the full-year plan in H1?

In 1Q of the fiscal year ending March 2027, revenue was ¥152.383 billion and operating profit was ¥14.041 billion. The full-year forecasts are ¥595.0 billion in revenue and ¥42.5 billion in operating profit, putting 1Q progress at 25.6% for revenue and 33.0% for operating profit. Operating profit progress was approximately 7.4 percentage points ahead of revenue progress, against a backdrop of higher volumes, price pass-through and foreign exchange gains lifting earnings.

The 1Q results presentation assumes full-year progress in line with the company plan, despite stating that 1Q performance exceeded the initial plan. This is because customer inventory adjustments are expected in the second half. The company is therefore not treating the 1Q upside as scope for a corresponding upward revision to the full-year forecasts. Whether H1 revenue exceeds ¥297.5 billion and operating profit exceeds ¥21.25 billion will indicate how much of the weakness expected in the second half has already emerged.

The 1Q operating margin was approximately 9.2%, a slight decline from approximately 9.4% in the same period of the previous year. Operating profit growth was limited to 7.7%, versus 9.4% revenue growth, so it will be necessary to assess not only the high earnings progress rate but also whether revenue growth is accompanied by margin improvement. In H1, we will track how much the ¥28.459 billion of operating profit required for the remainder of the year, based on the ¥42.5 billion full-year forecast, declines from the amount required at the end of 1Q.

The ¥14.041 billion of 1Q operating profit comprised ¥8.101 billion from High Performance Polymers, ¥4.245 billion from Materials, ¥308 million from Safety, ¥672 million from Smart and ¥499 million from Life Sciences. In H1, the key points will be whether High Performance Polymers' high earnings contribution continues, whether Safety's sharp earnings decline affects the full-year plan, and whether the company provides additional disclosure at the H1 stage on full-year outlooks and the amounts required in the second half by segment.