Full-year guidance unchanged, but H1 is a period for closing the profit gap

Consolidated revenue for the first quarter of the fiscal year ending March 2027 was ¥121.896 billion and operating profit was ¥5.553 billion, up 21.3% and 88.6%, respectively, year on year. Ordinary profit was also strong at ¥11.254 billion, up 81.5% year on year, but net profit attributable to owners of the parent was ¥4.192 billion, down 3.9%. The starting point for the next earnings release is that, despite substantial profit growth through operating profit, net profit did not move in the same direction.

Full-year forecasts are revenue of ¥485.0 billion, operating profit of ¥23.5 billion, ordinary profit of ¥37.5 billion and net profit attributable to owners of the parent of ¥24.5 billion. First-quarter progress rates were 25.1%, 23.6%, 30.0% and 17.1%, respectively. Revenue and operating profit were broadly in line with the 25% elapsed portion of the fiscal year, while ordinary profit was ahead, driven by improved equity-method investment gains and foreign exchange gains and losses. Net profit lagged because of higher income tax expense. The company did not revise its earnings forecasts as of the first quarter, and its materials did not characterize actual results as exceeding or tracking the plan.

A simple 50% H1 run rate would mean revenue of ¥242.5 billion, operating profit of ¥11.75 billion, ordinary profit of ¥18.75 billion and net profit of ¥12.25 billion. Based on first-quarter results, the second quarter alone would need to generate approximately ¥120.604 billion in revenue, ¥6.197 billion in operating profit, ¥7.496 billion in ordinary profit and ¥8.058 billion in net profit. These are not half-year targets disclosed by the company, but they provide a practical benchmark for measuring the distance to full-year guidance at the H1 stage.

For bottom-line profit, the presentation materials state that the impact of income taxes and profit attributable to non-controlling interests deteriorated from negative ¥1.5 billion in the year-earlier period to negative ¥5.7 billion. Accordingly, H1 will require confirmation not only of operating profit growth, but also of the level of tax expense, the reversal of equity-method investment gains and losses and foreign exchange gains and losses, and the presence or absence of extraordinary gains and losses. Even if operating profit reaches the 50% benchmark, the impact of profit growth on shareholder returns and valuation will remain limited unless net profit approaches ¥12.25 billion.