Can the substantial first-quarter profit growth be validated in the first half?

FY2027-Q1 revenue was ¥35,158 million, up 7.6% year on year, operating profit was ¥4,146 million, up 56.4%, ordinary profit was ¥4,272 million, up 74.7%, and net profit attributable to owners of the parent was ¥2,842 million, up 92.8%. Compared with revenue of ¥32,679 million and operating profit of ¥2,650 million in the same period of the previous year, the operating margin rose from approximately 8.1% to approximately 11.8% on a calculated basis, indicating that profit growth outpaced revenue growth.

In Q1, the company revised its full-year forecasts to revenue of ¥145,000 million, operating profit of ¥14,500 million, ordinary profit of ¥14,500 million, and net profit of ¥9,500 million. Q1 progress was therefore approximately 24.2% for revenue, 28.6% for operating profit, 29.5% for ordinary profit, and 29.9% for net profit, meaning that profit progress exceeded a simple even quarterly allocation. On the other hand, unless H1 revenue reaches ¥72,500 million and operating profit reaches ¥7,250 million, the second half will need to generate more than ¥72,500 million in revenue and more than ¥7,250 million in operating profit.

The company attributed Q1 profit growth to increased sales of compounds and other products, the pass-through of higher raw-material costs, and price adjustments in Japan and overseas. However, it did not disclose the contribution amounts from prices, volumes, and product mix. The Q1 earnings release also did not include a quarterly consolidated statement of cash flows, so operating cash flow and investing cash flow cannot be confirmed. In FY2027-H1, we will assess the standalone Q2 profit level, the sustainability of price pass-through, and the company’s ability to generate cash after absorbing working capital and capital expenditures.