First-quarter operating profit growth is ahead of the full-year plan, but its repeatability needs to be confirmed in the first half

In the first quarter from April to June 2026, revenue was ¥21,514 million, up 7.1% year on year, operating profit was ¥835 million, up 95.4%, and ordinary profit was ¥682 million. In the same quarter of the previous year, revenue was ¥20,087 million and operating profit was ¥427 million, while the operating margin improved from approximately 2.1% to approximately 3.9%. As operating profit grew faster than revenue, the current picture is that, in addition to higher volumes and shipments, the effects of cost reductions and production transfers lifted the operating margin.

The company has not revised its full-year forecast and expects revenue of ¥80,000 million, operating profit of ¥2,200 million, ordinary profit of ¥1,700 million and net income attributable to owners of the parent of ¥1,400 million. First-quarter progress rates were 26.9% for revenue, 38.0% for operating profit, 40.1% for ordinary profit and 30.1% for net income. For operating profit, ¥1,100 million in the first half, based on a simple equal allocation by quarter, is one benchmark to monitor. However, the company has not provided specific commentary on seasonality or the concentration of segment earnings in the second half, so ¥1,100 million should not be treated as a mechanical earnings forecast.

Net income was ¥421 million, down 98.1% from ¥22,384 million in the same quarter of the previous year. However, the previous year included a ¥22,057 million gain on bargain purchase arising from the conversion of Mepro Holdings and other entities into subsidiaries, so the decline in net income does not directly indicate a deterioration in operating performance. Factors cited for the first-quarter increase in operating profit include higher sales and shipments to the automotive and home-appliance sectors, production transfers from other companies, sales expansion initiatives, cost-reduction measures and the increase in yen-denominated amounts resulting from the weaker yen. The profit contribution and sales volumes of each factor have not been disclosed.

In FY2027-H1, the first points to monitor are whether operating profit builds to around ¥1,100 million and whether the revenue progress rate remains above 25%. It will also be important to determine the extent to which foreign-exchange effects, the pass-through of product and raw-material prices, and the benefits of cost reductions continue to affect ordinary profit. Since net income includes extraordinary gains such as gains on the sale of land in the United States, underlying performance should be assessed primarily through operating profit and ordinary profit, while monitoring whether additional disclosure is provided on the amounts and volumes associated with each factor behind changes in earnings.