Q1 operating profit is ahead of plan, but the full-year forecast remains cautious

Consolidated revenue in Q1 was ¥8,435 million, up 9.2% year on year. Operating profit was ¥1,033 million, up 58.6%, and ordinary profit was ¥1,138 million, up 56.5%. Operating profit growth substantially exceeded revenue growth, but profit attributable to owners of the parent fell 18.0% to ¥379 million, so the strong performance at the operating level did not flow through unchanged to bottom-line profit.

The full-year forecasts are revenue of ¥34,200 million, operating profit of ¥2,600 million, ordinary profit of ¥3,000 million and net profit of ¥1,700 million. Q1 progress rates were 24.7% for revenue, 39.7% for operating profit, 37.9% for ordinary profit and 22.3% for net profit. If 50% is treated simply as the half-year milestone, the first-half benchmarks are revenue of ¥17,100 million, operating profit of ¥1,300 million and net profit of ¥850 million. However, quarterly seasonality and internal targets have not been disclosed, so these are mechanical benchmarks, not the company’s formal first-half targets.

The Q1 operating margin was 12.3%, approximately 3.8 percentage points above the approximately 8.4% recorded in the same quarter of the previous year. The company attributed this to expanded sales of semiconductor-related products amid strong memory demand for generative AI applications and other uses, higher sales volumes, and improved profitability across the chemicals business. It has not disclosed the profit contribution from volume growth, pricing, product mix or cost reductions. In the first-half results, it will be important to determine whether the operating margin can remain around 12% and whether the improvement reflects higher volumes or better profitability.

The operating margin implied by the full-year forecast is 7.6%, below the Q1 actual margin of 12.3%. This does not necessarily mean that margins are expected to decline over the remainder of the year, but it is consistent with the full-year operating profit forecast being only 1.3% above the previous year. In addition to confirming whether first-half operating profit reaches ¥1,300 million, it will be important to determine whether margin gains can offset revenue falling short of ¥17,100 million, or whether the company will revise its full-year forecast.