FY2027-Q1 returned to profitability on mass-production projects; FY2027-H1 will test whether the recovery is sustainable

FY2027-Q1 revenue was ¥3,561.041 million, up 77.3% from ¥2,008.529 million in the same period of the previous year. Operating results turned from an operating loss of ¥59.614 million in the same period of the previous year to operating income of ¥37.911 million, while ordinary results turned from an ordinary loss of ¥58.9 million to ordinary income of ¥40.482 million. Net income attributable to owners of the parent also turned from a loss of approximately ¥6 million in the same period of the previous year to income of ¥40.529 million. Both revenue and earnings improved year on year, indicating a clear recent turnaround.

The full-year forecasts are ¥13,800 million in revenue, ¥454 million in operating income and ¥286 million in net income, putting Q1 progress at 25.8%, 8.4% and 14.2%, respectively. Revenue is close to a simple one-quarter pace, but operating income is lagging revenue. Against Q1 operating income of ¥37.911 million, ¥416.089 million remains to be generated to meet the full-year forecast, requiring a substantial increase in the operating margin from Q2 onward. Q1's operating margin was also only approximately 1.1%, still below the approximately 3.3% implied by the full-year operating income forecast.

The comparable period, FY2026-H1, recorded revenue of ¥3,965.595 million, an operating loss of ¥1 million, ordinary income of ¥7 million and a net loss of ¥14 million. FY2025-H1 also recorded revenue of ¥5,659.875 million and operating income of ¥104 million. Although Q1 improved year on year, it is not yet possible to conclude that earnings have recovered to historical levels on a half-year basis. In FY2027-H1, it will be necessary to check whether revenue exceeds at least the ¥3,965.6 million recorded in FY2026-H1 and whether operating income can remain positive.

The company attributes the improvement to the launch and revenue expansion of mass-production display projects, while also stating that initial project-launch costs and manufacturing costs weighed on profitability. The amounts of the initial costs, mass-production volumes, unit prices and gross margins by project have not been disclosed, making it impossible to determine whether the Q1 return to profitability resulted from temporary revenue recognition or represents a sustained improvement from the stabilization of mass production. In H1, the focus will be not only on additional Q2 revenue but also on the increase in operating income and improvement in the operating margin.

The full-year earnings forecast had not been changed as of Q1, and the full-year dividend forecast remained ¥6 per share. FY2026 ended with a net loss of ¥2,301 million, including an impairment loss on fixed assets of ¥2,027 million, whereas FY2027 forecasts net income of ¥286 million and a dividend of ¥6 per share. Accordingly, an important focus of the H1 results will be whether the earnings forecast and dividend policy are maintained. In particular, if operating income turns negative again in Q2, the company will need to provide additional explanation supporting the simultaneous maintenance of the ¥454 million full-year operating income forecast and the ¥6 dividend.