Can the return to profitability in the first quarter be replicated from the second quarter onward?

First-quarter revenue for the fiscal year ending March 2027 was ¥324.004 million, up 69.3% from ¥191.368 million in the year-earlier period. Operating profit was ¥58.370 million, compared with an operating loss of ¥29.104 million a year earlier, marking a return to profitability. Ordinary profit was ¥63 million and net profit for the quarter was ¥43 million. The operating margin was approximately 18.0%, an improvement of approximately 33.2 percentage points from approximately negative 15.2% in the year-earlier period. This confirms a significant improvement in profitability, rather than merely an increase in revenue.

The company’s FY2027 full-year plan calls for revenue of ¥2,180 million, operating profit of ¥310 million, ordinary profit of ¥310 million and net profit of ¥220 million. First-quarter progress rates were therefore 14.9%, 18.8%, 20.3% and 19.5%, respectively. Although profit progress exceeded revenue progress, revenue was below 25%, the simple quarterly run-rate benchmark. The company said it advanced sales activities, coordinated delivery schedules with customers and considered alternative materials to avoid a concentration in the second half, but it has not disclosed H1-specific revenue or profit plans or quarterly order plans.

If the full-year plan is simply allocated 50% to H1, the benchmarks are revenue of ¥1,090 million, operating profit of ¥155 million and net profit of ¥110 million. On this basis, the second quarter alone would need to generate approximately ¥765.996 million in revenue, ¥96.630 million in operating profit and ¥67 million in net profit. These are not the company’s official half-year targets, but mechanical benchmarks for measuring progress at the next earnings announcement. If the second quarter falls short of these levels, the company would need to add more than ¥1,000 million in revenue and approximately ¥155 million in operating profit in the second half, increasing its reliance on the full-year plan.

The company attributed first-quarter revenue growth qualitatively to contracts being brought forward, the capture of demand for the combustion disposal of pyrotechnic products and an increase in higher-margin orders. Since revenue and profit contributions by factor, order volumes and the value of deliveries brought forward have not been disclosed, the next results should be assessed for second-quarter revenue and operating profit alone, as well as whether the same group of projects continued or the benefit from accelerated deliveries faded. Whether the full-year earnings forecast is maintained or revised at H1 will also be an important point of verification.