Q1 progress broadly on track against full-year plan; sustainability to be confirmed in H1

Q1 revenue for the fiscal year ending March 2027 was ¥22,819 million, up 22.3% year on year, while operating income was ¥6,172 million, up 31.5%. Against full-year forecasts of ¥85,800 million in revenue and ¥24,300 million in operating income, Q1 progress rates were 26.6% and 25.4%, respectively. Compared with the 25% of the year elapsed after 3 months, revenue was 1.6 percentage points ahead and operating income was 0.4 percentage points ahead. At least on the surface, the year has started in line with the full-year plan.

Because the company’s H1 plan cannot be confirmed, the levels of ¥42,900 million in revenue and ¥12,150 million in operating income are mechanical checkpoints based on simply allocating the full-year forecasts across 6 months. On this basis, the revenue and operating income required in Q2 alone after the Q1 results are ¥20,081 million and ¥5,978 million, respectively. These are not forecasts because seasonality is not taken into account, but at the next earnings release it will be necessary to check whether results fall materially below these levels and, if they do, whether the company explains factors such as price revisions or changes in demand.

In terms of profitability, Q1 operating margin was approximately 27.0%, up approximately 1.9 percentage points from approximately 25.2% a year earlier. It also exceeded the 24.5% operating margin for the fiscal year ended March 2026. By contrast, the operating margin implied by the full-year forecast for the fiscal year ending March 2027 is approximately 28.3%, representing a plan that assumes a further improvement of approximately 1.3 percentage points from the Q1 result. In the H1 results, it will be necessary to examine by segment not only revenue progress but also whether margins are approaching the level assumed in the full-year plan.

The full-year earnings forecast was not revised as of Q1. At the next earnings release, it will be important to determine which of the following factors continued from Q1: demand, particularly for AI-related applications; sales volumes; price revisions; the weaker yen; and improved operating rates. The company has not disclosed the monetary contribution of each factor or a standalone H1 forecast. Therefore, even if the full-year forecast is maintained, the extent to which the H1 results have increased the likelihood of achieving the plan will need to be assessed from segment figures and profit margins.