Can the sharp increase in first-quarter profit be replicated in FY2027-H1?

FY2027-Q1 revenue was ¥38,676 million, up 20.9% year on year, while operating profit was ¥5,129 million, up 176.0%, and ordinary profit was ¥6,559 million, up 187.0%. Operating profit grew considerably faster than revenue, and progress against the company’s FY2027-H1 forecasts reached 52.3% for revenue, 64.1% for operating profit, 72.9% for ordinary profit and 72.0% for net profit attributable to owners of the parent.

With its first-quarter results, the company raised its FY2027-H1 operating profit forecast by 60.0%, from ¥5,000 million to ¥8,000 million, and increased its ordinary profit forecast from ¥5,700 million to ¥9,000 million and its net profit forecast from ¥4,500 million to ¥6,500 million. The revenue forecast was unchanged at ¥74,000 million, indicating that the revision primarily reflects improved assumptions for margins and profitability rather than volume growth.

Simply deducting first-quarter results from the first-half forecasts means that Q2 alone would need to generate revenue of ¥35,324 million, operating profit of ¥2,871 million, ordinary profit of ¥2,441 million and net profit of ¥1,821 million. The first-half operating profit target can be achieved even if Q2 operating profit is well below the ¥5,129 million recorded in Q1, but the key issue will be whether the slowdown in profit remains within expectations if the lag before higher raw-material prices are reflected in cost of sales narrows.

The full-year forecasts were also raised, with operating profit increased from ¥10,000 million to ¥13,000 million, ordinary profit from ¥11,500 million to ¥15,000 million and net profit from ¥9,000 million to ¥11,000 million. Meanwhile, first-quarter net profit fell 48.0% year on year, primarily because the benefit from lower tax expenses recorded in the previous year had disappeared. At the next results announcement, it will be important to confirm that the upside in operating profit is not dependent on tax factors and continues to flow through to first-half ordinary profit and net profit.