Sales are tracking the full-year forecast, but profit recovery is the focus for the next interim results

First-quarter sales in FY2027 were ¥4,284 million, up 7.2% year on year, representing progress of 26.8% against the full-year sales forecast of ¥16,000 million. Simply annualizing the first quarter would imply annual sales of ¥17,136 million, so sales are not behind plan. Operating profit, however, was ¥41 million and ordinary profit was ¥45 million, representing progress of only 7.5% and 9.0%, respectively, against full-year forecasts of ¥550 million and ¥500 million.

By sales breakdown, domestic sales rose to ¥1,765 million from ¥1,463 million in the same period of the previous year, while export sales were broadly flat at ¥2,519 million versus ¥2,532 million. The overall increase in sales was supported more by higher domestic sales and product mix than by growth in export volumes or value. At the next interim results, it will be necessary to determine from sales by region and product category whether the increase in domestic sales reflects temporary project factors and whether exports are returning to a growth trajectory.

Using a mechanical benchmark of 50% of the full-year forecast for the interim period, sales of ¥8,000 million, operating profit of ¥275 million and ordinary profit of ¥250 million provide reference points. These are monitoring benchmarks based on an even allocation of the full-year forecasts, not company forecasts for the interim period. If operating profit falls below ¥275 million, achieving the full-year forecast of ¥550 million in the second half will require substantial improvement, including recovery of the shortfall from the first half.

First-quarter net profit rose 108.3% year on year to ¥200 million, but this included a ¥230 million gain on the sale of investment securities, which partly offset the weak progress in operating profit. Therefore, in FY2027-H1 it will be necessary to assess not only whether sales reach around ¥8,000 million, but also whether operating profit excluding extraordinary gains approaches ¥275 million and whether the full-year forecast is revised.