Achieving operating profitability on a cumulative basis by Q2 is the first hurdle to meeting the full-year forecast

In Q1 of the fiscal year ending March 2027, revenue was ¥8,177 million, down 0.9% year on year, while operating loss was ¥258 million, ordinary loss was ¥115 million and net loss attributable to owners of the parent was ¥95 million. Revenue reached 23.4% of the full-year forecast of ¥35,000 million, only 1.6 percentage points below the simple 25% benchmark for one quarter, but operating profit was negative against the full-year forecast of ¥250 million, creating a significant gap between revenue and profit progress.

If the full-year forecast remains unchanged, revenue of ¥26,823 million and operating profit of ¥508 million will be required after Q1. To bring first-half operating income back to break-even or better, standalone Q2 operating profit must be at least ¥258 million. Ordinary profit and net profit also stood at △¥115 million and △¥95 million, respectively, against full-year forecasts of ¥100 million and ¥60 million, requiring the company to generate an additional ¥215 million and ¥155 million, respectively, during the remaining period.

The Q1 operating margin was approximately △3.2%, around 3.9 percentage points below the approximately 0.7% operating margin implied by the full-year forecast. Operating profit was ¥232 million in the year-earlier quarter, making it important to determine whether the deterioration in profitability caused by factors such as the drug price revision is temporary and whether profitability will recover in Q2 through normalization of volumes, product mix and sales timing. Even if the company becomes profitable in the first half, the unchanged full-year forecast will remain of low confidence if the second-half profit required to meet it is excessive.

At the next results announcement, it will be necessary to review separately not only whether first-half revenue reaches the simple 50% progress benchmark of ¥17,500 million, but also standalone Q2 operating profit, segment results for the pharmaceuticals business and other businesses, and ordinary and net profit. The key question is whether the profit required during the remaining period to maintain operating profit of ¥250 million can be explained solely by the resolution of the temporary factors behind the Q1 loss.