First-half return to profitability progressed, but Q3 will test whether the temporary margin uplift is sustainable

Revenue for the first half of the fiscal year ending November 2026 was ¥3,138 million, an increase of approximately ¥339 million from approximately ¥2,799 million in the same period of the previous year. Operating profit was ¥187 million, turning profitable from an operating loss of approximately ¥38.6 million in the same period of the previous year. Ordinary profit was also ¥210 million, compared with a loss of approximately ¥18 million in the same period of the previous year, while interim net income attributable to owners of the parent was ¥154 million, compared with a loss of approximately ¥11 million. The main profit levels on the income statement all improved at the same time.

However, the improvement in profit was not evenly distributed throughout the first half. First-quarter revenue was ¥1,413 million and operating profit was approximately ¥10.7 million, whereas standalone second-quarter revenue, calculated simply as the difference from the first-half cumulative figures, was approximately ¥1,725 million and operating profit was approximately ¥176.4 million. The operating margin rose from approximately 0.8% in the first quarter to approximately 6.0% for the first half and approximately 10.2% in the standalone second quarter, suggesting that the improvement in profit may have been concentrated in the second quarter.

The company cited the recovery in demand, partial implementation of price corrections, provisional price pass-through against the backdrop of the situation in the Middle East, and reductions in overhead expenses as factors behind the increase in profit. It also explained that manufacturing costs for shipped products are subject to a time lag, and that margins were temporarily elevated because prices from before the surge in raw-material prices were reflected for a period. No quantitative bridge showing how many millions of yen were contributed by each factor, including cost of sales, gross profit, raw-material costs and price pass-through, was available, so the quality of earnings cannot yet be fully separated.

At the next results announcement, we will compare nine-month cumulative revenue with ¥4,301 million in the same period of the previous year to determine whether the first-half 12.1% growth rate has continued. On the profit side, it will be important to see whether standalone third-quarter results remain profitable and whether the nine-month cumulative operating margin avoids a significant decline from the first-half level of approximately 5.96%. In addition, disclosure of at least the monetary or margin impact of price corrections, provisional pass-through, the raw-material cost lag and expense reductions will help assess the sustainability of the return to profitability.