Q1 was broadly in line with the full-year forecast, but FY2027-H1 will be the point at which 50% progress is assessed

Revenue in Q1 of the fiscal year ending March 2027 was ¥7,492 million, representing 22.4% progress against the full-year forecast of ¥33,400 million. Operating profit was ¥2,737 million, or 22.2% of the ¥12,300 million full-year forecast; ordinary profit was ¥2,907 million, or 23.3% of the ¥12,500 million forecast; and net income attributable to owners of the parent was ¥2,075 million, or 23.6% of the ¥8,800 million forecast. This is slightly below the simple 25% benchmark implied by allocating the full year evenly across four quarters, but the company has not revised its earnings forecast, making it difficult at this stage to conclude that the plan is materially behind schedule.

The simple FY2027-H1 benchmarks are revenue of ¥16,700 million, operating profit of ¥6,150 million, ordinary profit of ¥6,250 million and net income of ¥4,400 million. These represent 50% of the full-year forecasts provided by the company and are not the company's official half-year forecasts reflecting seasonality. Accordingly, it will be necessary to assess not only whether these figures are achieved, but also the extent to which revenue and operating profit progress improves from Q1 to Q2 and whether H1 margins are consistent with the full-year plan.

Q1 revenue increased 6.5% year on year, while operating profit declined 2.3%. The operating margin was approximately 36.5%, slightly below the approximately 36.8% calculated from the full-year forecast. Therefore, even if H1 revenue reaches ¥16,700 million, achieving operating profit of ¥6,150 million would be a separate issue if the decline in margins continues. On a cumulative basis, we would like to assess the breakdown between the Chemicals and Equipment businesses, the recognition of sales from the order backlog, and changes in pricing, volume and product mix.

The company did not prepare a cash flow statement for Q1, and operating cash flow and the period-end cash balance were not disclosed. In addition, the explanation for the increase in revenue and decline in operating profit was largely qualitative, citing server-related investment, demand for high-performance electronic devices and increased product shipments, with no quantitative breakdown by factor. In the next earnings release, it will be important to quantify not only cumulative H1 earnings progress, but also whether the forecast is revised, the contribution by segment and changes in margins.