1Q revenue and operating profit are on plan, but lower-line earnings remain weak

Revenue in 1Q of FY2027 was ¥22,815 million, up 9.6% year on year, while operating profit was ¥1,343 million, up 7.0%. For the full year, the company forecasts revenue of ¥84,800 million, operating profit of ¥2,950 million, ordinary profit of ¥2,810 million and net income attributable to owners of the parent of ¥1,630 million, based on a 34.7% increase in operating profit from the previous fiscal year.

The trend differs at the lower levels of the income statement. 1Q ordinary profit was ¥1,219 million, down 4.4% year on year, while quarterly net income attributable to owners of the parent was ¥394 million, down 25.7%. Quarterly earnings per share was also only ¥23.92, indicating that the increase in operating profit has not flowed through to ordinary profit and net income. The 1Q disclosure does not explicitly break down the specific factors behind the declines in ordinary profit and net income, which should also be noted.

The mechanical 1Q progress rates against the full-year forecasts are 26.9% for revenue, 45.5% for operating profit, 43.4% for ordinary profit and 24.2% for net income. Operating profit is progressing faster than revenue, but net income remains just under one-quarter of the full-year forecast. However, the company’s quarterly seasonality and weather-related effects cannot be adjusted for through this comparison alone. Rather than treating 50% as a direct achievement benchmark, it will be necessary to assess the year-on-year improvement together with whether the full-year forecasts are maintained.

At the next first-half results announcement, the mechanical midpoints of ¥42,400 million in revenue, ¥1,475 million in operating profit, ¥1,405 million in ordinary profit and ¥815 million in net income will be used to assess which earnings line approaches these levels. In particular, whether net income rises from ¥394 million to ¥815 million in the first half, and whether the full-year operating profit forecast of ¥2,950 million is maintained without revision, will provide evidence for the earnings recovery scenario.