First-quarter operating profit is ahead of plan, but the buildup of profit in the first half still needs to be confirmed

In the first quarter of FY2027, revenue was ¥30,098 million, up 4.0% year on year, and operating profit was ¥2,197 million, up 25.0%. The full-year forecasts are ¥118,000 million in revenue and ¥7,500 million in operating profit, implying progress rates of 25.5% for revenue and 29.3% for operating profit on a simple calculation. Operating profit is 3.8 percentage points ahead of revenue in terms of progress, suggesting that streamlining activities and lower costs in North America are benefiting earnings.

On the other hand, the company has disclosed only its full-year forecasts, without specific first-half forecasts or amounts of revenue and operating profit required in the second half. Deducting first-quarter results from the full-year forecasts leaves ¥87,902 million in revenue and ¥5,303 million in operating profit to be generated over the remaining 3 quarters. In FY2027-H1, we need to confirm whether results are at least approaching the simple half-year benchmarks of ¥59,000 million in revenue and ¥3,750 million in operating profit.

The first-quarter supplementary materials describe progress against the full-year forecasts as “on track,” but do not provide the progress rates themselves. Accordingly, in the first-half results we want to verify whether the company’s assessment matches the actual progress rates, particularly whether the increase in operating profit was not limited to first-quarter factors. With operating profit up 25.0% while revenue growth was limited to 4.0%, the sustainability of the gross margin, selling, general and administrative expenses, and streamlining benefits will be important.

The company also did not prepare a quarterly consolidated cash flow statement for the first quarter, and cash flow from operating activities was not disclosed. Cash flow from operating activities was ¥12,214 million in FY2026, so the first-half results should also indicate whether higher profit is being reflected in working capital and cash generation, providing a basis for assessing earnings quality.