Will the pattern of revenue growth but shrinking margins stop in the first half?

In the first quarter from 21 March 2026 to 20 June 2026, revenue increased by ¥436 million to ¥15,742 million from ¥15,306 million in the same period of the prior year, while operating income decreased by ¥255 million from ¥1,575 million to ¥1,320 million. Ordinary income was also ¥1,344 million, down 6.9% year on year, and net income attributable to owners of the parent was ¥922 million, down 1.9%, indicating that revenue growth has not flowed through from the operating level to net income.

The first-quarter progress rates against the full-year forecasts were approximately 25.4% for revenue, calculated as ¥15,742 million ÷ ¥62,000 million, and approximately 37.7% for operating income, calculated as ¥1,320 million ÷ ¥3,500 million. If 50% of the full-year forecast is simply used as the first-half progress benchmark, revenue would need to increase by ¥15,258 million and operating income by ¥430 million in 2Q alone from the first-quarter results. This is a mechanical benchmark for assessing the distance to the full-year forecasts at the next results announcement, not a first-half plan presented by the company.

The operating margin calculated from revenue and operating income declined by approximately 1.9 percentage points, from approximately 10.3% in the same period of the prior year to approximately 8.4% in the current quarter. Against the 7.0% full-year operating margin in the fiscal year ended March 2026, the simple calculation of FY2027 forecast operating income of ¥3,500 million divided by revenue of ¥62,000 million gives an operating margin of approximately 5.6%. The company cited various increases in costs associated with business activities as the reason for the decline in first-quarter profit, but did not disclose the amount of the cost increases or the amount absorbed through price revisions.

By segment, packaging containers posted profit of ¥814 million, down 21.0% year on year, and housewares posted profit of ¥280 million, down 9.4%, while industrial materials posted profit of ¥284 million, up 21.4%. At the next results announcement, in addition to whether the rates of profit decline in packaging containers and housewares narrow in the first half and whether industrial materials continues to grow profit, we will assess whether the effects of price pass-through and productivity improvements needed to reach operating income of ¥1,750 million are quantified.