Operating profit declines despite higher revenue, and profit recovery in H2 remains necessary even after a substantial full-year forecast cut

FY2026-H1 revenue was ¥156.406 billion, up 1.7% from ¥153.788 billion in the year-earlier period. However, operating profit fell 31.8% to ¥11.373 billion from ¥16.668 billion, and the operating margin declined 3.5 percentage points, from 10.8% to 7.3%. Although revenue remained at a similar level, the cost burden from equipment conversion, scheduled maintenance, start-up costs and raw material and fuel prices outweighed the benefit of higher revenue.

The full-year forecasts were revised from revenue of ¥320.0 billion to ¥300.0 billion, operating profit of ¥33.0 billion to ¥20.0 billion, ordinary profit of ¥33.0 billion to ¥25.0 billion and net profit attributable to owners of the parent of ¥23.0 billion to ¥15.0 billion. H1 progress rates were 52.1% for revenue, 56.9% for operating profit, 65.2% for ordinary profit and 42.8% for net profit. On the surface, operating profit and ordinary profit were more than 50% of their full-year forecasts. On a simple subtraction basis, however, H2 would require revenue of ¥143.594 billion, operating profit of ¥8.627 billion, ordinary profit of ¥8.700 billion and net profit of ¥8.586 billion. This assumes H2 net profit will exceed the H1 result.

The latest downward revision cited the slowdown in the Chinese economy, the situation in the Middle East and higher raw material and fuel prices due to the weaker yen, as well as scheduled maintenance costs in the display business, restructuring costs in the composite-materials business and delays in productivity improvements. In the next results, it will be necessary to assess whether the operating margin rebounds from 7.3%, whether the decline in display sales volumes continues and whether costs related to the composite-materials restructuring subside. Even if the full-year forecast is maintained, it will be difficult to verify where the ¥8.627 billion of H2 operating profit will be generated and through which cost improvements without additional disclosure of profit by business and volumes and prices.