Revenue growth but lower margins, with the probability of achieving the full-year forecast the focus in Q3

FY2026-H1 revenue was ¥19,023 million, up 3.9% year on year, while operating profit was ¥2,475 million, down 5.1%, ordinary profit was ¥2,341 million, down 14.0%, and net profit attributable to owners of the parent was ¥1,365 million, down 40.5%. The operating margin was approximately 13.0%, down approximately 1.2 percentage points from approximately 14.3% in the prior-year first half. Revenue growth did not translate directly into profit, making the decline in profitability the central issue in these results.

By quarter, FY2026-Q1 revenue was ¥8,857 million, operating profit was ¥1,057 million, ordinary profit was ¥832 million and net profit was ¥481 million. Q2 alone, calculated as the difference between the cumulative figures, generated revenue of ¥10,166 million, operating profit of ¥1,418 million, ordinary profit of ¥1,509 million and net profit of ¥884 million. Operating profit and ordinary profit improved from Q1 alone. However, ordinary profit in Q2 alone was almost flat year on year, so it cannot be said that the increase in revenue was sufficient to restore margins.

Progress against the company’s full-year forecasts at the interim stage was 46.4% for revenue, 57.6% for operating profit, 50.9% for ordinary profit and 50.6% for net profit. Ordinary profit progress was reported to be approximately in line with the 5-year average interim progress rate of approximately 50.6%, making it difficult to conclude that the full-year plan is immediately at risk. Revenue, however, had not reached the 50% mark for the elapsed period, while operating profit was ahead, so the key issue will be whether the company can build revenue in the second half while controlling depreciation, manufacturing costs and expenses related to idle facilities.

At the Q3 results, simple benchmarks based on evenly distributed annual progress would be revenue of ¥30,750 million, operating profit of ¥3,225 million, ordinary profit of ¥3,450 million and net profit of ¥2,025 million. If operating profit falls below this level, the company would need to generate more than ¥1,075 million in Q4 alone to achieve the full-year forecast of ¥4,300 million, making second-half seasonality and the recognition of expenses important considerations. The interim results did not disclose amounts by factor for depreciation and other expenses or idle-facility-related expenses, the contribution from higher manufacturing costs, or the breakdown of volume and pricing by region. Q3 will therefore warrant close attention to the operating margin, one-off expenses and whether the full-year forecasts are maintained or revised.