Will the sharp increase in first-quarter profit carry through to the first-half and full-year plans?

Revenue in the first quarter of the fiscal year ending March 2027 was ¥2,739.537 million and operating profit was ¥115.901 million, a significant improvement from revenue of ¥2,354.064 million and operating profit of ¥54.882 million in the same quarter of the previous year. The operating margin rose by approximately 1.9 percentage points, from approximately 2.3% to approximately 4.2%, indicating that the key change in these results was not simply higher revenue but also an improvement in profitability. However, ordinary profit was ¥151.202 million and net income attributable to owners of the parent was ¥63.525 million, so the strength of the profit improvement was not uniform from operating profit through to net income.

The company's forecast for the fiscal year ending March 2027 is revenue of ¥10,600 million, operating profit of ¥600 million, ordinary profit of ¥650 million and net income of ¥450 million. Based on a simple calculation of first-quarter progress, revenue was 25.8%, operating profit 19.3%, ordinary profit 23.3% and net income 14.1%. Progress in operating profit and net income is lower than that in revenue, making whether first-half operating profit reaches the simple half-year benchmark of ¥300 million and revenue reaches ¥5,300 million one measure of the full-year plan's reliability.

As of the first quarter, the company had not revised the consolidated earnings forecast announced on 14 May 2026. It cited expanded sales of core and new products, higher sales of core products in the foundry business, progress on large projects in the industrial furnace business, and increased orders for private-sector incineration facilities in the environmental and construction business as factors behind the increase in revenue and profit. However, contribution amounts and volumes for each factor have not been disclosed, so it is not yet possible to break down how much of the ¥115.901 million in operating profit came from recurring sales growth and how much from project progress.

In the previous fiscal year, revenue increased 4.5% to ¥10,220.922 million, while operating profit fell 13.4% to ¥410.155 million. By contrast, the current full-year forecast calls for revenue growth of only 3.7% but operating profit growth of 46.3% to ¥600 million, meaning the full-year plan depends more on improved profitability than on revenue growth. In FY2027-H1, it will be necessary to confirm whether the first-quarter operating margin of around 4.2% is maintained and whether US trade policy, the situation in the Middle East, labour shortages and wage increases, and higher prices are affecting costs or orders.