Can FY2027 H1 make up the shortfall against the full-year forecast?

The first quarter from April to June 2026 generated revenue of ¥3,522 million, operating profit of ¥317 million, ordinary profit of ¥369 million and net income attributable to owners of the parent of ¥236 million. Year on year, revenue fell 8.5%, operating profit 8.4%, ordinary profit 4.2% and net income 9.4%, with all four major items declining. Progress against the full-year revenue forecast of ¥16,500 million was 21.3%, while progress against the ¥1,900 million operating profit forecast was 16.7%, 3.7 and 8.3 percentage points below the 25% elapsed-quarter benchmark, respectively.

Using a simple benchmark of achieving 50% of the full-year forecast in the first half, first-half cumulative revenue would need to reach ¥8,250 million, operating profit ¥950 million and net income ¥700 million. After deducting first-quarter results, the standalone second quarter would need to generate revenue of ¥4,728 million, operating profit of ¥633 million and net income of ¥464 million. However, no seasonality driven by factors such as the completion timing of plant projects has been disclosed, so 50% is only a mechanical progress benchmark. At the next results announcement, it will be necessary to distinguish between a temporary recovery caused by projects shifting between periods and a recovery accompanied by improved earning power, rather than checking only whether these levels were exceeded.

The first-quarter decline in revenue and profit was not uniform across the company. Refractory Ceramics posted higher revenue and profit, with revenue of ¥1,993 million and segment profit of ¥147 million, while Plant generated only ¥1,024 million in revenue and ¥123 million in profit, as fewer large projects were completed than in the same quarter of the previous year. Building Materials and Paving Materials generated revenue of ¥390 million and a segment loss of ¥2 million, as weak construction projects and higher raw material costs could not be fully absorbed. Accordingly, achieving the required first-half amounts will require not only stronger refractory sales and price pass-through, but also a recovery in plant completions and a return to profitability in building materials.

As of the first quarter, the company had not revised its full-year forecasts of revenue of ¥16,500 million, operating profit of ¥1,900 million, ordinary profit of ¥2,000 million and net income of ¥1,400 million. At the next results announcement, if first-half results fall below the above benchmarks, it will be necessary to assess whether the assumption of generating nearly ¥1,000 million in operating profit in the second half alone remains valid, or whether the forecasts will be revised. The company did not prepare a cash flow statement for the first quarter, and information linking earnings progress with the collection of working capital is also limited. Disclosure of first-half operating cash flow will therefore be an important area for verification.