FY2027 is expected to deliver higher revenue, but profit growth is slow to get underway

First-quarter FY2027 revenue was ¥7,945 million, down 3.2% from approximately ¥8,210 million in the same quarter of the previous year. Operating profit was ¥895 million, down 17.2% from approximately ¥1,082 million, indicating a larger decline in profit than in revenue. The calculated operating margin also fell by approximately 1.9 percentage points, from approximately 13.2% in the same quarter of the previous year to approximately 11.3% in the current period. The interim results should clarify whether the decline in margin was driven by the sales mix, costs, or selling, general and administrative expenses.

As of the first-quarter disclosure, the full-year FY2027 forecasts were revenue of ¥31,770 million, operating profit of ¥3,550 million, and net income attributable to owners of the parent of ¥4,530 million, with EPS of ¥101.95. The revenue progress rate was approximately 25.0%, operating profit progress was approximately 25.2%, and net income progress was approximately 17.4%. While quarterly seasonality must be taken into account, achieving the net income plan will require profit growth in the second half, as well as the recognition of gains on the sale of investment securities. Progress should therefore be assessed separately on an operating profit basis.

At the next FY2027-H1 results, the top priorities will be to check whether revenue has reversed the year-on-year decline and whether the operating margin has recovered from the 11% range. In particular, if domestic refractory demand remains weak while raw material, energy and selling costs continue to weigh on results, the company will need to generate ¥2,655 million in the second half against its full-year operating profit forecast of ¥3,550 million. Even if the company maintains its full-year forecast, it will be important to see whether it explains, with year-on-year figures, whether that forecast assumes a recovery in domestic business volumes, price pass-through or cost reductions.