Can the company fully deliver the revised FY2027-H1 operating profit target of ¥740 million?

In the first quarter of the fiscal year ending March 2027, sales were ¥4.184 billion, operating profit was ¥360 million, ordinary profit was ¥464 million and net profit attributable to owners of the parent was ¥285 million, increases of 12.5%, 54.5%, 64.5% and 49.6%, respectively, year on year. At the time of the Q1 results, the company maintained its full-year forecasts of ¥18 billion in sales and ¥1.7 billion in operating profit, but in its September earnings forecast revision, it raised the full-year forecasts to ¥1.9 billion in operating profit, ¥2.2 billion in ordinary profit and ¥1.45 billion in net profit.

The benchmarks to verify directly in the next interim results are revised targets of ¥740 million in operating profit, ¥850 million in ordinary profit and ¥550 million in net profit. Starting from Q1 operating profit of ¥360 million, Q2 would need to generate ¥380 million in operating profit on a simple difference basis. However, demand for agricultural chemicals and agriculture-related products is seasonal, so ¥380 million should be treated not as a forecast but as a mechanical reference line calculated by subtracting Q1 results from the H1 target.

The company cites orders in its Agri business exceeding plan as the main reason for the upward revision. In bentonite, however, it indicated that shipments for low-level radioactive waste disposal had been pushed back. It will be necessary to determine whether this reflects a shift in the timing of recognition rather than lost demand, or a delay or downsizing of the projects themselves. Whether excess Agri orders continue through the interim period and whether environmental construction shipments were merely shifted to H2 will determine the reliability of the ¥1.9 billion full-year forecast.

Q1 progress against the full-year forecast was approximately 23.2% for sales and approximately 18.9% for operating profit against the revised forecast. Progress against the interim operating profit target of ¥740 million was approximately 48.6%. Accordingly, in the next earnings release, we will check progress against the revised H1 plan rather than simply looking at the year-on-year increase in profit. The revision disclosed to date does not specify a revised H1 sales amount, so any additional disclosure regarding the H1 sales plan, shipment timing and order backlog will also be important.