First-quarter progress toward the FY2027 forecast is broadly on plan, but profit accumulation through the first half needs to be confirmed.

First-quarter revenue was ¥2,821.196 billion, up 40.4% year on year. Progress against the full-year forecast of ¥11.2 trillion was 25.2%, almost exactly in line with the 25% of the fiscal year elapsed after 3 months. Based on revenue alone, the company is neither materially ahead of nor behind its full-year plan. At the next first-half earnings release, we will look at whether the plan assumes a heavier weighting toward the second half and whether revenue accumulates to around ¥5.6 trillion by the end of the first half.

Operating profit was ¥145.511 billion, compared with an operating loss of ¥139.559 billion in the same period of the previous year, marking a return to profitability. Progress against the full-year operating profit forecast of ¥630.0 billion was 23.1%, slightly below the 25.2% progress for revenue. Securing ¥315.0 billion for the first half would correspond to a simple 50% half-year progress rate, but this is not a first-half target explicitly stated by the company. It is a monitoring benchmark based on an even allocation of the full-year forecast. In practice, quarterly profit fluctuations may be significant depending on steel market conditions, inventory valuation differences and the earnings contribution from overseas businesses.

Quarterly profit attributable to owners of the parent was ¥75.299 billion, representing 26.0% progress against the full-year forecast of ¥290.0 billion. Although this exceeds the progress rate for operating profit, the summary figures for the first quarter alone do not show how much in acquisition-related expenses, finance costs, taxes and non-controlling interests will arise in the second half. In addition to confirming whether around ¥145.0 billion can be secured cumulatively in the first half, it will be necessary to assess how much of the quality of earnings is flowing from operating profit through to net income.

In the first-quarter results, the full-year forecasts were updated to revenue of ¥11.2 trillion, operating profit of ¥630.0 billion and profit attributable to owners of the parent of ¥290.0 billion, while the full-year dividend forecast of ¥24 was unchanged. At the next release, it will be important to see not only whether the full-year forecasts are revised again, but also whether the company discloses the profit required in the second half based on first-half results, profit margins and the contribution from overseas businesses. In particular, the key issue will be which businesses or factors will secure the ¥315.0 billion or more in second-half profit remaining after the first half in order to achieve full-year operating profit of ¥630.0 billion.