Full-year guidance unchanged, but the H1 pace of losses needs to be reassessed

In the first quarter of FY2027, revenue was ¥6,070 million, down 6.4% from ¥6,488 million in the same period of the previous year, while operating profit or loss moved from a ¥26 million profit in the prior-year quarter to a ¥223 million loss. Ordinary profit or loss was also a ¥168 million loss, and profit or loss attributable to owners of the parent was a ¥175 million loss, putting all three levels of profit or loss in the red.

Looking only at progress against full-year guidance, revenue was 24.3% (¥6,070 million ÷ ¥25,000 million), while the operating loss was 24.8% (¥223 million ÷ ¥900 million). The difference from the 25% elapsed portion of the first quarter is small, and the company has not revised its full-year earnings guidance. However, the disclosure provided does not include standalone revenue or operating profit or loss forecasts for the cumulative first half, so quarterly progress cannot simply be treated as the earnings plan.

Compared with the previous year's results, FY2026 revenue was ¥23,598 million and the operating loss was ¥309 million, while FY2027 guidance calls for revenue of ¥25,000 million and an operating loss of ¥900 million. Revenue is expected to increase by ¥1,402 million, or approximately 5.9%, yet the operating loss is planned to widen by ¥591 million, leaving a risk that a recovery in volume alone will not improve profitability.

For the second-quarter results, we will look to see whether cumulative revenue exceeds or falls short of ¥12,500 million and cumulative operating profit or loss exceeds or falls short of a ¥450 million loss, the simple benchmark for half-year progress. Starting from first-quarter revenue of ¥6,070 million, approximately ¥6,430 million would be required in the second quarter alone. For operating profit or loss, if the cumulative first-half loss exceeds ¥450 million, a larger improvement in the second half would be needed to maintain full-year guidance. The first-quarter disclosure did not quantify the impact of demand, selling prices, ferrous scrap prices or production volume, so it will also be important to see whether quantitative supplementary information is provided for H1.