Q1 rebounded sharply, but accelerating in H2 is necessary to meet the full-year operating profit target

In Q1 FY2027, consolidated net sales rose 28.8% year on year to ¥2,258 million, operating profit rose 154.4% to ¥99 million, ordinary profit rose 120.8% to ¥113 million, and net profit attributable to owners of the parent rose 64.9% to ¥109 million. Gross profit was ¥445 million, with the gross profit margin improving 1.6 percentage points year on year to 19.7%. The operating margin also rose approximately 2.2 percentage points from approximately 2.2% in the year-earlier period to 4.4%.

The full-year forecasts are ¥10,000 million in net sales, ¥835 million in operating profit, ¥900 million in ordinary profit and ¥720 million in net profit attributable to owners of the parent. Q1 progress was 22.6% for net sales, 11.9% for operating profit, 12.6% for ordinary profit and 15.1% for net profit. Net sales were approximately 2.4 percentage points below the simple 25% elapsed-period benchmark, while operating profit was substantially behind. Accordingly, it is necessary to assess whether profit can be recovered in H2 while maintaining the improvement in gross margin, rather than focusing solely on sales growth.

The company does, however, have quarterly seasonality. In FY2026, the first half accounted for 45.1% of net sales and the second half for 54.9%, while operating profit was weighted toward the second half, at 68.2% versus 31.8% in the first half. It is too early to conclude that the full-year target will be missed based solely on the low Q1 operating profit progress rate. In FY2027-H1, the key point will be whether sales and operating profit can exceed the year-earlier figures of ¥3,899 million and ¥213 million, respectively, while leaving sufficient profit to be generated in H2.

On the profit side, selling, general and administrative expenses are increasing due to aggressive hiring, employee training, research and development, and amortization of goodwill associated with M&A. SG&A expenses increased by ¥66 million year on year to ¥345 million in Q1. Even if sales growth continues, an earlier increase in personnel expenses, R&D expenses and amortization could halt the improvement in the operating margin. In FY2027-H1, we will assess not only cumulative net sales but also the gross profit margin at around 19.7%, an operating margin above 4.4%, the increase in SG&A expenses and profit progress against the full-year operating profit forecast of ¥835 million.