FY2027-Q1 turns profitable at the operating level despite lower volume, but net income remains negative

FY2027-Q1 revenue was ¥3,758 million, down ¥177 million, or 4.5%, from ¥3,935 million in the year-earlier period. Sales volumes declined against a backdrop of weak order volumes from water utilities and others, and no recovery in demand has yet been confirmed. Operating profit, however, was ¥90 million, an improvement of ¥173 million from the ¥83 million operating loss in the year-earlier period. The fact that the company secured an operating profit despite lower revenue suggests that price revisions and cost measures may have had some effect.

Ordinary profit was also positive at ¥44 million, compared with an ordinary loss of ¥59 million in the year-earlier period. However, ordinary profit was only ¥44 million against operating profit of ¥90 million, indicating that non-operating expenses weighed on earnings. Going forward, it will be necessary to determine from margins and segment disclosures whether the improvement in operating profit reflects only the effect of price revisions or also the ongoing effects of lower manufacturing costs and fixed expenses.

The final result was a ¥32 million quarterly net loss attributable to owners of the parent, deteriorating from profit of ¥29 million in the year-earlier period. The results therefore support both the assessment of "lower revenue but an operating profit" and the assessment that improvement through to net income has not yet been achieved. In the next FY2027-H1 results, we want to confirm not only whether operating profit remains positive on a cumulative first-half basis, but also the difference between ordinary profit and net income, the breakdown of extraordinary income and expenses, and the impact of the tax burden, to determine whether improvement at the operating level is translating into substantive earnings improvement.