Reassessing in the first half whether the first quarter’s higher operating profit despite lower revenue is sustainable

Consolidated revenue in Q1 of the fiscal year ending March 2027 was ¥58,172 million, down 13.9% from ¥67,544 million in the year-earlier quarter. Operating profit, meanwhile, rose 11.2% to ¥5,865 million from ¥5,272 million, while ordinary profit was ¥6,114 million and net profit attributable to owners of the parent was ¥5,932 million. Net profit increased 35.4% year on year, indicating that profit did not decline despite the smaller revenue base.

The operating margin calculated from the disclosed figures was approximately 10.1% in Q1, up approximately 2.3 percentage points from approximately 7.8% in the year-earlier quarter. The company attributed the increase in profit to the decline from the prior-year concentration of shipments of ELA equipment for FPD applications and to lower sales of resin-manufacturing and processing machinery. At the same time, it cited higher sales of defense-related equipment and firm demand related to power and nuclear energy in the industrial materials and engineering businesses. No profit bridge showing how many millions of yen each product-related factor contributed to operating profit was provided.

Q1 progress against the full-year forecast was 18.8% for revenue, 21.7% for operating profit, 23.5% for ordinary profit and 31.2% for net profit. Compared with the 25% elapsed-quarter benchmark, both revenue and operating profit were below that level, although operating profit’s progress rate was 2.9 percentage points above that for revenue. However, because the company has not disclosed the breakdown of its first-half plan or a quarterly shipment plan, full-year achievement cannot be assessed based solely on simple progress rates.

At the next results announcement, we will look to see whether revenue recovers to approximately ¥155,000 million in the first half and whether operating profit reaches approximately ¥13,500 million. In particular, if the downturn in ELA equipment shipments continues into Q2, whether the operating margin falls from 10.1% in Q1 and the extent to which higher defense, power and nuclear-related demand offsets that decline will determine the likelihood of achieving the full-year operating profit forecast of ¥27,000 million.