Will the upwardly revised FY2027 operating profit forecast of ¥130.0 billion be maintained in FY2027-H1?

The full-year forecasts for FY2027 were substantially raised: revenue from ¥1.99 trillion to ¥2.4 trillion, operating profit from ¥36.0 billion to ¥130.0 billion, ordinary profit from ¥73.0 billion to ¥180.0 billion, and net profit attributable to owners of the parent from ¥49.0 billion to ¥140.0 billion. The ¥94.0 billion increase in the operating profit forecast puts it at approximately 2.1 times the FY2026 actual result of ¥60.502 billion.

In 1Q FY2027, revenue was ¥597.005 billion, operating profit was ¥32.994 billion, ordinary profit was ¥51.902 billion, and net profit attributable to owners of the parent was ¥51.284 billion. Operating profit turned positive from a loss of ¥2.641 billion in the same quarter of the previous year. On a simple basis, progress rates were 25.4% for operating profit, 28.8% for ordinary profit and 36.6% for net profit, but it is too early to assess the likelihood of achieving the full-year targets based solely on these rates, as the company has not disclosed quarterly profit plans or seasonality.

The quality of earnings also requires attention. 1Q included ¥11.747 billion in extraordinary income, including a ¥11.033 billion gain from the revision of the retirement benefit plan, while extraordinary losses were limited to ¥88 million. This boosted net profit but had no impact on operating profit. Ordinary profit, meanwhile, exceeded operating profit by ¥18.908 billion, reflecting significant non-operating factors such as ¥10.1 billion in dividend income and ¥2.6 billion in equity-method investment gains and losses. In 2Q, it will be necessary to confirm whether both operating and ordinary profit are growing and whether the increase in net profit is being affected by the reversal of extraordinary income.

For the next earnings release, ¥65.0 billion, half of the full-year operating profit forecast, will be an important benchmark for cumulative 2Q operating profit. Even if this level is not reached, it will be important to see whether the company can explain the effects of seasonality and furnace maintenance. Conversely, if operating profit substantially exceeds ¥65.0 billion, the latest upward revision may have been conservative. Key points to monitor are any further revision to the full-year forecast, disclosure of the monetary contribution of profit and loss factors, and an explanation of underlying profit excluding extraordinary gains and losses.