Q1 revenue growth failed to absorb the operating loss and crypto asset valuation loss

FY2027-Q1 revenue was ¥179 million, up ¥20 million, or 13.2%, from ¥159 million in the same period of the prior year. The increase in revenue was driven by nickel sales volumes exceeding those of the prior-year period, as well as higher selling prices following the rise in LME prices. However, the increase in revenue failed to absorb the increase in operating expenses, and the operating result deteriorated from an operating loss of ¥102 million in the prior-year period to an operating loss of ¥162 million.

On the cost side, selling, general and administrative expenses increased by ¥76 million year on year, mainly due to higher taxes and dues and commissions paid. In addition, a ¥325 million valuation loss arising from the market valuation of held crypto assets was recorded as a non-operating expense. As a result, the ordinary loss was ¥512 million against an operating loss of ¥162 million, creating a ¥350 million gap in losses between the operating and ordinary levels. The bottom line was also a loss of ¥513 million. As of Q1, revenue growth in the core business and widening losses from company-wide costs and financial factors are occurring simultaneously.

In FY2027-H1, the first point to confirm is whether revenue growth is continuing rather than being limited to a one-off increase in LME prices and sales volumes. For the operating loss, it will be important to assess how much the cumulative H1 loss has widened or narrowed relative to Q1's standalone ¥162 million, and whether the increase in SG&A expenses has grown beyond ¥76 million. It will also be necessary to confirm whether an additional crypto asset valuation loss was recorded beyond Q1's ¥325 million, whether the gap between the operating and ordinary results narrowed, and whether the impact of extraordinary gains or losses and taxes on the bottom line is disclosed.