Will the strong progress in Q1 of the fiscal year ending March 2027 continue through the first half and beyond?

In Q1 of the fiscal year ending March 2027, revenue was ¥1,330,591 million, operating profit was ¥97,059 million, ordinary profit was ¥103,039 million and quarterly profit attributable to owners of the parent was ¥66,414 million. The full-year forecasts in the financial summary were revenue of ¥5,400,000 million, operating profit of ¥450,000 million and profit attributable to owners of the parent of ¥340,000 million, implying Q1 progress rates of 24.6%, 21.6% and 19.5%, respectively.

The FY2025 results were revenue of ¥4,679,789 million and operating profit of ¥320,663 million, while the FY2026 results were revenue of ¥5,110,171 million and operating profit of ¥418,173 million. Accordingly, the current FY2027 forecasts imply increases of approximately 5.7% in revenue and 7.6% in operating profit from the FY2026 results. This requires the effects of increased production, higher-value-added products and cost reductions to continue beyond Q1.

Recent reports indicate that the full-year forecast was revised upward to revenue of ¥5.4 trillion and operating profit of ¥450.0 billion, driven by strong automotive-related business and demand from data centres. However, the increase in Q1 profit also includes external factors such as the weaker yen and higher copper prices. The first-half results should therefore be reviewed to determine how much of the ¥97.059 billion in operating profit was contributed by higher volumes, product mix, productivity improvements, foreign exchange, copper prices and price pass-through, respectively.

In particular, the Q1 operating profit progress rate of 21.6% is below the 25% implied by simple equal allocation across the two half-years. Even allowing for the business's second-half weighting, it will be important to determine how far cumulative first-half operating profit progress rises. The first-half results should be reviewed for whether the full-year forecast was maintained or revised upward again, as well as for the drivers of profit growth by segment and profit growth on an underlying basis excluding external factors.