First-quarter losses continue to narrow, but first-half plan revised downward in October

FY2027 Q1 revenue was ¥18,942 million, up 0.2% from ¥18,904 million in the same quarter of the previous year. The operating loss narrowed by ¥89 million from ¥865 million to ¥776 million, but the company still recorded an ordinary loss of ¥623 million and a quarterly net loss attributable to owners of the parent of ¥449 million, leaving all 3 profit measures in the red. Increased sales of air-conditioning and home-appliance equipment, production rationalisation and expense reductions were cited as reasons for the smaller operating loss, but no breakdown by factor was disclosed.

In the performance revision announced on 22 October, the FY2027 first-half revenue forecast was cut by ¥1,090 million from ¥40,600 million to ¥39,510 million, while the ordinary profit forecast was reduced by ¥130 million from a loss of ¥300 million to a loss of ¥430 million. The forecast net profit attributable to owners of the parent improved by ¥10 million, from a loss of ¥300 million to a loss of ¥290 million, while the revised forecast EPS changed from negative ¥10.25 to negative ¥9.91. Since the direction of the revisions differs for revenue, ordinary profit or loss and final profit or loss, the next results should distinguish not only sales volume but also the effects of product mix, discounts, raw-material costs and logistics costs.

A mechanical breakdown of the revised first-half forecast from first-quarter results indicates that second-quarter revenue of ¥20,568 million is required. To move from the first-quarter ordinary loss of ¥623 million to a first-half loss of ¥430 million, the company needs ordinary profit of ¥193 million in the second quarter alone, while net profit of ¥159 million is also required in the second quarter. These are simple differences required to achieve the company's forecast and are not forecasts that take seasonality or product-level profitability into account, but they are specific hurdles to be tested first in the H1 results.

The full-year forecasts shown in the first-quarter summary were revenue of ¥86,000 million, operating profit of ¥600 million, ordinary profit of ¥1,000 million and net profit of ¥600 million. Since the revisions confirmed this time are centred on the first half, the next results should clearly state whether the full-year forecasts will be maintained or also changed following the first-half downward revision. Even if the ¥14 interim dividend is maintained, it will be important to assess the relationship between the earnings recovery and the funds available for dividends.