First-half revenue and earnings are trending lower; the focus in Q3 is on lifting operating profit

Revenue for the first half of FY2026 was ¥22,135 million, down ¥40 million, or approximately 0.2%, from ¥22,175 million in the first half of FY2025. Operating profit decreased by ¥191 million, from ¥1,390 million to ¥1,199 million, while the operating margin declined by approximately 0.9 percentage points, from around 6.3% to around 5.4%. Ordinary profit also fell 16.9%, from ¥1,491 million to ¥1,240 million, indicating that the company’s recurring earnings power in the first half was below the level recorded in the same period of the previous year.

By contrast, net income attributable to owners of the parent increased 181.8%, from ¥970 million in the same period of the previous year to ¥2,734 million. However, this increase was largely attributable to extraordinary income, including a ¥2,939 million gain on the sale of non-current assets, and is inconsistent with the declines in operating profit and ordinary profit. Accordingly, rather than viewing the increase in net income alone as a recovery in performance, it is necessary to separately assess the recurring profit level excluding the gain on sale of non-current assets, as well as trends in gross profit margin and selling, general and administrative expenses.

The company operates in a single segment covering the manufacture, sale, maintenance and repair of commercial kitchen equipment, so it does not disclose the decline in first-half operating profit by reporting segment. Although sales are disclosed by product, profit by product category and profit by region are not provided. As a result, in Q3 it will be difficult to assess the extent of improvement in the core business without checking not only the recovery in revenue, but also the product mix, including refrigeration equipment that may affect margins, growth in maintenance and repair revenue, and the effects of expense controls.

Cumulative revenue for the first three quarters of FY2025 was ¥34,146 million, operating profit was ¥2,041 million and ordinary profit was ¥2,153 million. In FY2026-Q3, the first points to check are whether revenue exceeds the previous-year level and whether operating profit recovers to the ¥2 billion range. If the operating margin does not return to the approximately 6.0% level recorded in the same period of the previous year and revenue remains flat, this should be viewed as a continuation of the slowdown in the core business seen in the first half.