First-quarter progress is in line with the full-year plan, but the focus is on confirming the repeatability of profit growth in the first half

First-quarter revenue was ¥89,401 million, operating profit was ¥5,155 million, ordinary profit was ¥5,667 million, and net profit attributable to owners of the parent was ¥3,484 million. Compared with revenue of ¥77,329 million and operating profit of ¥2,605 million in the same quarter of the previous year, revenue increased 15.6% and operating profit increased 97.9%. The operating margin also improved by approximately 2.4 percentage points, from approximately 3.37% in the same quarter of the previous year to approximately 5.77%.

The full-year forecasts are revenue of ¥359,000 million, operating profit of ¥19,200 million, ordinary profit of ¥18,900 million, and net profit attributable to owners of the parent of ¥13,000 million. First-quarter progress was 24.9% for revenue, 26.8% for operating profit, 30.0% for ordinary profit and 26.8% for net profit. Revenue was broadly in line with the 25% passage of the fiscal year, while operating profit exceeded it. However, the higher progress rate for ordinary profit than for operating profit includes the effect of foreign-exchange gains, so first-half progress should be assessed primarily on an operating-profit basis.

Revenue growth was driven by increased production in Japan and elsewhere, higher vehicle-model development revenue, including tooling, and foreign-exchange effects. Operating profit was lifted by the benefits of increased production and vehicle-model development. However, the company has not disclosed a value-based breakdown of the factors behind company-wide profit growth, such as production volume increases, vehicle-model development revenue, foreign exchange and higher labor costs. No cash flow statement was prepared for the first quarter, so it is not possible to determine the extent to which higher profit translated into operating cash flow or reduced investment burdens.

At the next first-half results announcement, revenue of ¥179,500 million and operating profit of ¥9,600 million, each representing a simple 50% of the full-year plan, will provide one benchmark. Even if these figures are exceeded, sustainability will differ depending on whether the result reflects only volume effects from increased production in North America and Japan or also includes an improved product mix and better profitability of vehicle-model development revenue. We want to assess the cumulative second-quarter operating margin, the gap between operating profit and ordinary profit, and the production and profit drivers by segment together.