Q1 operating profit ahead of the FY2027 first-half forecast; focus shifts to whether Q2 can deliver again

Q1 of the fiscal year ending March 2027 reported revenue of ¥15.316 billion, operating profit of ¥706 million, ordinary profit of ¥1.019 billion and quarterly net profit attributable to owners of the parent of ¥669 million. Year on year, revenue increased 17.0%, operating profit 305.4%, ordinary profit 237.7% and net profit 317.2%, making this a strong start with revenue and profit growing simultaneously. The Q1 operating margin was approximately 4.61%, up approximately 3.28 percentage points from approximately 1.33% in the same quarter of the previous year.

The revised first-half forecast presented as of Q1 calls for revenue of ¥31.4 billion, operating profit of ¥1.3 billion, ordinary profit of ¥1.6 billion and interim net profit attributable to owners of the parent of ¥1.0 billion. Q1 progress is therefore 48.8%, 54.3%, 63.7% and 66.9%, respectively, meaning that profit items are ahead of revenue. On a simple calculation, achieving the first-half forecast will require Q2 alone to generate revenue of ¥16.084 billion, operating profit of ¥594 million, ordinary profit of ¥581 million and net profit of ¥331 million.

The full-year forecast is revenue of ¥65.0 billion, operating profit of ¥2.8 billion, ordinary profit of ¥3.3 billion and net profit of ¥2.2 billion. Q1 progress against the full-year forecast is 23.6% for revenue, 25.2% for operating profit, 30.9% for ordinary profit and 30.4% for net profit, with operating profit slightly exceeding the 25% share implied by one quarter of the fiscal year. However, quarterly revenue and profit allocation is not uniform in manufacturing, so full-year achievement cannot be judged from Q1 progress alone. It will be necessary to confirm whether the ¥594 million of operating profit required in Q2 can be generated through demand, price pass-through and fixed-cost absorption.

The company cites sales-price revisions, cost-reduction initiatives, contributions from Doken and MDI, which were newly added to the consolidated group, and foreign-exchange translation effects at overseas subsidiaries resulting from the weaker yen as factors behind the profit increase. However, the two companies were not included in consolidated earnings in Q1 of the previous year, so the 17.0% year-on-year increase in revenue includes a difference in the scope of consolidation. At the next earnings release, it will be important to see whether growth in revenue and operating profit from existing businesses can be disclosed separately from contributions by the newly consolidated companies.