First-quarter revenue growth but profit evaporates; full-year plan assumes a recovery in the second half

Revenue in the first quarter of the fiscal year ending March 2027 was ¥11,401 million, up 3.9% from approximately ¥10,975 million in the year-earlier period. In addition to solid global production and sales by major customers, the weaker yen and higher order volumes for new domestic hybrid-vehicle inverter components supported revenue. Operating profit, however, plunged to ¥7 million from approximately ¥225 million a year earlier, while the operating margin fell by approximately 1.99 percentage points, from roughly 2.05% to 0.06%.

The company posted an ordinary loss of ¥77 million, showing that the deterioration in core earnings extended beyond operating profit. Profit attributable to owners of the parent was ¥110 million, but this included a ¥358.585 million gain on the sale of investment securities. The company also recorded ¥52.955 million in business-structure improvement expenses, so the bottom-line profit alone is insufficient to assess an earnings recovery. The priority at the next results announcement should be to determine whether operating profit and ordinary profit have improved.

The company has left its full-year forecasts unchanged at ¥44,500 million in revenue, ¥1,200 million in operating profit, ¥800 million in ordinary profit and ¥500 million in profit attributable to owners of the parent. First-quarter progress was approximately 25.6% for revenue but only around 0.6% for operating profit, leaving a substantial gap from the ¥300 million implied by straight-line first-quarter progress. Cumulative second-quarter operating profit of ¥600 million provides one benchmark, and it will be important to assess whether price normalization, cost improvements and production-restructuring benefits are emerging from the first half rather than only in the second half.

The company did not prepare a cash flow statement for the first quarter, and operating and investing cash flows have not been disclosed. At the next results announcement, it will be necessary to check not only the recovery in operating profit but also profit attributable to owners of the parent without reliance on asset-sale gains, operating cash flow and the trend in the equity ratio. The reliability of the full-year plan will depend not only on maintaining the ¥25 annual dividend but also on earnings quality and cash-generation capacity.