Will profitability recover in FY2027-H1 despite higher revenue and lower operating profit?

FY2027-Q1 revenue was ¥7,852 million, up 8.2% year on year, while operating profit fell 22.0% to ¥317 million from approximately ¥408 million in the same quarter of the previous year. The operating margin declined from approximately 5.6% to approximately 4.0%, indicating that higher revenue did not translate directly into profit growth. Outside the operating income line, ordinary profit rose 5.5% to ¥373 million, so the direction of performance differed at the operating and ordinary profit levels.

In the comparable period, FY2026-H1, revenue was ¥14,537 million and operating profit was ¥626 million, representing an operating margin of approximately 4.3%. Even if FY2027-H1 revenue exceeds the prior-year period, operating profit below ¥626 million would indicate that cost pressures from raw materials, energy, labor and tariffs are outweighing the benefits of increased scale. The company forecasts FY2027 full-year revenue of ¥30,000 million and operating profit of ¥1,500 million, making H1 operating profit of ¥750 million a reference level under a simple even half-year allocation.

The recent rise in crude oil prices and the impact of reciprocal tariffs imposed by the US government have been cited as factors behind the decline in operating profit, but the impact of each factor has not been disclosed. The company has previously explained that contracts link raw material and selling prices and that price pass-through is progressing, but it is not possible to determine how many millions of yen in higher costs were absorbed through how many millions of yen in price increases. In FY2027-H1, the focus will be not only on whether the operating margin recovers to at least 4.3%, but also on whether the amounts of cost increases and price pass-through are disclosed.