Q1 loss narrowed, but the focus is on the H1 catch-up after revenue recognition was pushed back

FY2027-Q1 revenue was ¥1,228 million, up ¥34 million, or 2.8%, from ¥1,194 million in the prior-year quarter. The operating loss narrowed from ¥76 million to ¥32 million, the ordinary loss from ¥70 million to ¥14 million, and the quarterly net loss attributable to owners of the parent from ¥40 million to ¥16 million. Although revenue growth was modest, profitability improved as the company moved toward absorbing fixed costs and other expenses.

However, Q1 progress against the full-year revenue forecast of ¥7,524 million was approximately 16.3%, below the 25% implied by even quarterly progress. The company explained that some revenue shifted to Q2 and beyond because of prolonged export procedures and other factors, but it has not disclosed the amount shifted, the products involved, or the timing of delivery and acceptance. If FY2027-H1 revenue exceeds ¥1,881 million, the delay against a simple half-year progress benchmark for the full-year forecast will at least narrow. If it falls below that level, reliance on the second half to achieve the full-year revenue forecast of ¥7,524 million will increase further.

On the earnings side, Q1 recorded an operating loss of ¥32 million against full-year operating income of ¥428 million, resulting in a negative simple progress rate. To achieve the full-year forecast, the company must generate a combined ¥460 million of operating income from Q2 onward. We therefore need to confirm whether operating income or loss turns positive in H1, or whether the company explains a plan weighted toward the second half. As of Q1, the full-year forecast had not been revised, and it remains unclear whether the revenue delay is merely a timing issue or reflects worsening demand and export conditions.

In FY2027-H1, in addition to cumulative revenue, it will be necessary to confirm the normalization of export procedures, progress in delivery and acceptance, and recovery by product. Grinding machines related to cutting tools declined 12.5% year on year in Q1, and it will be difficult to make up the full-year forecast in the second half alone without a recovery in this product. We view H1 revenue of at least ¥1,881 million and operating income or loss of at least ¥0 million as the minimum verification thresholds for maintaining the full-year forecast.