Can the sharp first-quarter increase in operating profit continue through the first-half forecast?

First-quarter revenue was ¥10.852 billion, up 6.7% year on year, while operating profit was ¥566 million, up 47.4%. Ordinary profit was ¥572 million and net profit attributable to owners of the parent was ¥375 million, up 69.3% and 158.8%, respectively. Revenue progress was approximately 23.9% against the full-year forecast of ¥45.5 billion, while operating profit progress was approximately 23.6% against ¥2.4 billion. The company was therefore broadly on plan after one-quarter of the fiscal year had elapsed.

The company’s first-half forecasts are revenue of ¥23.0 billion, operating profit of ¥1.260 billion, ordinary profit of ¥1.230 billion and net profit of ¥600 million. Working back from the difference between these forecasts and first-quarter results, the second quarter alone will need to generate revenue of ¥12.148 billion, operating profit of ¥694 million, ordinary profit of ¥658 million and net profit of ¥225 million. Based on the difference from the full-year forecasts, the company plans to generate revenue of ¥22.5 billion and operating profit of ¥1.140 billion in the second half after the first half. It is therefore necessary to assess not only whether the first-half targets can be met, but also whether growth can be sustained in the second half.

The company attributed first-quarter revenue growth to stronger market conditions and sales activity in Japan, demand for smartphones in China and expanded sales of focus products, the conversion of group companies in Southeast Asia, Europe, North America and other regions, exhibition participation, and stronger relationships with distributors. However, orders received, order backlog and regional profit for the second quarter alone were not disclosed. At the next earnings release, it will be important to assess, using the achievement of ¥23.0 billion in revenue and ¥1.260 billion in operating profit together with the standalone second-quarter figures, whether profit growth reflects first-quarter-specific cost improvements or is sustainable and accompanied by higher orders and shipments.