Sustaining consolidated profitability requires converting segment profits into company-wide earnings.

The company posted operating profit of ¥398 million for FY2024, returning to profitability, but operating losses returned in FY2025, at ¥79 million, amid weak performance at certain consolidated subsidiaries. FY2026-H1 also saw an operating loss of ¥89 million, an ordinary loss of ¥87 million and an interim net loss attributable to owners of the parent of ¥193 million. Although this was an improvement from the operating loss of ¥146 million in the same period of the previous year, it is still difficult to conclude that the company has established a stable earnings base.

The company's FY2026 full-year forecasts are revenue of ¥36,000 million, operating profit of ¥500 million and net income attributable to owners of the parent of ¥100 million. H1 revenue was ¥16,525 million and the operating loss was ¥89 million, meaning that, on a simple calculation, H2 would need to generate revenue of ¥19,475 million and operating profit of ¥589 million. This assumes that H2 revenue will be approximately 1.18 times H1 revenue and that operating profit will swing sharply from a loss to a substantial profit. At the next results announcement, we will want to confirm not only whether the full-year forecasts are maintained, but also the 3Q cumulative progress and the profit still required in 4Q.

By segment, the textile machinery business posted operating profit of ¥112 million and the machine-tool-related business operating profit of ¥354 million, for a simple combined total of ¥466 million. Consolidated operating income was instead a loss of ¥89 million, leaving a gap of ¥555 million. This gap may include company-wide expenses, consolidation adjustments and subsidiary earnings, but the H1 information currently available does not disclose a line-item reconciliation. The fact that improved segment profitability has not translated directly into consolidated profit is the issue that can be examined most specifically at the next results announcement.

The H1 ordinary loss was ¥87 million and the net loss was ¥193 million, indicating that financial expenses, extraordinary items, taxes and other items besides operating income and loss also affected the bottom line. As the financial summary provided does not include detailed breakdowns, the 3Q results should be checked not only for operating profit, but also for whether the decline from ordinary income and loss through to net income and loss has narrowed and whether additional impairment losses, valuation losses or one-time expenses have arisen. The minimum threshold for determining a return to operating profitability is cumulative 3Q operating profit of at least ¥0 million, but supporting the full-year forecast will also require evidence that the path from there to ¥500 million in profit is repeatable.