Significant first-quarter revenue decline and operating loss, while the full-year plan assumes a sharp recovery in the second half

Revenue in the first quarter of the fiscal year ending March 2027 was ¥7,649 million, down 27.3% from ¥10,519 million in the same period of the previous year. Operating results swung from a ¥307 million profit in the previous-year quarter to a ¥847 million loss, while the company posted an ordinary loss of ¥500 million and a quarterly net loss attributable to owners of the parent of ¥588 million. The operating margin declined from approximately 2.9% to approximately negative 11.1%, indicating that the deterioration in profitability was greater than the decline in revenue.

The company has left unchanged its full-year plan of revenue of ¥41,000 million, operating profit of ¥300 million, ordinary profit of ¥1,000 million and net income of ¥900 million. First-quarter revenue represented 18.7% of the full-year plan, below the simple quarterly elapsed-period rate of 25%. To achieve the full-year operating profit target, results must turn from a ¥847 million loss in the first quarter to a ¥300 million profit for the full year, implying cumulative operating profit of ¥1,147 million from the second quarter onward.

The company attributed the deterioration to intensifying competition in Bangladesh and China, customers’ cautious approach to capital investment, limited sales of molding machines and lower unit sales in Asian markets. However, it has not disclosed product-level unit sales, average selling prices or a quantitative breakdown of revenue changes by volume, price and product mix. As a result, the available figures do not allow the first-quarter loss to be separated between a temporary shipment timing issue and profitability deterioration caused by weak demand and price competition.

At the next earnings announcement, it will be necessary to assess whether first-half cumulative revenue is approaching the simple 50% progress level of ¥20,500 million and how far operating results have improved from the first-quarter loss. In particular, if the company maintains its full-year operating profit target of ¥300 million, key points will be whether it discloses the amount and components of profit dependent on the second half, unit sales of flat knitting and molding machines, and the effects of discounts and product mix.