How much of the 1Q shortfall can be recovered in 2Q

Revenue in 1Q of the fiscal year ending March 2027 was ¥320.557 million, down 13.6% year on year, while operating profit was ¥29.940 million, down 53.1%. Ordinary profit was also ¥30.586 million, down 53.5% year on year, while net profit was approximately ¥20 million, down 53.1%. Operating profit declined more sharply than revenue, with the 1Q operating margin falling to approximately 9.3% from approximately 17.2% a year earlier, a 7.9-point decline.

The full-year plan remains unchanged at revenue of ¥2,350 million and operating profit of ¥430 million. Progress against the full-year plan stood at just 13.6% for revenue and 7.0% for operating profit, 11.4 points and 18.0 points, respectively, below the 25% mark expected at the end of the first quarter. If a simple 50% of the full-year plan is used as the benchmark for the first half, the targets are revenue of ¥1,175 million and operating profit of ¥215 million.

This simple 50% line is not a half-year forecast disclosed by the company, but a benchmark for investment analysis. After deducting 1Q actual results, standalone 2Q revenue of ¥854.443 million and operating profit of ¥185.060 million would be required. The company has not disclosed quarterly revenue and profit plans or seasonal figures, so these levels cannot be treated as the company's forecasts. They nevertheless provide a useful benchmark for assessing the achievability of the plan at the half-year results.

The decline in 1Q revenue was driven by pump products, which fell to ¥113.888 million, down 29.3% year on year, and valve products, which fell to ¥28.325 million, down 59.8%. Parts and services, by contrast, increased 27.7% to ¥178.343 million. In 2Q, it will be necessary to assess not only whether growth in parts and services continues, but also how much of the decline in pumps and valves can be recovered, along with revenue and operating margins by product.