Sustaining operating profitability and reaching the full-year forecast of ¥150 million

FY2026-H1 revenue was ¥928 million, down 4.6% from approximately ¥973 million in the same period of the previous year. Operating profit, however, changed from a loss of ¥77 million in the same period of the previous year to a profit of ¥104 million, while ordinary profit changed from a loss of ¥80 million to a profit of ¥119 million. The operating margin was approximately 11.3%, an improvement of approximately 19 percentage points from approximately negative 7.9% in the same period of the previous year. As profit improved despite the lack of revenue growth, the return to profitability is likely to depend not only on volume growth but also on fixed-cost reductions and an improved project mix.

H1 progress against the full-year forecasts was approximately 49.6% for revenue, calculated as ¥928 million ÷ ¥1,870 million, and approximately 69.3% for operating profit, calculated as ¥104 million ÷ ¥150 million. On a simple calculation, the company needs to add ¥942 million in revenue and ¥46 million in operating profit in the second half to meet the full-year forecasts. The required second-half operating margin is only approximately 4.9%, so the profit forecast appears relatively achievable unless the H1 margin declines substantially. However, revenue progress is only about halfway to the full-year forecast, so FY2026-Q3 needs to distinguish between profitability accompanied by a recovery in revenue and profitability achieved by containing costs while revenue remains stagnant.

The company attributes the improvement in profit to reforms of its business and cost structures under its business restructuring plan, the acquisition of high-value-added projects, fixed-cost reductions, and the selective concentration of resources on its core products. The reported business consists of a single segment, the image inspection business, and revenue and profit by product and region are not disclosed. Accordingly, in the next results announcement it will be important to show, to the extent possible, the amount or percentage of the ¥104 million in operating profit attributable to improved selling prices, project mix, fixed-cost reductions and the downsizing of overseas operations, rather than only changes from revenue of ¥928 million.