Q1 led with profit growth; assess the achievability of the full-year plan in the first half

Q1, covering March to May 2026, generated revenue of ¥37,206 million, operating profit of ¥10,230 million, ordinary profit of ¥10,938 million and net profit attributable to owners of the parent of ¥8,210 million. Year on year, revenue increased 12.5%, operating profit 21.2%, ordinary profit 51.1% and net profit 56.0%, with profit growth outpacing revenue growth. The earnings presentation stated that quarterly revenue and operating profit both reached record highs.

The full-year forecasts are revenue of ¥159,021 million, operating profit of ¥38,112 million, ordinary profit of ¥38,241 million and net profit of ¥27,809 million. At the end of Q1, progress was 23.4%, 26.8%, 28.6% and 29.5%, respectively. Assuming that 50% of the full-year forecast is reached in the first half on a simple basis, cumulative revenue of ¥79,511 million would be required, including approximately ¥42,305 million in standalone Q2 revenue. Cumulative first-half operating profit of ¥19,056 million would be the benchmark, meaning that standalone Q2 operating profit of ¥8,826 million would bring progress to 50%. This is not the company’s plan itself, but a mechanical benchmark for assessing progress at the next earnings release.

Improved profitability is also contributing to profit growth ahead of revenue. The Q1 operating margin was 27.5%, approximately 2.0 percentage points above the roughly 25.5% calculated by dividing operating profit of ¥8,441 million in the year-earlier quarter by revenue of ¥33,061 million. However, the earnings presentation identified ¥490 million in foreign-exchange gains arising from the weaker yen as a factor behind the increase in operating profit. It remains unclear whether the 27.5% margin was achieved solely through sales volume and product mix, and whether it can be maintained excluding the foreign-exchange contribution.

In Q2, we will first assess whether cumulative revenue approaches ¥79,511 million and whether operating profit exceeds ¥19,056 million. As of Q1, the company assessed revenue as roughly on track for the midpoint of its first-half plan, albeit slightly soft, while profit had made a strong start, with progress above 50% of the first-half plan in both cases. Accordingly, alongside the decision on whether to maintain the full-year forecast, the key issue will be whether the revenue shortfall is temporary, due to the delivery timing of the order backlog, or reflects changes in the demand and production assumptions underlying the full-year forecast.