FY2027-Q1 revenue increased, but the gross margin declined, delaying the ramp-up toward the full-year operating profit target

Revenue in the first quarter of the fiscal year ending March 2027 was ¥6,361 million, up 2.1% from ¥6,232 million in the same period a year earlier. Operating profit, however, fell 27.8% to ¥835 million from ¥1,158 million, while ordinary profit was ¥930 million and net income attributable to owners of the parent was ¥603 million. The operating margin calculated from revenue and operating profit fell by approximately 5.4 percentage points, from approximately 18.6% in the same period a year earlier to approximately 13.1%.

For the fiscal year ending March 2027, the company forecasts revenue of ¥31,010 million, operating profit of ¥5,020 million, ordinary profit of ¥5,230 million and net income attributable to owners of the parent of ¥3,750 million. As of Q1, progress was 20.5% for revenue and 16.6% for operating profit, both below the simple 25% passage-of-time benchmark for the quarter, with the earnings ramp-up particularly slow. After deducting Q1 results, achieving the full-year plan will require revenue of ¥24,649 million and operating profit of ¥4,185 million over the remaining 3 quarters.

The main factor disclosed behind the decline in earnings is a lower gross margin. However, the Q1 materials do not provide the actual gross margin or a breakdown of the decline by contributing factor. As the company has a single reportable segment, the profit contribution by product application and region cannot be confirmed either. Net income was also affected by the absence of the ¥312 million gain on the sale of investment securities recorded in the same period a year earlier. Operating deterioration therefore needs to be assessed separately from the impact of non-operating and extraordinary items.

In FY2027-H1, the first points to confirm are whether operating profit will build to at least ¥2,510 million, equivalent to 50% of the full-year plan, and whether revenue will approach ¥15,505 million. It is also important to determine whether the gross margin will recover to the level seen in the same period a year earlier, whether the improvement will come from pricing, material costs, product mix or production efficiency, and whether the basis for maintaining the full-year forecast will be explained with reference to volumes or order backlog.