The focus for FY27 first-half results is whether the company can recover from the 1Q operating loss and return to its full-year plan

Revenue for FY27 April–June was ¥5,620 million, down ¥129 million from ¥5,749 million in the same period of the previous year. Operating income turned from a profit of ¥149 million in the same period of the previous year to a loss of ¥72 million, a deterioration of ¥221 million at the operating profit level. Ordinary profit was ¥23 million, down 85.1% year on year, while quarterly net loss attributable to owners of the parent was ¥16 million. Profit weakness was therefore more pronounced than the decline in revenue.

The company's full-year FY27 forecast calls for revenue of ¥30,500 million, operating profit of ¥1,650 million, ordinary profit of ¥1,650 million and net profit of ¥1,100 million. 1Q revenue progress was just 18.4%, 6.6 percentage points below the 25% implied by an even quarterly progression. Operating profit, meanwhile, was a loss of ¥72 million, resulting in negative progress against the full-year forecast. Since the company has not disclosed a first-half plan that reflects seasonality, revenue of ¥15,250 million and operating profit of ¥825 million should be treated as benchmarks for measuring simple 50% progress, not as company guidance.

The company attributed the decline in 1Q revenue to a sharp slowdown in sales to Asia and stalled construction-project bidding in Japan due to surging asphalt prices, despite a recovery in sales to North America. Accordingly, in the first-half results we will assess not only whether revenue recovered, but also how much operating profit recovered alongside it. Even if revenue reaches ¥15,250 million in the first half, a substantial shortfall in operating profit from ¥825 million could indicate that the company's ability to absorb raw-material prices and manufacturing and selling costs is below the assumptions underlying its full-year plan.

As of 1Q, there had been no revision to the full-year earnings forecast, and the operating profit target of ¥1,650 million remained unchanged. In the first-half results, key points will be whether operating profit returned to positive territory in 2Q alone, whether cumulative operating profit turned positive, and whether the company presents a reasonable basis for leaving the full-year forecast unchanged. In particular, changes in regional revenue and segment profit need to be examined to determine whether the 1Q loss was a temporary demand or bidding issue, or whether weakness in Asia and Japan is becoming prolonged.