Q1 laid the groundwork for an upward revision, but H1 will confirm whether the performance is repeatable

FY2027-Q1 sales were ¥13,700 million, up 13.3% year on year, and operating profit was ¥1,234 million, up 32.8%. Ordinary profit was ¥1,763 million, up 34.1%, while quarterly net profit attributable to owners of the parent was ¥1,137 million, up 27.0%, showing growth not only at the top line but from the operating level through to net profit. The first point to confirm in H1 is whether the improvement from the year-earlier sales of ¥12,088 million and operating profit of ¥929 million can be maintained.

In its supplemental Q1 materials, the company revised its H1 and full-year forecasts upward, citing sales exceeding assumptions and expense control. The latest full-year forecasts are sales of ¥60,700 million, operating profit of ¥5,400 million, ordinary profit of ¥6,460 million and net profit of ¥3,950 million. At the end of Q1, progress was approximately 22.6% for sales and 22.9% for operating profit. Compared with the 25% of the fiscal year that had elapsed, operating profit was broadly on plan, but the pre-revision full-year forecasts and the size of the revisions were not disclosed in the revision table accompanying the earnings report.

Q1 progress against the H1 forecast was 44.9% for sales and 41.1% for operating profit. This means that nearly half of the H1 total was secured in Q1, but performance during the remainder of H1 will be affected by demand in Europe and the Americas, small compressors in India, the pace of recovery in China and ASEAN, and increases in fixed costs and selling-related expenses. Rather than simply extrapolating the year-on-year Q1 growth rates, it will be necessary to review standalone Q2 sales and operating profit, as well as profit margins by region.

In Q1, Air Energy contributed sales of ¥8,017 million and operating profit of ¥683 million, while Coating contributed sales of ¥5,523 million and operating profit of ¥602 million. Other businesses recorded sales of ¥159 million against an operating loss of ¥51 million. In H1, the earnings assessment will depend on whether Air Energy and Coating continue to grow sales, whether the losses from other businesses widen, and whether the company maintains its full-year operating profit forecast of ¥5,400 million after the upward revision.