Whether the sharp decline in the auto-parts segment continues to weigh on the consolidated margin

Consolidated net sales for April through June 2026 were ¥9,017 million, up 1.5% year on year. However, operating profit was ¥389 million, ordinary profit was ¥576 million and net profit attributable to owners of the parent was ¥209 million, down 38.5%, 28.9% and 54.7%, respectively, from the same period of the previous year. Growth in sales did not flow through to profit, and the simple operating margin was approximately 4.3%, down approximately 2.8 percentage points from approximately 7.1% a year earlier.

By segment, Equipment generated sales of ¥7,064.779 million and segment profit of ¥955.251 million, up 8.0% and 8.1%, respectively, year on year. The company attributed the increases to higher deliveries of coating equipment and other factors. Automotive Parts generated sales of ¥1,952.239 million and segment profit of ¥17.359 million, with sales down 16.5% and profit down 93.4%. The company attributed this to lower production and sales of interior and exterior parts, but did not disclose the impact by volume or product.

The combined segment profit of Equipment and Automotive Parts was ¥972.610 million, creating a difference of approximately ¥583 million from consolidated operating profit of ¥389 million. Based on the information provided, it is not possible to determine whether this difference is attributable to group-wide costs, intersegment eliminations or other adjustments. The increase in Equipment profit was not sufficient to offset the decline in consolidated profit, so in the second quarter it will be necessary to monitor not only a recovery in Automotive Parts but also whether the adjustment from segment profit to consolidated operating profit is expanding.

In FY2027-H1, the first points to monitor will be whether the decline in Automotive Parts sales narrows from 16.5% in Q1 and whether segment profit exceeds ¥17.359 million. For Equipment, it will be necessary to confirm whether the Q1 increases of 8.0% in sales and 8.1% in profit continue on a first-half cumulative basis. If the consolidated operating margin does not improve from 4.3%, concerns will remain regarding the likelihood of achieving the full-year operating profit forecast of ¥2,000 million.