FY2027 H1: the point at which to determine whether the Q1 slowdown is temporary

Consolidated revenue for the first quarter of the fiscal year ending March 2027 was ¥11,445 million, down 6.4% year on year. Operating profit was ¥1,175 million, down 29.1%, ordinary profit was ¥1,535 million, down 19.9%, and net income attributable to owners of the parent was ¥1,072 million, down 18.3%. The decline in operating profit significantly exceeded the decline in revenue, indicating at this stage that profit was depressed not only by the smaller revenue base but also, to an amplified extent, by the burden of fixed costs and SG&A expenses.

Revenue in FY2026 Q1 was ¥12,227 million and operating profit was ¥1,657 million, putting the operating margin at approximately 13.6%, compared with approximately 10.3% this time. Year on year, revenue decreased by ¥782 million, while operating profit decreased by ¥482 million. At the next interim results, it will be necessary to assess not only a simple return to revenue growth, but also whether the operating margin approaches the year-earlier level, or whether the margin remains low because higher personnel and logistics costs offset any recovery in revenue.

In the comparable first half of FY2026, revenue was ¥25,878 million, operating profit was ¥3,576 million, ordinary profit was ¥3,883 million, and interim net income attributable to owners of the parent was ¥2,611 million. The FY2027 full-year plan calls for revenue of ¥63,000 million, operating profit of ¥10,000 million, ordinary profit of ¥10,600 million, and net income of ¥7,200 million. First-quarter progress was only approximately 18.2% for revenue and 11.8% for operating profit. However, the company has left its full-year forecasts unchanged on the assumption that shipments will progress from the second quarter onward. Whether first-half results can recover to the level recorded in the same period of the previous year will therefore be the first milestone for testing the validity of maintaining the plan.

The factors cited by the company for the deterioration included equipment shipments below the prior-year level across Japan's central air-conditioning market, sluggish domestic equipment sales, higher personnel and logistics costs, and lower sales volumes in Asia amid deteriorating economic sentiment and a stagnant property market in China. The financial summary does not disclose detailed figures for price pass-through by factor, equipment sales volumes, revenue deferred because of shipment delays, or the increase in SG&A expenses. At the interim results, domestic equipment sales recovery, the conversion of order backlog into revenue, the rate of SG&A growth, and any revision to the full-year forecasts should be assessed together.