Strong Q1 profit growth is progressing well against the full-year forecast, but H1 will test underlying earnings power

FY2027-Q1 revenue was ¥255,638 million, up 30.6% year on year, and operating profit was ¥14,961 million, up 212.3%. Profit before tax was ¥14,653 million, and profit for the quarter attributable to owners of the parent was ¥9,701 million, with all major profit measures in positive territory. Operating profit grew substantially faster than revenue, producing a simple operating margin of approximately 5.9%.

The full-year forecast is revenue of ¥1,040,000 million, operating profit of ¥50,000 million and profit attributable to owners of the parent of ¥29,000 million. Q1 progress was 24.6% for revenue, 29.9% for operating profit and 33.5% for profit attributable to owners of the parent, with operating profit and bottom-line profit ahead of revenue on a progress basis. If the half year is simply assumed to represent 50% of the full year, FY2027-H1 would provide reference thresholds of ¥520,000 million in revenue and ¥25,000 million in operating profit. However, seasonality and the timing of revenue recognition by business are not disclosed, so performance should not be assessed solely on a mechanical progress-rate basis.

The company cited consolidation of NS&C and its subsidiaries, increased demand for machine tools and semiconductor production equipment accompanying higher AI-related investment, and the weaker yen as factors behind the changes. At the same time, U.S. tariff policy and the slowdown in the Chinese economy remain sources of uncertainty. In Q1, the company did not disclose a bridge breaking down these factors into the monetary effects of consolidation, volume, price and foreign exchange, so the recurring portion of the profit increase cannot yet be confirmed.

In FY2027-H1, we will assess whether the approximately 5.9% Q1 operating margin reflects temporary consolidation and foreign-exchange factors, or structural improvement driven by appropriate pricing, productivity gains and recovering demand. Key points include whether revenue progress remains at least on a simple half-year run rate, whether operating profit continues to progress faster than revenue, and whether revenue and operating profit in the existing businesses excluding NS&C increase year on year.