Q1 broadly in line with full-year guidance; first half will test the sustainability of profit improvement

In Q1 of the fiscal year ending March 2027, revenue was ¥212,279 million, up 6.7% year on year, and operating profit was ¥8,319 million, up 19.2%. Progress against the full-year forecasts was approximately 26.2% for revenue and 25.2% for operating profit, almost the same as the 25.0% represented by one-quarter of the fiscal year having elapsed. Since both revenue and operating profit are on track against the plan, no clear delay against the full-year forecasts can be identified at this stage.

The full-year forecasts are revenue of ¥810,000 million, operating profit of ¥33,000 million, ordinary profit of ¥21,000 million and net profit attributable to owners of the parent of ¥15,000 million, with no revision as of Q1. Simply deducting Q1 results, ¥24,681 million in operating profit is required over the remaining three quarters to achieve the full-year operating profit forecast of ¥33,000 million. Revenue of ¥597,721 million is required over the remaining period. At the next results announcement, progress in the first half should therefore be assessed against the profit level required for the remaining period, rather than only against the revenue growth rate.

The Q1 presentation materials did not include the company’s assessment of progress against the full-year forecasts or whether results were ahead of plan. The Q1 operating margin was 3.9%, 0.2 percentage points below the 4.1% full-year forecast. Even if revenue is on track, a first-half operating margin below 3.9% would increase the dependence on improvement to 4.1% in the second half.

At the next results announcement, key points will include cumulative first-half revenue, operating profit and operating margin, as well as Q2 standalone operating profit. We will particularly check whether improvements in selling prices and reductions in variable costs continued in Q2, whether there is sufficient capacity to maintain the ¥33,000 million full-year operating profit forecast, and whether the full-year outlook, including the ¥13 dividend forecast, is maintained.