First-half operating profit growth outpaced revenue growth, bringing results closer to the earnings plan after the upward revision

Revenue in the interim period of the fiscal year ending November 2026 was ¥124,832 million, up 7.7% year on year, while operating profit was ¥6,769 million, up 60.7%. Compared with revenue of ¥115,887 million and operating profit of ¥4,213 million in the same period of the previous year, revenue increased by ¥8,945 million and operating profit by ¥2,556 million. The operating margin calculated from the disclosed figures rose 1.78 percentage points, from 3.64% in the same period of the previous year to 5.42% in the current interim period, indicating that margin improvement, in addition to revenue growth, drove the increase in profit. The revenue operating margin itself is not disclosed on the cover page of the earnings summary, so the above ratios are calculated from revenue and operating profit.

The company cited demand for construction machinery in Europe, the United States and China, improvement in the ASEAN aftermarket sector and the industrial machinery sector in the Americas, as well as fixed-cost reductions from structural reforms, passing higher raw-material costs through to selling prices, automation and rationalisation of production lines, and procurement cost reductions as factors behind the increase in profit. However, the amounts attributable to these factors, broken down into volume effects, price effects, fixed-cost reductions and procurement cost reductions, have not been disclosed. Accordingly, even if the operating margin improves further in Q3, the current disclosures make it difficult to determine whether this is driven by demand volume, price pass-through or temporary cost controls.

The full-year forecast was revised in the interim period to revenue of ¥255,000 million, operating profit of ¥15,300 million, ordinary profit of ¥13,300 million and net profit attributable to owners of the parent of ¥7,500 million. Progress rates at the interim stage were 48.95% for revenue, 44.24% for operating profit and 45.27% for net profit, leaving operating profit approximately 4.7 percentage points behind revenue. Assuming a simple even quarterly progression, cumulative Q3 revenue of ¥191,250 million, operating profit of ¥11,475 million and net profit of ¥5,625 million would serve as reference thresholds, although these are mechanical 75% benchmarks rather than forecasts that reflect the seasonality indicated by the company.

In Q3, we will monitor not only year-on-year revenue growth but also whether the operating margin can be maintained at the interim-period level of 5.42% and whether the full-year operating profit forecast of ¥15.3 billion remains unchanged. For the first-half earnings improvement to continue in the second half, the effects of demand recovery, price pass-through and structural reforms must not be temporary. It will therefore be important to see whether Q3 results include additional disclosure of the effects by factor and the cost assumptions for the second half.