Revenue is progressing well, but recovery in operating profit is the key focus for FY2027-H1

In 1Q from April to June 2026, revenue was ¥8,195 million, up 5.6% from ¥7,762 million in the same period of the previous year. Operating profit, however, was ¥273 million, down 63.4% from ¥746 million. Ordinary profit was also ¥626 million, down 21.3%, while net income attributable to owners of the parent was ¥389 million, down 27.5%, resulting in revenue growth and lower profit at the same time. The operating margin fell by approximately 6.3 percentage points, from approximately 9.6% in the same period of the previous year to approximately 3.3%.

The full-year forecasts are revenue of ¥31,500 million, operating profit of ¥2,800 million, ordinary profit of ¥3,200 million, and net income attributable to owners of the parent of ¥2,200 million, with no revisions as of 1Q. Revenue progress in 1Q was approximately 26.0%, broadly exceeding the 25% elapsed-quarter rate, while operating profit progress was only approximately 9.8%. The gap between revenue and profit progress was approximately 16 percentage points. Unless margins recover in H1, a substantial buildup in operating profit will be required in H2.

The company attributes the revenue increase to higher orders for single-lever faucets and thermostatic faucets following intensified order solicitation among customers. However, the 1Q disclosure did not provide a quantitative bridge showing the increase in orders, sales volumes, price increase effects, or the amounts by which copper prices and foreign exchange pushed down operating profit. It is therefore necessary to assess through H1 operating margins and disclosure of amounts by factor whether the 1Q profit decline reflects temporary cost factors or a deterioration in profitability extending through the full year.

For FY2027-H1, the buildup in profit should be assessed against revenue of ¥15,750 million, operating profit of ¥1,400 million, and net income of ¥1,100 million, representing simple 50% progress against the full-year plan. In particular, the extent to which operating margin improves from approximately 3.3% in 1Q on a cumulative H1 basis, and whether additional explanation is provided for the basis of maintaining the ¥2,800 million operating profit forecast, will be important.