Can first-quarter earnings growth lead to an upward revision to the full-year forecast?

In the first quarter from April to June 2026, sales were ¥1.4971 trillion, up 14% year on year, adjusted operating profit was ¥144.3 billion and the adjusted operating margin was 9.6%. Operating profit under IFRS was ¥139.5 billion, the operating margin was 9.3%, and profit attributable to owners of the parent was ¥109.8 billion, up 21% year on year. The ¥4.8 billion difference between adjusted operating profit and IFRS operating profit needs to be reviewed at the first-half results stage, together with the nature of the difference and how much of the improvement shown by the adjusted metric remains in accounting operating profit.

The ¥184.2 billion year-on-year increase in sales is largely explained by an ¥85.0 billion foreign-exchange impact and ¥99.3 billion from scale effects and other factors. For adjusted operating profit, the foreign-exchange impact contributed ¥22.0 billion, increased business scale approximately ¥20.0 billion, price improvements approximately ¥8.0 billion and the Next Stage effect approximately ¥11.0 billion, while procurement costs for materials and components reduced profit by approximately ¥11.0 billion. It is therefore important to examine not only sales growth, but also the separate contributions of price, volume, foreign exchange and procurement costs in the first half.

Based on the first-quarter results, the company raised its full-year sales outlook from ¥6.200 trillion to ¥6.270 trillion and its adjusted operating profit outlook from ¥590.0 billion to ¥620.0 billion. It forecasts a full-year adjusted operating margin of 9.9%, profit before tax of ¥670.0 billion and profit attributable to owners of the parent of ¥495.0 billion. First-quarter sales represented approximately 23.9% of the full-year forecast and adjusted operating profit approximately 23.3%, but the materials do not explicitly state progress rates against the full-year forecasts or the amounts required over the remaining three quarters.

In the next FY2027-H1 results, we will assess whether the revised forecasts of ¥6.270 trillion and ¥620.0 billion reflect actual demand and improved profitability rather than merely a change in exchange-rate assumptions. In particular, we will review the order backlog, the difference between cumulative first-half adjusted operating profit and IFRS operating profit, actual increases in procurement costs and whether the full-year forecasts are revised again. Exchange-rate assumptions from the second quarter onward are ¥150 per US dollar, ¥175 per euro and ¥21.5 per yuan, so it will also be important to determine how much any divergence from these assumptions affects sales and profit, and which of the two is affected more.