Will the full-scale momentum in generative AI and semiconductor demand continue through FY2027-H1?

FY2027-Q1 revenue was ¥32,237 million, up 33.5% from ¥24,151 million in the same quarter a year earlier. Operating profit also increased 138.1%, from ¥1,767 million to ¥4,209 million, while the operating margin improved by approximately 5.7 percentage points, from around 7.3% to around 13.1%. The improvement in margins may reflect a shift in the product and application mix toward areas with stronger demand, rather than simply a recovery in shipment volumes.

The company said that, in addition to demand in factory automation markets such as communications equipment, robotics and semiconductor manufacturing equipment, capital investment related to generative AI also boosted demand. Orders increased to ¥40,399 million and order backlog to ¥53,031 million, with these leading indicators of revenue up 56.7% and 41.4%, respectively, year on year. However, the company has not disclosed the value of generative AI-related sales, the breakdown of orders by customer or application, the proportion of backlog with confirmed delivery dates, or cancellation trends. Accordingly, a key issue in H1 will be how much of the increase in orders has converted into firm revenue.

By segment, the San Ace Company posted revenue of ¥11,638 million and segment profit of ¥2,741 million, representing a margin of approximately 23.6%. The Electronics Company recorded revenue of ¥6,318 million and profit of ¥619 million, turning profitable from a loss of ¥250 million in the same quarter a year earlier. The Motion Company posted revenue of ¥12,727 million and profit of ¥768 million, while Other recorded revenue of ¥1,553 million and profit of ¥158 million. Revenue exceeded the year-earlier level in all 4 segments.

In FY2027-H1, it will be necessary to assess whether strong AI- and semiconductor-related demand continues in both the San Ace and Motion companies, and whether the Electronics Company’s return to profitability is more than a one-off event. The mechanical 50% benchmark for H1 is ¥64,425 million against the full-year revenue forecast of ¥128,850 million, and ¥8,145 million against the operating profit forecast of ¥16,290 million. This is not the company’s half-year plan, but it provides a benchmark for measuring whether Q1’s strong growth has been maintained through H1.