Operating profit leads in Q1; FY2027-H1 will test the sustainability of the full-year plan

FY2027-Q1 revenue was ¥90,672 million, up 8.1% year on year, while operating profit was ¥10,413 million, up 171.0%. Against full-year forecasts of ¥359,700 million in revenue and ¥27,000 million in operating profit, this represents progress of 25.2% and 38.6%, respectively. Revenue was roughly one-quarter of the full-year target in Q1, while operating profit had reached nearly 40%, reflecting the strong contribution to profit from price revisions, sales volume, cost reductions, foreign exchange and earnings improvements associated with the transfer of the CGM business.

Using a mechanical first-half benchmark, 50% of the full-year forecasts equates to revenue of ¥179,850 million, operating profit of ¥13,500 million, pretax profit of ¥11,000 million and profit attributable to owners of the parent of ¥7,700 million. After deducting Q1 results, standalone Q2 would need to deliver revenue of ¥89,178 million, operating profit of ¥3,087 million, pretax profit of ¥2,867 million and profit attributable to owners of the parent of ¥1,362 million. These are not the company’s half-year forecasts, but comparison benchmarks obtained by simply dividing the full-year plan in half. They provide a minimum reference point for measuring progress at the next results announcement.

Q1’s revenue operating margin was approximately 11.5%, above both the 6.2% recorded in FY2026 and the approximately 7.5% implied by the FY2027 full-year forecast. The full-year plan may incorporate second-half seasonality, foreign exchange, tariffs and demand conditions, so Q1’s high margin cannot simply be extrapolated to the full year. Instead, it will be necessary to assess how much of the Q1 margin can be maintained in Q2 and distinguish continuing drivers, such as pricing, volume and cost reductions, from potentially temporary factors, such as foreign exchange and U.S. tariff refunds.

The quarterly report left the full-year forecast and annual dividend of ¥42 unchanged. However, it did not provide operating KPIs such as orders received, order backlog or sales volume, nor a monetary bridge breaking down the factors behind the change in operating profit. At the next H1 results announcement, it will be important to review standalone Q2 and first-half cumulative revenue and operating profit, profit by each of the 3 segments, the quantified impact of foreign exchange, tariffs, price revisions and cost reductions, and whether the full-year forecast has been revised, using the same segment definitions.