High order levels support revenue, while recovery in the pharmaceuticals business remains the focus

First-quarter revenue was ¥2,118 million, up 25.0% year on year. By business area, functional materials revenue was ¥894 million, up 18.4%; pharmaceuticals revenue was ¥579 million, down 20.7%; and bioscience revenue was ¥643 million, up 208.1%. The overall increase in revenue is clear, but the structure is one in which a substantial increase in bioscience revenue is offsetting the decline in pharmaceuticals. The points to monitor are whether the same business mix continues in the first half and whether pharmaceuticals recovers.

Order-related indicators were strong. New orders were ¥4.06 billion, the order backlog was ¥8.34 billion, and the order backlog lead time reached a record 13.1 months. These figures provide a degree of visibility toward achieving full-year revenue of ¥10,000 million, but the year-on-year change in the order backlog, the timing of revenue recognition for individual projects, and the status of delivery delays or cancellations have not been disclosed. In the second quarter, it will be important to check whether the order backlog has built on ¥8.34 billion and whether the 13.1-month lead time has extended further, indicating supply constraints.

The full-year revenue forecasts by business area are ¥3,300 million for functional materials, ¥4,100 million for pharmaceuticals and ¥2,600 million for bioscience. Actual revenue by business area for the fiscal year ending March 2026 was ¥3,056.7 million for functional materials, ¥3,927.5 million for pharmaceuticals and ¥2,109.5 million for bioscience. The company's plan therefore assumes approximate increases of 8.0%, 4.4% and 23.3%, respectively. Accordingly, the quality of the plan will depend not only on strong bioscience growth but also on how the planned increase in pharmaceuticals revenue is achieved from the first-quarter decline of 20.7%.

The company reports a single business segment and does not disclose profit or profit margins for functional materials, pharmaceuticals or bioscience. It is therefore impossible to determine how the first-quarter revenue mix affected the profit mix or to verify whether revenue growth is skewed toward low-margin projects. In the next earnings release, at minimum, cumulative revenue by business area, the conversion of the order backlog into revenue and the drivers of recovery in pharmaceuticals will need to be disclosed. Supplementary disclosure on profit or gross profit by business area would also be desirable if available.