Operating profit recovery is still underway despite sales growth

FY2026 1Q revenue was ¥50,373 million, up 7.3% year on year, while operating profit was ¥5,395 million, down 15.4%. Operating margin was approximately 10.7% on a simple calculation, indicating that sales growth did not translate directly into profit. According to the company, increased orders and the weaker yen boosted sales, while cost increases and other factors reducing profit outweighed selling-price and product-mix improvements and other factors increasing profit.

On a first-half cumulative basis, revenue was ¥106,384 million and operating profit was ¥13,147 million, with operating profit turning to 8.5% year-on-year growth. Operating margin rose to approximately 12.4%, an improvement from 1Q. Subtracting 1Q results on a simple basis gives approximately ¥56,011 million in revenue, ¥7,752 million in operating profit and a 13.8% operating margin for 2Q alone. However, these are reference figures calculated from the difference between cumulative figures, and the company has not formally disclosed standalone quarterly results.

Against the full-year revenue forecast of ¥225,000 million and operating profit forecast of ¥26,500 million, progress at the end of the first half was approximately 47.3% for revenue and 49.6% for operating profit. For operating profit, subtracting first-half results from the full-year plan means that ¥13,353 million is required in the second half. Cumulative operating profit through the third quarter of the previous year was ¥19,556 million. In the next earnings release, it will be necessary to check whether cumulative 3Q operating profit exceeds the year-earlier figure and whether sufficient headroom remains against the second-half plan.

In previous disclosures, selling-price and product-mix improvements and cost reductions were cited as factors supporting profit growth, but cost increases have recently remained a factor weighing on profit. For FY2026 3Q, the company should at least disclose the direction and monetary impact of each factor affecting changes in operating profit: selling prices, product mix, raw materials and logistics costs, SG&A expenses and foreign exchange. In particular, whether operating margin can remain at approximately 12.4% in the first half or move closer to approximately 10.7% in 1Q will be a direct indicator of the likelihood of achieving the full-year plan.