Strong start in Q1, but full-year forecast remains for lower revenue and earnings

FY2027-Q1 revenue was ¥6,905 million, up 10.5% year on year, while operating profit was ¥1,178 million, up 21.1%. Ordinary profit was ¥1,223 million, up 34.9%, and quarterly net income attributable to owners of the parent was ¥946 million, up 10.5%, with all major profit measures increasing. The operating margin was approximately 17.1%, up approximately 1.5 percentage points from approximately 15.6% in the year-earlier period.

However, the company's FY2027 full-year forecasts are revenue of ¥24,890 million, operating profit of ¥2,950 million, ordinary profit of ¥2,890 million and net income of ¥2,050 million, representing declines of 2.2%, 16.5%, 19.9% and 23.7%, respectively, from the previous fiscal year. As of Q1, progress against the full-year forecasts was approximately 27.7% for revenue and 39.9% for operating profit. Operating profit is ahead of revenue in terms of progress, but the full-year forecasts still assume substantial declines in earnings.

The company attributed the Q1 revenue growth in automotive applications mainly to stronger demand from South Korea, growth in Japan for consumer electronics and housing-equipment applications, and a recovery in Japan and China for industrial-equipment applications. The weaker yen also boosted revenue. Meanwhile, personnel and raw-material costs increased, meaning that the rise in profit resulted from revenue growth absorbing the higher costs. SEMITEC ELECTRONICS de Mexico, S.A. de C.V. was also newly included in the scope of consolidation from Q1, so changes in the scope of consolidation continue to affect simple year-on-year comparisons.

In FY2027-H1, the first points to confirm are whether revenue exceeds the year-earlier ¥12,696 million and operating profit exceeds ¥1,914 million. It will also be important to determine whether the higher operating margin seen in Q1 is maintained in the first half and the extent of growth in the existing business excluding the contribution from the Mexican subsidiary. The Q1 summary financial statements do not disclose a cash flow statement, order intake or order backlog, or off-balance-sheet volume KPIs. Accordingly, first-half results will need to be assessed alongside segment revenue and profit, with a focus on the sustainability of demand and whether the full-year forecasts are revised.