Revenue growth reversing into higher revenue but lower profit

Consolidated revenue for the interim period was ¥2,883 million, an increase of ¥633 million, or 28.1%, from ¥2,250 million in the previous interim period. However, operating profit fell 58.3% to ¥81 million from ¥195 million, while ordinary profit fell 44.6% to ¥125 million from ¥226 million. Interim net profit attributable to owners of the parent was ¥31 million, down 83.6% from ¥191 million in the previous year. Although revenue expanded, the decline in profit was substantial, making margin deterioration the central issue for the interim period.

By segment, revenue from the CAD/CAM systems and related businesses rose 49.4% year on year to ¥2,705 million, while segment profit fell 1.4% to ¥125 million. The segment margin, calculated on a simple basis, was approximately 4.6% for the interim period, down approximately 2.3 percentage points from approximately 7.0% in the previous interim period. The mold manufacturing business also deteriorated substantially, posting revenue of ¥178 million and a segment loss of ¥43 million, compared with revenue of ¥439 million and segment profit of ¥68 million in the previous year. The decline in consolidated profit resulted not from one business alone, but from the combination of lower margins in the core business and a loss in the mold manufacturing business.

The company's full-year forecast calls for revenue of ¥6,551 million, operating profit of ¥442 million, ordinary profit of ¥485 million and net profit attributable to owners of the parent of ¥214 million. Progress through the interim period was only approximately 44.0%, 18.3%, 25.8% and 14.5%, respectively. To maintain the forecast, the company must generate ¥3,668 million in revenue, ¥361 million in operating profit, ¥360 million in ordinary profit and ¥183 million in net profit in the second half alone. In particular, the plan assumes that operating profit in the second half will exceed four times the interim-period result. If a recovery cannot be confirmed as of Q3, concern over the likelihood of achieving the full-year forecast will intensify.

In FY2026-Q3, in addition to comparing results with cumulative third-quarter revenue of ¥3,486 million and operating profit of ¥309 million in the same period of the previous year, it will be necessary to confirm a recovery in the CAD/CAM business margin and a reduction in the mold manufacturing business's loss. If revenue alone continues to grow while operating profit remains below the previous year's level, the expansion in revenue from NDES consolidation and large projects will still be viewed as not having translated into sustainable profit growth.