Whether IAB’s sharp acceleration in Q1 will continue into the first half is key to the ¥80 billion full-year plan

In Q1 of the fiscal year ending March 2027, consolidated revenue was ¥209.9 billion, operating profit was ¥18.9 billion, and net income attributable to owners of the parent was ¥10.6 billion. Year on year, revenue increased 26.1%, operating profit 226.0%, and net income 131.1%. Q1 operating profit of ¥18.9 billion represents approximately 23.6% of the ¥80 billion full-year plan on a simple basis, but it is too early to assess full-year progress based solely on the Q1 progress rate, as the first half is affected by demand seasonality and expense allocation. The cumulative first-half operating profit and management’s own assessment of progress against the full-year plan need to be confirmed.

IAB reported revenue of ¥131.2 billion, up 37.2% year on year, and operating profit of ¥21.3 billion, up 100.8%. Its segment profit exceeds consolidated operating profit of ¥18.9 billion because consolidated adjustments include other segments and corporate and elimination adjustments. IAB’s profit should therefore not be extrapolated directly to consolidated profit. At the same time, profit growth exceeded revenue growth year on year. A key point for the first half is to determine whether the recovery of the customer base, AI-related demand, and capital investment in semiconductor and secondary battery equipment flowed through to profit via volume, mix, profitability, or some combination of these factors.

Among leading demand indicators, the Q1 order index was 1.67, with FY2022 Q4 set at 1.00. Revenue from both the semiconductor industry and the secondary battery industry increased 46% year on year, AXI revenue increased 257%, new product revenue increased 312%, and the cumulative number of new product models disclosed was 35. These figures indicate a strong demand environment, but the presentation materials do not disclose a breakdown of price and volume or market share. It is therefore not yet possible to determine whether the increase in orders resulted from actual shipment volume, pricing, or product mix.

In the first-half results, we will want to confirm whether IAB can maintain revenue growth in the 30% range year on year and whether its operating profit growth rate avoids a significant decline from around 100%. In addition, the key issue for FY2027-H1 will be whether the company maintains its Q1 outlook of full-year revenue of ¥880 billion, operating profit of ¥80 billion, net income from continuing operations of ¥40.5 billion, and net income attributable to owners of the parent of ¥40.5 billion, or revises it again in light of strong orders and demand.