Q1 revenue increased and the operating loss narrowed, but the return to operating profitability is not yet complete

Revenue in FY2027-Q1 was ¥7,483 million, up ¥1,500 million, or 25.1%, from ¥5,983 million in the same quarter of the previous year. The operating result also improved from a ¥433 million loss in the same quarter of the previous year to a ¥4 million loss, and the operating margin improved from approximately negative 7.2% to approximately negative 0.1%. The company may have reached a point close to break-even as revenue enters a recovery phase, but the operating loss remains ¥4 million, making it too early to regard the earnings recovery as complete.

By profit level, ordinary income was ¥230 million and net income attributable to owners of the parent was ¥1,307 million. Ordinary income was positive despite the ¥4 million operating loss because non-operating income, including gains from the management of investment partnerships, contributed to results. The substantial increase in net income also reflected extraordinary gains, including gains on the sale of fixed assets. Accordingly, the next interim results should distinguish between whether operating income has turned positive and whether the improvement in ordinary income and net income is accompanied by improved profitability in the core business.

Compared with the same quarter of the previous year, both the telecommunications-related business and the high-frequency-related business recorded higher revenue and profit, not merely higher overall revenue. However, the improvement in the telecommunications-related business was much larger. Segment-level progress should therefore be examined to determine how much of the improvement in overall operating results depends on demand for communications-quality improvements, defense and broadcasting-equipment upgrades. In the high-frequency-related business, a recovery in automotive-related capital investment is indicated, but the business recorded lower revenue and profit for the full previous year, making it important to determine whether the single-quarter rebound represents a sustained recovery.

The company has maintained its full-year forecasts of ¥36,500 million in revenue, ¥1,650 million in operating income, ¥1,650 million in ordinary income and ¥2,300 million in net income attributable to owners of the parent. In the next results, it will be necessary to confirm that cumulative operating income turns positive, that ordinary income continues to improve even excluding extraordinary gains, and that the margin rises toward the full-year operating-income forecast.