Full-year profitability depends on ¥3.8 billion in operating profit in H2

Revenue in Q1 of FY2027 was ¥18.680 billion, down ¥3.558 billion, or 16.0%, from ¥22.238 billion in the same quarter of the previous year. Operating performance deteriorated from an operating loss of ¥387 million in the same quarter of the previous year to an operating loss of ¥2.082 billion. The quarterly results were therefore weighed down not only by the smaller revenue base, but also by fixed costs and the burden of production adjustments. The full-year forecasts remain revenue of ¥86.5 billion, operating profit of ¥1.4 billion, ordinary profit of ¥100 million and net profit of ¥1.0 billion.

The company’s first-half forecasts are revenue of ¥39.3 billion and an operating loss of ¥2.4 billion. Simply deducting Q1 actual results implies that Q2 alone must generate approximately ¥20.62 billion in revenue, an increase of approximately 10.3% from Q1. For operating performance, the first-half plan of a ¥2.4 billion loss against the Q1 loss of ¥2.082 billion implies that the Q2 loss must narrow to approximately ¥300 million. Accordingly, the H1 results will need to confirm not only a recovery in Q2 revenue, but also whether the quarterly loss has genuinely narrowed to the single-digit-billion-yen range.

Deducting the first-half forecast from the full-year forecast leaves required H2 revenue of ¥47.2 billion and operating profit of ¥3.8 billion. H2 revenue would be 20.1% above the first-half ¥39.3 billion level, while operating profit would improve by ¥6.2 billion, from a ¥2.4 billion first-half loss to a ¥3.8 billion profit. Q1 revenue represented 21.6% of the full-year forecast, below the 25% share implied by the passage of one quarter. Full-year profitability therefore depends substantially on a recovery from the latter half of H1 through H2.

The company made no changes to its full-year earnings forecasts in the Q1 results, and provided limited explanation of its own assessment against plan or of the revenue and profit amounts required for the remainder of the year. In FY2027-H1, an important point will be whether the company additionally discloses the production volumes, price pass-through and fixed-cost reductions supporting the ¥3.8 billion H2 operating profit plan. If revenue falls short of approximately ¥20.6 billion and operating performance deteriorates beyond the ¥2.4 billion first-half loss plan, the key question will be whether the ¥1.4 billion full-year operating profit forecast can be maintained.