Can the sharp Q1 profit recovery be repeated in FY2027-H1?

Revenue in Q1 of the fiscal year ending March 2027 was ¥13,626 million, down ¥706 million, or 4.9%, from ¥14,332 million in the same quarter of the previous year. Operating profit, meanwhile, increased by ¥682 million from ¥192 million to ¥874 million, representing a 353.8% increase. On a simple calculation, the operating margin rose by approximately 5.1 percentage points, from about 1.3% in the same quarter of the previous year to about 6.4%. Profit therefore improved sharply even as the revenue base contracted.

The company attributed the substantial increase in operating profit mainly to a significant reduction in cost of sales resulting from tariff refunds in the United States. However, the refund amount itself, its impact on cost of sales and operating profit excluding the refund have not been disclosed. The ¥874 million therefore cannot be regarded as profit generated solely by normal product economics, and the six-month results through Q2 will need to distinguish the earnings level excluding this one-off factor.

Q1 depreciation was ¥265 million, gains on the sale of fixed assets were ¥4 million and no impairment loss was recorded. Accordingly, the ¥682 million increase in operating profit cannot be explained solely by the scale of the disclosed extraordinary gains and losses. The tariff refunds and changes in cost of sales identified by the company remain the central issues. The contributions of factors other than tariff refunds, including component prices, product mix, foreign exchange and volume, have not been broken down.

At the next earnings announcement, it will be necessary to check whether operating profit for the six months through Q2 remains positive year on year, as well as the impact of the tariff refunds and operating profit or gross margin excluding the refunds. The full-year operating profit forecast remains unchanged at ¥4,000 million. Even if first-half profit increases, if the increase is heavily concentrated in one-off refunds, the repeatability of second-half earnings and the reliability of the full-year forecast will require separate verification.