All segments posted higher revenue and profit in the first half, driven by recovering demand and improved utilization

IFRS revenue in the FY2026 interim period was ¥798,742 million, while operating profit was ¥192,680 million. Revenue and operating profit improved substantially from ¥634,311 million and ¥61,301 million, respectively, in the prior-year period, with the operating margin rising approximately 14.5 percentage points from about 9.7% to about 24.1%. Interim profit before tax was ¥254,785 million, and interim profit attributable to owners of the parent was ¥217,333 million, representing a return to profitability from a loss in the prior-year period.

By segment, Automotive revenue was ¥358,679 million, up 13.4% year on year, while segment profit was ¥126,061 million, up 50.8%. Industrial, Infrastructure & IoT revenue was ¥412,206 million, up 38.1%, and segment profit was ¥131,827 million, up 96.4%, exceeding Automotive in the magnitude of profit growth. Other revenue was ¥27,458 million, up 46.7%, and segment profit was ¥14,431 million, up 102.2%. A defining feature of this recovery is that both revenue and profit increased across the two core businesses and Other, rather than in only one business.

According to the company, increased demand and the reversal of the distribution inventory adjustments implemented in the prior year contributed to higher revenue in Automotive and Industrial, Infrastructure & IoT. In addition to higher gross profit, increased utilization and an improved product mix contributed to the higher operating margin. However, the latest disclosure provides limited quantitative detail breaking down the effects of demand, utilization, product mix, foreign exchange and manufacturing costs. Even if improvement continues through the nine-month period, it will be necessary to determine which factors contributed.

In the next earnings release, we will review nine-month revenue and operating profit, year-on-year changes in revenue and profit for the three major segments, and the cumulative operating margin. In particular, it will be important to see whether Industrial, Infrastructure & IoT continues to significantly outperform Automotive in profit growth, and whether Automotive margins are being supported not only by recovering demand but also by improved utilization and product mix. Using the interim operating margin of approximately 24.1% as a benchmark, a significant decline in the nine-month margin would warrant additional review of changes in costs, product mix and utilization during the third quarter alone.