How much will growth in branded products offset the decline in technology solutions?

Q1 revenue was ¥22,659 million, while technology solutions revenue was ¥14,248 million, down 20.7% year on year, and segment profit was ¥3,129 million, down 12.9%. The business accounts for approximately 62.9% of company-wide revenue and therefore has a significant impact on whether the company as a whole records lower revenue. By contrast, branded products generated revenue of ¥8,411 million, up 28.7% year on year, and segment profit of ¥997 million, up 122.8%.

Simple calculations based on the disclosed segment figures put the operating margin at approximately 22.0% for technology solutions and approximately 11.9% for branded products. Although branded products are recording stronger profit growth, their profit remains only about one-third of that generated by technology solutions. Accordingly, even if branded products continue to grow revenue, recovery in company-wide revenue will be limited if technology solutions continues to decline.

This divergence between the businesses is not limited to Q1. For the full fiscal year ended March 2026, technology solutions generated revenue of ¥77,257 million, down 11.1% year on year, and segment profit of ¥17,095 million, down 7.6%. Branded products generated revenue of ¥32,737 million, up 13.9% year on year, while segment profit turned from a loss of ¥2,879 million in the previous fiscal year to a profit of ¥2,019 million. The effects of structural reform in branded products are evident, but the profit base remains heavily dependent on technology solutions.

The company cites lower sales volumes, changes in OEM customers’ product cycles and changes in demand associated with higher semiconductor memory prices as factors behind the decline in technology solutions revenue, but it has not disclosed the revenue impact or sales-volume change for each factor. In the first-half results, it will be necessary to confirm whether the decline rate for technology solutions improves from 20.7%, whether the 28.7% growth in branded products is more than a temporary new-product effect, and whether additional disclosure by amount and volume is provided for each factor.