Assess whether the sharp increase in FY2027 Q1 profit will carry through to the first-half and full-year guidance

FY2027 Q1 revenue was ¥2,018,914 million, operating profit was ¥182,455 million and quarterly net profit attributable to owners of the parent was ¥135,173 million. Recent reports put year-on-year growth at 6.4% for revenue, 110.0% for operating profit and 89.2% for profit attributable to owners of the parent. Although these figures include a rebound from the previous fiscal year’s low profit base, they represent a strong start to the year.

As of Q1, the FY2027 full-year forecasts were revenue of ¥7,800.0 billion, operating profit of ¥590.0 billion, ordinary profit of ¥590.0 billion and profit attributable to owners of the parent of ¥450.0 billion. Q1 progress against the full-year forecast was 25.9% for revenue, 30.9% for operating profit and 30.0% for net profit. Assuming a simple even allocation between the two halves, first-half revenue of approximately ¥3,900.0 billion, operating profit of ¥295.0 billion and net profit of ¥225.0 billion would provide reference points, although the progress rates under the company’s plan, which reflects seasonality, need to be confirmed separately.

For FY2026, revenue was ¥8,048.722 billion, operating profit was ¥236.407 billion and profit attributable to owners of the parent was ¥189.540 billion, producing a 2.9% operating margin. By contrast, the FY2027 plan calls for revenue to decline 5.6% year on year while operating profit rises 132.6%, net profit rises 121.6% and the operating margin improves to approximately 7.6%. The issue in this results release is therefore not simply whether revenue will grow, but whether margins can be raised substantially on the smaller revenue base following the business sale.

In the first half, it will be necessary to break down whether the Q1 profit growth came from streamlining and improvements in pricing and mix, or whether it depended on a rebound from the previous year’s temporarily low profitability, subsidies or gains from business restructuring. Even if the full-year forecast is maintained, we will want to confirm the segment profit plan required to achieve operating profit of ¥590.0 billion despite lower revenue, the amount of fixed-cost reductions, foreign exchange and tariff assumptions, and profit after excluding non-recurring items.