Can the first-quarter upside translate into sustainability through the first half and full year?

Revenue in the first quarter of the fiscal year ending March 2027 was ¥741,005 million, up 38.3% year on year, while operating profit was ¥86,310 million, up 53.0%. The operating margin was 11.6%, up 1.1 percentage points from 10.5% in the same period of the previous year. Quarterly profit attributable to owners of the parent was also ¥80,581 million, up 94.4% year on year, outpacing the growth in revenue and operating profit. Progress against the full-year forecast was 28.7% for revenue and 29.3% for operating profit, exceeding the simple quarterly elapsed-time benchmark of 25.0%.

By contrast, actual results for the fiscal year ended March 2026 were revenue of ¥2,504,820 million, operating profit of ¥272,415 million and an operating margin of 10.9%, compared with company forecasts for the fiscal year ending March 2027 of revenue of ¥2,580,000 million, operating profit of ¥295,000 million and an operating margin of 11.4%. Full-year revenue growth is expected to be only 3.0% and operating profit growth 8.3%, so the first quarter's 38.3% revenue growth and 53.0% operating profit growth have not been incorporated directly into the full-year plan. The fact that the company maintained its full-year forecast despite the strong first-quarter results suggests an assumption that growth will normalize in the second half, or that uncertainty remains regarding demand and foreign exchange.

The information provided does not include the company's own first-half forecasts for revenue and operating profit. Therefore, revenue of ¥1,290,000 million and operating profit of ¥147,500 million, representing 50% of the full-year forecast, are merely mechanical progress benchmarks that do not account for seasonality. At the next results announcement, key points will include cumulative first-half results, second-quarter revenue and operating profit alone, growth by product or segment, and the company's confidence in the full-year forecast. Orders and order backlog have also not been disclosed quantitatively, leaving limited information outside the financial results with which to assess leading demand indicators.

Factors contributing to the first-quarter increase in profit included sales of new products such as smartphones, higher shipments of products for AI data centers, rationalization, the effects of structural reforms in the previous fiscal year, and foreign-exchange effects, which increased revenue by approximately ¥72.5 billion and operating profit by approximately ¥11.3 billion. At the first-half results, we will assess on a monetary basis whether the operating margin remains around the first-quarter level of 11.6%, whether profit continues to increase year on year excluding foreign-exchange effects, and whether the company moves to revise its full-year forecast.