Q1 returned to profitability, but progress toward the full-year operating profit forecast remains limited

FY2027 Q1 sales were ¥11,472 million, up 4.0% from ¥11,029 million in the same quarter of the previous year. Operating results turned from a ¥280 million loss in the prior-year quarter to a ¥6 million profit, while the operating margin improved from approximately negative 2.5% to approximately 0.1%. The earnings presentation also showed ordinary profit of ¥307 million and net income attributable to owners of the parent of ¥154 million, both in the black, and the company assessed performance as broadly in line with its initial forecast.

The full-year forecasts are sales of ¥49,000 million, operating profit of ¥800 million, ordinary profit of ¥1,200 million and net income of ¥800 million. Q1 operating profit of ¥6 million therefore represents only 0.8% of the full-year forecast. Sales progress was 23.4%, close to the simple quarterly average of 25%, but earnings progress lagged sales substantially. It is difficult to conclude that the return to profitability in Q1 has increased the likelihood of achieving the full-year earnings forecast. Whether the earnings plan, which is weighted toward the second half, will actually work is important.

In FY2027 H1, we would like to assess results against simple comparison benchmarks of sales of ¥24,500 million, operating profit of ¥400 million, ordinary profit of ¥600 million and net income of ¥400 million, each representing half of the full-year forecast. These are not half-year forecasts provided by the company, but they provide a basis for assessing whether the momentum in sales and earnings continues from Q1 into Q2. In operating profit in particular, a substantial increase will be required in Q2 alone from Q1’s ¥6 million, so the effects of structural reform, product mix and foreign exchange need to be examined separately.

The next results announcement is scheduled for 30 October 2026. Even if the full-year forecast is maintained, the key issue will be whether the company discloses not merely that there has been no revision, but also the H1 progress rate against the full-year forecast, the sales and operating profit required in H2, and the sustainability of the fixed-cost reduction effect recorded in Q1.