First-half plan half achieved in 1Q; focus turns to 2Q repeatability

1Q sales for the fiscal year ending March 2027 were ¥25.917 billion, up 23.4% year on year, while operating profit was ¥2.001 billion, up 172.7%. The operating margin was approximately 7.7%, an improvement of approximately 4.2 percentage points from approximately 3.5% a year earlier. Sales and operating profit represented 25.7% and 25.0%, respectively, of the full-year forecasts of ¥101.0 billion and ¥8.0 billion, indicating that 1Q was not materially behind the full-year plan.\n\nIn its 1Q results, the company raised its first-half sales forecast from ¥48.0 billion to ¥50.0 billion and its operating profit forecast from ¥3.3 billion to ¥3.9 billion. 1Q results represented 51.8% of the first-half sales forecast and 51.3% of the first-half operating profit forecast, meaning that half of the first-half plan had already been achieved in monetary terms. The full-year forecasts were also revised upward, with sales raised from ¥97.0 billion to ¥101.0 billion, an increase of 4.1%, and operating profit from ¥7.0 billion to ¥8.0 billion, an increase of 14.3%, incorporating a certain degree of 1Q’s strong performance.\n\nLooking at the first-half plan simply as the difference between the plan and 1Q results, the amounts required in 2Q are ¥24.083 billion in sales and ¥1.899 billion in operating profit. This implies a 2Q standalone operating margin of approximately 7.9%, slightly above 1Q’s approximately 7.7%. Accordingly, at the next results announcement it will be necessary to assess separately whether CTC’s high profitability continues into 2Q and whether VCCS’s low profitability improves, rather than focusing solely on sales growth.\n\n1Q ordinary profit was ¥2.187 billion, while profit attributable to owners of the parent was ¥1.706 billion. The first-half forecasts are ¥3.8 billion in ordinary profit and ¥2.8 billion in net profit, leaving ¥1.613 billion and ¥1.094 billion, respectively, to be generated in 2Q. However, the company did not prepare a quarterly cash flow statement for 1Q, so operating cash flow and investment amounts cannot be confirmed. In the first-half results, in addition to earnings performance, it will be necessary to check whether operating cash flow was positive and the extent of the cash outflow from capital expenditure.