Can the impact of the large one-off custom order be absorbed and operating results restored in the first half?

In the first quarter of the fiscal year ending March 2027, revenue fell 19.5% to ¥753.8 million from ¥935.9 million in the same quarter a year earlier. Operating profit of ¥54.1 million in the prior-year quarter turned into an operating loss of ¥161.8 million, while ordinary results were a loss of ¥117.0 million and quarterly net results attributable to owners of the parent were a loss of ¥121.9 million. Operating results deteriorated more than revenue declined, so at the first-half results announcement it will be necessary to confirm not only whether revenue has recovered, but also whether revenue has returned to a level and gross margin sufficient to absorb fixed costs.

The company explained that sales of radio-related equipment fell sharply in the current period because the prior-year quarter included a large custom order for such equipment. Supplementary materials also state that, excluding the impact of that order, underlying revenue was more than 25% higher year on year, but the revenue and profit contribution of the order itself have not been disclosed. Accordingly, an important question at the first-half results announcement will be whether the company can provide quantitative explanations for both revenue excluding the impact of the prior-year order and reported revenue including that impact.

First-quarter revenue from broadcasting-related equipment was ¥689 million, up 27.8% year on year and solid, whereas the communications systems business generated only ¥10 million, down 96.9%. The company has also indicated that revenue from its core broadcasting-related equipment business is seasonally weighted toward the fourth quarter, so it would be premature to judge the full year unattainable based solely on the first-quarter loss. However, if seasonality is the explanation, it will be necessary to confirm how far orders and shipments have progressed in the second quarter and how much dependence on the fourth quarter has eased.

The full-year plan is revenue of ¥4,100 million, operating profit of ¥50 million, ordinary profit of ¥100 million, net profit of ¥70 million and EBITDA of ¥160 million. Revenue progress at the end of the first quarter was 18.4%, and a simple residual calculation indicates that ¥3,346 million of revenue and ¥211 million of operating profit must still be generated to meet the full-year plan. In the first half, we will assess, in light of the impact of the prior-year order and seasonality, whether the company can secure more than ¥161.8 million of operating profit in the second quarter alone or at least return cumulative first-half operating results to positive territory.