Can the recovery in orders be converted into revenue growth and a return to profitability?

In FY2026, orders recovered 59.8% year on year to ¥27,841 million, but revenue declined 7.4% to ¥25,046 million. The company explained that the majority of the recovered orders would contribute to revenue in the following consolidated fiscal year and beyond, creating a time lag between the recovery in orders and the recovery in revenue. Operating profit also shifted from a ¥628 million profit in the previous year to a ¥695 million operating loss. The key point to verify is whether production and delivery capacity can convert the order backlog into actual shipments and revenue.

For the quarterly trend, revenue for the nine months of FY2026-Q3 was ¥17,346 million, down 18.2% year on year, while the operating loss was ¥899 million. By contrast, orders during the same period rose 44.6% year on year to ¥19,133 million, and order backlog increased 17.2% to ¥11,704 million, clearly showing the gap between orders and revenue. For FY2026 as a whole, orders were ¥27,841 million and order backlog was ¥12,810 million. In FY2027-Q1, the order backlog should therefore be assessed together with revenue, not orders alone, to determine how much has been converted into shipments and sales.

The company's FY2027 forecasts are revenue of ¥28,875 million, operating profit of ¥1,335 million, ordinary profit of ¥1,539 million and net income attributable to owners of the parent of ¥1,604 million. The plan assumes a 15.3% increase in revenue from FY2026 and a shift from an operating loss to an operating profit of ¥1,335 million, making a recovery in operating levels sufficient to absorb fixed costs a prerequisite, rather than merely a recovery in orders. In Q1, it will also be important to see whether progress against the full-year forecasts is disclosed or whether only quarterly revenue, orders and order backlog are provided.

At the next earnings release, the key items to track will be: 1) whether revenue turns positive year on year, 2) whether operating profit returns to positive territory, 3) whether the order backlog is being converted into revenue rather than merely increasing, and 4) whether the book-to-bill ratio remains above 1.0x. If orders continue to grow without a corresponding recovery in revenue and operating profit, the likelihood of achieving the FY2027 plan will decline. Conversely, simultaneous recovery in revenue and operating profitability would make it easier to view the business as moving from the order-led phase through FY2026 into a normalization phase.