First-quarter revenue rose sharply, but profit growth lagged

Revenue for the first quarter of the fiscal year ending March 2027 was ¥145.8 billion, up 21.7% year on year, while operating profit was ¥8.7 billion, up 1.8%. However, ordinary profit was ¥9.5 billion, down 6.6%, and profit attributable to owners of the parent was ¥4.1 billion, down 19.7%. Operating profit growth was modest relative to the increase in revenue, and the operating margin fell 1.2 percentage points from approximately 7.2% in the same period of the previous year to 6.0%.

The full-year plan calls for revenue of ¥622.0 billion, operating profit of ¥55.0 billion, ordinary profit of ¥58.0 billion and profit attributable to owners of the parent of ¥34.0 billion. On a simple basis, first-quarter progress was only 23.4% for revenue, 15.8% for operating profit, 16.4% for ordinary profit and 12.1% for net profit. Automotive-related companies may have quarterly fluctuations in production and shipments, so performance cannot be judged to be below plan solely against a simple 25% benchmark. However, the fact that progress in operating profit and net profit is lagging revenue should be examined on a cumulative second-quarter basis.

In the cumulative second quarter of the previous year, revenue was ¥248.47 billion, operating profit was ¥18.46 billion, ordinary profit was ¥21.99 billion and net profit was ¥10.16 billion. Accordingly, at the next results announcement, it will be necessary to look beyond year-on-year changes and confirm whether operating profit exceeds ¥18.46 billion and returns to year-on-year growth, and whether the operating margin recovers to approximately 7.4%. If net profit also falls below ¥10.16 billion, it will be important to identify where profit was lost, including non-operating income and expenses, extraordinary income and expenses, and the tax burden.

The first-quarter supplementary materials do not explicitly state progress against the full-year earnings forecast or management's own assessment against the plan. At the next second-quarter results announcement, the focus will be on whether the company can disclose cumulative revenue, operating profit, ordinary profit and net profit, year-on-year changes, progress against the full-year plan, and the operating profit required in the second half. In particular, we will assess from segment margins and cost factors whether the first-quarter operating margin of 6.0% reflects a one-off factor or a structural decline that will continue into the second half.