Whether the full-year plan can absorb the 1Q loss is the key issue for FY2027-H1.

Revenue in FY2027 1Q was ¥24,465 million, down 39.1% year on year. Operating loss was ¥1,961 million, ordinary loss was ¥1,362 million, and net loss attributable to owners of the parent was ¥1,710 million. In contrast, the company left its full-year forecasts unchanged at revenue of ¥164,000 million, operating profit of ¥26,500 million, ordinary profit of ¥26,200 million and net profit of ¥21,300 million.

1Q revenue reached only approximately 14.9% of the full-year forecast, calculated as ¥24,465 million ÷ ¥164,000 million. If H1 is treated as a simple 50% progression toward the full-year plan, the revenue benchmark is ¥82,000 million, requiring an additional ¥57,535 million in 2Q from the 1Q result. This 50% is a monitoring benchmark that does not take seasonality into account, and does not represent a quarterly H1 plan disclosed by the company.

For operating profit, the 1Q loss of ¥1,961 million means that progress against the full-year plan of ¥26,500 million is effectively negative. To secure ¥13,250 million in H1, 2Q alone would need to generate operating profit of ¥15,211 million. Even if the full-year plan is maintained, the company would need to generate an additional ¥139,535 million in revenue and ¥28,461 million in operating profit over the remaining three quarters after 1Q. Accordingly, the key issue in H1 will be whether profits recover sharply, rather than merely whether the decline in revenue narrows.

Consolidated revenue in FY2026 was ¥179,353 million, ¥15,353 million above the FY2027 forecast of ¥164,000 million. However, the medical equipment business was transferred at the beginning of FY2027, and reported segments were changed from 3 to 2. The difference between the annual result and forecast should therefore not be interpreted directly as a deterioration in demand.

At the H1 results, we will assess whether revenue approaches the ¥82,000 million benchmark and whether operating profit reaches ¥13,250 million, as well as the basis on which the company maintains its full-year forecast. In particular, the key checks will be whether the delay in procedures for China’s import duty exemption system, which contributed to the 1Q revenue decline, has been resolved, when projects will be recognized as revenue, whether tighter export controls have eased, and whether the financial and earnings assumptions supporting the ¥132 annual dividend forecast remain unchanged.