¥868 million in operating profit is needed in Q2 to meet the first-half forecast

Revenue in Q1 of the fiscal year ending March 2027 was ¥4,200 million, operating profit was ¥632 million, ordinary profit was ¥794 million, and net income attributable to owners of the parent was ¥556 million. As of Q1, revenue had reached 28.0% of the full-year forecast of ¥15,000 million, while operating profit had reached 86.6% of the full-year forecast of ¥730 million, meaning that profit progress was far ahead of revenue progress.

Meanwhile, the cumulative first-half forecasts revised in Q1 are revenue of ¥8,600 million, operating profit of ¥1,500 million, ordinary profit of ¥1,720 million, and net income of ¥1,230 million. Simply subtracting the Q1 results from these forecasts gives the required Q2 figures of ¥4,400 million in revenue, ¥868 million in operating profit, ¥926 million in ordinary profit, and ¥674 million in net income. The required revenue is only 4.8% above the Q1 result, but operating profit must be 37.3% above Q1's ¥632 million.

The Q2 operating margin calculated from these differences is 19.7%, 4.7 percentage points above Q1's 15.0%. Q1 profit was boosted by strong performance in target markets, price revisions, sourcing raw materials from outside China, and lower cost of sales from using raw materials secured before the sharp rise in raw-material prices. A key point in assessing first-half performance is whether the same factors continue in Q2 or whether the inventory and cost benefits unique to Q1 fade.

At the next earnings release, it will be necessary to review not only first-half cumulative revenue and operating profit, but also the standalone Q2 margin, the profit contribution from the machinery-parts and electrical-components businesses, and the effects of price revisions and raw-material costs. If operating profit does not reach ¥1,500 million, the assumptions for the second half could become even more demanding, given that the full-year forecast remains unchanged.