First-quarter profit is ahead of plan; the first half will test the sustainability of the full-year decline forecast

Operating revenue in the first quarter of the fiscal year ending March 2027 was ¥2,072 million, up 12.3% year on year, while operating income was ¥456 million, up 34.4%. The operating margin was 22.0%, an improvement of approximately 3.6 percentage points from approximately 18.4% in the same quarter of the previous year. Operating income grew faster than operating revenue, indicating that higher volumes, a change in business mix and cost improvements contributed to profit, at least on a standalone first-quarter basis.

The full-year forecasts are ¥8,200 million in operating revenue, ¥1,340 million in operating income and ¥910 million in net income attributable to owners of the parent. Progress against these forecasts in the first quarter was approximately 25.3%, 34.0% and 32.0%, respectively. This indicates that operating income and net income are ahead of the 25% mark implied by one-quarter completion. Using a simple 50% allocation for the first half, ¥4,100 million in operating revenue and ¥670 million in operating income serve as monitoring benchmarks. These are not company-issued first-half targets, however, but mechanical benchmarks that do not account for seasonality.

Compared with the previous fiscal year, the current-year operating revenue forecast is only 3.0% above the ¥8,065 million recorded in the fiscal year ended March 2026, while operating income is forecast to decline 15.4% from ¥1,687 million to ¥1,340 million. The full-year operating margin is approximately 16.3% on a forecast basis, below both the 20.9% recorded in the previous fiscal year and the 22.0% achieved in the first quarter. Accordingly, if the high first-quarter margin continues into the first half, the gap between actual performance and the conservative full-year profit forecast could widen further.

At the next earnings announcement, the focus will be on the first-half cumulative results and whether the first-quarter lead in operating income was temporary. The company’s materials explain the structure used to present progress against the full-year forecasts, but do not state specific progress rates as of the first quarter or the operating revenue and operating income required during the remaining period. The first-half assessment will depend on whether the company discloses that the full-year forecasts are being maintained or revised, or provides an explanation of its margin assumptions.