Revenue increased, but margins declined, making a recovery in first-half profitability necessary to achieve the full-year plan.

Revenue in the first quarter of the fiscal year ending March 2027 was ¥9,238 million, up ¥524 million, or 6.0%, from ¥8,714 million in the same period of the previous year. Operating profit, however, was ¥703 million, down ¥26 million, or 3.5%, from ¥729 million. Revenue growth did not translate into profit growth, resulting in higher revenue but lower profit, which is the first point to monitor through the next results announcement.

The operating margin declined 0.8 percentage points, from approximately 8.4% in the same period of the previous year to 7.6%. The company cited higher raw material prices, product mix effects, and increased selling, general and administrative expenses as factors behind the decline in profit, but as of the first quarter it had not disclosed gross margin or SG&A expenses. In the first-half results, we will examine, based on margins and expense-line amounts, whether the improvement in gross profit from higher revenue was sufficient to absorb higher procurement costs and SG&A expenses.

The full-year forecast is revenue of ¥35,500 million, operating profit of ¥2,450 million, ordinary profit of ¥2,600 million, and net profit attributable to owners of the parent of ¥1,800 million, and had not been revised as of the first quarter. First-quarter progress rates were 26.0% for revenue, 28.7% for operating profit, 27.6% for ordinary profit, and 31.4% for net profit, meaning profit progress was ahead of revenue progress. However, first-half plan figures incorporating seasonality have not been disclosed, so full-year achievement cannot be judged on this basis alone.

The figures of ¥17,750 million in cumulative first-half revenue and ¥1,225 million in operating profit are mechanical benchmarks equivalent to 50% of the full-year forecasts, not first-half targets provided by the company. At the next results announcement, we will check actual results against these benchmarks, whether the operating margin exceeds 7.6%, and whether the full-year forecasts remain unchanged. In particular, if the margin does not recover while revenue continues to grow, the likelihood of achieving full-year operating profit of ¥2,450 million will need to be viewed cautiously.