Q1 operating profit fell despite higher revenue; profit progress is the priority for the FY2027 full-year plan

Revenue in FY2027-Q1 was ¥175.614 billion, up ¥11.694 billion, or 7.1%, from ¥163.920 billion in the year-earlier quarter. Operating profit, however, was ¥3.649 billion, down ¥542 million, or 12.9%, from ¥4.191 billion. The operating margin was approximately 2.08%, down approximately 0.48 percentage points from approximately 2.56% in the year-earlier quarter. The key question for the next results is why the recovery in the top line has not translated directly into profit growth.

For FY2026, revenue declined 4.1% year on year to ¥677.919 billion, while operating profit rose 23.3% to ¥18.715 billion, lifting the operating margin from 2.1% to 2.8%. FY2027-Q1, by contrast, produced higher revenue but lower profit. The FY2027-H1 explanation of changes in profit will need to distinguish whether the benefits of price pass-through and efficiency improvements seen in the previous full year are continuing on a quarterly basis, or whether new increases in material, labor and logistics costs, together with start-up costs, are weighing on profit.

The latest Q1 materials give FY2027 full-year forecasts of ¥690 billion in revenue, ¥19 billion in operating profit, ¥19 billion in ordinary income and ¥14 billion in net income attributable to owners of the parent. Compared with the next-year revenue forecast of ¥669 billion stated in the FY2026 full-year materials, the revenue forecast is ¥21 billion higher, while the operating profit forecast is unchanged at ¥19 billion. Although the figures have changed, the materials provided do not clearly state whether there was a revision or explain the reason for the change. The next results will therefore need to clarify whether the revenue forecast change is merely an update to assumptions or a formal revision reflecting customer production volumes, foreign exchange rates and material prices.

Q1 operating profit represents approximately 19.2% of the full-year forecast of ¥19 billion, while revenue represents approximately 25.5% of the ¥690 billion forecast. The company has not disclosed a formal first-half profit plan, but if half of the annual forecast is used simply as a six-month benchmark, FY2027-H1 would imply revenue of ¥345 billion and operating profit of ¥9.5 billion. These are mechanical benchmarks, not forecasts that reflect the company’s actual seasonality, and should not be treated as expected results. We will nevertheless track whether the Q1 decline in operating margin continues through H1 and whether management explains an assumption of substantial profit accumulation in the second half.