Q1 brought higher revenue but lower profit, making this a point at which to reconfirm the benchmark for the full-year profit target and progress toward it

In Q1 of FY2027 ending March 2027, revenue was ¥126.162 billion, operating profit was ¥10.813 billion, ordinary profit was ¥10.861 billion, and profit attributable to owners of the parent was ¥8.299 billion. Revenue increased by ¥12.217 billion from ¥113.945 billion in the same period of the previous year, while operating profit decreased by ¥2.561 billion from ¥13.374 billion. Operating margin calculated on a simple basis declined by approximately 3.2 percentage points, from approximately 11.7% in the same period of the previous year to approximately 8.6% in the current period, indicating that higher revenue has not translated directly into earnings growth.

The full-year forecasts stated in the latest Q1 earnings report are revenue of ¥489.0 billion, operating profit of ¥20.0 billion, and profit attributable to owners of the parent of ¥16.0 billion. Based on these figures, Q1 progress was 25.8% for revenue, 54.1% for operating profit, and 51.9% for profit attributable to owners of the parent. Progress for operating profit and net profit is well above the 25% elapsed-period rate, but the presence or absence of a gain on bargain purchase and the uneven distribution of demand and expense recognition by quarter make it difficult to view this simply as a likely full-year upside.

In addition, the previous full-year earnings report stated a FY2027 ending March 2027 revenue forecast of ¥489.5 billion and an operating profit forecast of ¥24.0 billion, whereas the latest Q1 earnings report gives revenue of ¥489.0 billion and operating profit of ¥20.0 billion. At the same time, the Q1 earnings report states that the earnings forecasts are “unchanged.” Whether this is merely a difference in presentation or data, or whether the company has effectively revised its forecasts, is a point requiring confirmation in the disclosure. At the next results announcement, it will be necessary to clarify not only whether first-half operating profit exceeds ¥10.0 billion, but also whether the denominator for the full-year target is ¥20.0 billion or ¥24.0 billion.

The previous year included a gain on bargain purchase associated with the acquisition of Chita Kogyo as a wholly owned subsidiary, so the decline in operating profit this year includes the reversal of a one-off factor. However, the decline in operating margin may not be fully explained by one-off factors alone. The effects of product mix at AC and HC, raw material and logistics costs, foreign exchange, and tariff measures need to be examined separately. At the next results announcement, the focus will be on cumulative first-half revenue, operating profit, and profit attributable to owners of the parent, as well as reconfirming the full-year guidance and explaining operating profit excluding one-off items.