Revenue is on track, but operating profit is significantly behind plan

FY2027-Q1 revenue was ¥1,315.603 billion, up 7.8% from ¥1,220.384 billion in the same period of the previous year. Operating profit, however, fell 23.6% to ¥36.592 billion from ¥47.876 billion, while profit before tax was ¥47.846 billion and profit for the quarter attributable to owners of the parent was ¥31.883 billion. Despite higher revenue, profit declined at every level from operating profit downward, clearly indicating margin pressure.

The full-year forecasts are revenue of ¥5,250.0 billion, operating profit of ¥235.0 billion, profit before tax of ¥245.0 billion, and profit attributable to owners of the parent of ¥150.0 billion. No forecast revisions had been made as of Q1. Revenue progress was 25.1%, broadly in line with the 25% of the fiscal year elapsed, but operating profit progress was only 15.6%. If a simple half-year run rate is set at ¥117.5 billion in operating profit, a significant shortfall from that level in the next H1 results would make the back-loaded nature of the plan more apparent.

The operating margin is calculated because the company has not disclosed the Q1 margin. It was approximately 2.8% in FY2027-Q1, calculated as ¥36.592 billion divided by ¥1,315.603 billion, compared with approximately 3.9% in the same period of the previous year, calculated as ¥47.876 billion divided by ¥1,220.384 billion. The explanation for the decline in profit includes lower sales volumes of powertrain units, tariff impacts, and higher material prices resulting from the situation in the Middle East. Accordingly, the next H1 results will need to show not only whether revenue recovers, but also how far sales volumes, pricing pass-through, material costs, and tariff burdens restore the operating margin.

FY2026 full-year operating profit rose 12.7% year on year to ¥228.796 billion, supported by efforts to improve the company’s operating structure and by structural reforms. The FY2027 full-year operating profit forecast of ¥235.0 billion is only 2.7% above the previous year’s actual result. Absorbing the weak Q1 start will require structural reform benefits to reaccelerate, sales volumes to recover, and higher costs to be absorbed from Q2 onward. Cumulative H1 operating profit and the margin will therefore be important indicators for assessing the credibility of the full-year forecast.