Can the Q1 return to profitability become established in the first half and lead to full-year operating profit of ¥150 billion?

FY2027-Q1 revenue was ¥1.2857 trillion, up 16.9% year on year, while operating profit was ¥32.8 billion, turning profitable from the ¥46.1 billion operating loss in the same period of the previous year. The operating margin also improved by 6.8 percentage points, from negative 4.2% in the same period of the previous year to 2.6%. The full-year forecasts are revenue of ¥5.5 trillion and operating profit of ¥150 billion, putting Q1 progress at 23.4% for revenue and 21.9% for operating profit. Operating profit is slightly below the simple 25% benchmark for the three months elapsed.

Operating profit for FY2026 fell to ¥51.6 billion, with ROS declining to 1.0%, whereas the FY2027 forecast is operating profit of ¥150 billion and ROS of approximately 2.7%. This means that a ¥98.4 billion recovery in operating profit is required for the full year. The company cites the introduction of the new CX-5 in key markets, higher unit sales, lower costs and greater fixed-cost efficiency as recovery drivers, but the Q1 return to profitability does not establish that the full-year target will be achieved. We will track whether profit can be accumulated to approximately ¥75 billion in the first half as a mechanical benchmark that does not take seasonality into account.

The ¥78.9 billion improvement in Q1 operating profit was driven by volume and mix of ¥43.4 billion, foreign exchange of ¥41.3 billion, cost improvements of ¥15.7 billion, and fixed costs and other items of ¥12.3 billion, while raw materials, logistics and other costs of ¥24.0 billion and growth investment of ¥9.8 billion were negative factors. More than half of the profit improvement depended on volume and mix and foreign exchange, while cost improvements contributed ¥15.7 billion. There have also been reports that global sales from April to September were 616,000 units, up only 1% year on year, so the extent to which sales volume growth accelerated after Q1 needs to be assessed carefully.

For FY2027-H1, it is important to redisclose the bridge including volume and mix, foreign exchange, sales incentives, raw materials and logistics costs, structural cost reductions and fixed costs, not just the actual operating profit. In particular, we will check how many billions of yen cost improvements contributed to year-on-year profit growth excluding foreign exchange and temporary sales-volume effects, and whether the company reports progress against the ¥150 billion full-year forecast. The Q1 materials did not disclose progress against the full-year forecast itself.