FY2027-H1 will test whether the full-year outlook can recover after a loss-making Q1 start

FY2027 Q1 consolidated revenue was ¥6,322 million, down 7.1% from ¥6,808 million in the same quarter of the previous year. Operating income deteriorated from a ¥195 million profit to a ¥533 million loss, ordinary income from a ¥139 million profit to a ¥616 million loss, and profit attributable to owners of the parent from a ¥2,283 million profit to a ¥465 million loss. The swing in operating income was larger than the decline in revenue, so it is necessary to determine whether higher raw material prices and other expenses, rather than lower volumes alone, pressured margins.

The company has not revised its full-year outlook and forecasts revenue of ¥34,386 million, operating income of ¥1,290 million, ordinary income of ¥1,091 million, and profit attributable to owners of the parent of ¥61 million. Q1 revenue represents 18.4% of the full-year forecast, 6.6 percentage points below the 25% implied by one quarter of the year having elapsed. If revenue were generated evenly, ¥17,193 million in H1 would be a monitoring benchmark, but this is not a company-provided half-year forecast.

Because the company recorded a ¥533 million operating loss in Q1, maintaining the ¥1,290 million full-year operating income forecast requires total operating income of ¥1,823 million from Q2 through Q4. This equates to an average of approximately ¥608 million over the remaining 3 quarters, meaning the company would need to generate a level above FY2026 full-year operating income of ¥540 million during the remaining period of FY2027 alone. At the next results announcement, it will be important to assess not only whether cumulative Q2 operating income turns positive, but also whether most of the profit required to meet the full-year forecast has been deferred to H2.

FY2026 Q1 revenue was ¥6,808 million and operating income was ¥195 million, while cumulative Q2 results improved to revenue of ¥14,220 million and operating income of ¥423 million. FY2027 Q1 did not maintain that recovery trend. In addition, the company did not prepare a quarterly consolidated cash flow statement for Q1, so cash generation from operating activities and changes in inventories and trade receivables cannot be confirmed. In the H1 disclosure, it will be important to see whether the company provides specific information not only on earnings recovery, but also on operating cash flow, working capital, and the assumptions underlying the full-year outlook.