Revenue is on plan, but operating profit recovery is the key issue for FY2027-H1

First-quarter revenue for the fiscal year ending March 2027 was ¥29,658 million, up 1.3% from ¥29,292 million in the year-earlier quarter. Operating profit, however, fell ¥593 million, from ¥679 million to ¥86 million, an 87.3% decline. The operating margin was only 0.29% on a simple calculation, down approximately 2.03 percentage points from approximately 2.32% in the year-earlier quarter. Despite the maintenance of revenue levels, the sharp contraction in profit is the key starting point for analysis in the next half-year results.

The full-year forecasts are ¥118,000 million in revenue and ¥2,400 million in operating profit. First-quarter revenue progress was 25.1%, calculated as ¥29,658 million ÷ ¥118,000 million, broadly in line with the elapsed share of the fiscal year. Operating profit progress, meanwhile, was only 3.6%, calculated as ¥86 million ÷ ¥2,400 million. Simply deducting first-quarter results means that ¥2,314 million of operating profit is still required to meet the full-year forecast, equivalent to an average of ¥771 million over the remaining 3 quarters. Seasonality has not been disclosed, so a simple comparison is not possible, but the level to which profit recovers in the cumulative first half will be important.

The profit shortfall has also affected results below operating profit. Ordinary income fell from a ¥451 million profit in the year-earlier quarter to a ¥14 million loss, while quarterly net income attributable to owners of the parent fell from a ¥520 million profit to a ¥154 million loss. The earnings presentation materials show a first-quarter gross margin of 8.5%, down 1.4 percentage points year on year, selling, general and administrative expenses of ¥2,423 million, and an SG&A-to-revenue ratio of 8.2%. In the second quarter, it will be necessary to assess not only whether revenue builds, but also whether the gross margin recovers and whether the SG&A ratio stops rising.

Compared with FY2026 actual results, the FY2027 full-year plan calls for revenue to increase 2.7%, from ¥114,861 million to ¥118,000 million, while operating profit is expected to decline 9.4%, from ¥2,647 million to ¥2,400 million. No changes were made to the earnings or dividend forecasts in the first-quarter results. Next time, we will assess the cumulative first-half progress rates for revenue and operating profit, the operating margin, and whether the full-year forecasts are maintained or revised, to determine whether the low first-half profit reflects a temporary ramp-up issue or a risk to the full-year plan itself.