Revenue recovery has not translated into operating profit; FY2026-Q3 will focus on margins

Revenue in FY2026-H1 was ¥247,059 million, up 4.1% year on year, while operating profit was ¥27,249 million, down 3.1%. The operating margin, calculated simply, was approximately 11.0%, down approximately 0.8 percentage points from approximately 11.8% in FY2025-H1, calculated as ¥28,123 million divided by ¥237,409 million. Revenue has recovered, but profit growth has not kept pace. This is the most readily verifiable issue for FY2026-Q3.

The company explained that although the global economy remained resilient in FY2026-H1, the outlook continued to be uncertain because of trade policies, heightened tensions in the Middle East and rising energy prices. It is therefore necessary to distinguish whether the decline in operating profit was temporary, caused by the sales mix or production adjustment costs, or whether cost pressures from personnel, logistics and raw materials have become structural. The H1 financial summary provided does not show a factor-by-factor monetary breakdown of the decline in operating margin.

The FY2026 full-year forecasts are revenue of ¥491,000 million and operating profit of ¥47,000 million. If nine-month cumulative results achieve a simple 75% run rate, revenue of ¥368,250 million and operating profit of ¥35,250 million will be key reference points. Based on H1 results, the lower-half revenue required to meet the full-year forecast is ¥243,941 million and the operating profit required is ¥19,751 million. An operating margin of approximately 8.1% in the second half would be sufficient to reach the operating profit forecast.

At the next results announcement, we will examine not only consolidated figures but also segment revenue and operating profit for bicycle components and fishing tackle, changes in cost of sales and selling, general and administrative expenses, and expenses associated with factory production adjustments. The key to distinguishing a simple revenue recovery from an earnings recovery will be whether the increase in revenue is driven by volume, prices or foreign exchange, and whether the operating margin can remain at approximately 11.0% in H1.