A sharp recovery in the fourth quarter is needed to achieve the full-year plan

Cumulative third-quarter sales were ¥13,267 million and operating profit was ¥2,813 million. Progress against the full-year forecasts of ¥18,000 million and ¥4,025 million was therefore 73.7% and 69.9%, respectively. Compared with the simple 75% time-based progress expected after nine months, sales were 1.3 percentage points behind and operating profit 5.1 percentage points behind. Since the full-year forecasts were not revised in the third-quarter financial results, the first test in the next earnings release will be whether the shortfall was made up in the actual results.

Back-calculating from the full-year forecasts, the company needs fourth-quarter sales of ¥4,733 million and operating profit of ¥1,212 million. For reference, fourth-quarter sales for the fiscal year ended August 2025 can be calculated at ¥3,617 million, based on the difference between full-year sales of ¥16,983 million and cumulative third-quarter sales of ¥13,366 million. Fourth-quarter operating profit can likewise be calculated at ¥668 million, based on the difference between full-year operating profit of ¥3,583 million and cumulative third-quarter operating profit of ¥2,915 million. Achieving the current plan therefore requires sales to increase approximately 30.9% and operating profit 81.4% from the fourth quarter of the previous year.

Cumulative third-quarter sales declined 0.7% year on year and operating profit declined 3.5%. The company attributed the decline in sales to softer demand for patient wear, delays in renewal projects due to price revision negotiations and the situation in the Middle East, while stating that surgical wear and overseas markets generated higher sales. In other words, achieving the fourth-quarter target will require not only the resolution of delivery timing delays, but also a market mix that offsets weak patient-wear demand and margin improvement sufficient to absorb higher raw-material prices, processing fees and labour costs.

At the next earnings release, it will be necessary to confirm not only whether fourth-quarter sales of ¥4,733 million and operating profit of ¥1,212 million were actually achieved, but also the value of renewal-project deliveries, the contribution from price revisions and the impact of costs such as raw materials and processing fees. If sales reach the plan but operating profit falls short of ¥1,212 million, the cause of the full-year shortfall is more likely to remain in gross margin or SG&A expenses than in project timing.