Q1 profit is ahead of the full-year plan; sustainability to be assessed in H1

In Q1 of FY2027, revenue was ¥19,555 million and operating profit was ¥1,049 million, up from ¥17,945 million and ¥798 million, respectively, in the same period of the previous year. Revenue increased 9.0% year on year and operating profit rose 31.5%, while the operating margin improved by 0.91 percentage points, from approximately 4.45% to approximately 5.36%. The key change in this quarter’s results was not simply higher revenue, but the fact that profit growth significantly outpaced revenue growth.

The full-year forecasts are revenue of ¥80,000 million, operating profit of ¥3,700 million, ordinary profit of ¥3,900 million and net profit attributable to owners of the parent of ¥2,730 million, with no revisions as of Q1. Progress against the full-year forecast was 24.4% for revenue and 28.4% for operating profit, putting operating profit ahead of the simple 25% revenue run rate. However, achieving 50% of the full-year forecast in H1 is a mechanical benchmark that does not account for seasonality, rather than an H1 target indicated by the company. FY2027-H1 results therefore need to be assessed separately from this benchmark.

The company attributed the increase in revenue and profit to firm demand for automotive aftermarket replacement parts in Japan and overseas, as well as price revisions for some products in response to higher crude oil prices and transportation costs. However, it has not disclosed a breakdown by factor of the increase in revenue from the price revisions, changes in sales volume, or changes in raw material, purchasing and logistics costs. Accordingly, the ¥251 million increase in Q1 operating profit cannot currently be quantitatively verified as to whether it arose from pricing, volume, product mix or cost controls.

Actual results for FY2026 were revenue of ¥75,246 million and operating profit of ¥3,587 million. The FY2027 full-year forecast therefore assumes revenue growth of 6.3% and operating profit growth of only 3.1%. As the high Q1 profit growth rate is not assumed to continue unchanged through the full year, FY2027-H1 should be assessed not only against the simple operating profit run-rate benchmark of ¥1,850 million, but also by checking whether the H1 operating margin exceeds the 4.63% implied by the full-year forecast and whether the effect of the price revisions is continuing to absorb higher costs.