Q1 upside is strong, but H1 will test the repeatability of the full-year plan

Revenue in Q1 of the fiscal year ending March 2027 was ¥324,808 million and operating profit was ¥24,815 million. Revenue increased 16.8% year on year and operating profit increased 57.5%, with operating profit growth substantially outpacing revenue growth. Ordinary profit was ¥23,762 million and net income attributable to owners of the parent was ¥15,172 million, with both remaining profitable.

The current full-year forecasts are revenue of ¥1,402,000 million, operating profit of ¥102,000 million, ordinary profit of ¥94,600 million and net income of ¥54,000 million. Q1 progress was 23.2% for revenue and 24.3% for operating profit, broadly in line with the 25% quarterly elapsed-period rate. On a simple 50% basis, the H1 cumulative benchmarks would be revenue of ¥701,000 million and operating profit of ¥51,000 million, but these are mechanically calculated benchmarks based on the full-year forecasts, not company-issued interim forecasts.

As of the May disclosure, the forecasts for the fiscal year ending March 2027 were revenue of ¥1,424,000 million, operating profit of ¥92,000 million, ordinary profit of ¥84,000 million and net income of ¥50,000 million. Compared with these figures, the forecasts as of Q1 were lowered by ¥22,000 million for revenue, while operating profit was raised by ¥10,000 million, ordinary profit by ¥10,600 million and net income by ¥4,000 million. The company has slightly reduced its top-line forecast while raising its profit forecasts, so H1 needs to establish whether the higher profit forecasts resulted from pricing, product mix or cost absorption.

The Q1 summary report did not provide a specific monetary bridge for the forecast revision in the main text, instead referring to a separately issued notice. Accordingly, the H1 results should explain separately the contribution from Q1 actual results and the assumptions for Q2 onward for each of revenue, operating profit, ordinary profit and net income. In particular, dividing the full-year operating profit forecast of ¥102,000 million by forecast revenue of ¥1,402,000 million gives a simple forecast operating margin of approximately 7.3%, making the key issue whether the Q1 margin improvement is maintained in H1.