How much of the sharp Q1 slowdown can be recovered in the first half?

Revenue in the first quarter of the fiscal year ending March 2027 was ¥2,657 million, down 25.5% year on year, while operating income was ¥198 million, down 60.5%. Ordinary income was ¥253 million and net income attributable to owners of the parent was ¥116 million, down 49.4% and 59.5%, respectively, year on year. Operating income progress was only 12.4% against the full-year forecast of ¥1,600 million, while revenue progress was 19.0% against the full-year forecast of ¥14,000 million, indicating that profit is lagging revenue by a wider margin.

Using 50% of the full-year forecast as a simple first-half midpoint benchmark, the targets are ¥7,000 million in revenue and ¥800 million in operating income. Working back from the first-quarter results, this means the company would need to record ¥4,343 million in revenue and ¥602 million in operating income in the second quarter alone. However, the company has not disclosed first-half revenue or operating income forecasts, or quarterly seasonality. Accordingly, ¥7,000 million and ¥800 million should be treated not as company guidance but as mechanical benchmarks for measuring progress against the full-year plan.

The company attributed the decline in revenue to lower revenue recognition for electric servo motor testing machines, following extended production lead times caused by shortages of components and other supplies, as well as continued delivery-date adjustments with customers. However, it has not disclosed the amount of deferred acceptance, revenue by product, the number or value of delivery delays, or when supply constraints were resolved. In the second-quarter results, it will be important to determine whether the company provides disclosure that allows recovery in acceptance of electric servo motor testing machines to be assessed by volume, value and delivery timing.

As of the first quarter, there was no revision to the full-year earnings forecast. The forecasts remained at ¥14,000 million in revenue, ¥1,600 million in operating income, ¥1,600 million in ordinary income and ¥1,000 million in net income. If the first-quarter decline in revenue and profit was only a temporary shift in acceptance timing, progress could accelerate in the first half. However, if first-half cumulative results fall below the simple midpoint benchmark and the company provides no specific evidence of a recovery in acceptance, the likelihood of achieving the full-year forecast will need to be reassessed.