Q1 loss narrowed, but the FY2027 full-year forecast depends on a recovery in the second half

Consolidated revenue in FY2027-Q1 was ¥4,632 million, up 29.3% from ¥3,583 million in the same quarter of the previous year. Revenue grew in drive systems for semiconductor and liquid-crystal-related equipment and in automotive motor cores, while the operating loss narrowed to ¥65 million from ¥191 million in the same quarter of the previous year. However, the ordinary loss was ¥108 million and the quarterly net loss attributable to owners of the parent was ¥10 million, so the company has not yet returned to profitability at the operating, ordinary or net income level.

The full-year forecast is revenue of ¥25,800 million, operating profit of ¥770 million, ordinary profit of ¥550 million and net profit of ¥330 million. Q1 revenue represented only about 18.0% of the forecast, below the 25% implied by a simple even quarterly run rate. Since the company recorded an operating loss of ¥65 million in Q1, the gap to the full-year forecast is ¥835 million. The company will need average operating profit of approximately ¥278 million in each of the three quarters from Q2 onward, making the forecast dependent on the contribution from new projects and a recovery in orders translating into actual earnings.

Turning the first half profitable at the operating level alone will require standalone Q2 operating profit of more than ¥65 million. In addition, to raise first-half revenue to ¥12,900 million, half the full-year forecast, Q2 revenue would need to reach ¥8,268 million, approximately 1.8 times Q1 revenue. In the first-half results, it will be important to assess not only the buildup in revenue but also the extent to which drive-system profit offset the mold-system loss.

As of Q1, the full-year earnings forecast had not been revised, and the annual dividend forecast remained unchanged at ¥20. However, the Q1 summary financial statements did not include a quarterly cash flow statement, so changes in capital expenditure and working capital cannot be assessed from a cash perspective. At the next results release, the company will need to provide, to the extent possible with amounts, the basis for maintaining the full-year forecast, the timing of revenue recognition for new projects, the first-half operating profit level, and the impact of raw material and energy prices and foreign exchange rates.