The key test is the start of cumulative Q2 results that will support the full-year upward revision

In Q1 of the fiscal year ending March 2027, revenue was ¥121,775 million, operating profit was ¥14,368 million and net income attributable to owners of the parent was ¥10,490 million. Compared with revenue of ¥135,785 million, operating profit of ¥24,386 million and net income of ¥16,687 million in the same quarter of the previous year, revenue declined 10.3%, while operating profit and net income fell 41.1% and 37.1%, respectively, indicating a larger drop in profit. Progress against the full-year forecast was 16.4% for revenue, 9.2% for operating profit and 9.1% for net income.

At the same time, the full-year forecast as of Q1 was revenue of ¥743,000 million, operating profit of ¥156,500 million and net income of ¥115,000 million, above FY2026 actual revenue of ¥605,748 million, operating profit of ¥122,522 million and net income of ¥92,003 million. Reports on the results briefing stated that the forecasts were raised from revenue of ¥725,000 million and operating profit of ¥150,000 million as of May, reflecting strong orders driven by AI investment and other factors. Accordingly, rather than concluding from the low Q1 progress alone that the full-year target will be missed, the key issue is whether the assumption that orders will translate into revenue and profit from Q2 onward is realized.

As a benchmark, the previous year's cumulative Q2 results were revenue of ¥274,299 million, operating profit of ¥46,454 million and net income of ¥31,855 million. The current source does not provide the company's FY2027-H1 plan or the quarterly allocation of revenue and profit, so it is not possible to simply treat 50% of the full-year plan as the H1 target. The next announcement should be checked for disclosure of H1 progress against the full-year forecast in addition to year-on-year changes.

The main point to monitor is whether a recovery in revenue is accompanied by a recovery in the operating margin. In Q1, operating profit progress was only 9.2% against revenue progress of 16.4% for the full year, leaving open the possibility that fixed-cost burdens and product mix, rather than only delayed revenue recognition, are suppressing profit. We will track whether the full-year forecast is maintained in FY2027-H1, whether the revenue and operating profit forecasts are revised further, and whether the reasons relate to volume, timing or profitability.