A return to profitability was confirmed, but full-year operating profit is lagging revenue progress

1Q revenue was ¥18,795 million, up ¥1,272 million, or 7.3%, from ¥17,523 million a year earlier. Operating profit improved by ¥395 million, from an operating loss of ¥123 million in the prior-year quarter to ¥272 million, while the operating margin rose from approximately negative 0.70% to approximately 1.45%. Revenue growth and the return to profitability have been confirmed, but the next point to assess is whether the profit improvement continues through H1.

The full-year forecasts are revenue of ¥76,500 million and operating profit of ¥1,600 million, putting 1Q progress at 24.6% and 17.0%, respectively. Revenue was broadly in line with the 25% share of the fiscal year elapsed, while operating profit was 8.0 percentage points behind the passage of time. Following 1Q, ¥1,328 million of the full-year operating profit forecast remains, requiring average quarterly operating profit of ¥442.7 million over the remaining 3 quarters.

On a mechanical basis assuming the full-year forecast is achieved evenly over 6 months, cumulative H1 revenue of ¥38,250 million and operating profit of ¥800 million provide reference points. Working back from the 1Q results, standalone 2Q revenue of ¥19,455 million and operating profit of ¥528 million would be required, but the company has not disclosed an official H1 forecast that reflects seasonality. These figures are therefore benchmarks for measuring progress, not targets.

At the H1 results, it will be necessary to assess not only whether operating profit reached ¥800 million, but also whether the additional profit came from appropriate pricing, higher sales volumes and market share, productivity improvements, or lower depreciation. If revenue exceeds ¥38,250 million but operating profit remains below ¥800 million, the possibility remains that the revenue growth confirmed in 1Q has not translated into margin improvement.