Revenue growth has begun, but a return to operating profitability remains some way off

Consolidated revenue in FY2027-Q1 rose 6.3% year on year to ¥2,700 million, but the operating loss was ¥209 million, a deterioration of ¥23.4 million from the ¥186 million loss in the same period of the previous year. The ordinary loss was ¥190 million, and the quarterly net loss attributable to owners of the parent was ¥184 million, leaving all three levels of profit, ordinary income and net income in the red. The key point is that higher revenue did not translate directly into improved profitability, as a decline in gross margin and an increase in SG&A expenses weighed on earnings.

The company left its full-year forecasts unchanged at revenue of ¥13,600 million, operating profit of ¥10 million, ordinary profit of ¥10 million and net income attributable to owners of the parent of ¥510 million. First-quarter revenue progress was approximately 19.9%, about 5.1 percentage points below a simple one-quarter benchmark. At the next interim results announcement, it will be necessary to check not only whether revenue has accumulated to at least around ¥6,800 million, but also how far the operating loss has narrowed.

In FY2026, the previous fiscal year, revenue was ¥10,547 million and the operating loss was ¥594 million, marking the sixth consecutive fiscal year of operating losses since the fiscal year ended March 2021. FY2026-H1 revenue was ¥5,361 million and the operating loss was ¥182 million. Thus, although revenue increased year on year in the current fiscal year's first quarter, the operating loss widened to ¥209 million. To achieve full-year operating profit of ¥10 million, the company will need to absorb the first-quarter loss of ¥209 million and achieve at least approximately ¥219 million of improvement over the remainder of the year.

At the next results announcement, the focus should be not only on whether the operating loss narrowed year on year, but also on how many millions of yen were contributed by the recovery in gross margin and by SG&A expense controls. The first-quarter results did not disclose the amount of each factor behind the decline in gross margin or increase in SG&A expenses. If the full-year forecasts are maintained, the key points for verification will be whether the company can explain, alongside first-half operating results, the order in which it plans to absorb the burden of converting its order backlog into revenue, improving prices and costs, and investing in advertising and promotion.