Will the strong start to 1Q FY2027 sustain through the first half?

In 1Q FY2027, revenue was ¥10,777 million, operating income was ¥552 million, ordinary income was ¥698 million, and net income attributable to owners of the parent was ¥501 million. Year on year, revenue rose 11.9%, operating income 43.8%, ordinary income 45.2%, and net income 50.5%, indicating a clear improvement in earnings.

The full-year forecasts newly presented at the 1Q stage are revenue of ¥42.8 billion, operating income of ¥2,250 million, ordinary income of ¥2,510 million, and net income attributable to owners of the parent of ¥1.9 billion. Progress against these forecasts was 25.2% for revenue, 24.5% for operating income, 27.8% for ordinary income, and 26.4% for net income. Operating income was broadly in line with the 25% implied by assuming an even quarterly run rate, and no significant shortfall against plan has been identified.

However, these progress rates are not adjusted for seasonality or the product mix between the first and second halves. At the first-half results, revenue and operating income will need to be reviewed to determine whether demand related to housing, insulation materials and non-residential products, precision-business orders, and the benefits of passing through raw-material price increases have continued from 1Q. Even if revenue is in line with plan, operating income below ¥1,125 million would require a back-loaded second half to achieve the full-year forecast.

The 1Q summary did not include a quarterly consolidated cash flow statement, and cash flow from operating, investing, and financing activities was not disclosed. In the first half, operating and investing cash flow should be reviewed to determine whether the increase in profit was accompanied by higher working capital in accounts receivable, inventories, or accounts payable, and the extent of the investment burden for the second Okayama plant.