Can the upward revision to first-half operating profit translate into the full-year target?

Operating profit for the first quarter of the fiscal year ending March 2027 was ¥752 million, while revenue was ¥23,950 million. Revenue increased just 0.3% year on year, whereas operating profit rose 62.2%, improving the operating margin from approximately 1.9% in the same quarter of the previous year to 3.1%, a gain of 1.2 percentage points. Progress against the full-year operating profit forecast of ¥2,500 million was 30.1%, exceeding the 23.7% progress against the full-year revenue forecast of ¥101,000 million.

The earnings presentation raised the first-half operating profit forecast by ¥350 million, from the previous forecast of ¥850 million to ¥1,200 million. In contrast, the full-year forecasts for operating profit of ¥2,500 million, revenue of ¥101,000 million, ordinary profit of ¥2,950 million and profit attributable to owners of the parent of ¥4,200 million were unchanged. The presentation shows an operating profit plan of ¥1,300 million for the third and fourth quarters, indicating that the first-half upward revision has increased the profit plan for the first half rather than raised the full-year forecast as a whole.

On the revenue side, first-quarter revenue was ¥23,950 million against a full-year forecast of ¥101,000 million. Deducting the third- and fourth-quarter revenue plan of ¥52,000 million shown in the earnings presentation implies first-half revenue of approximately ¥49,000 million. At the next results announcement, the key points will be not only whether cumulative first-half revenue reached this level, but also whether the reason operating profit exceeded plan despite revenue being on plan was price pass-through, product mix or cost control.

The operating margin calculated from the full-year forecast is approximately 2.5%, below the first-quarter margin of 3.1%. This may indicate an assumption that the margin will normalize in the second half, making it important to determine whether the difference between the first-half actual operating margin and the second-half plan is explained. The impact of US tariff measures has not been incorporated into the earnings forecast because it is considered difficult to calculate reasonably, and the risk amount has not been disclosed. In the first-half results, we will track not only whether the full-year forecast is maintained, but also whether the assumptions underlying the outlook, including tariffs, raw material costs and energy costs, are made more specific.