The first-half return to profitability is running ahead of the full-year forecast on an operating-profit basis, while net income is heavily affected by gains on asset sales

First-half revenue was ¥4,671 million, representing 48.2% progress against the ¥9,700 million full-year forecast revised in August. Although this was slightly below the 50% implied by a simple assumption of equal quarterly contributions, operating profit was ¥197 million, reaching 56.3% of the ¥350 million full-year forecast. Since operating profit was ahead of revenue at the first-half stage, FY2026-Q3 will require an assessment not only of whether the recovery in revenue continues, but also of whether the improvement in margins is temporary.

Ordinary profit was ¥236 million, or 65.6% of the ¥360 million full-year forecast, while interim net income attributable to owners of the parent was ¥1,195 million, or 95.6% of the ¥1,250 million full-year forecast. However, while looking only at the progress rate for net income may suggest that full-year achievement is almost certain, the first half included ¥1,058 million in gains on the sale of investment securities. Accordingly, progress in net income is not a direct indicator of progress in operating activities, and it is more appropriate to focus the assessment on operating profit of ¥197 million and ordinary profit of ¥236 million.

The company posted an operating loss of ¥192 million and an ordinary loss of ¥199 million in the same period of the previous year, but turned to an operating profit of ¥197 million and an ordinary profit of ¥236 million in the first half of the current year. Revenue also increased 13.9% year on year, making the direction of earnings clearly positive. However, the factors cited by the company for the improvement in profit include a mix of production efficiency gains, control of selling, general and administrative expenses, temporary price pass-through in response to higher raw-material prices, and lower depreciation following the impairment loss recognised in the previous fiscal year. The contribution of each factor has not been disclosed.

For FY2026-Q3, nine-month cumulative revenue of ¥7,275 million and operating profit of ¥262.5 million, equivalent to 75% of the full-year forecasts, will be an important benchmark. Exceeding these levels would make it easier to judge progress against the full-year forecasts as solid, but if operating profit falls short, the profit required in the second half will need to be assessed. In particular, disclosure of ordinary profit excluding gains on asset sales, reductions in fixed manufacturing costs and SG&A expenses, the year-on-year change in depreciation and amortisation, and the sustainability of price pass-through will be important in assessing the quality of the return to profitability.