Assessing the profitability of the core automotive business, where higher revenue resulted in lower operating profit

Consolidated revenue in the first quarter of the fiscal year ending March 2027 was ¥90,888 million, up 6.3% from ¥85,541 million in the same quarter a year earlier. Operating profit, however, was ¥12,786 million, below ¥12,999 million in the same quarter a year earlier, a decline of 1.6%. The operating margin fell from approximately 15.2% to approximately 14.1%, making the lack of profit growth in line with revenue growth the first item to confirm at the next earnings announcement.

The core molded synthetic resin products business reported revenue of ¥81,584 million and segment profit of ¥12,831 million. Revenue increased 6.3% year on year, but segment profit declined 1.5%, resulting in higher revenue but lower profit in this business as well. For FY2026, the business reported revenue of ¥315,691 million and segment profit of ¥47,663 million, with profit declining 2.8% year on year. The beds and furniture business reported revenue of ¥9,304 million and segment profit of ¥1,438 million in the first quarter, both higher year on year, but its contribution to consolidated profit was smaller than that of the automotive-related business, making profitability improvement in the core business essential.

In FY2027-H1, it will be necessary to confirm whether consolidated operating profit can exceed ¥25,134 million in the same period a year earlier and whether segment profit in the molded synthetic resin products business can exceed ¥25,152 million. While revenue growth has been confirmed as of the first quarter, rising prices and personnel expenses are depressing profit. It is therefore necessary to distinguish between the extent to which price pass-through and expense reductions were reflected in the margin in the second quarter and how regional differences in automotive production affected revenue and profit.