FY2027 Q1: Revenue and earnings declined, with a turnaround in H1 the focus

Revenue in Q1 FY2027 was ¥29,419 million, down 3.5% from ¥30,502 million in the same period a year earlier. Operating profit was ¥1,327 million, ordinary profit was ¥1,596 million and net profit attributable to owners of the parent was ¥1,083 million, down 12.7%, 9.0% and 10.1%, respectively, year on year. Operating profit declined more sharply than revenue, so H1 will be examined not only for the timing of project recognition but also for the company’s ability to absorb costs and protect profitability.

The company attributed the revenue decline to the loss in the current period of a large project for China that was recorded in the same period a year earlier, as well as changes to and postponements of customers’ capital investment projects amid uncertainty surrounding the situation in the Middle East. It also said that operating profit declined because gross profit fell and selling, general and administrative expenses increased. However, it has not disclosed the amounts by which the loss of projects, capital investment postponements and higher SG&A affected revenue and profit, respectively. At the next results announcement, it will be necessary to determine whether the postponed projects have been carried forward into H2 or later rather than lost, and to confirm the timing of revenue recognition by project.

Q1 progress against the full-year forecasts was 22.3% for revenue, 19.8% for operating profit, 21.9% for ordinary profit and 20.4% for net profit. If half of the full-year forecast is used as a simple H1 benchmark, cumulative H1 figures to monitor would be revenue of ¥66.0 billion, operating profit of ¥3,350 million, ordinary profit of ¥3,650 million and net profit of ¥2,650 million. However, quarterly recognition tends to fluctuate depending on the progress and delivery schedules of equipment projects. Rather than judging performance solely by simple progress rates, investors should also consider the conversion of the order backlog into revenue and the recovery in standalone Q2 performance.

Revenue in Q2 of the previous year was approximately ¥34,324 million, calculated by subtracting Q1 revenue of ¥30,502 million from H1 FY2026 revenue of ¥64,826 million. In H1 FY2027, the ability to exceed this level, and to surpass approximately ¥1,655 million in standalone Q2 operating profit in the previous year, will provide concrete benchmarks for assessing the achievability of the full-year forecasts. The forecasts remain unchanged at present, so at the next results announcement it will be important to confirm not only whether they are maintained but also whether postponed projects are being recovered and margins are improving.