First-quarter revenue rose, but pretax profit declined; the first half will show how far the core business has recovered

In the first quarter from April through June 2026, revenue rose 9.0% year on year to ¥1,949,362 million. Pretax profit, however, fell 27.6% to ¥152,261 million, while quarterly profit attributable to owners of the parent rose 11.2% to ¥190,075 million. Revenue growth, a decline in pretax profit and an increase in net profit occurred simultaneously, making it difficult to assess earnings progress based on sales scale alone. Operating profit was not disclosed, so the amount of profit remaining at the operating level cannot be confirmed directly.

The company cited improved utilization and operations in the construction equipment rental business, a rebound from weakness in the melon business in the year-earlier period, strong precious-metals trading, growth in the semiconductor materials business, higher copper prices and wider aluminum margins as factors behind the revenue increase. These benefits were offset by higher personnel costs, deterioration in gains and losses on securities, and lower equity-method investment income. Gains and losses on securities were reported at a negative ¥26,342 million. In the first half, it will be necessary to determine whether this loss was temporary or reflects continuing factors related to the valuation environment for investees and held assets.

Profit attributable to owners of the parent of ¥190,075 million exceeded pretax profit of ¥152,261 million by ¥37,814 million. The company identified the loss on the sale of the Madagascar nickel business, the gain on the sale of an offshore wind power business in Belgium, and tax effects and realized foreign-exchange gains associated with the reorganization of an intermediate holding company as factors affecting profit. Accordingly, the 11.2% year-on-year increase in net profit cannot be taken as evidence of an improvement in ordinary earnings power. The focus in the first half will be a profit bridge separating tax expenses, gains and losses on business sales, and investment gains and losses.

The full-year forecast for profit attributable to owners of the parent was left unchanged at ¥630,000 million, implying a 4.9% year-on-year increase. Progress stood at 30.2% as of the first quarter, but a simple annualization is inappropriate because the figure includes the effects of tax benefits and one-off gains and losses. In addition to whether first-half profit exceeds ¥315,000 million, investors should check whether the year-on-year change in pretax profit, the profit measure corresponding to operating profit, and underlying profit excluding gains and losses on disposals are disclosed together.