First-quarter progress reaches approximately 27% of full-year profit forecast, aided by market conditions

First-quarter revenue was ¥5.180999 trillion, up 22.8% year on year. Profit before tax was ¥388.009 billion, up 53.4%, and profit for the quarter attributable to owners of the parent was ¥298.524 billion, up 47.0%. Earnings per share was ¥81.53. The full-year forecast for profit attributable to owners of the parent remains ¥1.1 trillion, putting first-quarter progress at 27.1%.

For comparison with prior-year results, profit attributable to owners of the parent was ¥950.709 billion in the fiscal year ended March 2025 and fell to ¥800.460 billion in the fiscal year ended March 2026. The ¥1.1 trillion forecast for the fiscal year ending March 2027 implies a recovery of nearly ¥300 billion from the previous year. The key question is therefore whether the company can sustain this level of profit throughout the year, rather than merely achieve a year-on-year rebound.

The factors behind first-quarter profit growth were not limited to higher revenue and gross profit resulting from stronger market conditions. In gains and losses on securities, the company faced the absence of the gain on the sale of TH Foods shares recorded in the previous year, but recognized a revaluation gain associated with Chiyoda Corporation becoming an equity-method affiliate. Gains and losses on the disposal and sale of property, plant and equipment included disposal-related gains and losses from the Australian metallurgical coal business. Other gains and losses included settlement proceeds related to Mitsubishi Foods' litigation, while financial income included higher dividend income from resource-related investees. The next update should, where possible, separate these items on an amount basis to distinguish growth in underlying earnings from one-off gains and losses.

However, the IFRS-based financial results summary does not disclose operating profit or the operating margin, so improvement in profitability at the operating level cannot be confirmed directly. Judgment will need to combine profit before tax, profit attributable to owners of the parent, cash flow from operating activities and segment profit. In the second quarter, the focus will be on whether cumulative profit can build to approximately ¥550 billion, half of the full-year forecast, and how much progress is attributable to factors other than market conditions.