Profit growth in Q1, but reassessing progress toward full-year guidance in H1

First-quarter revenue was ¥78,890 million, up 2.7% year on year, and operating profit was ¥7,364 million, up 11.0%. Ordinary profit was ¥8,753 million, up 18.5%, and net profit attributable to owners of the parent was ¥5,620 million, up 15.4%, meaning growth below operating profit was stronger than at the operating level. The fact that profit increased at every level of the income statement is the first point to monitor in FY2027-H1.

Full-year guidance remains unchanged at revenue of ¥330,000 million, operating profit of ¥31,400 million, ordinary profit of ¥35,100 million and net profit of ¥21,220 million. Progress from Q1 was approximately 23.9% for revenue, 23.5% for operating profit, 24.9% for ordinary profit and 26.5% for net profit. Revenue and operating profit were slightly below the simple 25% quarterly run rate, while ordinary profit and net profit were broadly at or above it. At least based on Q1 alone, there is no indication that the full-year plan will fall short.

However, the Q1 disclosure provided full-year guidance but no specific company forecast for cumulative Q2. The 50% H1 benchmark is therefore not a company-set H1 target, but merely a comparison line obtained by mechanically dividing full-year guidance in half. Mitani Shoji's businesses include PC replacement demand, construction materials, fuel, ODA projects and automobile sales, all of which can cause revenue and profit recognition to vary by period. Accordingly, falling below this benchmark would not immediately imply a revision to full-year guidance.

At the next results announcement, it will be necessary to check the four cumulative H1 profit indicators and their differences from full-year guidance, as well as whether the company revises its forecasts. In particular, the Q1 operating margin improved from 8.6% in the year-earlier period to 9.3%, making it important to determine whether this margin improvement continues in H1. The company also did not prepare a quarterly consolidated cash flow statement for Q1, so it is not yet possible to verify whether the increase in profit was accompanied by working capital improvement or cash generation.