Does Q1 profit growth put the company on track to achieve ¥1,800 million in full-year operating profit?

FY2027-Q1 consolidated revenue was ¥12,095 million, operating profit was ¥661 million, ordinary profit was ¥601 million and net income attributable to owners of the parent was ¥375 million. Year on year, revenue rose 5.9%, operating profit rose 35.9% and net income rose 56.0%, indicating higher revenue and profit on the surface. Operating profit of ¥661 million represented 36.7% of the ¥1,800 million full-year forecast, while revenue of ¥12,095 million represented only 27.5% of the ¥44,000 million full-year forecast, meaning profit progress is outpacing revenue progress.

However, the next review point, FY2027-H1, needs to be assessed on a cumulative basis. In the year-earlier FY2026-H1, revenue was ¥22,482 million, operating profit was ¥1,005 million and ordinary profit was ¥1,068 million, while net loss attributable to owners of the parent was ¥209 million. The key test will be whether cumulative H1 results not only exceed the year-earlier period but also secure ¥900 million, equivalent to 50% of the full-year operating profit forecast. This will indicate whether the recovery is in line with the full-year plan rather than merely a rebound in Q1.

The full-year forecasts are revenue of ¥44,000 million, operating profit of ¥1,800 million, ordinary profit of ¥1,300 million and net income of ¥500 million. This implies a further 31.7% decline from FY2026 operating profit of ¥2,636 million. Q1 operating profit growth of 35.9% year on year may appear conservative against this forecast, but the company updated its management plan in its FY2026 results after recognizing that recent performance had diverged from its initial assumptions. In H1, it will be necessary to determine whether the factors behind Q1 profit growth are continuing or whether the forecast has been left unchanged while still assuming higher costs and slower demand in the second half.

The Q1 results did not disclose operating cash flow, investing cash flow, financing cash flow or the closing balance of cash and cash equivalents. In H1, the focus will be on whether the improvement in operating profit represents a substantive improvement without an accompanying working-capital or investment burden, whether the equity ratio of 34.2% declines further, and how these factors compare with the company's assessment of risks to the full-year forecast.