Q1 profit progress trails sales progress: can the gap be closed in the first half to achieve the full-year earnings growth plan?

In Q1 of the fiscal year ending March 2027, revenue was ¥31,867 million, down 0.3% year on year, and operating income was ¥770 million, down 10.6%. Ordinary income was ¥710 million, down 35.5%, while net income attributable to owners of the parent was ¥561 million, down 43.5%, indicating a larger decline in lower-level earnings than in revenue. Progress against the full-year forecasts was 22.8% for revenue and 12.8% for operating income, with earnings progress clearly lagging.

Comparing the first half with a simple 50% of the full-year forecasts gives mechanical benchmarks of ¥70,000 million for revenue and ¥3,000 million for operating income. These are not first-half targets announced by the company, however. Results for the period corresponding to the first half of the previous fiscal year, the first half of the fiscal year ending March 2027, were revenue of ¥63,123 million and operating income of ¥1,933 million, representing 48.9% and 40.6%, respectively, of the previous full-year results. Accordingly, for operating income, it is necessary to assess separately whether the company can exceed the previous first-half figure of ¥1,933 million, taking into account the possibility of a second-half bias, and how much further must be accumulated to reach the full-year target of ¥6,000 million.

The company explained that, while the new Roox, the new Nissan LEAF, the increase in used-car sales accompanying the recovery in new-car sales, and the vehicle servicing business supported revenue and earnings, selling, general and administrative expenses, mainly personnel costs, increased. However, the amounts of the increases in personnel costs and SG&A, as well as the profit contributions from vehicle sales, used cars and servicing, were not disclosed. The reported segments also consist of a single automotive-related business segment, making it difficult to verify numerically which businesses contributed to any first-half earnings recovery.

For the full year, the company forecasts revenue of ¥140,000 million and operating income of ¥6,000 million, representing planned operating-income growth of 26.1% from the previous year's results. In the first-half results, it will be necessary to confirm not only whether revenue exceeds the previous first-half figure of ¥63,123 million, but also whether operating income exceeds the previous first-half figure of ¥1,933 million and whether the operating margin has improved from Q1's 2.42% even after the increase in SG&A. As of Q1, there had been no revision to the earnings forecasts. Whether the company leaves its forecasts unchanged or revises them while earnings progress remains weak in the first half is also an important point to monitor.