Q1 delivered modest revenue and profit growth, but operating profit progress is lagging revenue

FY2027-Q1 revenue was ¥154,564 million and operating profit was ¥10,218 million, up 0.4% and 6.2%, respectively, from ¥153,954 million and ¥9,623 million in the year-earlier period. The operating margin rose by approximately 0.36 percentage points to 6.61% on a simple calculation, from approximately 6.25% a year earlier, confirming that profit improved faster than revenue. However, ordinary profit was ¥10,832 million and net profit attributable to owners of the parent was ¥8,873 million, meaning the 40.9% increase in net profit cannot be explained by operating profit growth alone.

The full-year forecasts are revenue of ¥638,500 million, operating profit of ¥47,000 million, ordinary profit of ¥45,500 million and net profit of ¥33,000 million. Progress at the end of Q1 was 24.2% for revenue, 21.7% for operating profit, 23.8% for ordinary profit and 26.9% for net profit. Compared mechanically with the 25% of the fiscal year elapsed, revenue is broadly on track, while operating profit is approximately 3.3 percentage points behind. Whether operating profit can be built up in the first half will therefore be a key point to monitor in FY2027-H1. Seasonal effects have not been quantified in this source, so full-year underperformance cannot be judged from progress rates alone.

Q1 extraordinary income included a ¥3,218 million gain on the sale of investment securities and ¥371 million in subsidy income, while no extraordinary losses were recorded. Net profit was boosted by the reduction of cross-held shares, whereas operating profit rose only 6.2%. The quality of earnings therefore needs to be assessed separately for operating results and gains from asset sales. Net profit in the year-earlier period was ¥6,296 million, but the earnings release does not break down how much of the Q1 increase came from the gain on the sale of investment securities, including the tax effect.

At the next earnings release, we will look for cumulative Q2 revenue, operating profit and operating margin, as well as whether the company can secure at least ¥23,500 million against its ¥47,000 million full-year operating profit forecast. Disclosure is also needed on year-on-year changes in ordinary profit and net profit excluding extraordinary income, operating cash flow and first-half segment profit. The company did not prepare a quarterly consolidated cash flow statement for Q1, so cash generation can only be assessed for the first time in the interim results.