FY2027-H1: Operating profit recovery is the focus, rather than sales progress

First-quarter revenue increased 7.1% year on year to ¥170,705 million. Higher selling prices across regions, a higher mix of the Visual Communication and Packaging businesses, and the weaker yen contributed to the increase in revenue, while higher personnel and logistics costs drove up SG&A expenses, leaving operating profit down 6.8% year on year at ¥1,591 million. The increase in revenue has not flowed through to operating profit, so the second quarter will need to clarify the combination of volume, pricing and costs.

The full-year forecasts remain unchanged at revenue of ¥710,000 million, operating profit of ¥11,000 million, ordinary profit of ¥6,500 million and profit attributable to owners of the parent of ¥5,000 million. First-quarter progress was approximately 24.0% for revenue and 14.5% for operating profit, indicating a clear lag in operating profit progress relative to revenue when compared with the simple passage of one-quarter of the year. Achieving the full-year operating profit forecast will require ¥9,409 million of operating profit over the remaining period, a substantial increase from the first-quarter pace of ¥1,591 million.

The comparable first-half period of FY2026 recorded revenue of ¥319,186 million and operating profit of ¥3,881 million. At the next earnings release, we will prioritize checking not only whether revenue growth continues, but also whether first-half operating profit exceeds the year-earlier level and whether the decline in profit in Europe/Americas has bottomed out. The first-quarter earnings summary did not include a quarterly consolidated cash flow statement, and cash flow from operating, investing and financing activities was not disclosed. With M&A, share buybacks and increased borrowings occurring in parallel, cash generation in the second quarter is also an important item to monitor.