Q1 operating income rose, but ordinary income and net income declined due to the reversal of foreign exchange gains; full-year forecasts unchanged

In FY2027-Q1, operating revenue was ¥14,933 million, up 1.3% year on year, while operating income was ¥1,106 million, up 4.3%. As operating income grew faster than operating revenue, the operating margin improved by approximately 0.21 percentage points, from approximately 7.19% in the same quarter of the previous year to approximately 7.41%. While the recovery in revenue scale remains limited, improved gross margins, greater operating efficiency and cost controls supported profit at the operating level.

Ordinary income, however, was ¥1,173 million, down 10.0% year on year, and net income attributable to owners of the parent was ¥789 million, down 9.3%. The decline in lower-line earnings despite higher operating income was mainly due to the reversal of the foreign exchange gains recorded in the same quarter of the previous year. Accordingly, in FY2027-H1, it will be necessary to examine not only the improvement in operating income but also underlying ordinary income excluding foreign exchange gains and losses, as well as the amount of foreign exchange gains recorded in the same period of the previous year.

Full-year forecasts were maintained at ¥62,500 million for operating revenue, ¥4,530 million for operating income, ¥4,960 million for ordinary income and ¥3,390 million for net income attributable to owners of the parent. Assuming each quarter accounts for 25% of the full year, Q1 progress was 23.9% for operating revenue, 24.4% for operating income, 23.6% for ordinary income and 23.3% for net income. Operating-level progress was close to an even quarterly pace rather than being heavily weighted toward the second half, while lower-line earnings were somewhat behind.

At the next interim results, one checkpoint will be whether operating revenue reaches ¥31,250 million, operating income ¥2,265 million, ordinary income ¥2,480 million and net income ¥1,695 million, representing a simple 50% benchmark. However, seasonality related to the Lunar New Year and ocean freight rates, as well as fluctuations in foreign exchange gains and losses, mean that judging full-year achievement based solely on progress rates would be risky. Even if operating income remains on plan, ordinary income and net income could still fall below plan because of foreign exchange gains and losses. We will therefore examine the breakdown of non-operating income and expenses and the reasons for maintaining the full-year forecasts in H1.