FY2027-Q1: Revenue rose but profit fell, with the focus on catching up with the full-year earnings plan

First-quarter revenue was ¥4,900 million, an increase of ¥250 million, or 5.4%, from ¥4,650 million in the same period of the previous year. However, operating profit fell by ¥59 million from ¥254 million to ¥195 million, and the operating margin declined by 1.5 percentage points from approximately 5.5% to approximately 4.0%. Ordinary profit also fell 22.7% year on year to ¥206 million, indicating that revenue growth has not translated into higher profit.

The company forecasts full-year revenue of ¥20,267 million, operating profit of ¥1,439 million, ordinary profit of ¥1,375 million and net income attributable to owners of the parent of ¥972 million. First-quarter revenue progress was approximately 24.2%, close to the 25% implied by a simple quarterly allocation, while operating profit progress was only approximately 13.6%. Deducting first-quarter operating profit of ¥195 million from the full-year forecast leaves ¥1,244 million to be earned over the remaining 3 quarters, or approximately ¥415 million per quarter on average. This requires a high profit run rate even compared with the previous full-year result of ¥1,331 million.

The company attributed the decline in profit to the time required for price revisions and pass-through to take hold, as well as higher costs resulting from raw material prices and foreign exchange movements. However, it has not disclosed the exchange rate assumptions, raw material prices, amount of price pass-through or quarterly profit plan incorporated into the full-year forecast. For FY2027-H1, the key points will be whether cumulative operating profit reaches approximately ¥360 million or more, and the extent to which price revisions recover the decline in first-quarter margins.