Revenue rose, but Q1 operating profit turned into a loss, making the full-year forecast more difficult to achieve

Q1 FY2027 revenue was ¥343.944 billion, up 4.4% from ¥329.562 billion in the previous-year quarter. However, operating loss was ¥5.393 billion, ordinary loss was ¥3.291 billion and quarterly loss attributable to owners of the parent was ¥3.772 billion. The previous-year quarter recorded operating profit of ¥39.586 billion, ordinary profit of ¥33.931 billion and quarterly net profit of ¥26.802 billion. The important point is that all three profit measures turned negative despite higher revenue.

The full-year forecasts remain unchanged at revenue of ¥1.49 trillion, operating profit of ¥52.0 billion, ordinary profit of ¥40.0 billion and net profit of ¥31.0 billion. Q1 revenue progress was approximately 23.1%, only about 1.9 percentage points below the simple 25% quarterly elapsed-period rate, but operating profit progress against the full-year forecast was negative. It will therefore be necessary to determine whether operating profitability at least returns in FY2027-H1 and whether the company is positioned to build approximately ¥52.0 billion of full-year operating profit in the second half.

The deterioration in margins is more pronounced. Q1 operating margin was approximately negative 1.6%, based on revenue of ¥343.944 billion and an operating loss of ¥5.393 billion, down approximately 13.6 percentage points from approximately 12.0% in the previous-year quarter. The full-year forecast operating margin is approximately 3.5%. In the H1 results, it will be necessary to distinguish whether the Q1 loss was a temporary seasonal factor or reflected structural pressure on profitability from the fuel cost adjustment mechanism, competition and transmission and distribution costs.

Meanwhile, the body of the Q1 earnings summary does not break down the factors behind changes in results by specific amounts or volumes, leaving the overview of operating results to the supplementary earnings presentation. The company also did not prepare a cash flow statement for Q1, so operating, investing and financing cash flows cannot be confirmed. In FY2027-H1, it will be necessary to determine whether disclosure covers not only a return to operating profitability but also revenue, segment profit, the impact of the fuel cost adjustment mechanism and cash flow.