Profit is front-loaded in Q1, but normalization in Q2 will determine whether the full-year forecast is achieved

FY2027-Q1 operating revenue was ¥11,959 million, down 2.3% year on year, while operating profit rose 17.0% to ¥552 million. Ordinary profit was ¥528 million, up 15.3%, and quarterly net profit was ¥365 million, up 13.8%, indicating improvement at the profit level despite the decline in sales. Operating profit increased by ¥80 million from ¥472 million in the same quarter of the previous year. The company attributes the improvement primarily to better margins and lower selling, general and administrative expenses, rather than to one-off extraordinary income.

The company forecasts FY2027-H1 operating revenue of ¥23,300 million, operating profit of ¥820 million, ordinary profit of ¥770 million and net profit of ¥480 million. Q1 progress against the H1 forecasts was approximately 51.3% for operating revenue, 67.3% for operating profit, 68.6% for ordinary profit and 76.0% for net profit. Looking at operating profit alone, Q1 operating profit of ¥552 million already exceeds the full-year forecast of ¥420 million, an unusually high level of progress on a simple annual basis. At the next results announcement, it will be important to see whether the company can explain if this front-loaded profit reflects seasonality or whether the improvement in margins and expense controls is structural and continuing.

Subtracting Q1 results from the H1 forecasts implies Q2 standalone operating revenue of ¥11,341 million, operating profit of ¥268 million, ordinary profit of ¥242 million and net profit of ¥115 million. In the previous year, Q2 standalone operating revenue and operating profit, calculated by subtracting Q1 results from FY2026-H1 results, were ¥11,243 million and ¥399 million, respectively. The operating revenue now required is therefore approximately 0.9% above the previous year's Q2 standalone figure, while operating profit is approximately 32.8% lower. In other words, the H1 forecast appears achievable at roughly the previous year's level on sales, but incorporates some slowdown in profit in Q2. That assumption needs to be verified.

The full-year forecasts are operating revenue of ¥44,000 million, operating profit of ¥420 million, ordinary profit of ¥300 million and net profit of ¥150 million. Operating profit is expected to rise 76.4% from the previous year's ¥238 million. The previous year ended with a net loss of ¥361 million due to extraordinary losses, including an impairment loss of ¥507 million, while FY2027 is expected to return to a net profit of ¥150 million. The annual dividend forecast is unchanged from the previous year at ¥10 per share, with a forecast payout ratio of 54.1%. At the next results announcement, it will be necessary to confirm not only whether the profit forecasts are maintained, but also how much profit is expected from Q2 onward against the full-year operating profit forecast of ¥420 million, and the extent to which extraordinary losses are included in the forecast.