First-quarter results are in line with the full-year plan, but the decline in margins will be assessed at the interim stage

In the first quarter from April to June 2026, revenue was ¥19,355 million, up 11.7% from ¥17,335 million in the same quarter of the previous year. Operating profit, however, was ¥1,550 million, down 3.8% from ¥1,611 million, while ordinary profit was ¥1,721 million and net profit attributable to owners of the parent was ¥1,153 million. Progress against the full-year forecasts was 26.2% for revenue, based on a forecast of ¥74,000 million, and 26.7% for operating profit, based on a forecast of ¥5,800 million. Compared with the simple 25% elapsed-quarter benchmark, performance was not significantly behind schedule, including on profit.

However, the increase in revenue did not translate into higher operating profit. The calculated operating margin declined by approximately 1.3 percentage points, from approximately 9.3% in the same quarter of the previous year to approximately 8.0% in the current period. The company explained that revenue increased on sales of components to major customers and new products, while surging raw-material prices due to the situation in the Middle East and other factors, deteriorating market conditions, price competition, prolonged price negotiations and delays in the acceptance of large-scale equipment weighed on profit. The impact of each factor and the amount recovered through price pass-through have not been disclosed.

The full-year forecast implies an operating margin of approximately 7.8%, calculated as ¥5,800 million divided by ¥74,000 million, so the first-quarter result of 8.0% is slightly above the full-year assumption. However, the difference is only around 0.2 percentage points and could easily narrow if raw-material and selling-price fluctuations continue. At the interim stage, ¥37,000 million in revenue and ¥2,900 million in operating profit, representing 50% of the full-year forecasts, will serve as simple comparison benchmarks, and we will check whether actual results reach these levels.

Of particular importance is that, to achieve the full-year operating profit forecast of ¥5,800 million from ¥1,550 million in the first quarter, the company must accumulate ¥4,250 million over the remaining 3 quarters. At the interim results announcement, we will check not only whether the full-year forecasts are left unchanged, but also whether the effects of rising raw-material prices and price negotiations have subsided in the second quarter, to what extent delays in accepting large-scale equipment have been reflected in revenue and profit, and whether the operating margin has been maintained at around 8.0%.