First-half forecast raised; full-year forecast unchanged

In the earnings revision announced on 21 October, the FY2027-H1 sales forecast was raised by ¥165 million, from ¥3,388 million to ¥3,553 million, indicating expected growth from the ¥3,287 million recorded in the same period of the previous year. The ordinary profit forecast was raised from ¥86 million to ¥110 million and the net income forecast from ¥53 million to ¥70 million, both above the previous-year figures of ¥68 million and ¥45 million, respectively.

Meanwhile, the full-year forecasts were unchanged at sales of ¥6,800 million, operating profit of ¥87 million, ordinary profit of ¥183 million and net income of ¥113 million. The revised first-half sales forecast of ¥3,553 million represents 52.3% of the full-year forecast, meaning that, on a simple calculation, second-half sales of ¥3,247 million will be required. The plan calls for second-half ordinary profit of ¥73 million and net income of ¥43 million. It is not yet possible to determine whether the first-half upgrade represents further upside potential for the full year or will be absorbed by conservative second-half assumptions.

In the latest first quarter, sales were ¥1,680 million, operating profit ¥2 million, ordinary profit ¥27 million and net income ¥10 million, representing a return to profitability from losses at each level in the same period of the previous year. However, first-quarter operating profit was only 2.3% of the full-year forecast of ¥87 million, indicating that the improvement in first-half profit is concentrated in the period after the first quarter. At the next results announcement, it will be important to check not only whether the revised first-half figures were achieved, but also whether the improvement in operating profit can be disclosed by product category, gross profit, SG&A expenses and extraordinary gains and losses.

In particular, the decision to raise only the first-half forecast while leaving the full-year forecast unchanged may indicate a cautious approach to the earnings upside. The assumptions for second-half orders and sales, the sustainability of demand for industrial machinery and tools, the timing of a recovery in automotive-related capital investment, and the impact of higher prices and labor costs will determine full-year profit after the first-half revision.