1Q operating profit is ahead of plan; H1 FY2027 will show whether high profitability is repeatable

FY2027 1Q revenue was ¥113,108 million, up 29.3% year on year, and operating profit was ¥10,810 million, up 90.4%. Revenue and operating profit increased substantially from ¥87,501 million and ¥5,679 million, respectively, in the same period of the previous year, resulting in a 1Q operating margin of approximately 9.6%. Compared with FY2026 full-year operating margin of 7.1%, the margin improvement was approximately 2.5 percentage points.

The full-year forecast is revenue of ¥436,000 million, operating profit of ¥32,900 million, ordinary profit of ¥34,400 million and net income attributable to owners of the parent of ¥23,700 million. As of 1Q, progress was 25.9% for revenue, 32.9% for operating profit, 34.2% for ordinary profit and 34.2% for net income. Compared with the 25.0% of the fiscal year elapsed, revenue was broadly on plan while profit was clearly ahead. Based on a simple even allocation over six months, the H1 benchmarks are ¥218,000 million in revenue, ¥16,450 million in operating profit and ¥11,850 million in net income, but these are mechanical benchmarks that do not account for seasonality and are not H1 guidance from the company.

FY2026 full-year results were revenue of ¥417,023 million, operating profit of ¥29,711 million and an operating margin of 7.1%. The FY2027 full-year plan calls for revenue growth of 4.6% and operating profit growth of 10.7%, meaning the company plan itself assumes profit growth exceeding revenue growth. If the 1Q operating margin of 9.6% is maintained in H1, profitability could exceed the assumptions underlying the full-year plan. On the other hand, if a temporary increase in shipments caused by demand being brought forward or concerns about material supplies fades, the margin could decline from 2Q onward.

The company did not disclose cash flow from operating, investing or financing activities in 1Q and did not prepare a quarterly consolidated cash flow statement. Accordingly, in H1 we will check not only profit progress, but also working capital, including increases in inventories and accounts receivable, operating cash flow and the amount of the increase in selling, general and administrative expenses. After operating profit progress moved ahead to 32.9%, the central issue in assessing whether the full-year forecast should remain unchanged will be whether the H1 operating margin falls below 7.1% or remains at a high level.