Whether the timing shift in revenue recognition in 1Q is recovered in H1 is the first inflection point for the full-year plan

Revenue in 1Q of the fiscal year ending March 2027 was ¥36.691 billion, up 1.5% year on year, while operating profit was ¥2.601 billion, down 12.4%, ordinary profit was ¥2.977 billion, down 9.5%, and profit attributable to owners of the parent was ¥1.978 billion, down 10.4%. The operating margin also declined to 7.1% from approximately 8.2% in the year-earlier period, indicating that revenue growth did not translate into profit growth.

The full-year forecasts were left unchanged at ¥180 billion in revenue, ¥18 billion in operating profit, ¥18.5 billion in ordinary profit and ¥13.7 billion in net profit. Based on 1Q results, progress was approximately 20.4% for revenue and 14.5% for operating profit, both below the simple 25% quarterly elapsed-period benchmark. At the end of 1Q, the remaining amounts required to meet the full-year targets were ¥143.309 billion in revenue and ¥15.399 billion in operating profit. In H1, it will be necessary to assess not only whether revenue accumulates, but also the pace of profit recovery.

The company explained that orders for instrumentation projects were progressing smoothly, but that the larger scale and longer duration of the projects shifted progress from 1Q to 2Q and beyond. However, it has not disclosed the impact of the shifted projects on revenue, gross profit and operating profit, the remaining contract value for each project, or the amounts scheduled to be recognized in 2Q and thereafter. H1 results in the year-earlier period were ¥78.491 billion in revenue and ¥7.284 billion in operating profit. Whether H1 results exceed these levels will provide a basis for assessing the recovery in the timing of revenue recognition.

At the next earnings announcement, in addition to cumulative H1 revenue and operating profit, we will check how many millions of yen in revenue and profit from the shifted projects were actually recognized. In particular, key indicators will be whether the H1 operating margin returns from 7.1% in 1Q to approximately 8.2%, the year-earlier level, whether the company can absorb the increase in SG&A expenses while maintaining its full-year operating profit forecast of ¥18 billion, and whether it revises its full-year forecasts.