Can the upgraded FY2027-H1 plan be achieved through sustained data center and semiconductor demand?

FY2027-Q1 consolidated revenue was ¥131.44 billion, up 32.3% year on year, and operating profit was ¥17.837 billion, up 85.3%. Ordinary profit was ¥17.830 billion and net income attributable to owners of the parent was ¥11.703 billion, up 73.6% and 62.1% year on year, respectively. Profit growth was substantial as well as revenue growth, with the Q1 operating margin calculated at approximately 13.6%, an improvement of approximately 3.9 percentage points from approximately 9.7% in the year-earlier quarter.

Following the strong Q1 performance, the company raised its FY2027-H1 forecasts to revenue of ¥266.0 billion and operating profit of ¥35.0 billion. The previous interim forecasts were revenue of ¥238.4 billion and operating profit of ¥24.1 billion, so the increases were ¥27.6 billion, or 11.6%, for revenue and ¥10.9 billion, or 45.2%, for operating profit. The full-year forecasts were also revised upward to revenue of ¥532.0 billion and operating profit of ¥67.0 billion, increases of ¥40.5 billion and ¥12.0 billion, respectively. As of Q1, 24.7% of full-year revenue and 26.6% of full-year operating profit had been achieved, meaning operating profit was ahead of revenue on a simple quarterly progress basis.

On the other hand, achieving the interim forecasts requires Q2 alone to generate revenue of ¥134.56 billion and operating profit of ¥17.163 billion. These levels should be assessed not only against the year-earlier quarter but also for continuity with Q1 results. The Q2 operating margin and segment profit breakdown will be needed to determine whether the Q1 improvement in operating margin was a temporary effect from higher volumes or product mix, or a sustainable improvement in profitability driven by digital model initiatives and expanding demand.

The company cited demand for data centers and semiconductor-related applications, a recovery in automotive-related demand, and initiatives including Fictiv, the Economy Series, D-JIT and meviy as factors behind the Q1 revenue increase. However, the breakdown of revenue and profit contributions by factor, volumes and foreign-exchange effects was not provided. At the next results announcement, we would like to confirm not only performance against the interim plan but also how extensively the company discloses the contributions of demand factors and its own initiatives in terms of volumes, customer numbers, usage counts or amounts.