FY2027 1Q progress toward the full-year plan is weak, making a recovery in 2Q the focus

FY2027 1Q revenue was ¥1,966.468 million and operating profit was ¥165.205 million. Compared with revenue of ¥2,005 million and operating profit of ¥179 million in the prior-year quarter, revenue declined by approximately ¥38.5 million and operating profit by approximately ¥13.8 million. The operating margin calculated from the disclosed figures also declined from approximately 8.9% in the prior-year quarter to approximately 8.4% in the current quarter. Operating profit declined more than revenue, meaning that as of 1Q, profit growth was lagging revenue growth.

Meanwhile, the FY2027 full-year forecasts in the financial summary are revenue of ¥9,310 million, operating profit of ¥1,117 million and net income of ¥752 million. Compared with FY2026 actual revenue of ¥8,757 million, operating profit of ¥1,016 million and net income of ¥718 million, the full-year plan assumes increases of approximately 6.3%, 9.9% and 4.7%, respectively. Progress in 1Q was 21.1% for revenue, 14.8% for operating profit and 16.7% for net income, with operating profit showing the largest shortfall against the simple 25% benchmark. The company has not changed its full-year earnings forecasts as of 1Q, but a recovery will be needed to maintain the profit plan.

Looking mechanically at revenue alone, subtracting 1Q actual revenue of ¥1,966.468 million from the full-year forecast of ¥9,310 million leaves ¥7,343.532 million, requiring an average of ¥2,447.844 million from 2Q through 4Q. In FY2026, revenue was ¥2,005 million in 1Q, ¥3,999 million for H1 and ¥8,757 million for the full year, making the average quarterly revenue from 2Q through 4Q approximately ¥2,251 million. Assuming the prior year’s seasonality continues unchanged, FY2027 revenue over the remaining 3 quarters would need to average approximately 8.8% more than in the corresponding period of the prior year.

At the next H1 results, the first points to check will be whether revenue reaches the mechanical midpoint of ¥4,655 million and operating profit builds to ¥558.5 million. In addition, reaching FY2026 H1 revenue of ¥3,999 million would require approximately ¥2,033 million in FY2027 2Q alone. If revenue falls below this level, the burden on the second half required to achieve the full-year revenue forecast of ¥9,310 million will increase further. If the full-year forecasts are maintained at H1, it will be important to see whether the company provides specific explanations of a recovery in revenue by product, an improvement in the operating margin or a second-half concentration of earnings.