Revenue is broadly in line with plan and operating profit is ahead, but the reliability of the full-year forecast remains unconfirmed

Consolidated revenue in 1Q was ¥24,871 million, down 4.6% year on year, while operating profit was ¥217 million, down 12.8%. By contrast, the company's FY2027 full-year forecasts are ¥99,700 million in revenue and ¥700 million in operating profit, meaning that the 1Q results represent 24.9% and 31.0% of the respective forecasts. Revenue was broadly in line with the 25% passage of the fiscal year, while operating profit was approximately 6.1 percentage points ahead of revenue.

Using 50% of the full-year forecast as a simple progress benchmark, cumulative 2Q revenue would need to reach ¥49,850 million and operating profit ¥350 million. From the 1Q results, an additional ¥24,979 million in revenue and ¥133 million in operating profit would be required. This 50% is not a first-half plan explicitly provided by the company, but merely a comparison benchmark obtained by mechanically dividing the full-year forecast by two. The company will therefore need to explain seasonality and other factors in the next results announcement.

The 1Q operating margin was approximately 0.87%, calculated by dividing operating profit of ¥217 million by revenue of ¥24,871 million. In the same period a year earlier, operating profit was ¥249 million and revenue was ¥26,063 million, producing a margin of approximately 0.96%. Thus, although profit progress is strong, the margin itself was approximately 0.08 percentage points lower than a year earlier. Even if cumulative 2Q operating profit reaches ¥350 million, it will be necessary to check whether the margin has fallen further because of lower revenue or higher costs.

As of 1Q, there had been no revision to the earnings forecast, and the full-year dividend forecast also remained unchanged at ¥27. However, the assumptions underlying the FY2027 forecast, including the sales volume, gross margin and SG&A expenses required to achieve the revenue and profit figures, have not been disclosed. At the next results announcement, it will be important to assess the cumulative 2Q results, whether the full-year forecasts of ¥99,700 million and ¥700 million are maintained or revised, and the reasonableness of the remaining revenue of ¥74,829 million and operating profit of ¥483 million required in the second half.