Earnings outlook raised, but first-half profit still expected to fall 24.1%. How should investors read Sysmex’s (6869) 39.5% increase in Q1 operating profit?

Sysmex reported first-quarter revenue of ¥130.674 billion and operating profit of ¥14.821 billion, up 23.6% and 39.5%, respectively, from the same period a year earlier. Profit attributable to owners of the parent was ¥8.691 billion, up 90.9% year on year.

On the same day, the company raised its first-half operating profit forecast to ¥25 billion and also revised upward its forecasts for profit before tax and profit attributable to owners of the parent for the interim period. The new first-half outlook is expected to be 24.1% below the ¥32.957 billion recorded in the first half of the previous fiscal year.

The full-year outlook was also revised, with revenue raised from ¥535 billion to ¥545 billion and operating profit from ¥58 billion to ¥60 billion. Sysmex cited the impact of foreign exchange movements and strong equipment sales in the Americas, while indicating that it would continue to assess the timing of recovery in each region. The company remains cautious about its outlook from the second quarter onward.

By region, equipment sales were strong in the Americas, while China declined. Japan contributed to higher profit, helped by the impact of commencing operations in the biochemical testing business. The focus will be on how the sales mix develops from the second quarter onward as equipment, reagents and services build up.