Hirose Tsusho Lifts Q1 Operating Profit 54% to ¥1.24 Billion Even as FX Trading Volume Falls 27%

Hirose Tsusho Co., Ltd. (TSE: 7185), the Osaka-based retail foreign-exchange broker behind the LION FX platform, reported consolidated results for the first quarter of the fiscal year ending March 2027 — the three months from April 1 to June 30, 2026 — under Japanese GAAP. Operating revenue rose 21.8% to ¥3,123 million, net operating revenue rose 21.6% to ¥3,096 million, operating profit rose 53.8% to ¥1,242 million, ordinary profit rose 52.6% to ¥1,240 million and net profit attributable to owners of the parent rose 48.1% to ¥802 million. Basic earnings per share were ¥130.49, up from ¥88.53, and diluted earnings per share were ¥130.04, up from ¥87.95. The comparison flatters the quarter: a year earlier the same three months saw operating profit fall 34.1% and revenue fall 8.4%.

Fewer trades, far more revenue from each one

The quarter's most striking figure is one that shrank. Foreign-exchange trading volume came to 2.3602 trillion currency units, down 27.2% year on year, which the company attributed to the dollar-yen rate and other yen crosses holding at elevated levels with volatility persistently low. Revenue nevertheless rose more than a fifth. Applying the disclosed 27.2% decline implies year-earlier volume of roughly 3.24 trillion currency units, which would put operating revenue at about ¥1.32 billion per trillion units traded this quarter against roughly ¥790 million a year earlier — a two-thirds increase in revenue captured per unit of customer flow. That widening spread between volume and revenue is where the entire profit increase originated: trading income reached ¥3,094 million against ¥2,552 million while the underlying volume fell. Client money moved in the opposite direction from volume. Customer accounts stood at 455,193 at June 30, up 1.0% from the previous fiscal year-end, and foreign-exchange margin deposits received rose 6.9% to ¥94,488 million. Hirose Tsusho omitted CFD account numbers, margin deposits and volumes from the release, saying they remain small relative to the foreign-exchange figures.

Spread cuts, gold and silver minis, and freezer giveaways

The company described a currency market that moved in three phases. Escalating tensions in the Middle East pushed oil prices higher and prompted safe-haven dollar buying, weakening the yen; government and Bank of Japan yen-buying, dollar-selling intervention then briefly turned the yen stronger; and stubbornly high oil prices plus growing expectations of U.S. rate increases sent the dollar higher again, leaving the quarter to end around the ¥162 level. With rates stuck in a range for stretches of that, Hirose Tsusho leaned on product and promotion to keep customers trading. In May 2026 it narrowed the spread on South African rand/yen. In June it began offering gold-mini and silver-mini CFDs — two contracts that cut the capital a customer needs to one-tenth of the existing products — aimed at retail interest in metals amid large price swings. It also added a risk-reward display to LION FX C2 that shows the prospective loss and profit range around the click point at a glance before a trade is entered. Alongside those it ran food and merchandise giveaway campaigns, headlined by an upgraded freezer, and cashback campaigns for new account openings.

Costs grew 7% against a 22% revenue gain

Selling, general and administrative expenses rose to ¥1,854 million from ¥1,739 million, an increase of roughly 6.6% against the 21.8% gain in operating revenue, and that gap is what pushed the operating margin to 39.8% of operating revenue from 31.5%. Financial revenue climbed to ¥29 million from ¥11 million and financial expenses to ¥26 million from ¥17 million, leaving net operating revenue ¥26 million below the operating-revenue line. Below the operating line the amounts are small but not entirely routine: non-operating income of ¥2.1 million was outweighed by non-operating expenses of ¥4.0 million, which included a ¥2.8 million administrative surcharge and a ¥1.2 million foreign-exchange loss, trimming ordinary-profit growth to 52.6% from the 53.8% recorded at the operating line. An extraordinary gain of ¥11 million on the liquidation of an affiliate then lifted pre-tax profit to ¥1,252 million. Income taxes of ¥449 million — ¥376 million current and ¥73 million deferred — represented an effective rate of 35.9%, up from 33.2% a year earlier, which is why net profit grew 48.1% while ordinary profit grew 52.6%. Comprehensive income was ¥822 million, up 47.7%, after ¥19 million of foreign-currency translation gains. The weighted average share count rose only marginally, to 6,153,231 from 6,122,231.

A ¥150.6 billion balance sheet that is 14.8% equity

Total assets reached ¥150,550 million at June 30, up ¥13,887 million from ¥136,663 million at the March 2026 year-end, with effectively all of the increase — ¥13,953 million — in current assets. The largest single move was a ¥7,760 million rise in customer segregated trust accounts, followed by a ¥5,366 million increase in foreign-exchange margin deposits placed with counterparties, a ¥573 million rise in derivative assets, a ¥410 million rise in accrued foreign-exchange revenue and a ¥408 million rise in other deposits; cash and deposits fell ¥769 million to ¥11,706 million. Liabilities rose ¥13,304 million to ¥128,245 million, driven by the ¥6,128 million increase in customer margin received, a ¥3,953 million increase in short-term borrowings to ¥11,053 million, a ¥1,945 million rise in derivative liabilities and a ¥1,060 million rise in accrued foreign-exchange expenses. Net assets rose ¥582 million to ¥22,305 million, almost entirely through the ¥563 million increase in retained earnings, and shareholders' equity reached ¥22,287 million. Because assets grew far faster than equity, the equity ratio slipped to 14.8% from 15.9% — a level that reflects the balance-sheet mechanics of holding client money rather than leverage taken on for the firm's own account. No quarterly cash-flow statement was prepared.

Still no full-year guidance, and a dividend yet to be decided

Hirose Tsusho again declined to publish consolidated full-year forecasts, repeating its standing explanation that as a financial instruments business its results are heavily influenced by exchange-rate volatility and market conditions and are therefore difficult to predict. In place of guidance it discloses operating revenue, customer account numbers, foreign-exchange trading volume and customer margin deposits on a monthly basis. The dividend position is similarly open: the articles of incorporation set the second-quarter-end and the fiscal-year-end as dividend record dates, but the company says the amounts for those dates are undetermined at this point, so no figures are forecast for the year ending March 2027 — against the ¥39.00 annual dividend paid for the year ended March 2026, all of it at the year-end. There was no revision to any previously announced dividend forecast. The scope of consolidation changed during the quarter, with Hirose Technology Co., Ltd. newly included and HIROSE TRADING HK LIMITED excluded, the latter the source of the quarter's extraordinary liquidation gain. Of 6,883,500 shares issued, 730,269 were held in treasury at quarter-end, unchanged from the year-end. The company prepared no supplementary explanatory material and held no results briefing, and the quarterly consolidated financial statements were not subject to review by a certified public accountant or auditing firm.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.