TOYOKOH Lifts Q1 Revenue 24% but Operating Profit Falls 9.8% as Costs Outrun Sales

Revenue grew by almost a quarter while every profit line fell

TOYOKOH Inc. (TSE: 341A), which renovates manufacturers' domestic production facilities through its SOSEI business and sells CoolLaser equipment through a second segment, published non-consolidated results for the first quarter of FY3/2027 — the three months from April 1 to June 30, 2026 — on August 5, 2026 under Japanese GAAP. Revenue rose 24.0% to ¥849 million, but operating profit fell 9.8% to ¥131 million, ordinary profit 7.3% to ¥130 million and quarterly net profit 4.5% to ¥116 million. Earnings per share were ¥8.56 against ¥9.12, or ¥8.17 against ¥8.67 on a diluted basis. The comparison is a genuine year-on-year one: the company prepared statements for the first quarter of FY3/2026, though not for the same quarter of FY3/2025, which is why last year's figures carry no growth rates of their own.

The whole of the shortfall sits in two cost lines, and the filing explains neither. Cost of sales rose 31.6% to ¥512 million against revenue growth of 24.0%, so gross profit grew only 14.0% to ¥337 million and the gross margin narrowed from 43.2% to 39.7%. Selling, general and administrative expenses then rose 37.1% to ¥205 million from ¥149 million. In money terms gross profit added about ¥41 million and SG&A about ¥56 million, and the difference is the ¥14 million by which operating profit fell. The operating margin went from 21.3% to 15.5%, a drop of 5.8 points. Depreciation, which the filing discloses in place of a quarterly cash-flow statement, rose to ¥13.0 million from ¥7.8 million, and the company says it acquired machinery for the business during the quarter; beyond that, it gives no breakdown of either cost line.

Non-operating items and a lighter tax charge softened the fall

Below the operating line the quarter compared better with last year. Non-operating income rose to ¥5.5 million from ¥0.2 million, including ¥2.3 million of income from electricity sales, ¥1.1 million of interest on securities, ¥1.0 million of fees received and ¥0.7 million of interest, most of which had no counterpart a year earlier. Non-operating expenses were ¥7.0 million against ¥5.8 million: interest paid almost doubled, to ¥6.9 million from ¥3.7 million, while commission fees fell to ¥0.1 million from ¥2.0 million. The net non-operating charge therefore shrank from about ¥5.6 million to about ¥1.6 million, and ordinary profit fell a narrower 7.3%. There were no extraordinary items, so pre-tax profit equalled ordinary profit at ¥130 million.

Income taxes fell to ¥13.4 million from ¥18.2 million, helped by a deferred-tax credit of ¥7.2 million against ¥2.9 million, which put the effective rate at about 10.3% against 12.9%. That is why net profit fell only 4.5%. Earnings per share fell further, by 6.1%, because the average number of shares was 1.7% higher, at 13,625,565 against 13,392,534.

SOSEI carried the quarter; CoolLaser grew its sales and slipped into a loss

The company reports two segments, and both grew revenue at almost exactly the same rate. SOSEI, the larger at 71% of revenue, had sales of ¥605 million, up 23.9%, and segment profit of ¥207 million, up 4.4%. The filing attributes the growth to rising demand for renovating manufacturers' domestic production facilities, with repeat projects from existing customers added to large projects carried over from the previous fiscal year. Profit did not keep pace with sales: the segment margin fell from about 40.7% to 34.3%, so SOSEI's extra ¥117 million of sales produced only about ¥9 million of extra profit, and the filing does not say why.

CoolLaser sales rose 24.1% to ¥244 million, which the filing links to repeat orders for, and deliveries of, its CoolLaser G19-6000 series to affiliates of Japan's largest general contractors and to contractors working on public road-bridge projects. Yet the segment swung to a loss of ¥8 million from a profit of ¥5 million — a turnaround of about ¥15 million on higher sales, which the filing does not explain. Corporate costs not allocated to either segment, mainly general and administrative expenses, rose 14.5% to ¥66.9 million from ¥58.4 million. Put together, SOSEI added about ¥9 million to operating profit, while CoolLaser took away about ¥15 million and corporate costs about ¥8 million, which reconciles to the ¥14 million decline.

Cash went into inventory

Total assets rose 0.6% to ¥5,373 million from ¥5,341 million at March 31, 2026, but their make-up shifted. Cash and deposits fell by ¥391 million, to ¥1,807 million, while inventories rose by ¥350 million: merchandise and finished products more than tripled, to ¥479 million from ¥153 million, and raw materials and supplies rose to ¥194 million from ¥130 million, against a decline in work in progress to ¥221 million from ¥260 million. Receivables shifted within the total, with accounts receivable down to ¥391 million from ¥506 million and receivables on completed construction contracts up to ¥412 million from ¥282 million. The filing does not say what the inventory build is for.

Total liabilities fell 4.3% to ¥2,260 million. Long-term borrowings fell by ¥67 million on repayments and income taxes payable by ¥52 million, while a new short-term borrowing of ¥100 million appeared; including the current portion of long-term debt, borrowings totalled about ¥1,764 million against ¥1,730 million. Net assets rose 4.5% to ¥3,113 million, from the quarter's profit and about ¥8 million each added to share capital and capital surplus by the exercise of stock acquisition rights, which lifted shares issued to 13,642,060 from 13,618,090. The equity ratio rose from 55.8% to 57.9%. The company holds no treasury shares, and its quarterly statements were not reviewed by an auditor.

Guidance is unchanged, and it leans heavily on the second half

TOYOKOH left its FY3/2027 guidance, published on May 13, 2026, unchanged. For the full year it expects revenue of ¥4,000 million (+27.7%), operating profit of ¥790 million (+25.6%), ordinary profit of ¥772 million (+24.8%) and net profit of ¥654 million (+18.9%), or ¥47.94 per share. For the first half, however, it guides to revenue of ¥1,660 million (+1.6%) and operating profit of ¥286 million, down 30.8%, with ordinary profit of ¥274 million (−32.4%) and net profit of ¥232 million (−32.7%).

Set against those targets, the first quarter delivered 51.1% of first-half revenue guidance but 45.8% of first-half operating profit, and 21.2% of full-year revenue but only 16.6% of full-year operating profit. The plan therefore implies second-quarter operating profit of about ¥155 million and second-half operating profit of about ¥504 million — some 64% of the year's total in six months. The filing gives no reason for that phasing. No dividend was paid for FY3/2026 and none is forecast for FY3/2027. The company describes an economy in gradual recovery, supported by better employment and incomes, returning inbound demand and firmer business investment, but weighed down by high energy and raw-material prices, persistent inflation and geopolitical risks including the Middle East.

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.