[Earnings Analysis] Willtec Co., Ltd. (7087) Q1 FY2027 Results: Record-High Sales and Dramatic V-Shaped Recovery to Operating Profit, Driven by EMS and Engineer Staffing

Willtec Co., Ltd. (Securities Code: 7087) has announced its financial results for the first quarter of the fiscal year ending March 31, 2027 . This report provides a comprehensive and in-depth summary based on the facts presented in the earnings materials, covering performance highlights, factors behind operating profit fluctuations, detailed segment trends, full-year forecasts, and the company's mid-to-long-term growth vision.

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1. Earnings Summary: Record-High Sales and a Dramatic V-Shaped Recovery in Operating Profit

Willtec’s Q1 FY2027 performance saw sales reach a record high for a first quarter , while the company successfully transitioned from a loss in the same period last year to a significant operating profit .

Key financial metrics are as follows:

• Net Sales : 11,861 million yen (up 10.8% YoY)
• Gross Profit : 2,320 million yen (up 26.0% YoY)
• Operating Profit : 293 million yen (compared to an operating loss of 53 million yen in the same period last year)
• Ordinary Profit : 308 million yen (compared to an ordinary loss of 28 million yen in the same period last year)
• Quarterly Net Income Attributable to Owners of Parent : 128 million yen (compared to a quarterly net loss of 85 million yen in the same period last year)

Driven by the completion of inventory adjustments in the semiconductor and electronic components markets and increased investment related to generative AI, robust demand in the engineer staffing and EMS (Electronics Manufacturing Services) sectors significantly boosted performance.

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2. Detailed Analysis of Q1 FY2027 Results

To grasp the full picture of the company's performance, it is essential to review the earnings summary slide, which covers the year-on-year changes in major income statement items.

[Explanation of Slide (P.8) and Data Significance]

The slide above compares key financial figures between Q1 FY2026 and Q1 FY2027. The most significant takeaway is the dramatic improvement in the profit structure, as gross profit grew (+26.0%) at a pace significantly outpacing the sales growth rate (+10.8%) .

The cost of sales ratio improved by 2.4 percentage points, falling from 82.8% to 80.4% in the same period last year. Consequently, the gross profit margin rose from 17.2% to 19.6% . The ratio of selling, general and administrative (SG&A) expenses to sales decreased by 0.6 percentage points from 17.7% to 17.1% , indicating that the reduction in fixed cost burdens due to increased sales (business efficiency) is functioning effectively.

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3. Analysis of Operating Profit Fluctuations: Margin Improvement and Operating Leverage Drive Profit Growth

To understand the internal structure behind the turnaround from an operating loss of 53 million yen in the previous year to an operating profit of 293 million yen this term, we analyze the operating profit waterfall chart.

[Explanation of Slide (P.9) and Data Significance]

This slide breaks down the 347 million yen increase in operating profit compared to the same period last year into three factors:

1. Sales Impact (Operating Effect): +199 million yen The completion of inventory adjustments in the semiconductor and electronic components markets, the subsequent recovery in demand, and strong demand for talent in generative AI and semiconductor-related fields boosted profit by 199 million yen.
2. Gross Margin Change (Cost Improvement Effect): +279 million yen This was the primary driver of profit growth. As the total number of engineers increased, the ratio of initial training costs (such as new graduate training) to the total decreased. Additionally, the upfront costs associated with the market launch of new products in the lighting equipment manufacturing and sales business, which occurred in the same period last year, have been resolved.
3. SG&A Expense Impact (Fluctuations in Labor and Other Expenses): -131 million yen SG&A expenses increased by 131 million yen due to planned talent investment and strengthened sales activities in preparation for business expansion and future growth; however, this was largely absorbed by the expansion in gross profit.

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4. Segment Performance ①: Human Resources Field (Engineer Staffing & Manufacturing Contracting)

Willtec's business is structured into two main pillars: the "Human Resources Field" and the "Manufacturing & Solutions Field." First, we summarize the Human Resources Field.

[Human Resources Field Total]

• Net Sales : 6,948 million yen (up 6.5% YoY)
• Segment Profit : 169 million yen (up 35.2% YoY)

① Engineer Staffing Business (Driving Growth and Higher Profitability)

• Net Sales : 3,764 million yen (up 9.0% YoY)
• Business Profit : 98 million yen (compared to a loss of 1 million yen in the same period last year)
• Sales Trends by Field :
  • Mechanical/Electrical : 1,469 million yen (up 12.1% YoY)
  • Construction : 1,556 million yen (up 9.3% YoY)
  • IT : 739 million yen (up 2.9% YoY)

Supported by steady demand in generative AI and urban redevelopment projects, all fields achieved sales growth. Business profit turned significantly profitable from a loss in the same period last year, driven by proactive unit price negotiations and a decrease in the burden ratio of new graduate recruitment and training costs as the total number of technical staff increased.

② Manufacturing Contracting & Staffing Business (Demand Recovery and Recruitment Investment)

• Net Sales : 3,183 million yen (up 3.8% YoY)
  • Manufacturing Contracting: 1,209 million yen (down 9.1% YoY)
  • Manufacturing Staffing: 1,973 million yen (up 13.5% YoY)
• Business Profit : 70 million yen (down 44.2% YoY)

In manufacturing staffing, the semiconductor sector recorded double-digit growth (+13.5%) due to strong underlying demand from generative AI and data center-related investments. However, business profit decreased year-on-year due to short-term cost increases resulting from intensified recruitment investments to meet customer needs.

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5. Segment Performance ②: Manufacturing & Solutions Field (EMS & Social Support)

The EMS business within the "Manufacturing & Solutions Field" saw the most dramatic V-shaped recovery in the first quarter.

[Explanation of Slide (P.12) and Data Significance]

The slide above provides detailed performance data for the Manufacturing & Solutions Field. It highlights the fact that this field, which recorded a segment loss of 112 million yen in the same period last year, turned into a profit of 183 million yen this term.

[Manufacturing & Solutions Field Total]

• Net Sales : 4,913 million yen (up 17.6% YoY)
• Segment Profit : 183 million yen (compared to a loss of 112 million yen in the same period last year)

① EMS Business (The Star of the V-Shaped Recovery)

• Net Sales : 4,370 million yen (up 21.6% YoY)
  • Electronic Components Manufacturing/Sales: 1,147 million yen (up 30.6% YoY)
  • Lighting Equipment Manufacturing/Sales: 3,222 million yen (up 18.7% YoY)
• Business Profit : 193 million yen (compared to a loss of 136 million yen in the same period last year)

Electronic components manufacturing surged 30.6% year-on-year due to increased orders for generative AI/server-related products and a recovery in domestic capital investment. Furthermore, the lighting equipment sector performed very well with new product sales, and the elimination of new product launch costs that burdened the previous year helped achieve a significant profit improvement of 329 million yen .

② Social Support Business (Upfront Investment in New Areas)

• Net Sales : 543 million yen (down 7.3% YoY)
  • Social Infrastructure: 321 million yen (down 15.3% YoY)
  • Employment Support: 87 million yen (down 3.3% YoY)
  • Circular Economy: 134 million yen (up 14.5% YoY)
• Business Profit : -10 million yen (compared to a profit of 23 million yen in the same period last year)

This segment recorded a small business loss due to a decline in sales in the social infrastructure field following the completion of seasonal demand from some customers, as well as continued upfront investment for future business expansion. However, the circular economy field, which handles refurbishing, grew steadily by 14.5% year-on-year.

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6. Full-Year Earnings Forecast and Progress

Willtec has announced its full-year earnings forecast for the fiscal year ending March 31, 2027, and states that progress is generally in line with the plan as of the first quarter.

[FY2027 Full-Year Consolidated Earnings Forecast]

• Net Sales : 47,740 million yen (up 3.9% YoY)
• Operating Profit : 1,350 million yen (up 1.5% YoY)
• Ordinary Profit : 1,420 million yen (down 3.0% YoY)
• Net Income Attributable to Owners of Parent : 923 million yen (up 2.8% YoY)

While there are concerns regarding the impact of heightened tensions in the Middle East on some customers, the improvement in income environments due to wage increases and strong appetite for capital investment in labor-saving, digital transformation (DX), and AI-related fields remain robust, leading to a smooth start toward achieving the full-year plan.

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7. Shareholder Returns and Long-Term Vision "FUTURE VISION 2035"

Shareholder Return Policy

Willtec's basic policy is to " implement sustainable and stable dividends without reducing them ," with a target consolidated dividend payout ratio of 30% .

• FY2027 Annual Dividend Forecast : 43.0 yen/share (Interim: 21.5 yen, Year-end: 21.5 yen)
• Shareholder Benefit Program : QUO cards worth a total of 10,000 to 30,000 yen are presented twice a year (end of September and end of March), depending on the number of shares held and the holding period.

Long-Term Vision "FUTURE VISION 2035"

The company has set the following ultra-long-term goals for the fiscal year ending March 31, 2035:

• Net Sales : 100 billion yen
• Ordinary Profit : 5 billion yen

By combining the on-site capabilities cultivated in the staffing and contracting business with manufacturing functions such as the EMS business, the company aims for multi-faceted growth through "horizontal expansion of the business model" and "optimization of capital efficiency."

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8. Summary

Willtec's Q1 FY2027 results clearly demonstrate the recovery in generative AI and semiconductor demand and the strength of its integrated domestic EMS system . Sales reached a record high for a first quarter, and the company achieved a V-shaped recovery to an operating profit of 293 million yen , following the completion of upfront investments and new product launch costs from the previous year. Continued demand capture and efficiency improvements across all business fields are expected moving forward.