FAQ for FY2026 Q1 Financial Announcement | Global

Why did you maintain your full-year operating profit forecast for fiscal 2026 at ¥95 billion even though you posted a one-time gain from U.S. tariff refunds in the first quarter?

While our initial forecasts did not include U.S. tariff refunds, we need to assess the impact of further increases in semiconductor memory costs, raw materials and logistics risks from developments in the Middle East, and how these refunds might transform the competitive climate in the Office Printing market.

Why was your Workplace Services operating profit just ¥600 million in the first quarter?

In line with our shift to new segments, we are reviewing allocations of personnel costs and shared expenses for Workplace Services and Digital Products based on actual activity levels and our projections. Recurring revenue builds each quarter. We also factor in seasonality, as there tend to be more deals generating non-recurring revenue in the second half. So, from the outset we planned for earnings to be greater in the second half. Our first-quarter results were largely on target. Note that in the first quarter of fiscal 2025 we posted a ¥200 million operating loss after excluding a negative one-time factor of ¥5.0 billion.

How does Workplace Services amass recurring revenues?

It generates ongoing monthly or annual earnings after securing recurring contracts.
In Japan in particular, we focus on offering higher-margin services. We use the number of service-in-field contracts for these services as a key performance indicator. We added around 70,000 service-in-field contracts in the first quarter. They will keep contributing to earnings from the second quarter.

Which Workplace Services offerings are the most profitable?

Profitability is high for services we provide ourselves, such as building secure IT environments and supporting AI adoption, as well as for proprietary software including DocuWare. Margins are lower with PCs, servers, and other resold hardware and partner software.

Graphic Communications posted ¥2.2 billion in operating profit in the first quarter against a full-year projection of a ¥5.5 billion operating loss. What's your assessment of this performance?

Compared with the initial forecast, earnings benefited from approximately ¥2.5 billion in U.S. tariff refunds that had not been anticipated, as well as approximately ¥1.5 billion from the weaker-than-expected yen. The one-time expenses downside was around ¥3.0 billion. The underlying operating profit after excluding these factors was slightly higher than projected. A solid Commercial Printing non-hardware performance and cost controls offset the impact of Commercial Printing hardware demand remaining soft in Europe and the Americas, where customers again held off on investing.