Olympus (7733): 1Q results: North America demand solid, some costs postponed but restructuring benefits appear

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

07 August 2026

Olympus (7733)

1Q results: North America demand solid, some costs

postponed but restructuring benefits appear

Positive: Olympus reported 1Q results August 7. Operating profit of ¥29 billion

beat the Bloomberg consensus estimate of ¥11.9 billion, supported by strong sales

in North America and low one-time costs. The order backlog increased in FY2025

as production was unable to keep pace with demand for high-margin extended

depth of field (EDOF) scopes released in the US in May 2025, and we believe this

contributed to gross margin growth in 1Q. Restructuring benefits also contributed.

FDA compliance progress is unchanged. Some SG&A expenses were delayed until

2Q onward, and as Olympus also expects to incur one-time costs, it maintained

FY2026 guidance. However, we expect the share price to react positively.

1Q results: We believe the gap between 1Q operating profit of ¥29 billion and

our estimate of ¥14.4 billion primarily reflects roughly (1) ¥5 billion from gross

profit growth and product mix benefits for the gross margin due to strong sales

of EDOF scopes in North America; (2) ¥3 billion from restructuring in

FY2025; (3) ¥3 billion from plans to record one-time costs from 2Q rather than

1Q; and (4) ¥3 billion from delaying some SG&A expenses. Olympus incurred

one-time restructuring costs of around ¥600 million in 1Q, and quality and

regulatory affairs (QARA)-related costs of around ¥700 million in the

gastrointestinal solutions (GIS) segment and the surgical and interventional

solutions (SIS) segment. The impact of tariffs does not appear to have changed

significantly YoY in 1Q.

Outlook: FY2026 operating profit guidance for ¥135.6–155.5 billion

(Bloomberg consensus estimate ¥140.6 billion) conservatively factors in

several one-time costs, including ¥8.4 billion for the risk of impairment losses

(GIS ¥5.1 billion, SIS ¥3.3 billion), ¥5.4 billion for restructuring (SIS ¥1.3

billion, GIS ¥2.2 billion, companywide ¥1.9 billion), ¥2.3 billion related to

QARA for FDA compliance (SIS), and ¥1–2 billion for other factors. EDOF

scopes in the US drove earnings in 1Q, and although it is unknown whether the

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