FY2027 Q1: profit growth led results, with H1 set to test the sustainability of the ¥395 million full-year plan

Q1 revenue was ¥1,466 million, up 34.4% year on year. Operating profit was ¥105 million, ordinary profit was ¥102 million, and net profit attributable to owners of the parent was ¥61 million, turning positive from a final loss in the same quarter of the previous year. The operating margin was approximately 7.2% of revenue. The distinguishing feature of these results was that margin improvement progressed alongside revenue growth.

Progress against the full-year forecast was approximately 22.7% for revenue and 26.7% for operating profit. Operating profit progress was approximately 4 percentage points ahead of revenue progress, indicating that profit ramp-up was leading rather than simply reflecting the scale of revenue. The company explains, however, that the number of people referred and revenue from recruitment services in its employment support business for people with disabilities tend to be weighted toward the second half, making progress against the full-year profit plan from Q1 through Q3 relatively low. Accordingly, Q1 revenue progress of 22.7% alone does not indicate that the full-year target will be missed.

The company attributed the revenue increase to the expansion of farm openings and tourism and local-products businesses in its regional revitalisation business, the expansion of home-visit nursing services in its home healthcare business, and the acquisition of new customers in its IoT business. It has not disclosed a factor-by-factor breakdown showing how many millions of yen each factor contributed to revenue or operating profit. As the regional revitalisation business delivered higher profit while the home healthcare business remained loss-making, the next results should confirm the sustainability of consolidated profit by segment.

For FY2027-H1, cumulative revenue of ¥3,230.5 million and operating profit of ¥197.5 million, equivalent to half of the full-year forecast, will serve as reference progress benchmarks. These are analytical benchmarks calculated mechanically at 50% of the full-year plan, not targets provided by the company for the first half. The main points to confirm in the H1 results will be whether the operating margin declines materially from approximately 7.2% in Q1 and whether the full-year forecast of ¥6,461 million in revenue and ¥395 million in operating profit is maintained. The company did not prepare a quarterly consolidated statement of cash flows for Q1, so cash conversion of profit will need to be confirmed through the H1 cash flow disclosure.