Verifying the low starting point for FY2027-Q1 in light of seasonality

The company has consistently explained that its high weighting in public works-related projects causes revenue to decline in Q1 (July–September) and Q4 (April–June), and increase in Q2 (October–December) and Q3 (January–March). Accordingly, FY2027-Q1's revenue decline should not immediately be viewed as a failure to meet the full-year plan. It is necessary to distinguish between a decline following historical seasonal patterns and one accompanied by deterioration in the order environment or construction capacity.

Consolidated revenue in the year-earlier period, FY2026-Q1, was ¥5,475 million, while operating profit was ¥755 million. In FY2026-H1, revenue expanded to ¥10,893 million and operating profit to ¥1,395 million, meaning that the year-earlier Q1 accounted for approximately 50.3% of first-half revenue and approximately 54.1% of first-half operating profit. In FY2027-Q1, even if revenue and operating profit fall below the year-earlier figures of ¥5,475 million and ¥755 million, the size and reasons for the decline should be examined separately by construction volume, completed construction revenue, costs, and selling, general and administrative expenses.

In FY2026, revenue from the Cutting and Drilling Construction business was ¥19,421 million, while revenue from the Building Maintenance business was ¥667 million. The former accounted for most of consolidated revenue of ¥20,089 million. Seasonality may have a stronger impact on the Cutting and Drilling Construction business in Q1, making it important to compare completed construction revenue and segment profit for both businesses with the year-earlier quarter, rather than examining consolidated figures alone.

Orders received, order backlog and revenue by region have not been disclosed quantitatively in the latest financial information. In the next earnings release, the focus should be at least on order trends for expressway-related, public and private-sector projects, as well as whether an order backlog exists at the period-end. To determine whether Q1 figures reflect seasonal factors, the combination of completed construction revenue by segment, profit margins and order backlog is more useful than revenue alone.