Q1 delivered higher revenue and profit, but progress toward the full-year plan was below 25% for both revenue and operating profit

Revenue for Q1 of FY2027 was ¥105,044 million, up 12.4% year on year, while operating profit was ¥6,484 million, up 22.3%. Ordinary profit was ¥6,336 million, up 41.7%, and net income attributable to owners of the parent was ¥4,237 million, up 34.9%, with all major profit items increasing on a consolidated basis. The operating margin also rose 0.5 percentage points, from 5.7% in the year-earlier period to 6.2%, indicating improved profitability in Q1 alone.

Progress toward the full-year forecast was 21.4% for revenue, calculated as ¥105,044 million ÷ ¥490,000 million, and 19.1% for operating profit, calculated as ¥6,484 million ÷ ¥34,000 million. Both were below the simple 25% benchmark after one-quarter of the year, and while this does not immediately indicate a shortfall given seasonality, operating profit progress was 2.4 percentage points below revenue progress. In FY2027-H1, the extent to which revenue and operating profit can exceed the year-earlier figures of ¥201,023 million and ¥12,076 million, respectively, will be a basis for assessing the validity of the full-year plan.

The company's full-year plan calls for revenue of ¥490,000 million, operating profit of ¥34,000 million, ordinary profit of ¥33,600 million and net income of ¥22,200 million. Operating profit is only 1.1% above the FY2026 result of ¥33,618 million. Net income, meanwhile, is planned to decline 25.4% from the FY2026 result of ¥29,746 million. Accordingly, at the next results announcement, we will assess separately how far operating profit progresses from 19.1% of the full-year plan in the first half and whether the ¥84 dividend forecast can be maintained despite the planned decline in net income.

The company has not revised its earnings forecast as of Q1 and said that both government and private-sector construction investment were generally firm. However, it identified trends in material prices and labor costs, the situation in the Middle East, and volatility in the financial and capital markets as risks, so the external environment in Q1 may not continue unchanged beyond the first half. In FY2027-H1, it will be necessary to assess, together with segment profitability, whether operating profit progress returns to around 25% and whether the year-on-year profit growth rate is maintained.