First-quarter sales are ahead of schedule, but can the profit shortfall be made up in the first half?

First-quarter revenue was ¥74,057 million and operating profit was ¥2,730 million, up 2.9% and 25.9%, respectively, year on year. Calculated against the full-year forecasts, progress was 22.2% for revenue and 16.5% for operating profit, meaning revenue progress was 5.7 percentage points ahead of profit progress. The operating margin was approximately 3.69%, up approximately 0.68 percentage points from approximately 3.01% in the prior-year period, although operating profit progress toward the full-year forecast remains low.

FY2026-H1 revenue was ¥150,073 million and operating profit was ¥5,146 million. Using these figures as the comparison base for FY2027-H1, achieving revenue at around the prior-year period's level would represent approximately 44.9% of the full-year revenue forecast of ¥334,000 million, while achieving operating profit of ¥5,146 million would represent approximately 31.2% of the full-year operating profit forecast of ¥16,500 million. These are not levels disclosed by the company as first-half targets, but they provide a practical benchmark for assessing the current lag in profit accumulation relative to revenue.

As of the first quarter, cumulative FY2027-H1 results, a first-half-specific profit plan and the quarterly build-up of the full-year forecasts cannot be confirmed. The first-quarter forecasts remain unchanged at revenue of ¥334,000 million and operating profit of ¥16,500 million. Accordingly, at the next results announcement it will be necessary to assess not only year-on-year changes, but also whether the gap between revenue and profit progress had narrowed by the end of the first half.

If first-half operating profit remains at the prior-year period's ¥5,146 million, ¥11,354 million would be required in the second half to achieve the full-year forecast. Likewise, if first-half revenue is at the prior-year period's level, second-half revenue of ¥183,927 million would be required. At the first-half results announcement, in addition to whether the full-year forecasts are revised, it will be important to assess whether this second-half burden is realistic based on margins, construction profitability and progress in selling, general and administrative expenses.