Revenue down, profit up: testing whether margin gains are real and concentrated in H2

Revenue for FY2026 from January through June was ¥4,646 million, down 5.9% from ¥4,936 million in the same period of the previous year. Operating profit, meanwhile, rose 43.3% to ¥223 million from ¥156 million, ordinary profit rose 123.9% to ¥220 million, and interim net profit attributable to owners of the parent rose 160.6% to ¥146 million. Although the scale of revenue contracted, the central change in H1 was improvement from operating profit through to net income.

The FY2026 full-year forecasts based on the earnings summary are revenue of ¥11,100 million, operating profit of ¥500 million, ordinary profit of ¥510 million, and net profit attributable to owners of the parent of ¥360 million. H1 progress was 41.9% for revenue, 44.6% for operating profit, 43.1% for ordinary profit, and 40.6% for net profit, below the 50% mark implied by simple time apportionment. To achieve the full-year forecasts, the company needs to generate ¥6,454 million in revenue, ¥277 million in operating profit, ¥290 million in ordinary profit, and ¥214 million in net profit in H2.

The increase in profit reflects an improvement in gross margin driven by more appropriate inventory management and improved profitability in the Equipment Integration segment. H1 gross margin rose 3.8 percentage points year on year to 25.1%. Selling, general and administrative expenses were ¥942 million, up ¥48 million from the same period of the previous year. It is therefore important to determine whether the improvement in profit resulted from a recovery in gross margin, rather than simply from cuts in SG&A expenses.

FY2026-Q3 will confirm whether the gross-margin improvement seen through H1 has continued and whether revenue from projects scheduled for delivery in H2 is actually being recognized. In particular, if nine-month cumulative revenue of ¥8,325 million and operating profit of ¥375 million, the mechanical 75% progress benchmarks, are not reached, the company will need to explain not only seasonality and project delivery delays but also the achievability of the full-year revenue forecast of ¥11,100 million.