FY2027 Q1 is slightly behind the full-year forecast, making recovery in H1 the focus

Consolidated revenue in FY2027 Q1 was ¥10,153 million, operating profit was ¥534 million, ordinary profit was ¥573 million, and profit attributable to owners of the parent was ¥381 million. Revenue fell 23.5% year on year, operating profit fell 46.9%, ordinary profit fell 44.4%, and net profit fell 48.2%, with all major profit measures showing substantial declines.

The full-year forecasts remained unchanged at revenue of ¥49,000 million, operating profit of ¥2,550 million, ordinary profit of ¥2,550 million, and net profit of ¥1,700 million. Q1 progress was 20.7% for revenue and 20.9% for operating profit, both below the simple quarterly run-rate benchmark of 25.0%. Revenue in FY2026-H1 was ¥25,807 million and operating profit was ¥2,381 million, so the H1 results will need to show not only a year-on-year recovery but also whether revenue reaches the mechanical 50% benchmark of ¥24,500 million and operating profit reaches ¥1,275 million against the full-year forecasts.

The decline in revenue and profit in Q1 was primarily due to lower revenue in the Construction business. Revenue was ¥7,834 million in Construction, ¥2,128 million in Civil Engineering, and ¥191 million in Real Estate. Construction revenue fell 31.9% year on year, while Civil Engineering revenue rose 22.2% and Real Estate revenue rose 627.4%, showing divergent trends across the businesses. Recovery in consolidated operating profit will require a recovery in construction progress and project profitability in Construction, the largest segment.

The company treats operating margin as a key metric and continues to focus on securing target gross margins at the time of order intake, early procurement, and strict project profitability management. Operating profit improved to ¥3,861 million and operating margin to 7.6% for FY2026, but the operating margin fell to approximately 5.3% in FY2027 Q1. At the H1 results announcement, the focus will be on the basis for maintaining the full-year forecast, the pass-through of construction costs, and whether there has been any further deterioration in costs, in addition to a recovery in Construction revenue.