Separating the sharp profit recovery into core operating improvements and one-off gains

FY2027-Q1 revenue was ¥623.429 billion, up 19.0% year on year, while operating profit was ¥32.700 billion, up 107.0%. The operating margin improved by 2.2 percentage points, from approximately 3.0% in the same quarter of the prior year to approximately 5.2%, with several factors supporting margins, including improved profitability in domestic construction and real estate sales. However, the improvement rate in a single quarter cannot simply be extrapolated to the first half or full year, making it important to confirm whether the same margin can be maintained on a first-half cumulative basis.

In assessing earnings quality, it is important that the company recognized a substantial ¥20.064 billion extraordinary gain on sales of investment securities against quarterly net income attributable to owners of the parent of ¥39.091 billion. Gains on sales of investment securities totaling ¥48.986 billion were also recorded for FY2026 as a whole, so the improvement in FY2027-Q1 net income reflects not only higher operating profit but also extraordinary gains from asset sales. For FY2027-H1, an earnings bridge separating operating profit, ordinary profit, profit before income taxes, extraordinary gains and extraordinary losses will be needed.

The company's full-year FY2027 forecast calls for revenue of ¥2.945 trillion, operating profit of ¥180.0 billion, ordinary profit of ¥183.0 billion and net income attributable to owners of the parent of ¥157.0 billion. Revenue is expected to increase 13.9% from the FY2026 result, while operating profit is forecast to decline 7.5% from ¥194.678 billion and net income to decline 9.6%, indicating that revenue growth and profit growth are expected to diverge. In H1, it will be important to determine whether profitability in domestic construction continues to improve, how much profit volatility in overseas construction and real estate offsets that improvement, and where recurring profit stands excluding gains on asset sales.