Orders increased, but revenue recognition did not lead in FY2027-Q1; the pace of conversion will be assessed in H1

FY2027-Q1 orders were ¥34,866 million, up 8.3% year on year. However, revenue was ¥20,264 million, down 10.2%, while construction revenue was ¥19,933 million, down 10.0%, and real estate and other revenue was ¥330 million, down 20.5%. The increase in orders has not yet been reflected in revenue recognition for the quarter, highlighting the time lag between orders and revenue. Q1 progress against the full-year revenue forecast of ¥96,000 million was 21.1%, below the simple quarterly elapsed rate of 25%.

In the past full-year results, FY2026 construction orders were ¥102,921 million, down 1.8% from the previous fiscal year, while completed construction revenue was ¥94,470 million, down 2.7%. In contrast, carried-over orders rose to ¥111,998 million from ¥104,242 million the previous fiscal year. Orders had increased 10.5% year on year to ¥104,814 million in FY2025, so it is necessary to determine whether the recent Q1 increase represents a temporary rebound or a sustainable order base supported by the conversion of carried-over orders.

In FY2026-Q1, revenue was ¥22,563 million and operating profit was ¥1,145 million. This time, revenue fell by ¥2,299 million, while operating profit increased to ¥1,327 million, resulting in a weak start in volume terms. Although orders have been disclosed, the order backlog as of Q1 has not, so the extent to which increased orders will translate into revenue from FY2027-H1 onward cannot be verified using public information alone.

In FY2027-H1, disclosures on whether orders will remain positive year on year, as well as the order backlog, carried-over orders, scheduled completion dates and construction progress, will be important. We will also monitor the extent to which revenue recovers toward the full-year forecast of ¥96,000 million and whether the increase in orders reflects higher unit prices or greater construction volume. If revenue progress remains low despite higher orders, the company will need to explain any delays in recognition or changes in the project mix.