Q1 operating profit led the way; can the strong first-half progress be repeated?

In Q1, covering April to June 2026, revenue was ¥20,531 million, up 21.9% year on year, while operating profit was ¥1,410 million, up 41.2%. Revenue increased by ¥3,683 million from ¥16,848 million in the year-earlier quarter, while operating profit increased by ¥411 million from ¥999 million. The operating margin was 6.9% on a calculated basis, an improvement of approximately 0.9 percentage points from approximately 5.9% in the year-earlier quarter.

The full-year forecasts are revenue of ¥81,000 million, operating profit of ¥4,800 million, ordinary profit of ¥4,900 million and net profit attributable to owners of the parent of ¥3,200 million. Q1 progress rates were 25.3% for revenue, 29.4% for operating profit, 25.7% for ordinary profit and 23.0% for net profit. Assuming the year is divided evenly across four quarters, the simple H1 benchmarks would be revenue of ¥40,500 million, operating profit of ¥2,400 million, ordinary profit of ¥2,450 million and net profit of ¥1,600 million. However, these are not the seasonally adjusted targets presented by the company and should therefore be treated as mechanical benchmarks for measuring progress.

Profit growth was strong at the operating profit level, but ordinary profit was ¥1,260 million, up 12.1% year on year, while net profit was ¥735 million, up just 0.3%. Q1 included a ¥5 million gain on the sale of fixed assets and no loss on the disposal of fixed assets, but these amounts are not large enough to explain the difference between the growth rates of operating profit and net profit. In H1, it will be necessary to confirm the flow-through from operating profit to ordinary profit and net profit, including non-operating income and expenses and the tax burden.

The company cited progress on projects carried over from the beginning of the period, as well as carried-over and new projects, as factors behind the Q1 revenue increase. It has not revised either its earnings forecast or dividend forecast. Accordingly, at the next results announcement, we will look not only at whether operating profit exceeded the year-earlier level, but also at progress against the simple half-year benchmarks of ¥40,500 million for revenue and ¥2,400 million for operating profit, and whether the 6.9% operating margin can be maintained on a cumulative H1 basis.